<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended December 31, 1996
Commission File Number: 33-74254
COGENTRIX ENERGY, INC.
(Exact name of registrant as specified in its charter)
NORTH CAROLINA 56-1853081
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
9405 ARROWPOINT BOULEVARD, CHARLOTTE, NORTH CAROLINA 28273-8110
(Address of principal executive offices) (Zipcode)
(704) 525-3800
(Registrant's telephone number, including area code)
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 period that the registrant was required to
file such reports), and (2) has been subject to such filing requirements for the
past 90 days. [X] Yes [ ] No
On February 14, 1997, there were 282,000 shares of common stock, no par value,
issued and outstanding.
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COGENTRIX ENERGY, INC.
<TABLE>
<CAPTION>
PAGE NO.
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PART I: FINANCIAL INFORMATION
<S> <C>
Item 1. Consolidated Condensed Financial Statements:
Consolidated Balance Sheets at December 31, 1996 (Unaudited)
and June 30, 1996 3
Consolidated Statements of Operations for the Three Months and Six
Months Ended December 31, 1996 and 1995 (Unaudited) 4
Consolidated Statements of Cash Flows for the Six Months
Ended December 31, 1996 and 1995 (Unaudited) 5
Notes to Consolidated Condensed Financial Statements (Unaudited) 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 9
PART II: OTHER INFORMATION
Item 1: Legal Proceedings 15
Item 6. Exhibits and Reports on Form 8-K 16
Signature 18
</TABLE>
2
<PAGE> 3
COGENTRIX ENERGY, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
December 31, 1996 and June 30, 1996
(dollars in thousands)
<TABLE>
<CAPTION>
December June
31, 1996 30, 1996
-------- --------
(Unaudited) (Audited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 89,188 $ 33,351
Restricted cash 29,274 42,203
Accounts receivable 53,218 57,331
Inventories 18,764 19,086
Other current assets 1,257 2,883
-------- --------
Total current assets 191,701 154,854
PROPERTY, PLANT AND EQUIPMENT,
Net of accumulated depreciation: $172,455 and $156,215, respectively 531,781 604,491
LAND AND IMPROVEMENTS 2,424 2,424
DEFERRED FINANCING, START-UP AND
ORGANIZATION COSTS,
Net of accumulated amortization: $20,531 and $19,653, respectively 24,483 25,105
RESTRICTED MARKETABLE SECURITIES 63,695 63,695
NATURAL GAS RESERVES 3,215 3,611
INVESTMENTS IN AFFILIATES 33,489 56,028
OTHER ASSETS 15,153 11,433
-------- --------
$865,941 $921,641
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 59,115 $ 48,416
Accounts payable 23,245 21,453
Accrued interest payable 4,409 4,063
Accrued dividends payable 0 4,759
Other accrued liabilities 11,132 13,209
-------- --------
Total current liabilities 97,901 91,900
LONG-TERM DEBT 664,284 670,900
DEFERRED INCOME TAXES 22,779 46,971
MINORITY INTEREST IN JOINT VENTURE 13,196 22,044
OTHER LONG-TERM LIABILITIES 17,150 6,816
-------- --------
815,310 838,631
-------- --------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Common stock, no par value, 300,000 shares authorized;
282,000 shares issued and outstanding 130 130
Accumulated earnings 50,501 82,880
-------- --------
50,631 83,010
-------- --------
$865,941 $921,641
======== ========
</TABLE>
The accompanying notes to consolidated condensed financial statements
are an integral part of these balance sheets.
3
<PAGE> 4
COGENTRIX ENERGY, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the Three Months and Six Months Ended December 31, 1996 and 1995
(dollars in thousands, except for earnings per common share)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31, December 31,
------------------------- -------------------------
1996 1995 1996 1995
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
OPERATING REVENUE:
Electric $ 72,516 $ 84,717 $162,909 $178,687
Steam 6,652 6,497 13,284 12,000
Other 2,511 5,773 4,608 11,873
-------- -------- -------- --------
81,679 96,987 180,801 202,560
-------- -------- -------- --------
OPERATING EXPENSES:
Fuel expense 28,372 40,383 71,350 84,917
Operations and maintenance 17,573 18,210 36,998 37,326
General, administrative and development expenses 8,032 7,733 16,017 14,755
Depreciation and amortization 9,417 9,639 18,702 18,997
Loss on impairment and cost of removal of cogeneration facilities 65,628 0 65,628 0
-------- -------- -------- --------
129,022 75,965 208,695 155,995
-------- -------- -------- --------
OPERATING INCOME (LOSS) (47,343) 21,022 (27,894) 46,565
OTHER INCOME (EXPENSE):
Interest expense (14,066) (14,768) (28,144) (29,548)
Investment and other income 2,375 2,105 4,486 4,265
Gain on sale of investment in Bolivian Power 3,243 0 3,243 0
Equity in net income (loss) of affiliates (429) 107 (648) 91
-------- -------- -------- --------
INCOME (LOSS) BEFORE MINORITY INTEREST IN
INCOME OF JOINT VENTURE, INCOME TAXES AND
EXTRAORDINARY LOSS (56,220) 8,466 (48,957) 21,373
MINORITY INTEREST IN INCOME OF JOINT VENTURE (1,137) 58 (1,614) (742)
-------- -------- -------- --------
INCOME (LOSS) BEFORE INCOME TAXES AND
EXTRAORDINARY LOSS (57,357) 8,524 (50,571) 20,631
BENEFIT (PROVISION) FOR INCOME TAXES 21,707 (3,515) 18,895 (8,339)
-------- -------- -------- --------
INCOME (LOSS) BEFORE EXTRAORDINARY LOSS (35,650) 5,009 (31,676) 12,292
EXTRAORDINARY LOSS ON EARLY EXTINGUISHMENT
OF DEBT, NET OF INCOME TAX BENEFIT OF $470 0 0 (703) 0
-------- -------- -------- --------
NET INCOME (LOSS) ($35,650) $ 5,009 ($32,379) $ 12,292
======== ======== ======== ========
EARNINGS (LOSS) PER COMMON SHARE ($126.42) $ 17.76 ($114.81) $ 43.59
======== ======== ======== ========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 282,000 282,000 282,000 282,000
======== ======== ======== ========
</TABLE>
The accompanying notes to consolidated condensed financial statements
are an integral part of these statements.
4
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COGENTRIX ENERGY, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Six Months Ended December 31, 1996 and 1995
(dollars in thousands)
<TABLE>
<CAPTION>
Six Months Ended
December 31,
-----------------------
1996 1995
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ($32,379) $ 12,292
Adjustments to reconcile net income (loss) to net cash provided by operating
activities:
Depreciation and amortization 18,702 18,997
Loss on impairment and cost of removal of cogeneration facilities 65,628 0
Deferred income taxes (24,192) 5,533
Extraordinary loss on early extinguishment of debt 1,173 0
Gain on sale of investment in Bolivian Power (3,243) 0
Minority interest in income of joint venture, net of dividends (8,848) (323)
Equity in net income (loss) of affiliates, net of dividends 936 181
Decrease in accounts receivable 4,113 5,490
Decrease in inventories 718 665
Increase (decrease) in accounts payable 1,792 (4,993)
Decrease in accrued liabilities (1,731) (2,071)
Decrease (increase) in other (550) 1,461
-------- --------
Net cash flows provided by operating activities 22,119 37,232
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Property, plant and equipment additions (837) (848)
Increase in marketable securities 0 (12,836)
Investments in affiliates (750) (1,125)
Proceeds from sale of investment in Bolivian Power, net 25,504 0
Decrease (increase) in restricted cash 12,929 (752)
-------- --------
Net cash flows provided by (used in) investing activities 36,846 (15,561)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of debt 67,750 63
Repayments of debt (63,535) (22,344)
Increase in deferred financing costs (2,584) 0
Common stock dividends paid (4,759) (4,235)
-------- --------
Net cash flows used in financing activities (3,128) (26,516)
-------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 55,837 (4,845)
CASH AND CASH EQUIVALENTS, beginning of period 33,351 34,073
-------- --------
CASH AND CASH EQUIVALENTS, end of period $ 89,188 $ 29,228
======== ========
</TABLE>
The accompanying notes to consolidated condensed financial statements
are an integral part of these statements.
5
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COGENTRIX ENERGY, INC. AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
UNAUDITED
1. PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION
The accompanying consolidated condensed financial statements include
the accounts of Cogentrix Energy, Inc., its subsidiary companies and a 50% owned
joint venture in which the Company has effective control through majority
representation on the board of directors of the managing general partner.
Investments in other affiliates in which the Company has a 20% to 50% interest
and/or the ability to exercise significant influence over operating and
financial policies are accounted for on the equity method. All material
intercompany transactions and balances among Cogentrix Energy, Inc., its
subsidiary companies and its consolidated joint venture have been eliminated in
the accompanying consolidated condensed financial statements.
Information presented as of December 31, 1996 and for the three months
and six months ended December 31, 1996 and 1995 is unaudited. In the opinion of
management, however, such information reflects all adjustments, which consist of
normal recurring adjustments necessary to present fairly the financial position
of the Company as of December 31, 1996, the results of operations for the three
months and six months ended December 31, 1996 and 1995, and cash flows for the
six months ended December 31, 1996 and 1995. The results of operations for these
interim periods are not necessarily indicative of results which may be expected
for any other interim period or for the fiscal year as a whole.
The accompanying unaudited consolidated condensed financial statements
have been prepared pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and note disclosures normally included
in annual financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to those rules and
regulations, although management believes that the disclosures made are adequate
to make the information presented not misleading. It is suggested that these
consolidated condensed financial statements be read in conjunction with the
audited consolidated financial statements and the notes thereto included in the
Annual Report on Form 10-K filed with the Securities and Exchange Commission on
October 11, 1996.
2. JAMES RIVER REFINANCING
In July 1996, James River Cogeneration Company ("James River"), a joint
venture owned 50% by the Company, which owns a cogeneration facility in
Hopewell, Virginia (the "Hopewell facility"), renegotiated the Hopewell
facility's project financing arrangements. The amended agreements resulted in a
$13 million increase in the amount of James River's outstanding debt and
extended the final maturity date of the loan by 21 months. The amended project
debt accrues interest at an annual rate equal to the applicable LIBOR as chosen
by the Company, plus .875% per annum through July 1999 and 1.125% thereafter.
Principal is payable quarterly with interest payable the earlier of the maturity
of the applicable LIBOR term or quarterly through June 2002. James River
transferred substantially all of the additional funds borrowed (net of
transaction costs) to its partners. The distribution received by Cogentrix
Energy, Inc. related to the refinancing was approximately $6.1 million.
3. AMENDMENTS TO POWER SALES AGREEMENTS AND PROJECT DEBT AGREEMENTS
Effective in September 1996, the Company amended the power sales
agreements on its Lumberton, Elizabethtown, Kenansville, Roxboro and Southport
facilities. These amendments provide the purchasing utility additional rights
related to the dispatch of the facilities and eliminate the purchase options
which the utility held related to the Roxboro and Southport facilities. In
connection with the amendment of these power sales agreements, the Company
refinanced the existing project debt on the Lumberton, Elizabethtown and
Kenansville facilities, as well as the project debt on the Roxboro and Southport
facilities.
6
<PAGE> 7
The project debt on the Elizabethtown, Lumberton and Kenansville
facilities, which consisted of a senior loan with a syndicate of banks and a
subordinated credit facility with a financial institution, was refinanced with
the proceeds of a $39 million senior credit facility and a $5.5 million capital
contribution by Cogentrix Energy, Inc. The senior credit facility accrues
interest at an annual rate equal to the applicable LIBOR rate, as chosen by the
Company, plus .875% through September 1997 and 1% thereafter. Principal is
payable quarterly with interest payable at the earlier of the maturity of the
applicable LIBOR term or quarterly through September 2000. The senior credit
facility also provides for a $3.3 million letter of credit to secure the
project's obligations to pay debt service. An extraordinary loss of $1.2 million
related to the write-off of unamortized deferred financing costs from the
original senior loan and subordinated credit facility is shown net of an income
tax benefit of $470,000 in the accompanying consolidated statements of
operations for the six months ended December 31, 1996.
The project debt for the Roxboro and Southport facilities consisted of
a note payable to banks, which was refinanced with the proceeds of a senior
credit facility. This senior credit facility accrues interest at an annual rate
equal to the applicable LIBOR rate, as chosen by the Company, plus .875% through
September 1997, 1% through September 2001 and 1.125% thereafter. Principal is
payable quarterly with interest payable at the earlier of the maturity of the
applicable LIBOR term or quarterly through June 2002. The senior credit facility
also provides for a $6.5 million letter of credit to secure the project's
obligations to pay debt service. The revised credit facility for the Roxboro and
Southport facilities increased outstanding borrowings $18.4 million, the
proceeds of which (net of transaction costs of $1.3 million and accrued interest
payments of $400,000) were paid as a distribution to Cogentrix Energy, Inc. In
connection with the refinancing, Cogentrix Energy, Inc. has entered into an
agreement for the benefit of the project lenders to fund cash deficits the
subsidiary that operates the Roxboro and Southport facilities could experience
as a result of incurring certain costs, subject to a cap of $11.3 million.
4. LOSS ON IMPAIRMENT AND COST OF REMOVAL OF COGENERATION FACILITIES
During the second quarter of fiscal year 1997, the Company undertook an
analysis of the post-contract operating environment for all of its operating
facilities in light of the dramatic market changes that are taking place in the
power generation industry. The analysis included assumptions regarding future
levels of operations, operating costs and market prices for equivalent
generation available from other sources. As a part of this analysis, in
accordance with the Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed of," the Company assessed whether any impairment of the Company's
facilities had occurred. This assessment included comparing the projected future
cash flows to be provided by these assets to the net book value of such assets.
Based on this assessment, the Company determined that an impairment loss had
occurred on the Elizabethtown, Lumberton, Kenansville and Ringgold facilities.
This loss on impairment of cogeneration facilities of $57.3 million, which was
recorded in the second quarter of fiscal 1997, represents the excess of the net
book value of these cogeneration facilities over their current fair value,
determined by discounting to present value, projected future cash flows to be
provided by such assets. The Company believes that its projections of future
cash flows are based upon reasonable assumptions about the future performance of
these assets. Because of the risks and uncertainties associated with any
projections, there can be no assurances, however, that actual events will be
consistent with the assumptions made, and future cash flows may be greater or
less than those projected. The analysis also resulted in the recognition of an
$8.3 million liability related to the Company's estimated cost of removal
obligations under the land leases for the Elizabethtown, Lumberton and
Kenansville facilities. The total impairment loss and cost of removal amounting
to $65.6 million has been reflected in the accompanying statements of operations
for the three and six months ended December 31, 1996. Also in connection with
the overall assessment of the post-contract operating environment for its
cogeneration facilities, the Company concluded that, effective January 1, 1997,
the Lumberton, Elizabethtown, Kenansville, Roxboro and Southport facilities will
be depreciated over the remaining term of these facilities' power purchase
agreements.
7
<PAGE> 8
5. SALE OF INVESTMENT IN BOLIVIAN POWER
In December 1996, the Company sold its investment in Bolivian Power
Company Limited ("Bolivian Power") pursuant to a cash tender offer made for all
of the outstanding common stock of Bolivian Power at a price of $43 per share.
The Company received proceeds from the sale of $25.5 million, net of transaction
costs, which included payments made to certain unaffiliated individuals who
performed development activities for Bolivian Power. The resulting book gain of
$3.2 million is reflected in the accompanying statements of operations for the
quarter ended December 31, 1996.
6. PENDING CLAIMS AND LITIGATION
The Company is a party to certain matters which have resulted in
litigation and arbitration proceedings. Management believes that the resolution
of these matters will not have a material adverse effect on the consolidated
financial position or results of operations of the Company.
8
<PAGE> 9
PART I - FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED CONDENSED FINANCIAL STATEMENTS.
The information called for by this item is hereby incorporated herein
by reference to pages 3 through 8 of this report.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
In addition to discussing and analyzing the Company's recent historical
financial results and condition, the following "Management's Discussion and
Analysis of Financial Condition and Results of Operations" includes statements
concerning certain trends and other forward-looking information affecting or
relating to the Company which are intended to qualify for the protections
afforded "Forward-Looking Statements" under the Private Securities Litigation
Reform Act of 1995, Public Law 104-67. The forward-looking statements made
herein are inherently subject to risks and uncertainties which could cause the
Company's actual results to differ materially from the forward-looking
statements.
GENERAL
Cogentrix Energy, Inc. and subsidiary companies (collectively, the
"Company") are primarily engaged in the development, ownership and operation of
independent power generating facilities (individually, a "facility" or
collectively, the "facilities"). The Company's consolidated revenues are derived
and costs are incurred primarily from the generation and sale of electricity
and, to a lesser extent, from the production and sale of thermal energy
(primarily steam) and other commodities related to its cogeneration operations.
Other revenues and costs arise from fees earned and costs incurred in connection
with the development of power generating facilities, ash transport, ash
by-products, and environmental consulting services.
As of December 31, 1996, Cogentrix Energy, Inc. owned, through its
subsidiaries, eleven operating facilities in the United States with an aggregate
installed capacity of approximately 1,120 megawatts ("MW"). Two of the eleven
facilities are owned 50% by the Company and 50% by other independent power
producers.
Effective in September 1996, the Company amended the power sales
agreements with Carolina Power & Light Company ("CP&L") on the Elizabethtown,
Lumberton, Kenansville, Roxboro and Southport facilities. Under the amended
terms, the power sales agreements are dispatchable contracts which provide the
utility the ability to suspend or reduce purchases of energy from the facilities
if CP&L determines it can operate its system for a designated period more
economically. The amended power sales agreements are structured so that the
Company will continue to receive capacity payments during any period of economic
dispatch. Capacity payments cover project debt service, fixed operating costs
and constitute a substantial portion of the profit component of the power sales
agreements. Energy payments, which will be reduced or eliminated as a result of
economic dispatch, primarily cover variable operating and maintenance costs as
well as coal and rail transportation costs. The impact of the amendments to
these power sales agreements will be a significant reduction in the Company's
electric revenues, which will be offset by reduced fuel costs and operations and
maintenance expense at these facilities in future years. In addition to
providing CP&L additional dispatch rights, the amendments eliminated the
purchase options for the Roxboro and Southport facilities which CP&L had given
notice they were going to exercise.
Unusual weather conditions, reduced demand for steam by a facility's
steam host and the needs of each facility to perform routine or unanticipated
facility maintenance involving planned or forced turbine outages may have an
effect on interim financial results. In addition, power sales agreements at
seven of the Company's facilities permit the utility customer to significantly
dispatch the related plant (i.e., direct the plant to deliver a reduced amount
of electrical output). However, even when dispatched, such facilities' capacity
payments, which are structured to cover fixed operating costs and debt service
and constitute a substantial portion of the profits of these facilities, are not
reduced.
The activities of the Company are subject to stringent environmental
regulations by federal, state, local and (for future non-U.S. projects) foreign
governmental authorities. The Clean Air Act Amendments of 1990 require states to
impose permit fees on certain emissions, and Congress may consider proposals to
restrict or tax certain emissions, which proposals, if adopted, could impose
additional costs on the operation of the Company's facilities.
9
<PAGE> 10
There can be no assurance that the Company's business and financial condition
would not be materially and adversely affected by the cost of compliance with
future changes in domestic or foreign environmental laws and regulations or
additional requirements for reduction or control of emissions imposed by
regulatory authorities in connection with renewals of required permits. The
Company maintains a comprehensive program to monitor its project subsidiaries'
compliance with all applicable environmental laws, regulations, permits and
licenses.
All of the Company's operating facilities are wholly-owned by the
Company except for the Hopewell and Birchwood cogeneration facilities, in which
the Company has a 50% ownership interest. The Company's consolidated condensed
financial statements include the accounts of the Hopewell facility as the
Company has effective control of the facility through majority representation on
the board of directors of the managing general partner. The "minority interest
in income of joint venture" on the Company's consolidated statements of
operations for the three months and six months ended December 31, 1996 and 1995
reflects the Company's joint venture partner's interest in the net income of the
Hopewell facility. The Company accounts for its investment in the Birchwood
facility using the equity method.
RESULTS OF OPERATIONS - THREE MONTHS AND SIX MONTHS ENDED
DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
THREE MONTHS ENDED DECEMBER 31, SIX MONTHS ENDED DECEMBER 31,
------------------------------------------- -----------------------------------------------
1996 1995 1996 1995
-------------------- -------------------- --------------------- ---------------------
(dollars in thousands, unaudited)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total operating revenues $ 81,679 100% $96,987 100% $ 180,801 100% $202,560 100%
Operating costs 45,945 56 58,593 60 108,348 60 122,243 60
General, administrative and
development 8,032 10 7,733 8 16,017 9 14,755 7
Depreciation and amortization 9,417 12 9,639 10 18,702 10 18,997 10
Loss on impairment and cost
of removal of cogeneration
facilities 65,628 80 0 0 65,628 36 0 0
-------- ---- ------- --- --------- ---- -------- ---
Operating income (loss) $(47,343) (58)% $21,022 22% $ (27,894) (15)% $ 46,565 23%
======== ==== ======= === ========= ==== ======== ===
</TABLE>
Total operating revenues decreased 15.8% to $81.7 million for the
second quarter of fiscal 1997 as compared to the second quarter of fiscal 1996.
This decrease was primarily attributable to the significant decreases in
electric revenues associated with the amendment of the Company's power sales
agreements with CP&L on the Elizabethtown, Lumberton, Kenansville, Roxboro and
Southport facilities. The decrease in operating revenues is also attributable to
the $5 million fee earned by the Company in the second quarter of fiscal 1996
related to the pre-construction development phase of an electric generation
facility for the Public Utility District No. 1 of Clark County, Washington
("Clark"). The decrease in operating revenues was partially offset by increases
in electric revenues at the Hopewell, Portsmouth and Richmond facilities, due to
an increase in megawatt hours delivered to the purchasing utility during the
second quarter of fiscal 1997 as compared to the same period of fiscal 1996, as
well as escalation/inflation adjustment provisions in certain power sales
agreements.
The Company's operating revenues for the first six months of fiscal
1997, which decreased 10.7% to $180.8 million as compared to $202.6 million for
the first six months of fiscal 1996, were largely influenced by the same factors
as discussed above: the significant decrease in megawatt hours sold to CP&L and
the development fee related to the Clark facility. The decrease in operating
revenues for the six months of fiscal 1997 also related to a payment received by
the Company upon the execution in July 1995 of the joint development agreement
with China Light & Power Company Limited ("CLP") related to the development of
the Company's India project. These decreases in revenues for the first six
months of fiscal 1997 were partially offset by an increase in electric revenues
associated with an increase in megawatt hours sold at the Portsmouth and
Richmond Facilities, as well as escalation/inflation adjustment provisions in
certain power sales agreements.
Operating costs decreased 21.6% to $45.9 million for the second quarter
of fiscal 1997 as compared to the same period of fiscal 1996. This decrease
related primarily to the significant decrease in fuel expense at the
Elizabethtown, Lumberton, Kenansville, Roxboro and Southport facilities
associated with the amendment of their power sales agreements with CP&L. The
decrease in operating costs in the second quarter of fiscal 1997 also related to
decreases in maintenance costs at the Portsmouth and Hopewell facilities, at
which facilities the Company performed
10
<PAGE> 11
routine maintenance during the second quarter of fiscal 1996. These decreases in
operating costs were partially offset by costs incurred by the Richmond and
Rocky Mount Facilities related to routine maintenance performed during the
second quarter of fiscal 1997, increases in fuel expense at the Portsmouth and
Richmond Facilities associated with an increase in megawatt hours sold, as well
as an increase in operating costs incurred by ReUse Technology, Inc. ("ReUse")
related to third party agreements. The Company's operating costs for the first
six months of fiscal 1997, which decreased 11.4% to $108.4 million as compared
to $122.2 million for the first six months of fiscal 1996, were largely
influenced by the same factors: a reduction of fuel expense associated with the
amendments to the CP&L contracts, reductions in routine maintenance costs
incurred at the Hopewell and Portsmouth Facilities, an increase in routine
maintenance costs incurred at the Rocky Mount and Richmond Facilities, increases
in fuel expense at the Portsmouth and Richmond Facilities associated with an
increase in megawatt hours sold and an increase in operating costs incurred by
ReUse related to third party agreements.
General, administrative and development expenses increased 3.9% to $8.0
million for the second quarter of fiscal 1997 and 8.6% to $16.0 million for the
six months ended December 31, 1996 as compared to the corresponding periods of
fiscal 1996. These increases relate primarily to a general increase in payroll,
due to an increase in performance bonuses paid during the first quarter of
fiscal 1997. The increase in general, administrative and development expenses
also relates to an increase in expenses incurred related to the Company's
international development efforts. These increases were partially offset by a
reduction in development expenses incurred on a project the Company is
developing in Idaho.
During the second quarter of fiscal year 1997, the Company undertook an
analysis of the post-contract operating environment for all of its operating
facilities in light of the dramatic market changes that are taking place in the
power generation industry. The analysis included assumptions regarding future
levels of operations, operating costs and market prices for equivalent
generation available from other sources. As a part of this analysis, in
accordance with the Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed of," the Company assessed whether any impairment of the Company's
facilities had occurred. This assessment included comparing the projected future
cash flows to be provided by these assets to the net book value of such assets.
Based on this assessment, the Company determined that an impairment loss had
occurred on the Elizabethtown, Lumberton, Kenansville and Ringgold facilities.
This loss on impairment of cogeneration facilities of $57.3 million, which was
recorded in the second quarter of fiscal 1997, represents the excess of the net
book value of these cogeneration facilities over their current fair value,
determined by discounting to present value, projected future cash flows to be
provided by such assets. The Company believes that its projections of future
cash flows are based upon reasonable assumptions about the future performance of
these assets. Because of the risks and uncertainties associated with any
projections, there can be no assurances, however, that actual events will be
consistent with the assumptions made, and future cash flows may be greater
or less than those projected. The analysis also resulted in the recognition of
an $8.3 million liability related to the Company's estimated cost of removal
obligations under the land leases for the Elizabethtown, Lumberton and
Kenansville facilities. The total impairment loss and cost of removal
amounting to $65.6 million has been reflected in the accompanying statements of
operations for the three and six months ended December 31, 1996. Also in
connection with the overall assessment of the post-contract operating
environment for its cogeneration facilities, the Company concluded that,
effective January 1, 1997, the Lumberton, Elizabethtown, Kenansville, Roxboro
and Southport facilities will be depreciated over the remaining term of these
facilities' power purchase agreements.
In December 1996, the Company sold its investment in Bolivian Power
Company Limited ("Bolivian Power") to NRG Generating Holdings (No. 9) B.V., a
wholly owned subsidiary of NRG Energy, Inc. ("Holdings"), pursuant to a cash
tender offer which Holdings made for all of the outstanding common stock of
Bolivian Power at a price of $43 per share. The Company recognized a $3.2
million gain on the sale of its investment in Bolivian Power, net of transaction
costs, which included payments made to certain unaffiliated individuals who
performed development activities for Bolivian Power.
The Company's long-term debt averaged $719 million with a weighted
average interest rate of 7.8% for the six months ended December 31, 1996 as
compared with an average of $751 million with a weighted average interest rate
of 7.9% in the corresponding period of fiscal 1996. The decrease in weighted
average debt outstanding, which relates to the scheduled maturities of the
Company's project finance debt, was partially offset by an increase in project
debt outstanding at the Hopewell facility and Roxboro and Southport facilities
related to refinancings completed during the first six months of fiscal 1997.
11
<PAGE> 12
The decrease in equity in net income (loss) of affiliates during the
second quarter and the first six months of fiscal 1997 as compared to the
corresponding periods of fiscal 1996 relates primarily to a reduction in the
equity in net income of the Company's investment in Bolivian Power and the
Company's equity in the net loss of the Texas greenhouse project, which
commenced commercial operations during the first six months of fiscal 1997. See
"Liquidity and Capital Resources" for further discussion of the Texas greenhouse
project.
The increase in minority interest in income of joint venture for the
first half of fiscal 1997 as compared to fiscal 1996 relates to the increased
net income of the Hopewell facility during the first half of fiscal 1997 as a
result of a reduction in maintenance costs incurred in fiscal 1997 as compared
to fiscal 1996.
The benefit for income taxes for the first six months of fiscal 1997
represents an effective rate of 37.4% of income before benefit for income taxes
as compared to an effective rate of 40.4% of income before income taxes for the
first six months of fiscal 1996. This decrease in the effective tax rate in
fiscal 1997 relates to the reduced recognition of current year losses for state
income tax purposes.
The extraordinary loss on early extinguishment of debt in the first six
months of fiscal 1997 relates to the write-off of the deferred financing costs
on the Elizabethtown, Lumberton and Kenansville facilities' original project
debt, which was refinanced in September 1996.
LIQUIDITY AND CAPITAL RESOURCES
The principal components of operating cash flow for the six months
ended December 31, 1996 were generated by a net loss of $32.4 million, increases
due to adjustments for depreciation and amortization of $18.7 million, loss on
impairment and cost of removal of cogeneration facilities of $65.6 million,
extraordinary loss on early extinguishment of debt of $1.2 million,
distributions from and equity in net loss of unconsolidated affiliates of $0.9
million and a net $4.3 million source of cash reflecting changes in other
working capital assets and liabilities, which were partially offset by deferred
taxes of $24.2 million, gain on sale of investment in Bolivian Power of $3.2
million and minority interest in income of joint venture, net of dividends of
$8.8 million. Cash flow provided by operating activities of $22.1 million, net
proceeds from the sale of investment in Bolivian Power of $25.5 million,
proceeds from project finance borrowings of $67.8 million and $13.0 million of
cash escrows released were primarily used to purchase equipment of $0.8 million,
to make investments in affiliates of $0.8 million, to repay project finance
borrowings of $63.5 million, to pay deferred financing costs of $2.6 million and
to pay common stock dividends of $4.8 million.
Historically, the Company has financed the capital costs of each of its
facilities under financing arrangements that, with certain exceptions, are
substantially non-recourse to Cogentrix Energy, Inc. and its other project
subsidiaries. Based upon the Company's current level of operations, the Company
believes that its project subsidiaries will generate sufficient revenue to pay
all required debt service on the project financing debt and to allow them to pay
management fees and dividends to Cogentrix Energy, Inc. periodically in
sufficient amounts to allow the Company to pay all existing debt service, fund a
significant portion of its development activities and meet its other
obligations. If, as a result of unanticipated events, the Company's ability to
generate cash from operating activities is significantly impaired, the Company
could be required to curtail its development activities to meet its debt service
obligations.
In December 1994, the Company acquired a 50% interest in Birchwood
Power Partners, L.P. ("Birchwood Power"), a partnership formed to own a 220
megawatt coal-fired cogeneration facility (the "Birchwood facility") in King
George County, Virginia, from two indirect wholly-owned subsidiaries of The
Southern Company. The Birchwood facility, which commenced commercial operations
in November 1996, sells electricity to Virginia Electric and Power Company and
provides thermal energy to a 36-acre greenhouse under long-term contracts. The
purchase price of the 50% interest in Birchwood Power was approximately $29.5
million and was funded with a portion of the net proceeds of the sale of $100
million of the Company's Senior Notes due 2004 (the "Senior Notes"). The Company
has also committed to provide an equity contribution to Birchwood Power of
approximately $43.7 million, which is anticipated to be funded in March 1997.
This equity commitment is supported by a letter of credit of equal amount,
provided by a bank, which is collateralized by a pledge of marketable
securities.
In December 1994, the Company executed an engineering, procurement and
construction agreement (the "Construction Agreement") with Clark. Under this
Construction Agreement, the Company is currently engineering,
12
<PAGE> 13
procuring equipment for and constructing a 248 megawatt combined-cycle,
gas-fired electric generation facility (the "Clark facility"). In October 1995,
the Company delivered to Clark a $20 million letter of credit, provided by a
bank, which is collateralized by a pledge of marketable securities. This letter
of credit will support the Company's contingent obligations under certain
performance guarantees and late construction completion payments under the
Construction Agreement. The Company is also obligated to pay 50% of costs and
expenses, if any, incurred in constructing the facility in excess of the
contract amount. Pursuant to the Construction Agreement, the contract amount of
$117 million may be adjusted as a result of a force majeure event, scope change,
certain delays in schedule or change in law. The Company will earn a
construction fee of $5 million upon completion of the Clark facility. The
Company will also share in 50% of the amount, if any, equal to the excess of the
contract amount over the costs and expenses in constructing the Clark facility.
Cogentrix of Vancouver, Inc. ("CVC"), an indirect wholly-owned subsidiary of
Cogentrix Energy, Inc., performed the development and preliminary engineering on
the Clark facility and received a development fee of $5 million in October 1995.
The Company anticipates that construction on the Clark facility will be
completed in late calendar 1997. Upon commencing commercial operations, CVC will
operate and maintain the Clark facility pursuant to a two-year operations and
maintenance agreement.
In July 1995, the Company executed a joint development agreement with a
subsidiary of CLP (the "Joint Venture") which provides for the Company and CLP
to co-develop a 1,000 megawatt coal-fired facility in India and to share equally
in the direct development expenses related to the project. Additionally, the
Company is currently seeking other international partners for the purpose of
making equity investments in the project. The Company currently anticipates
requiring funds, in addition to amounts payable by CLP to the Company at
financial closing of the project, in an amount ranging from $50 to $80 million
for the purpose of making its equity investment in the India project. The
Company expects to fund this equity commitment from corporate cash balances.
In February 1996, the Company formed the Village Farms of Texas,
Limited Partnership (the "Texas Partnership") with wholly-owned subsidiaries of
Agro Power Development, Inc., for the purpose of developing, constructing and
operating a 41-acre venlo-style greenhouse (the "Greenhouse facility") located
in Fort Davis, Texas, which produces tomatoes. In February 1996, the Texas
Partnership obtained construction financing and a working capital facility
aggregating $21.1 million from a group of banks (the "Banks"). In addition, the
Company, which holds a 50% interest in the Texas Partnership, made a
contribution to the Texas Partnership of $4.6 million which, together with the
funds provided by the Banks (the "Construction Funds"), were used to construct
the Greenhouse facility. In connection with the construction of the Greenhouse
facility, which commenced in February 1996, the Company has entered into a
guaranty agreement with the Banks which obligates the Company to make an
additional capital contribution to the Texas Partnership in the event the
construction costs related to the Greenhouse facility exceed the amount of the
Construction Funds. The maximum capital contribution the Company is obligated to
make under this guaranty agreement is $5 million. The Greenhouse facility, which
was constructed in two phases, commenced sales of tomatoes in November 1996. The
Company anticipates that the Texas Partnership will declare construction
completion in March 1997.
In July 1996, the Company renegotiated the project financing
arrangements for its Hopewell facility, in which it owns a 50% interest. The
amended agreements resulted in a $13 million increase in the amount of
indebtedness of James River outstanding and extended the final maturity date of
the loan by 21 months. James River transferred substantially all of the
additional funds borrowed (net of transaction costs) to its partners. The
distribution received by Cogentrix Energy, Inc. related to the refinancing was
approximately $6.1 million.
In September 1996, the Company renegotiated the project financing
arrangements for its Roxboro and Southport facilities. The amended agreements
resulted in an approximate $18.4 million increase in the amount of indebtedness
outstanding and extended the final maturity date of the loan by 7 months. The
Company's project subsidiary operating the Roxboro and Southport facilities
transferred substantially all of the additional funds borrowed (net of
transaction costs) to Cogentrix Energy, Inc., which utilized $5.5 million to
make a capital contribution to the project subsidiary operating the
Elizabethtown, Lumberton and Kenansville facilities in connection with the
refinancing of its project debt in September 1996. The remainder of the proceeds
were distributed to Cogentrix Energy, Inc.
In December 1996, the Company sold its investment in Bolivian Power
pursuant to a cash tender offer received for all of the outstanding common stock
of Bolivian Power at a price of $43 per share. The Company received proceeds of
$25.4 million from the sale of its investment in Bolivian Power, net of
transaction costs which included
13
<PAGE> 14
payments made to certain unaffiliated individuals who performed development
activities for Bolivian Power. See "Results of Operations" for the financial
reporting impact of the sale of the investment in Bolivian Power.
Any projects the Company develops in the future, and those independent
power projects it may seek to acquire, are likely to require substantial capital
investment. The Company's ability to arrange financing on a substantially
non-recourse basis and the cost of such capital are dependent on numerous
factors. In order to access capital on a substantially non-recourse basis in the
future, the Company may have to make larger equity investments in, or provide
more financial support for, its project subsidiaries.
The ability of the Company's project subsidiaries to declare and pay
dividends and management fees periodically to Cogentrix Energy, Inc. is subject
to certain limitations in their respective project credit documents. Such
limitations generally require that: (i) project debt service payments be
current, (ii) project debt service coverage ratios be met, (iii) all project
debt service and other reserve accounts be funded at required levels, and (iv)
there be no default or event of default under the relevant project credit
documents. There are also additional limitations that are adapted to the
particular characteristics of each project subsidiary.
In September 1996, the Company paid a $4.8 million dividend to the
common shareholders of the Company for the fiscal year ended June 30, 1996. The
Board of Directors has adopted a policy, which is subject to change at any time,
of maintaining a dividend payout ratio of no more than 20% of the Company's net
income for the immediately preceding fiscal year. Under the terms of the
Indenture for the Senior Notes, the Company's ability to pay dividends and make
other distributions to its shareholders is restricted.
IMPACT OF ENERGY PRICE CHANGES, INTEREST RATES AND INFLATION
Energy prices are influenced by changes in supply and demand, as well
as economic conditions, and generally tend to fluctuate significantly. Through
various hedging mechanisms, the Company has attempted to mitigate the impact of
such changes on the results of operations of most of its projects. The basic
hedging mechanism against increased fuel and transportation costs is to provide
contractually for matching increases in the energy payments the Company's
project subsidiaries receive from the utility purchasing the electricity
generated by the facility.
Under the power sales agreements for two of the Company's recently
developed facilities, energy payments are indexed, subject to certain caps, to
reflect the purchasing utility's solid fuel cost of producing electricity. The
Company's other power sales agreements provide periodic, scheduled increases in
energy prices that are designed to match periodic, scheduled increases in fuel
and transportation costs that are included in the fuel supply and transportation
contracts for the facilities.
Changes in interest rates could have a significant impact on the
Company. Interest rate changes affect the cost of capital needed to construct
projects, as well as interest expense of existing project financing debt. As
with fuel price escalation risk, the Company has substantially hedged against
the risk of fluctuations in interest rates by arranging either fixed-rate
financing or variable-rate financing with interest rate swaps, collars or caps.
As of December 31, 1996, approximately 84.8% of the Company's project financing
debt was hedged, of which 20.1% was hedged with interest rate caps which were
above the prevailing market rate at December 31, 1996 and therefore subject to
interest rate volatility.
14
<PAGE> 15
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Under the recently amended terms of the power sales agreements for the
Elizabethtown, Lumberton, Kenansville, Roxboro and Southport Facilities, the
purchasing utility, CP&L, has exercised its right of economic dispatch resulting
in significantly reduced fuel requirements at each of these facilities. Coal is
supplied to the Elizabethtown, Lumberton and Kenansville Facilities
(collectively, the "ELK Facilities") by James River Coal Sales, Inc. ("James
River Coal") and its affiliate, Bell County Coal Corporation. The coal sales
agreement for the ELK Facilities provides that the Company's subsidiary
operating the ELK Facilities will purchase, and James River Coal will provide,
all of such subsidiary's coal requirements through the end of the contract term.
In November 1996, James River Coal and its affiliate instituted an action
against Cogentrix Eastern Carolina Corporation ("CECC"), an indirect
wholly-owned subsidiary of Cogentrix Energy, Inc., claiming breach of contract
and fraud in the inducement based on the reduction in fuel requirements at the
ELK Facilities as a consequence of the recent amendments to the power sales
agreements. James River Coal and its affiliate seek specific performance and, in
the alternative, an unspecified amount of damages. The lawsuit is pending in the
United States District Court for the Eastern District of Kentucky. The coal
sales agreement for the ELK Facilities contains an arbitration provision
requiring disputes to be submitted to arbitration in North Carolina, which CECC
intends to seek to enforce with respect to these claims. Motions to dismiss the
Kentucky suit have been filed, briefed and are pending oral argument before the
court.
In October 1996, Coastal Sales, Inc. ("Coastal"), the coal supplier to
the Southport facility under a similar requirements contract, initiated an
arbitration proceeding against Cogentrix of North Carolina, Inc., an indirect
wholly-owned subsidiary of Cogentrix Energy, Inc., through the American
Arbitration Association in Charlotte, North Carolina. The notice of arbitration
alleges breach of contract based on the reduction in fuel requirements at the
Southport facility as a consequence of the recent amendment to the power sales
agreement. Coastal is seeking an unspecified amount of damages. The arbitration
panel has been selected, and the proceedings are expected to commence in the
near future.
Management believes that in some instances there is no basis for these
claims, and, as to the others, there are meritorious defenses. The Company
intends to defend the lawsuit and arbitration proceeding vigorously. In the
opinion of management, the ultimate outcome of the litigation, or any
arbitration proceeding relating to these claims, will not have a material
adverse effect on the Company's consolidated results of operations or financial
position.
15
<PAGE> 16
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit No. Description of Exhibit
----------- ----------------------
10.1 Loan and Reimbursement Agreement, dated as of May 18,
1994, among Birchwood Power Partners, L.P., the Banks
party thereto, John Hancock Mutual Life Insurance
Company, Allstate Insurance Company, New York Life
Insurance Company and the other Institutions party
thereto, Banque Paribas, New York Branch, Barclays
Bank PLC, Credit Suisse, Union Bank of California, as
Co-Agents for the Banks and Credit Suisse, as Issuing
Bank and as Administrative Agent for the Banks
(Birchwood facility).
10.2 Security Deposit and Intercreditor Agreement, dated
as of May 18, 1994, among Birchwood Power Partners,
L.P., the Secured Parties named therein and Credit
Suisse, as Security Agent (Birchwood facility).
10.3 First Amendment to Composite Amendment and Consent to
Project Loan Agreement and Security Deposit
Agreement, among Birchwood Power Partners, L.P. and
the persons party to the Loan and Reimbursement
Agreement, dated as of May 18, 1994, as amended, and
the Security Deposit and Intercreditor Agreement,
dated as of May 18, 1994, as amended (Birchwood
facility).
10.4 Amended and Restated Stock Pledge Agreement, dated as
of November 19, 1996, by and between
Cogentrix/Birchwood Two, L.P., as Pledgor, and
Birchwood Power Partners, L.P., as Lender (Birchwood
facility).
10.5 Amended and Restated Facility Operations and
Maintenance Agreement, dated as of May 18, 1994,
between Southern Electric International, Inc. and
Birchwood Power Partners, L.P. (Birchwood facility).
(*)
10.6 Power Purchase and Operating Agreement, dated as of
July 13, 1990, between SEI Birchwood, Inc. (assigned
to and assumed by Birchwood Power Partners, L.P.) and
Virginia Electric and Power Company, as amended
(Birchwood facility).
10.7 Coal Supply Agreement, dated as of July 22, 1993, by
and among Birchwood Power Partners, L.P., AgipCoal
Holding USA, Inc. and AgipCoal Sales USA, Inc.
(assigned to and assumed by Neweagle Coal Sales Corp.
and Neweagle Industries, Inc.), Laurel Creek Co.,
Inc. and Rockspring Development, Inc. (Birchwood
facility). (*)
10.7(a) First Amendment to Coal Supply Agreement, dated as of
May 18, 1994, by and among Birchwood Power Partners,
L.P., Laurel Creek Co., Inc., Rockspring Development,
Inc., Neweagle Coal Sales Corp. and Neweagle
Industries, Inc. (Birchwood facility).
16
<PAGE> 17
Exhibit No. Description of Exhibit
----------- ----------------------
10.8 Coal Transportation Agreement, dated as of July 22,
1993, between Birchwood Power Partners, L.P. and
ER&L-Birchwood, Inc. (Birchwood facility). (*)
10.8(a) First Amendment to Coal Transportation Agreement,
dated as of April 28, 1994, between Birchwood Power
Partners, L.P. and ER&L Birchwood, Inc. (Birchwood
facility). (*)
10.9 Amendment No. 6 to Contract CSXT-C-03951, dated as of
January 1, 1997, between Cogentrix of Rocky Mount,
Inc. and CSX Transportation, Inc. (Rocky Mount
facility).
27 Financial Data Schedule, which is submitted
electronically to the Securities and Exchange
Commission for information only and is not filed.
(*) Portions of these exhibits have been omitted pursuant to a
request for confidential treatment pursuant to Rule 24b-2
under the Securities Exchange Act of 1934, as amended.
(b) Reports on Form 8-K
The Company filed a current Report on Form 8-K, dated November
14, 1996, with respect to the sale of its investment in Bolivian Power
Company Limited to NRG Generating Holdings (No. 9) B.V., a wholly owned
subsidiary of NRG Energy, Inc. ("Holdings"), pursuant to a cash tender
offer by Holdings for all of the outstanding common stock of Bolivian
Power Company Limited at a price of $43 per share.
17
<PAGE> 18
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
COGENTRIX ENERGY, INC.
(Registrant)
February 14, 1997 /s/ Bruce C. McMillen
---------------------------------
Bruce C. McMillen
Group Senior Vice President,
Chief Financial Officer
(Principal Financial Officer)
February 14, 1997 /s/ Thomas F. Schwartz
---------------------------------
Thomas F. Schwartz
Vice President - Finance
Treasurer
(Principal Accounting Officer)
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<PAGE> 19
EXHIBIT INDEX
Exhibit No. Description of Exhibit
----------- ----------------------
10.1 Loan and Reimbursement Agreement, dated as of May 18, 1994,
among Birchwood Power Partners, L.P., the Banks party thereto,
John Hancock Mutual Life Insurance Company, Allstate Insurance
Company, New York Life Insurance Company and the other
Institutions party thereto, Banque Paribas, New York Branch,
Barclays Bank PLC, Credit Suisse, Union Bank of California, as
Co-Agents for the Banks and Credit Suisse, as Issuing Bank and
as Administrative Agent for the Banks (Birchwood facility).
10.2 Security Deposit and Intercreditor Agreement, dated as of May
18, 1994, among Birchwood Power Partners, L.P., the Secured
Parties named therein and Credit Suisse, as Security Agent
(Birchwood facility).
10.3 First Amendment to Composite Amendment and Consent to Project
Loan Agreement and Security Deposit Agreement, among Birchwood
Power Partners, L.P. and the persons party to the Loan and
Reimbursement Agreement, dated as of May 18, 1994, as amended,
and the Security Deposit and Intercreditor Agreement, dated as
of May 18, 1994, as amended (Birchwood facility).
10.4 Amended and Restated Stock Pledge Agreement, dated as of
November 19, 1996, by and between Cogentrix/Birchwood Two,
L.P., as Pledgor, and Birchwood Power Partners, L.P., as
Lender (Birchwood facility).
10.5 Amended and Restated Facility Operations and Maintenance
Agreement, dated as of May 18, 1994, between Southern Electric
International, Inc. and Birchwood Power Partners, L.P.
(Birchwood facility). (*)
10.6 Power Purchase and Operating Agreement, dated as of July 13,
1990, between SEI Birchwood, Inc. (assigned to and assumed by
Birchwood Power Partners, L.P.) and Virginia Electric and
Power Company, as amended (Birchwood facility).
10.7 Coal Supply Agreement, dated as of July 22, 1993, by and among
Birchwood Power Partners, L.P., AgipCoal Holding USA, Inc. and
AgipCoal Sales USA, Inc. (assigned to and assumed by Neweagle
Coal Sales Corp. and Neweagle Industries, Inc.), Laurel Creek
Co., Inc. and Rockspring Development, Inc. (Birchwood
facility). (*)
10.7(a) First Amendment to Coal Supply Agreement, dated as of May 18,
1994, by and among Birchwood Power Partners, L.P., Laurel
Creek Co., Inc., Rockspring Development, Inc., Neweagle Coal
Sales Corp. and Neweagle Industries, Inc. (Birchwood
facility).
19
<PAGE> 20
Exhibit No. Description of Exhibit
----------- ----------------------
10.8 Coal Transportation Agreement, dated as of July 22, 1993,
between Birchwood Power Partners, L.P. and ER&L-Birchwood,
Inc. (Birchwood facility). (*)
10.8(a) First Amendment to Coal Transportation Agreement, dated as of
April 28, 1994, between Birchwood Power Partners, L.P. and
ER&L Birchwood, Inc. (Birchwood facility). (*)
10.9 Amendment No. 6 to Contract CSXT-C-03951, dated as of January
1, 1997, between Cogentrix of Rocky Mount, Inc. and CSX
Transportation, Inc. (Rocky Mount facility).
27 Financial Data Schedule, which is submitted electronically to
the Securities and Exchange Commission for information only
and is not filed.
(*) Portions of these exhibits have been omitted pursuant to a
request for confidential treatment pursuant to Rule 24b-2
under the Securities Exchange Act of 1934, as amended.
20
<PAGE> 1
EXHIBIT 10.1
================================================================================
COMPOSITE
(through 4/96)
of
LOAN AND REIMBURSEMENT AGREEMENT
among
Birchwood Power Partners, L.P.
and
The Banks Parties Hereto
and
John Hancock Mutual Life Insurance Company
Allstate Insurance Company
New York Life Insurance Company
and the Other Institutions Parties Hereto
and
Banque Paribas, New York Branch
Barclays Bank PLC
Credit Suisse
Union Bank of California,
as Co-Agents for the Banks
and
Credit Suisse,
as Issuing Bank and as Administrative Agent for the Banks
Dated as of May 18, 1994
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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SECTION 1. DEFINITIONS............................................................................. 1
Section 1.1 Defined Terms................................................................. 1
Section 1.2 Other Definitional Provisions................................................. 2
SECTION 2. THE CREDIT FACILITIES AND THE COMMITMENTS............................................... 2
Section 2.1 The Credit Facilities......................................................... 2
Section 2.2 Commitments................................................................... 2
Section 2.3 Mandatory Reduction of Total Loan Commitments................................. 2
Section 2.4 Mandatory Reduction of Total Bank Project Loan Commitments.................... 3
SECTION 3. BANK LOAN FACILITY...................................................................... 3
Section 3.1 Bank Loans.................................................................... 3
Section 3.2 Procedure for Bank Loan Borrowings............................................ 3
Section 3.3 Bank Notes.................................................................... 5
Section 3.4 Repayment of Bank Loans....................................................... 6
Section 3.5 Conversion and Continuation Options........................................... 7
Section 3.6 Maximum Number of Tranches.................................................... 8
Section 3.7 Interest on Bank Loans........................................................ 8
Section 3.8 Computation of Interest on Bank Loans......................................... 9
Section 3.9 Inability to Determine Interest Rate on Bank Loans............................ 10
Section 3.10 Illegality................................................................... 10
Section 3.11 Requirements of Law.......................................................... 11
Section 3.12 Substitution or Removal of an Affected Bank.................................. 13
Section 3.13 Banks' Representation........................................................ 13
SECTION 4. INSTITUTIONAL LOAN FACILITY............................................................. 13
Section 4.1 Institutional Loans........................................................... 13
Section 4.2 Procedure for Institutional Loan Borrowings................................... 13
Section 4.3 Institutional Notes........................................................... 14
Section 4.4 Repayment of Institutional Loans.............................................. 15
Section 4.5 Interest on Institutional Loans............................................... 15
Section 4.6 Computation of Interest on Institutional Loans................................ 15
Section 4.7 Registration, Transfer and Substitution of Registered Institutional
Notes.................................................................... 15
Section 4.8 Institutions' Representations; Source of Funds................................ 17
SECTION 5. BOND LETTER OF CREDIT FACILITY.......................................................... 18
Section 5.1 Issuance of and Participation in the Bond Letters of Credit................... 18
Section 5.2 Bond Letters of Credit........................................................ 18
Section 5.3 Notice of Payments under the Bond Letters of Credit........................... 19
Section 5.4 Termination of the Bond Letters of Credit..................................... 19
Section 5.5 Borrower's Obligations in Respect of Bond Letters of Credit................... 19
</TABLE>
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<TABLE>
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Section 5.6 Extension of Bond L/C Expiration Dates........................................ 20
Section 5.7 Reduction of Bond Letters of Credit........................................... 20
SECTION 6. VP LETTER OF CREDIT FACILITY............................................................ 21
Section 6.1 Issuance of and Participation in the VP Letters of Credit..................... 21
Section 6.2 Construction VP Letter of Credit.............................................. 21
Section 6.3 Term VP Letter of Credit...................................................... 22
Section 6.4 Notice of Payments under the VP Letters of Credit............................. 22
Section 6.5 Termination of the VP Letters of Credit....................................... 23
Section 6.6 Borrower's Obligations in Respect of VP Letters of Credit..................... 23
Section 6.7 Extension of VP Expiration Dates.............................................. 24
SECTION 7. GENERAL PROVISIONS APPLICABLE TO LOANS
AND LETTERS OF CREDIT............................................ 24
Section 7.1 Fees ......................................................................... 24
Section 7.2 Pro Rata Treatment and Payments............................................... 26
Section 7.3 Mandatory Prepayments of Loans................................................ 27
Section 7.4 Optional Prepayments of Loans................................................. 32
Section 7.5 Application of Certain Prepayments Among Lenders.............................. 33
Section 7.6 Taxes......................................................................... 35
Section 7.7 Certain Indemnities........................................................... 36
Section 7.8 Funding into Accounts......................................................... 38
Section 7.9 Funding of Letter of Credit Disbursements..................................... 38
Section 7.10 Additional Letter of Credit Provisions. .................................... 39
Section 7.11. Payment with Issuing Bank Funds; Timing of Reimbursement
and Other Payments........................................................... 41
SECTION 8. REPRESENTATIONS AND WARRANTIES.......................................................... 42
Section 8.1 Organization.................................................................. 42
Section 8.2 Authorization; Enforceable Obligations........................................ 42
Section 8.3 No Proceeding or Litigation................................................... 42
Section 8.4 Financial Statements.......................................................... 43
Section 8.5 No Legal Bar; Consents........................................................ 43
Section 8.6 Full Disclosure............................................................... 43
Section 8.7 Governmental Approvals........................................................ 43
Section 8.8 No Liens...................................................................... 44
Section 8.9 Solvency...................................................................... 44
Section 8.10 No Default................................................................... 44
Section 8.11 Business..................................................................... 44
Section 8.12 ERISA........................................................................ 44
Section 8.13 Security Documents........................................................... 45
Section 8.14 Environmental Matters........................................................ 45
Section 8.15 Federal Regulations.......................................................... 46
Section 8.16 Taxes........................................................................ 46
Section 8.17 Regulatory Status............................................................ 46
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Section 8.18 Offer of Notes............................................................... 47
Section 8.19 Sufficiency and Delivery of Project Documents................................ 47
Section 8.20 Qualifying Facility.......................................................... 48
SECTION 9. CONDITIONS PRECEDENT.................................................................... 48
Section 9.1 Conditions to Effectiveness of Commitments.................................... 48
Section 9.2 Conditions to Each Bank Project Loan and Institutional Loan................... 55
Section 9.3 Additional Conditions to Bank Project Loans................................... 59
Section 9.4 Conditions to VP Letters of Credit Issuance................................... 60
Section 9.5 Conditions to Bond Letters of Credit Issuance................................. 60
Section 9.6 Conditions to Bank L/C Loans and Bank Liquidity Loans......................... 61
Section 9.7 Representations............................................................... 61
SECTION 10. AFFIRMATIVE COVENANTS.................................................................. 61
Section 10.1 Use of Proceeds.............................................................. 61
Section 10.2 Project Reports.............................................................. 63
Section 10.3 Financial Statements......................................................... 64
Section 10.4 Certificates; Other Information.............................................. 65
Section 10.5 Accounts..................................................................... 66
Section 10.6 Maintenance of Existence, Properties, Etc.; Taxes............................ 66
Section 10.7 Books and Records; Inspection of Property; Discussions....................... 67
Section 10.8 Insurance.................................................................... 67
Section 10.9 Completion of Facility; Maintenance of Properties............................ 71
Section 10.10 Maintenance of Title........................................................ 72
Section 10.11 "As Built" Surveys.......................................................... 72
Section 10.12 Maintenance of Qualifying Facility Status................................... 72
Section 10.13 Governmental Approvals...................................................... 73
Section 10.14 Compliance With Laws........................................................ 73
Section 10.15 Employee Plans.............................................................. 73
Section 10.16 Assignments of Additional Contracts; Maintenance of Liens of
the Security Documents; Future Project Mortgages............................ 73
Section 10.17 Notices..................................................................... 74
Section 10.18 Greenhouse Adverse Change................................................... 75
Section 10.19 Ownership of the Borrower................................................... 76
Section 10.20 Performance and Enforcement of Other Agreements............................. 76
Section 10.21 Interest Rate Hedging Transactions.......................................... 76
Section 10.22 Equity Funding Loans........................................................ 77
Section 10.23 Operating Budgets........................................................... 77
Section 10.24 Annual Opinion of Counsel................................................... 78
Section 10.25 Issuance of Bonds........................................................... 78
Section 10.26 Coordination of Unit Reliability Test With Virginia Power................... 79
Section 10.27 Environmental Matters....................................................... 80
Section 10.28 Termination of Facility Operator............................................ 81
Section 10.29 Real Estate Post-Closing Matters............................................ 81
Section 10.30 Submission of Application for Recertification of Facility................... 81
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Section 10.31 Bond Repurchase Covenants................................................... 81
SECTION 11. NEGATIVE COVENANTS..................................................................... 82
Section 11.1 Limitations on Indebtedness.................................................. 82
Section 11.2 Limitations on Liens......................................................... 84
Section 11.3 Limitations on Guarantee Obligations......................................... 84
Section 11.4 Limitations on Distributions................................................. 84
Section 11.5 Limitations on Investment, Loans and Advances................................ 85
Section 11.6 Limitations on Transactions with Affiliates and Others....................... 85
Section 11.7 Limitations on Disposition of Assets......................................... 85
Section 11.8 Limitations on Fundamental Changes........................................... 86
Section 11.9 Limitations on Change Orders................................................. 86
Section 11.10 Limitations on Nature of Business........................................... 87
Section 11.11 Limitations on Optional Payments and Modifications of Debt
Instruments; Limitation on Payments of Equity Funding Loans................. 87
Section 11.12 Limitations on Amendment, Termination or Extension of Project
Documents; Limitation on Exercise of Remedies under
Greenhouse Documents........................................................ 87
Section 11.13 Limitations on Sale or Issuance of Partnership Interests.................... 88
Section 11.14 Assignment of Coal Supply Agreement......................................... 89
Section 11.15 Limitations on Leases....................................................... 89
Section 11.16 Fiscal Year................................................................. 90
Section 11.17 Change of Office............................................................ 90
Section 11.18 Change of Name.............................................................. 90
Section 11.19 Tax Exempt Status of Bonds.................................................. 90
SECTION 12. EVENTS OF DEFAULT...................................................................... 90
Section 12.1 Events of Default............................................................ 90
Section 12.2 Rights and Remedies Following an Event of Default............................ 96
SECTION 13. THE ADMINISTRATIVE AGENT AND THE SECURITY AGENT....................................... 99
Section 13.1 The Administrative Agent..................................................... 99
Section 13.2 The Security Agent...........................................................102
SECTION 14. MISCELLANEOUS..........................................................................103
Section 14.1 Amendments and Waivers.......................................................103
Section 14.2 Notices......................................................................103
Section 14.3 No Waiver; Cumulative Remedies...............................................104
Section 14.4 Survival of Representations and Warranties...................................104
Section 14.5 Payment of Expenses and Taxes; Indemnification...............................104
Section 14.6 Successors and Assigns.......................................................107
Section 14.7 Permitted Bank Transfers and Participations..................................107
Section 14.8 Permitted Institution Transfers..............................................109
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Section 14.9 Set-off......................................................................110
Section 14.10 Agreements Among Lenders....................................................111
Section 14.11 Counterparts................................................................114
Section 14.12 Severability................................................................114
Section 14.13 Limitation of Recourse......................................................114
Section 14.14 Confidentiality Undertaking.................................................115
SECTION 14.15 GOVERNING LAW...............................................................116
Section 14.16 Submission To Jurisdiction; Waivers.........................................116
Section 14.17 Acknowledgements............................................................117
Section 14.18 Security Agent as Third Party Beneficiary...................................117
SECTION 14.19 WAIVERS OF JURY TRIAL.......................................................117
Section 14.20 Integration.................................................................117
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Annexes:
A Definitions
Schedules:
1 Lenders; Commitment Percentages
2 Applicable Bank Loan Margins
3 Bank Loan Amortization
4 Institutional Loan Amortization
5 The Site
6 Governmental Approvals
7 Filings and Recordings
8 Facility Construction Schedule
9 Greenhouse Construction Schedule
Exhibits:
A-1 Form of Bank Project Notes
A-2 Form of Bank L/C Notes
A-3 Form of Bank Liquidity Notes
A-4 Form of Institutional Notes
B-1 Form of Bank Loan Extension of Credit Request
B-2 Form of Institutional Loan Extension of Credit Request
B-3 Form of Letter of Credit Extension of Credit Request
C-1 Form of Construction VP Letter of Credit
C-2 Form of Term VP Letter of Credit
C-3 Form of Bond Letter of Credit
D Form of Security Deposit Agreement
E Form of Project Mortgage
F-1 Form of General Partner Interest Pledge Agreement
F-2 Form of Limited Partner Interest Pledge Agreement
G Form of Southern Equity Contribution Agreement
H Form of Borrower Stock Assignment
I-1 Form of Consent to Assignment of Virginia Power
I-2 Form of Consent to Assignment of ER&L and CSXT
I-3 Form of Consent to Assignment of Neweagle
I-4 Form of Consent to Assignment of Arch
I-5 Form of Consent to Assignment of Facility Contractor and Parent
Guarantor (SEI and Southern)
I-6 Form of Consent to Assignment of Facility Operator (SEI)
I-7 Form of Consent to Assignment of Ash Disposal Agreement
I-8 Form of Consent to Assignment of Greenhouse Contractor and Parent
Guarantor (SEI and Southern)
I-9 Form of Consent to Assignment of Greenhouse Owner (as steam
purchaser)
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I-10 Form of Consent to Assignment of Greenhouse Operator
J-1 Form of Facility Completion Certificate
J-2 Form of Greenhouse Completion Certificate
K-1 Form of Opinion of Troutman Sanders
K-2 Form of Opinion of McGuire Woods Battle & Boothe
K-3 Form of Opinion of counsel to Virginia Power
K-4 Form of Opinion of counsel to the Greenhouse Owner
K-5 Form of Opinion of counsel to the Greenhouse Operator
K-6 Form of Opinion of counsel to the Coal Supplier
K-7 Form of Opinion of counsel to Arch
K-8 Form of Opinion of counsel to CSXT and the Coal Transporter
L-1 Form of Bank Transfer Supplement
L-2 Form of Institutional Transfer Supplement
M Form of Interest Rate Election Notice
N Form of Subordination Provisions
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<PAGE> 9
LOAN AND REIMBURSEMENT AGREEMENT, dated as of May 18, 1994,
among BIRCHWOOD POWER PARTNERS, L.P., a Delaware limited partnership (the
"Borrower"), the several banks parties to this Agreement and identified on the
signature pages hereof as a "Bank" and each other bank or other financial
institution which becomes a party to this Agreement pursuant to Section 14.7
hereof (collectively, the "Banks"), JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY,
ALLSTATE INSURANCE COMPANY, NEW YORK LIFE INSURANCE COMPANY, the other financial
institutions or institutional investors parties to this Agreement and identified
on the signature pages hereof as an "Institution" and each other institution
which becomes a party to this Agreement pursuant to Section 14.8 hereof
(collectively, the "Institutions"), BANQUE PARIBAS, NEW YORK BRANCH, BARCLAYS
BANK PLC, CREDIT SUISSE and UNION BANK OF CALIFORNIA, as co-agents for the Banks
hereunder (in such capacity, the "Co-Agents"), CREDIT SUISSE and CREDIT SUISSE,
NEW YORK BRANCH, as Issuing Bank (in such capacity, the "Issuing Bank", and
together with the Banks and the Institutions, the "Lenders"), and CREDIT SUISSE,
as administrative agent for the Banks and the Issuing Bank hereunder (in such
capacity, the "Administrative Agent").
W I T N E S S E T H :
WHEREAS, the Borrower desires to acquire, construct, own and
operate the Project referred to herein, consisting of a nominal 220 MW
pulverized coal-fired cogeneration facility to be located in King George County,
Virginia, and in connection therewith has requested that the Lenders provide a
portion of the construction and term financing for the Project, in the maximum
principal amount of $350,976,000, and the Lenders are willing to provide such
financing subject to and upon the terms and conditions set forth herein;
WHEREAS, the Borrower expects to obtain additional
construction and term financing for the Project through the issuance of Bonds
(as hereinafter defined) in the maximum principal amount of $50,000,000; and
WHEREAS, concurrently with the execution and delivery of this
Agreement the Borrower is entering into an Equity Funding Loan Agreement (as
hereinafter defined) pursuant to which the banks parties thereto agree to make
revolving loans to the Borrower, in the maximum principal amount of $87,390,000,
to fund on an interim basis the equity investment in the Project to be made by
the partners of the Borrower, the proceeds of which will be applied to finance
construction of the Project.
NOW, THEREFORE, in consideration of the premises, and of the
mutual covenants, agreements herein contained and other good and valuable
consideration, receipt of which is hereby acknowledged, the parties hereto
hereby agree as follows:
SECTION 1. DEFINITIONS
Section 1.1 Defined Terms. Capitalized terms used herein and
not otherwise defined herein shall have the meanings assigned to them in Annex
A.
<PAGE> 10
2
Section 1.2 Other Definitional Provisions. (a) Any term
defined by reference to an agreement, instrument or document shall have the
meaning so assigned to it whether or not such document is in effect.
(b) As used herein, references to a "true and complete copy"
of a document shall include all amendments, supplements, modifications,
exhibits, schedules and disclosure letters referred to therein or delivered
pursuant thereto, if any.
(c) As used herein and in the other Loan Documents, and any
certificate or other document made or delivered pursuant hereto, accounting
terms not defined herein and accounting terms partly defined herein, to the
extent not defined, shall have the respective meanings given to them under GAAP.
(d) 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 Section,
paragraph, clause, Annex, Schedule and Exhibit references are to the same
contained in or attached to this Agreement unless otherwise specified.
(e) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
SECTION 2. THE CREDIT FACILITIES AND THE COMMITMENTS
Section 2.1 The Credit Facilities. The credit facilities
provided by the Lenders to the Borrower under this Agreement (the "Credit
Facilities") shall consist of (a) the Bank Loan Facility, (b) the Institutional
Loan Facility, (c) the VP Letter of Credit Facility and (d) the Bond Letter of
Credit Facility.
Section 2.2 Commitments. The aggregate amount of the several
Commitments of the Lenders under the Credit Facilities shall be as follows: (a)
the amount of the Commitment of each Bank under the Bank Loan Facility shall be
equal to its Commitment Percentage of the Total Bank Loan Commitments, which
shall be comprised of the Total Bank Project Loan Commitments and the Total Bank
L/C Loan Commitments; (b) the amount of the Commitment of each Institution under
the Institutional Loan Facility shall be equal to its Commitment Percentage of
the Total Institutional Commitments; (c) the amount of the Commitment of each
Bank under the VP Letter of Credit Facility shall be equal to its Commitment
Percentage of the Total VP Letter of Credit Commitments; and (d) the amount of
the Commitment of each Bank under the Bond Letter of Credit Facility shall be
equal to its Commitment Percentage of the Total Bond Letter of Credit
Commitments.
Section 2.3 Mandatory Reduction of Total Loan Commitments. The
Total Loan Commitments shall be reduced permanently and automatically by an
amount equal to the aggregate principal amount of any prepayment of Loans made
pursuant to Section 7.3 (other than paragraph (i) thereof) during the
Construction Period. Any reduction in the Total Loan Commitments pursuant to the
foregoing sentence shall permanently and automatically reduce (a)
<PAGE> 11
3
the Total Bank Project Loan Commitments by an amount equal to the aggregate
principal amount of any Bank Loans which were prepaid pursuant to any such
Section and (b) the Total Institutional Commitments by an amount equal to the
aggregate principal amount of any Institutional Loans which were prepaid
pursuant to any such Section.
Section 2.4 Mandatory Reduction of Total Bank Project Loan
Commitments. The Total Bank Project Loan Commitments shall be reduced
permanently and automatically by an amount equal to the aggregate principal
amount of Bonds issued pursuant to Section 10.25. Such reduction shall be
effective concurrently with the issuance of such Bonds.
SECTION 3. BANK LOAN FACILITY
Section 3.1 Bank Loans. Subject to the terms and conditions of
this Agreement, including without limitation the satisfaction of the conditions
set forth in Sections 9.1, 9.2, 9.3 and 9.6, each Bank severally agrees to make
loans (collectively, the "Bank Loans") to the Borrower from time to time during
the Bank Loan Commitment Period in an aggregate principal amount at any time
outstanding not to exceed such Bank's Commitment Percentage of the Total Bank
Loan Commitments. Bank Loans shall be made as either (a) Bank Project Loans, if
the proceeds thereof are to be used to pay Project Costs or to repay Equity
Funding Loans on the Completion Date as permitted by Section 10.1(c), (b) Bank
L/C Loans, if the proceeds thereof are to be used (i) to finance VP
Reimbursement Obligations or Bond Reimbursement Obligations arising in respect
of Refunding Drawings or (ii) to refinance Bank Liquidity Loans outstanding on
the applicable Bond L/C Expiration Date, or (c) Bank Liquidity Loans, if the
proceeds thereof are to be used to finance Bond Reimbursement Obligations
arising in respect of Liquidity Drawings; provided that (x) the aggregate
principal amount of outstanding Bank Project Loans may not exceed the Total Bank
Project Loan Commitments then in effect and (y) the aggregate principal amount
of outstanding Bank L/C Loans and Bank Liquidity Loans may not exceed the Total
Bank L/C Loan Commitments then in effect. Subject to Section 3.5, the Bank Loans
(other than Bank Liquidity Loans) from time to time may be (A) Eurodollar Loans,
(B) C/D Rate Loans, (C) Base Rate Loans or (D) a combination thereof, as
determined by the Borrower and notified to the Administrative Agent in
accordance with Sections 3.2 and 3.5. The Bank Liquidity Loans shall be Base
Rate Loans.
Section 3.2 Procedure for Bank Loan Borrowings. (a) Each
borrowing of Bank Project Loans, Bank L/C Loans and Bank Liquidity Loans shall
be on a Borrowing Date; provided that the Borrower shall deliver to the
Administrative Agent (with copies to the Institutions and the Independent
Engineer) an Extension of Credit Request substantially in the form of Exhibit
B-1 (which request, to be effective on the requested Borrowing Date, must be
received by the Administrative Agent, the Institutions and the Independent
Engineer (i) if such borrowing is of Bank Project Loans other than Debt Service
Loans, at least 10 Business Days prior to the requested Borrowing Date, (ii) if
such borrowing is of Debt Service Loans or of Bank L/C Loans, on the date that
the Interest Rate Election Notice with respect to such borrowing is required to
be delivered pursuant to the following proviso) or (iii) if such borrowing is of
Bank Liquidity Loans, prior to 12:00 Noon, New York City time, one Business Day
prior to the requested Borrowing Date; provided, further that the Borrower
shall, except in the case of Bank
<PAGE> 12
4
Liquidity Loans, also deliver to the Administrative Agent an Interest Rate
Election Notice substantially in the form of Exhibit M (which must be received
by the Administrative Agent (i) prior to 12:00 Noon, New York City time, three
Business Days prior to the requested Borrowing Date, if all or any part of such
Bank Loans initially are to be Eurodollar Loans, (ii) prior to 12:00 Noon, New
York City time, two Business Days prior to the requested Borrowing Date, if all
or any part of such Bank Loans initially are to be C/D Rate Loans and none of
such Bank Loans are to be Eurodollar Loans, or (iii) prior to 12:00 Noon, New
York City time, one Business Day prior to the requested Borrowing Date, if all
of such Bank Loans initially are to be Base Rate Loans). Each Extension of
Credit Request shall specify (x) the amount to be borrowed, (y) the applicable
Borrowing Date and (z) whether such Bank Loans are to be Bank Project Loans,
Bank L/C Loans or Bank Liquidity Loans, the proposed use of the proceeds thereof
and, if all or any part of such Bank Loans are to be Bank L/C Loans, the amount
thereof made to finance VP Reimbursement Obligations or Bond Reimbursement
Obligations arising in respect of Refunding Drawings and/or to refinance Bank
Liquidity Loans outstanding on the applicable Bond L/C Expiration Date, as the
case may be. In addition, each Extension of Credit Request shall, (1) in the
case of each Bank Project Loan, include a statement that the proceeds of such
Bank Loans will be used solely to pay Project Costs identified in a schedule
attached to such Extension of Credit Request or (if applicable) to repay Equity
Funding Loans in accordance with Section 10.1(c), or (2) in the case of each
Bank L/C Loan and Bank Liquidity Loan, include a statement that the proceeds of
such Bank Loans will be used solely to finance the Borrower's obligation to make
L/C Reimbursement Payments. Each Interest Rate Election Notice shall specify (A)
whether the Bank Loans to be borrowed are to be Eurodollar Loans, C/D Rate
Loans, Base Rate Loans or a combination thereof and (B) if such Bank Loans are
to be entirely or partly Eurodollar Loans or C/D Rate Loans, the respective
amounts of each such Type of Bank Loan and the respective durations of the
initial Bank Loan Interest Periods therefor. Each borrowing of Bank Project
Loans that are not Debt Service Loans shall be in an amount equal to $2,000,000
or a whole multiple of $100,000 in excess thereof (or such lesser amount as
shall equal the Total Bank Project Loan Commitments then in effect). Each
Borrowing of a Bank L/C Loan or Bank Liquidity Loan shall be in the amount of
the applicable L/C Reimbursement Obligation.
(b) Upon receipt of an Extension of Credit Request pursuant to
Section 3.2(a), the Administrative Agent shall promptly notify each Bank
thereof. If such borrowing is of Bank L/C Loans or Bank Liquidity Loans, each
Bank will, on the Borrowing Date specified in such Extension of Credit Request,
make such Loan by applying the proceeds thereof to the payment of the applicable
L/C Reimbursement Obligation owed to it. If such borrowing is of Bank Project
Loans, following receipt of the notice from the Administrative Agent referred to
in the first sentence of this paragraph (b), each Bank will make the amount of
its pro rata share of such borrowing available to the Administrative Agent for
the account of the Borrower, by wire transfer to the office of the
Administrative Agent specified on Schedule 1 prior to 12:00 Noon, New York City
time, on the applicable Borrowing Date in funds immediately available to the
Administrative Agent. The Administrative Agent then will promptly deposit the
aggregate of the amounts of such Bank Project Loans made available to the
Administrative Agent by the Banks and in like funds as received by the
Administrative Agent into the Construction Account or, if applicable, the
Accounts specified in Section 4.3 of the Security Deposit Agreement for
application to the payment of Project Costs and/or the repayment of Equity
Funding Loans to the extent permitted by Section 10.1(c), as specified in the
Extension of Credit Request.
<PAGE> 13
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(c) Unless the Administrative Agent shall have been notified
in writing by any Bank prior to a Borrowing Date on which the Borrower has
requested Bank Project Loans that such Bank will not make the amount that would
constitute its Commitment Percentage of the borrowing of such Bank Project Loans
on such date available to the Administrative Agent, the Administrative Agent may
assume that such Bank has made such amount available to the Administrative Agent
on such Borrowing Date, and the Administrative Agent may, in reliance upon such
assumption, make available to the Borrower, through the deposit of funds in the
Construction Account or, if applicable, the Accounts specified in Section 4.3 of
the Security Deposit Agreement, a corresponding amount. If such amount of Bank
Project Loans is made available to the Administrative Agent by such Bank on a
date after such Borrowing Date, such Bank shall pay to the Administrative Agent
on demand, such amount, with interest thereon at a rate equal to the daily
average Federal Funds Effective Rate for the period from and including such
Borrowing Date to the date such Bank makes such amount immediately available to
the Administrative Agent. A certificate of the Administrative Agent submitted to
any Bank with respect to any amounts owing under this paragraph (c) shall be
conclusive in the absence of manifest error. If such Bank's Commitment
Percentage of such borrowing of Bank Project Loans is not in fact made available
to the Administrative Agent by such Bank within three Business Days after such
Borrowing Date, the Administrative Agent shall also be entitled to recover such
amount from the Borrower on demand, together with interest thereon from the date
such amount was made available to the Borrower at the rate per annum applicable
to Base Rate Loans hereunder.
Section 3.3 Bank Notes.
(a) Bank Project Notes. The Bank Project Loans made by each
Bank shall be evidenced by a promissory note of the Borrower, substantially in
the form of Exhibit A-1 with appropriate insertions as to payee, date and
principal amount (a "Bank Project Note"), payable to the order of such Bank.
Each Bank Project Note shall (i) be dated the Closing Date, (ii) be in a
principal amount equal to such Bank's Commitment Percentage of the initial Total
Bank Project Loan Commitments, (iii) be payable as provided in Section 3.4, (iv)
bear interest for the period from the date thereof until paid in full on the
unpaid principal amount thereof from time to time outstanding at the applicable
interest rate per annum provided in, and payable as specified in, paragraphs
(a), (b), (c), (d) and (e) of Section 3.7 and (v) be entitled to the benefits of
this Agreement and the other Loan Documents. Each Bank is hereby authorized to
record, on the schedules annexed to and constituting part of its Bank Project
Note or on other appropriate records of such Bank, the date and amount of each
Bank Project Loan made by such Bank, the Type of such Bank Project Loan, each
continuation of such Bank Project Loan as a Bank Project Loan of the same Type,
each conversion of all or a portion of such Bank Project Loan to a Bank Project
Loan of another Type, the date and amount of each payment or prepayment of
principal of such Bank Project Loan and, in the case of a Eurodollar Loan and a
C/D Rate Loan, the duration of each Bank Loan Interest Period with respect
thereto, and any such recordation shall constitute prima facie evidence of the
accuracy of the information so recorded; provided that the failure to make any
such recordation shall not affect the obligations of the Borrower hereunder or
under any Bank Project Note.
<PAGE> 14
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(b) Bank L/C Notes. The Bank L/C Loans made by each Bank to
finance VP Reimbursement Obligations and Bond Reimbursement Obligations arising
in respect of Refunding Drawings and/or to refinance Bank Liquidity Loans
outstanding on the applicable Bond L/C Expiration Date shall be evidenced by a
promissory note of the Borrower, substantially in the form of Exhibit A-2 with
appropriate insertions as to payee, date and principal amount (a "Bank L/C
Note"), payable to the order of such Bank. Each Bank L/C Note shall (i) be dated
the Closing Date, (ii) be in a principal amount equal to such Bank's Commitment
Percentage of the sum of (x) the initial Total VP Letter of Credit Commitments
and (y) the initial Total Bond Letter of Credit Commitments, (iii) be payable as
provided in Section 3.4, (iv) bear interest for the period from the date thereof
until paid in full on the unpaid principal amount thereof from time to time
outstanding at the applicable interest rate per annum provided in, and payable
as specified in, Section 3.7 and (v) be entitled to the benefits of this
Agreement and the other Loan Documents. Each Bank is hereby authorized to
record, on the schedules annexed to and constituting part of its Bank L/C Note
or on other appropriate records of such Bank, the date and amount of each Bank
L/C Loan made by such Bank, the Type of such Bank L/C Loan, each continuation of
such Bank L/C Loan as a Bank L/C Loan of the same Type, each conversion of all
or a portion of such Bank L/C Loan to a Bank L/C Loan of another Type, the date
and amount of each payment or prepayment of principal of such Bank L/C Loan and,
in the case of a Eurodollar Loan and a C/D Rate Loan, the duration of each Bank
Loan Interest Period with respect thereto, and any such recordation shall
constitute prima facie evidence of the accuracy of the information so recorded;
provided that the failure to make any such recordation shall not affect the
obligations of the Borrower hereunder or under any Bank L/C Note.
(c) Bank Liquidity Notes. The Bank Liquidity Loans made by
each Bank shall be evidenced by a promissory note of the Borrower, substantially
in the form of Exhibit A-3 with appropriate insertions as to payee, date and
principal amount (a "Bank Liquidity Note"), payable to the order of such Bank.
Each Bank Liquidity Note shall (i) be dated the Closing Date, (ii) be in a
principal amount equal to such Bank's Commitment Percentage of the initial Total
Bond Letter of Credit Commitments, (iii) be payable as provided in Section 3.4,
(iv) bear interest for the period from the date thereof until paid in full on
the unpaid principal amount thereof from time to time outstanding at the
applicable interest rate per annum provided in, and payable as specified in,
paragraphs (b), (d) and (e) of Section 3.7 and (v) be entitled to the benefits
of this Agreement and the other Loan Documents. Each Bank is hereby authorized
to record, on the schedules annexed to and constituting part of its Bank
Liquidity Note or on other appropriate records of such Bank, the date and amount
of each Bank Liquidity Loan made by such Bank and the date and amount of each
payment or prepayment of principal of such Bank Liquidity Loan, and any such
recordation shall constitute prima facie evidence of the accuracy of the
information so recorded; provided that the failure to make any such recordation
shall not affect the obligations of the Borrower hereunder or under any Bank
Liquidity Note.
Section 3.4 Repayment of Bank Loans. (a) The Borrower shall
repay the Bank Loans (other than Bank Liquidity Loans) in consecutive quarterly
installments of principal on each Loan Installment Payment Date specified on
Schedule 3 (each, a "Bank Loan Installment Payment Date") to and including the
Bank Loan Final Maturity Date. The amount of the installment of principal of the
Bank Loans (other than Bank Liquidity Loans) due on a Loan Installment Payment
Date shall be equal to the product of (i) the aggregate outstanding principal
<PAGE> 15
7
amount of the Bank Loans (other than Bank Liquidity Loans) on the Construction
Period Termination Date (after giving effect to any Bank Loans (other than Bank
Liquidity Loans) made on such date) and (ii) the percentage set forth opposite
such Loan Installment Payment Date on Schedule 3 attached hereto (as adjusted
from time to time pursuant to paragraph (b) below). Notwithstanding anything to
the contrary in the first sentence of this Section 3.4(a), if one or more Bank
Loan Installment Payment Dates occur before the Initial Repayment Date, the
amounts of principal of the Bank Loans that would, absent this sentence, be
payable on such Loan Installment Payment Dates shall not be required to be
repaid by the Borrower on such dates, but shall instead be repaid on the Initial
Repayment Date, together with the installment of principal on the Bank Loans
which is scheduled to be due on the Initial Repayment Date in accordance with
the first sentence of this Section 3.4, and such amounts of principal of Bank
Loans the repayment of which is deferred to the Initial Repayment Date shall
bear interest to the Initial Repayment Date at the rates applicable thereto
pursuant to Section 3.7.
(b) Upon any making of a Bank L/C Loan following the
Construction Period Termination Date pursuant to Section 3.1, the percentages
set forth in Schedule 3 shall be adjusted on a proportionate basis to reflect
such increase in the principal amount of the Bank Loans and to provide that such
Bank L/C Loan is repaid by the Borrower, on a basis pro rata with the repayment
of Bank Project Loans then outstanding, on each of the remaining scheduled Bank
Loan Installment Payment Dates until the Bank Loan Final Maturity Date,
commencing on the Bank Loan Installment Payment Date next succeeding the date on
which such Bank L/C Loan was made. A revised Schedule 3, prepared in accordance
with the foregoing provisions of this paragraph (b), executed by the
Administrative Agent and delivered to the Borrower and the Lenders, shall
without further act supersede the existing Schedule 3 to this Agreement and,
absent manifest error, be conclusive and binding on the Borrower and the Banks.
(c) Unless earlier prepaid pursuant to Section 7.3(i) or
refinanced with a Bank L/C Loan pursuant to Section 3.1, the Borrower shall
repay in full the then aggregate outstanding principal amount of the Bank
Liquidity Loans, if any, on the Liquidity Loan Termination Date applicable
thereto.
Section 3.5 Conversion and Continuation Options. (a) The
Borrower may elect from time to time (i) to convert Eurodollar Loans to Base
Rate Loans or C/D Rate Loans by giving the Administrative Agent irrevocable
notice of such election (which notice, to be effective, must be received by the
Administrative Agent prior to 12:00 Noon, New York City time, three Business
Days prior to the requested conversion date) and (ii) to convert C/D Rate Loans
to Base Rate Loans by giving the Administrative Agent irrevocable notice of such
election (which notice, to be effective, must be received by the Administrative
Agent prior to 12:00 Noon, New York City time, two Business Days prior to the
requested conversion date), provided that any such conversion of Eurodollar
Loans or C/D Rate Loans may only be made on the last day of a Bank Loan Interest
Period with respect thereto. The Borrower may elect from time to time to convert
Base Rate Loans (other than Base Rate Loans which are Bank Liquidity Loans) or
C/D Rate Loans to Eurodollar Loans by giving the Administrative Agent
irrevocable notice of such election (which notice, to be effective, must be
received by the Administrative Agent prior to 12:00 Noon, New York City time,
three Business Days prior to the requested conversion date), provided that any
such conversion of C/D Rate Loans may, subject to the penultimate sentence of
this Section
<PAGE> 16
8
3.5(a), only be made on the last day of a Bank Loan Interest Period with respect
thereto. Any such notice of conversion to Eurodollar Loans or C/D Rate Loans
shall specify the duration of the initial Bank Loan Interest Period or Bank Loan
Interest Periods therefor. Upon receipt of any such notice the Administrative
Agent shall promptly notify each Bank thereof. If the last day of the then
current Bank Loan Interest Period with respect to C/D Rate Loans that are to be
converted to Eurodollar Loans is not a Business Day with respect to Eurodollar
Loans, such conversion shall be made on the next succeeding Business Day with
respect to Eurodollar Loans and during the period from such last day to such
succeeding Business Day, such Eurodollar Loans shall bear interest as if they
were Base Rate Loans. All or any part of outstanding Eurodollar Loans, Base Rate
Loans and C/D Rate Loans may be converted as provided herein, provided that (i)
no Bank Loan may be converted to a Eurodollar Loan or a C/D Rate Loan when any
Default or Event of Default has occurred and is continuing and the Majority
Banks have determined that the Bank Loan Interest Period requested is not
appropriate in light of such Default or Event of Default and (ii) no such
conversion may be made if it would contravene the provisions of Section 3.6 or
if it would not be permitted under the provisions of Section 3.9 or 3.10.
(b) Eurodollar Loans or C/D Rate Loans may be continued as
such upon the expiration of the then current Bank Loan Interest Period with
respect thereto by the Borrower giving notice to the Administrative Agent (which
shall promptly notify the Banks) in accordance with the applicable provisions of
the term "Bank Loan Interest Period", of the duration of the next Bank Loan
Interest Period to be applicable to such Loans; provided that no Eurodollar Loan
or C/D Rate Loan will be continued as such (A) when any Default or Event of
Default has occurred and is continuing and the Majority Banks have determined
that the Bank Loan Interest Period requested by the Borrower is not appropriate
in light of such Default or Event of Default or (B) if such continuation would
contravene the provisions of Section 3.6 or if it would not be permitted under
the provisions of Section 3.9 or 3.10; and provided, further, that if the
Borrower shall fail to give any required notice as described above in this
paragraph or if such continuation is not permitted pursuant to the preceding
proviso such Loans shall be automatically converted to Base Rate Loans on the
last day of such then expiring Bank Loan Interest Period.
Section 3.6 Maximum Number of Tranches. All borrowings,
conversions and continuations of Bank Loans hereunder and all selections of Bank
Loan Interest Periods hereunder shall be in such amounts and be made pursuant to
such elections so that, after giving effect thereto, at no time will the
aggregate number of Eurodollar Tranches and C/D Tranches collectively exceed
six. As used in this Section 3.6 and in the definition of "Bank Loan Interest
Period", the term "Eurodollar Tranche" is the collective reference to Eurodollar
Loans and the term "C/D Rate Tranche" is the collective reference to C/D Rate
Loans, the Bank Loan Interest Periods with respect to which begin on the same
date and end on the same later date (whether or not such Eurodollar Loans or C/D
Rate Loans, as the case may be, originally shall have been made on the same
day).
Section 3.7 Interest on Bank Loans. (a) Each Eurodollar Loan
shall bear interest for each day (including the first day but excluding the last
day) during each Bank Loan Interest Period with respect thereto at a rate per
annum equal to the Eurodollar Rate determined for such day plus the Applicable
Bank Loan Margin.
<PAGE> 17
9
(b) Each Base Rate Loan shall bear interest at a rate per
annum equal to the Base Rate plus the Applicable Bank Loan Margin.
(c) Each C/D Rate Loan shall bear interest for each day
(including the first day but excluding the last day) during each Bank Loan
Interest Period with respect thereto at a rate per annum equal to the C/D Rate
determined for such day plus the Applicable Bank Loan Margin.
(d) If all or a portion of the principal amount of any Bank
Loan or any interest payable thereon shall not be paid when due (whether at the
stated maturity, by acceleration or otherwise), such overdue amount shall bear
interest at the Bank Default Rate from the date of such non-payment until such
amount is paid in full (after as well as before judgment). In addition (but
without duplication of any amounts payable pursuant to the preceding sentence),
if any Event of Default shall occur, the outstanding principal amount of all
Bank Loans shall bear interest at the Bank Default Rate from the date on which
such Event of Default occurred until the date on which no Event of Default shall
be continuing.
(e) Interest shall be payable in arrears on each Bank Loan
Interest Payment Date, provided that interest accruing pursuant to paragraph (d)
of this Section shall be payable on demand.
Section 3.8 Computation of Interest on Bank Loans. (a)
Interest on Base Rate Loans shall be calculated on the basis of a 365- (or 366-,
as the case may be) day year for the actual days elapsed. Interest on Eurodollar
Loans and C/D Rate Loans shall be calculated on the basis of a 360-day year for
the actual days elapsed. The Administrative Agent shall as soon as practicable
notify the Borrower and the Banks of each determination of a Eurodollar Rate or
of a C/D Rate. Any change in the interest rate on a Bank Loan resulting from a
change in the Base Rate, the Eurocurrency Reserve Requirements, the C/D
Assessment Rate or the C/D Reserve Percentage shall become effective as of the
opening of business on the day on which such change in the Base Rate is
announced or such change in the Eurocurrency Reserve Requirements, the C/D
Assessment Rate or the C/D Reserve Percentage becomes effective, as the case may
be. The Administrative Agent shall as soon as practicable notify the Borrower
and the Banks of the effective date and the amount of each such change in
interest rate.
(b) Each determination of an interest rate on the Bank Loans
by the Administrative Agent pursuant to any provision of this Agreement shall be
conclusive and binding on the Borrower and the Banks in the absence of manifest
error. The Administrative Agent shall, at the request of the Borrower, deliver
to the Borrower a statement showing the quotations used by the Administrative
Agent in determining any interest rate pursuant to Section 3.7(a) or 3.7(c).
(c) If any Reference Bank shall for any reason no longer have
a Commitment or any Loans, such Reference Bank shall thereupon cease to be a
Reference Bank, and if, as a result, there shall only be one Reference Bank
remaining, the Administrative Agent (after consultation with the Borrower and
the Banks) shall, by notice to the Borrower and the Banks,
<PAGE> 18
10
designate another Bank as a Reference Bank so that there shall at all times be
at least two Reference Banks.
(d) Each Reference Bank shall use its best efforts to furnish
quotations of rates to the Administrative Agent as contemplated by this
Agreement. If any of the Reference Banks shall be unable or shall otherwise fail
to supply such rates to the Administrative Agent upon its request, the rate of
interest shall, subject to the provisions of Section 3.9, be determined on the
basis of the quotations of the remaining Reference Banks or Reference Bank.
Section 3.9 Inability to Determine Interest Rate on Bank
Loans. In the event that, prior to the first day of any Bank Loan Interest
Period, (a) the Administrative Agent is unable to make the determination of the
Eurodollar Rate or the C/D Rate for such Bank Loan Interest Period required to
be made by it as provided herein by reason of the failure or inability of at
least two of the Reference Banks to supply quotations necessary to make such
determination or (b) the Administrative Agent shall have received notice from
the Majority Banks that the Eurodollar Rate or the C/D Rate determined or to be
determined for such Bank Loan Interest Period will not adequately and fairly
reflect the cost to such Banks of making or maintaining their affected Bank
Loans during such Bank Loan Interest Period, the Administrative Agent shall give
telex, telecopy or telephonic notice thereof (stating the reason therefor) to
the Borrower and the Banks as soon as practicable. If such notice is given (i)
any Eurodollar Loans or C/D Rate Loans, as the case may be, requested to be made
on the first day of such Bank Loan Interest Period shall be made as Bank Loans
of another Type, (ii) any Bank Loans that were to have been converted on the
first day of such Bank Loan Interest Period to Eurodollar Loans or C/D Rate
Loans, as the case may be, shall be converted to or continued as Bank Loans of
another Type and (iii) any outstanding Eurodollar Loans or C/D Rate Loans, as
the case may be, shall be converted, on the first day of such Bank Loan Interest
Period, to Bank Loans of another Type, in each case as the Borrower shall
designate; provided, however, that (A) if the Borrower shall so designate
Eurodollar Loans, its irrevocable notice thereof must be received by the
Administrative Agent prior to 12:00 Noon, New York City time, three Business
Days prior to the first day of such Bank Loan Interest Period, (B) if the
Borrower shall so designate C/D Rate Loans, its irrevocable notice thereof must
be received by the Administrative Agent prior to 12:00 Noon, New York City time,
two Business Days prior to the first day of such Bank Loan Interest Period, and
(C) if the Borrower shall fail to give any required notice of its designation of
Bank Loans of another Type, such Bank Loans shall be made as or converted to
Base Rate Loans on the first day of such Bank Loan Interest Period. Until such
notice has been withdrawn by the Administrative Agent or, in the case of any
notice given by the Majority Banks pursuant to clause (b) of the first sentence
of this Section, by the Majority Banks, no further Eurodollar Loans or C/D Rate
Loans, as the case may be, shall be made or continued as such, nor shall the
Borrower have the right to convert Loans to Eurodollar Loans or C/D Rate Loans,
as the case may be.
Section 3.10 Illegality. Notwithstanding any other provision
of this Agreement, if any change in any Requirement of Law (other than any
change to any organizational or governing document of any Bank) or in the
interpretation or application thereof by any authority charged with the
interpretation or administration thereof or by any court of competent
jurisdiction shall make it unlawful for any Bank to make or maintain Eurodollar
Loans as contemplated by
<PAGE> 19
11
this Agreement, such Bank shall give telex, telecopy or telephonic notice
thereof to the Borrower and the Administrative Agent (specifying the reason for
such illegality) as soon as practicable and (a) the commitment of such Bank
hereunder to make Eurodollar Loans, continue Eurodollar Loans as such and
convert Domestic Dollar Loans to Eurodollar Loans shall forthwith be suspended
until such time as such Bank may again lawfully make and maintain Eurodollar
Loans, and (b) such Bank's Loans then outstanding as Eurodollar Loans, if any,
shall be converted automatically to Base Rate Loans on the respective last days
of the then current Bank Loan Interest Periods with respect to such Bank Loans
or within such earlier period (determined by the Administrative Agent in its
sole judgment) as required by law (unless (i) the Borrower shall have elected to
convert such Bank Loans to C/D Rate Loans and (ii) the Administrative Agent
shall have received the Borrower's irrevocable notice thereof prior to 12:00
Noon, New York City time, two Business Days prior to the earlier of (x) the
first day of the next succeeding Bank Loan Interest Period with respect to such
Bank Loan and (y) the last day of such earlier period as required by law). If,
as a result of such change in a Requirement of Law or in the interpretation or
application thereof, any such conversion of a Eurodollar Loan occurs on a day
which is not the last day of the then current Bank Loan Interest Period with
respect thereto, the Borrower shall pay to such Bank such amounts, if any, as
may be required pursuant to Section 7.7(a) with respect to such conversion.
Section 3.11 Requirements of Law. (a) In the event that any
Requirement of Law or any change therein or in the interpretation or application
thereof or compliance by any Bank with any request or directive (whether or not
having the force of law) from any central bank or other Government Authority:
(i) does or shall subject any Bank to any tax (except
to the extent such tax is the subject of the agreements set forth in
Section 7.6) of any kind whatsoever with respect to this Agreement, any
Bank Note or any Eurodollar payments made by it, or change the basis of
taxation of payments to such Bank of principal, fees, interest or any
other amount payable hereunder (except for changes in the rate of tax
on the overall net income of such Bank);
(ii) does or shall impose, modify or hold applicable
any reserve, special deposit, compulsory loan or similar requirement
against assets held by, or deposits or other liabilities in or for the
account of, advances or loans by, or other credit extended by, or any
other acquisition of funds by, any office of such Bank which are not
otherwise included in the determination of the Eurodollar Rate; or
(iii) does or shall impose on such Bank any other
condition;
and the result of any of the foregoing is to increase the cost to such Bank, by
any amount which such Bank deems to be material, of making, renewing or
maintaining advances or extensions of credit or to reduce any amount receivable
hereunder, in each case in respect of its Eurodollar Loans or C/D Rate Loans
made to the Borrower hereunder, then, in any such case, the Borrower shall
promptly pay such Bank, within 10 Business Days after demand by such Bank
(through the Administrative Agent) in accordance with paragraph (c) of this
Section, any additional amounts necessary to compensate such Bank for such
additional costs or reduced amount receivable.
<PAGE> 20
12
(b) In the event that any Bank shall have determined that the
adoption after the date hereof of any law, rule, guideline or regulation
regarding capital adequacy, or any change after the date hereof in any existing
or future law, rule, guideline or regulation regarding capital adequacy or in
the interpretation or application thereof, or compliance by any Bank or any
corporation controlling such Bank with any request or directive made or adopted
after the date hereof regarding capital adequacy (whether or not having the
force of law) from any central bank or Government Authority, does or shall have
the effect of reducing the rate of return on such Bank's or such corporation's
capital as a consequence of its obligations hereunder to a level below that
which such Bank or such corporation could have achieved but for such adoption,
change or compliance (taking into consideration such Bank's or such
corporation's policies with respect to capital adequacy) by an amount deemed by
such Bank to be material, then from time to time, within 10 Business Days after
submission by such Bank to the Borrower (through the Administrative Agent) of a
written request therefor in accordance with paragraph (c) of this Section, the
Borrower shall pay to such Bank such additional amount or amounts as will
compensate such Bank for such reduction.
(c) A Bank intending to make a claim pursuant to paragraph (a)
or (b) of this Section shall deliver to the Borrower through the Administrative
Agent, as soon as practicable after becoming aware of the circumstances giving
or which shall give rise to such claim, notice of such Bank's intention to make
a claim, specifying the event by which it is or shall be entitled to make such
claim and setting out in reasonable detail the expected basis and computation of
such claim (and the Administrative Agent shall promptly upon receipt thereof
deliver such notice to the Borrower); provided that no claim shall be made by
any Bank, and the Borrower shall not be required to indemnify any Bank, with
respect to any cost, increased cost or other liability or reduction described in
paragraph (a) or (b) of this Section which is incurred by such Bank and which is
payable, or which is applicable to any period, more than 90 days prior to the
date the Borrower is first notified by the Administrative Agent pursuant to the
foregoing provisions of this paragraph (c) that such Bank is incurring such
costs, other liability or reduction, as the case may be.
(d) A certificate as to any additional amounts payable to any
Bank pursuant to this Section 3.11, submitted by such Bank to the Borrower and
showing in reasonable detail that such amounts were computed in accordance with
this Section 3.11, shall be conclusive in the absence of manifest error. The
provisions of this Section 3.11 shall survive the termination of this Agreement
and the payment of the Bank Loans and all other amounts payable to the Banks and
the Issuing Bank hereunder.
(e) Each Bank agrees that, as promptly as practicable after it
becomes aware that additional amounts are or will be due to such Bank under this
Section 3.11, it will, to the extent not inconsistent with such Bank's internal
policies, make, fund or maintain its Bank Loans through another lending office
of such Bank if as a result thereof such amounts will not be required to be paid
and if, as determined by such Bank in it its sole discretion, the making,
funding or maintaining of such Bank Loans through such other lending office (i)
would be permitted by applicable Requirements of Law and (ii) would not
adversely affect its Bank Loans or such Bank. The Borrower hereby agrees to pay
all reasonable expenses incurred by a Bank in utilizing another lending office
of such Bank as provided in this paragraph.
<PAGE> 21
13
Section 3.12 Substitution or Removal of an Affected Bank. In
the event any Bank notifies the Borrower pursuant to Section 3.10 that it may no
longer make or maintain Eurodollar Loans, or demands payment of additional
amounts pursuant to Section 3.11 or 7.6, the Borrower, at its expense, at any
time within 180 days after such demand, so long as no Default or Event of
Default shall have occurred and be continuing, may require such Bank to sell in
accordance with the provisions of Section 14.7, at par plus accrued interest,
without recourse or warranty and pursuant to a Bank Transfer Supplement, its
rights and obligations hereunder (including its Commitment and the Bank Loans at
the time owing to it and the Bank Notes held by it) to a Qualified Financial
Institution specified by the Borrower that is willing to purchase such rights
and obligations on the terms hereof and is reasonably acceptable to the
Administrative Agent; provided that (i) such assignment shall not conflict with
or violate any Requirement of Law applicable to or binding on such Bank, (ii)
the Borrower shall have paid to the assigning Bank all amounts (other than
interest) accrued and owing hereunder to it (including, without limitation,
amounts owing pursuant to Sections 3.11, 7.6 and 7.7(a)) and (iii) the assignee
Bank shall have executed and delivered a Bank Transfer Supplement.
Notwithstanding anything set forth above in this Section 3.12 to the contrary,
the Borrower shall not be entitled to require an assignment under this Section
3.12 with respect to any Bank demanding payment under Section 3.11 or 7.6 if (x)
prior to any such requirement by the Borrower, such Bank shall have changed its
lending office so as to eliminate the continued incurrence of the costs in
respect of which such payment was demanded or (y) the circumstances giving rise
to such Bank's demand for payment of such additional amounts are applicable to
all the Banks.
Section 3.13 Banks' Representation. Each Bank represents that
the Bank Loans to be made by it hereunder are being made in the ordinary course
of its banking business not with a view to or for sale in connection with any
distribution thereof within the meaning of the Securities Act of 1933, as
amended or for resale in any transaction which would be in violation of any
applicable securities laws; provided that the sale, transfer or other
disposition by each Bank of its Bank Loans and Bank Notes shall at all times be
within such Bank's control.
SECTION 4. INSTITUTIONAL LOAN FACILITY
Section 4.1 Institutional Loans. Subject to the terms and
conditions of this Agreement, including without limitation the satisfaction of
the conditions set forth in Sections 9.1 and 9.2, each Institution severally
agrees to make two loans (collectively, the "Institutional Loans") to the
Borrower during the Institutional Commitment Period in an aggregate principal
amount equal to its Commitment Percentage of the Total Institutional
Commitments; provided that the initial Institutional Loan to be made by each
Institution shall be in a principal amount equal to at least one-half of its
Commitment Percentage of the Total Institutional Commitments and shall be
available for borrowing only during the Initial Funding Period, and the other
Institutional Loan to be made by each Institution shall be available for
borrowing only during the Subsequent Funding Period.
Section 4.2 Procedure for Institutional Loan Borrowings. Each
borrowing of Institutional Loans shall be on a Borrowing Date; provided that the
Borrower shall deliver to each Institution (with copies to the Administrative
Agent and the Independent Engineer) an Extension of Credit Request substantially
in the form of Exhibit B-2 (which request, to be
<PAGE> 22
14
effective on the requested Borrowing Date, must be received by each Institution,
the Administrative Agent and the Independent Engineer at least 10 Business Days
prior to the requested Borrowing Date). Each Extension of Credit Request shall
specify (a) the amount to be borrowed, (b) the applicable Borrowing Date and (c)
the proposed use of proceeds of the Institutional Loans and whether a portion
thereof is to remain on deposit in the Institutional Loan Proceeds Account
pending application for the purposes described in Section 10.1(b)(iv) on a
succeeding Borrowing Date. Upon receipt of an Extension of Credit Request, each
Institution will, on the applicable Borrowing Date, deposit the amount of its
Commitment Percentage of the borrowing requested therein in funds immediately
available to the Security Agent into the Institutional Loan Proceeds Account (by
wire transfer of such funds to the Security Agent at its office specified in the
Security Deposit Agreement) for application to the payment of Project Costs
and/or the repayment of Bank Loans or Equity Funding Loans, as specified in such
Extension of Credit Request.
Section 4.3 Institutional Notes. (a) Each Institutional Loan
shall be evidenced by a promissory note of the Borrower, substantially in the
form of Exhibit A-4 with appropriate insertions as to date, interest rate and
principal amount (an "Institutional Note"), and either registered in the name of
the Institution making such Loan (or its nominee) or payable to the order of
such Institution, as such Institution shall request. Each Institutional Note
shall (a) be dated the date of the Institutional Loan evidenced thereby, (b) be
in a principal amount equal to the amount of such Institutional Loan, (c) be
payable as provided in Section 4.4, (d) bear interest for the period from the
date thereof until paid in full on the unpaid principal amount thereof from time
to time outstanding at the applicable interest rate per annum calculated in
accordance with, and payable as specified in, Section 4.5 and (e) be entitled to
the benefits of this Agreement and the other Loan Documents.
(b) The Borrower and the Institutions shall cooperate in
attempting to obtain a NAIC rating on the Institutional Credit Facility as soon
as possible after the execution and delivery of this Agreement.
(c) The Borrower shall, within five Business Days after the
Note Exchange Date, at the request of an Institution and at the Borrower's
expense, exchange with such Institution, for the Institutional Notes held by
such Institution, new Institutional Notes. Each such new Institutional Note
delivered to an Institution shall be in the form of Annex A-4, either registered
in the name of such Institution or payable to the order of such Institution, as
such Institution shall request, and shall otherwise meet the requirements of
paragraph (a) above, except that such new Institutional Note shall (i) be dated
the Note Exchange Date, (ii) be in a principal amount equal to the unpaid
aggregate principal amount of the Institutional Notes so exchanged and (iii)
bear interest for the period from the Note Exchange Date until paid in full on
the unpaid principal amount thereof from time to time outstanding at a rate
equal to the weighted average of the rates of interest borne by each
Institutional Note so exchanged by such Institution, as calculated by the
Institutions and notified to the Borrower and the Administrative Agent. The
determination by the Institutions of the applicable interest rate pursuant to
the preceding sentence shall be conclusive and binding on the Borrower in the
absence of manifest error. Each Institution shall, upon delivery to it of a new
Institutional Note executed and delivered by the Borrower and meeting the
requirements of the preceding sentence, surrender to the Borrower the
Institutional
<PAGE> 23
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Notes held by it that were exchanged in accordance with this paragraph, and,
upon such delivery, such surrendered Institutional Notes shall be cancelled by
the Borrower and shall not be deemed to be outstanding Notes for any purpose of
this Agreement.
Section 4.4 Repayment of Institutional Loans. The Borrower
shall repay the Institutional Loans in quarterly installments of principal on
each Loan Installment Payment Date specified on Schedule 4 (each, an
"Institutional Loan Installment Payment Date") to and including the
Institutional Loan Final Maturity Date. The amount of the installment of
principal of an Institutional Note due on each Institutional Loan Installment
Payment Date shall be equal to the product of (i) the initial principal amount
of such Institutional Note and (ii) the percentage set forth opposite such
Institutional Loan Installment Payment Date on Schedule 4 attached hereto.
Section 4.5 Interest on Institutional Loans. Each
Institutional Loan shall bear interest at a rate equal to the sum of (A) 7.35%
per annum and (B) the Applicable Institutional Loan Margin from time to time;
provided that if all or a portion of the principal amount of any Institutional
Loan or any interest payable thereon shall not be paid when due (whether at the
stated maturity, by acceleration or otherwise), such overdue amount shall bear
interest at the Institution Default Rate from the date of such non-payment until
such amount is paid in full (after as well as before judgment). In addition (but
without duplication of any amounts payable pursuant to the proviso of the
preceding sentence), if any Event of Default shall occur, the principal amount
of all outstanding Institutional Loans shall bear interest at the Institution
Default Rate from the date on which such Event of Default occurred until the
date on which no Event of Default shall be continuing. Interest shall be payable
in arrears (i) on the last day of each March, June, September and December prior
to the Commercial Operations Date and (ii) on each Institutional Loan
Installment Payment Date after the Commercial Operations Date; provided that
interest accruing pursuant to the preceding sentence and the proviso of the
first sentence of this Section 4.5 shall be payable on demand.
Section 4.6 Computation of Interest on Institutional Loans.
Interest on Institutional Loans shall be calculated on the basis of a 360-day
year consisting of twelve 30-day months. The Institutions shall, on the
Borrowing Date with respect to each Institutional Loan, and on any date on which
there is a change in the Applicable Institutional Loan Margin on any
Institutional Loan, notify the Borrower of their determination of the interest
rate to be applicable to such Institutional Loan, which determination shall be
conclusive and binding on the Borrower absent manifest error. Each Institution
shall, at the request of the Borrower, deliver to the Borrower a statement
showing in reasonable detail the determination of any interest rate, or change
thereof, pursuant to Section 4.3(c) or 4.5.
Section 4.7 Registration, Transfer and Substitution of
Registered Institutional Notes.
(a) Note Register. The Borrower shall keep at its office a
register (the "Institutional Note Register") in which the Borrower will, at the
request of any Institution, provide for the registration of Institutional Notes
held by such Institution (the "Registered Institutional Notes") and the
registration of transfers of such Registered Institutional Notes. The Borrower
and the Security Agent may treat the Person in whose name any Registered
<PAGE> 24
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Institutional Note is registered on the Institutional Note Register as the owner
thereof for the purpose of receiving payment of the principal of and the
Make-Whole Premium or Modified Make-Whole Premium, if any, and interest on such
Registered Institutional Note and for all other purposes, whether or not such
Registered Institutional Note shall be overdue, and all payments to the
registered holder of a Registered Institutional Note shall satisfy the
Borrower's and the Security Agent's obligations in respect of such Registered
Institutional Note and the Borrower and the Security Agent shall not be affected
by any notice to the contrary. All references in this Agreement or in a
Registered Institutional Note to a "holder" of any Registered Institutional Note
shall mean the Person in whose name such Registered Institutional Note is at the
time registered on the Institutional Note Register.
(b) Transfer and Exchange of Registered Institutional Notes.
Upon surrender of any Registered Institutional Note to the Borrower for
registration of transfer or for exchange or for re-registration in the name of a
nominee of the holder thereof, the Borrower, at its expense, will execute and
deliver in exchange therefor a new Registered Institutional Note or Registered
Institutional Notes in the form of Annex A-4 as requested by the holder or
transferee of such Registered Institutional Note, which aggregate the unpaid
principal amount of such surrendered Registered Institutional Note. Each such
new Registered Institutional Note shall be dated so that there will be no loss
of interest on such surrendered Note and shall otherwise be of like tenor, and
shall be registered in the name or names of such Person (including, without
limitation, in the name of a nominee) as such holder or transferee of such
Registered Institutional Note may request. Any Registered Institutional Note in
lieu of which any such new Registered Institutional Note has been executed and
delivered shall be cancelled and shall not be deemed to be an outstanding Note
for any purpose of this Agreement. The Project Mortgage shall be amended in
connection with any transfer of a Registered Institutional Note to the extent
necessary under Virginia law to preserve the benefits thereof.
(c) Replacement of Registered Institutional Notes. Upon
receipt of evidence reasonably satisfactory to the Borrower of the loss, theft,
destruction or mutilation of any Registered Institutional Note and, in the case
of any such loss, theft or destruction of any Registered Institutional Note,
upon delivery of an indemnity bond in such reasonable amount as the Borrower may
determine (or, in the case of any Registered Institutional Note held by an
Institution originally a party to this Agreement or by another institutional
holder or a nominee of any thereof, an indemnity agreement reasonably
satisfactory to the Borrower), or, in the case of any such mutilation, upon the
surrender of such Registered Institutional Note for cancellation to the Borrower
at its office, the Borrower, at its expense, will execute and deliver, in lieu
thereof, a new Registered Institutional Note in the unpaid principal amount of
such lost, stolen, destroyed or mutilated Registered Institutional Note, dated
so that there will be no loss of interest on such Registered Institutional Note
and otherwise of like tenor. Any Registered Institutional Note in lieu of which
any such new Registered Institutional Note has been so executed and delivered by
the Borrower shall not be deemed to be an outstanding Registered Institutional
Note for any purpose of this Agreement.
(d) The Borrower shall promptly notify the Security Agent, the
Administrative Agent and the Institutions of the initial holders of Registered
Institutional Notes, and any transfer or exchange or re-registration of a
Registered Institutional Note pursuant to Section 4.7(b).
<PAGE> 25
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Section 4.8 Institutions' Representations; Source of Funds.
(a) Each Institution represents that it is making, funding and maintaining the
Institutional Loans for its own account or for one or more separate accounts
maintained by such Institution or for the account of one or more pension or
trust funds, in each case not with a view to or for sale in connection with any
distribution thereof within the meaning of the Securities Act of 1933, as
amended, or for resale in any transaction which would be in violation of any
applicable securities laws; provided that the sale, transfer or other
disposition by each Institution of its Loans and Notes shall at all times be
within such Institution's control. If an Institution is making, funding or
maintaining its Institutional Loans for the account of one or more pension or
trust funds, such Institution represents that (except to the extent that it has
otherwise advised its special counsel and the Borrower in writing) it has sole
investment discretion with respect to the making, funding and maintaining of its
Institutional Loans pursuant to this Agreement and the determination and
decision to make, fund and maintain the Institutional Loans for such pension or
trust funds is being made by the same individual or group of individuals who
customarily pass on such investments.
(b) Each Institution represents and warrants that, with
respect to each source of funds to be used by it to make, fund and maintain the
Institutional Loans (respectively, the "Source"), at least one of the following
statements shall be accurate as of the Closing Date:
(i) The Source is assets of an insurance company general
account and not assets of an insurance company separate account (within
the meaning of Section 3(17) of ERISA);
(ii) The Source is a "governmental plan" as defined in
Title I, Section 3(32) of ERISA;
(iii) The Source is either (x) an insurance company pooled
separate account, and the making, funding and maintaining of the
Institutional Loans is exempt in accordance with Prohibited Transaction
Exemption ("PTE") 90-1 (issued January 29, 1990), or (y) a bank
collective investment fund, in which case the making, funding and
maintaining of the Institutional Loans is exempt in accordance with PTE
91-38 (issued July 12, 1991);
(iv) The Source is an "investment fund" managed by a
"qualified professional asset manager" or "QPAM" (as defined in Part V
of PTE 84-14, issued March 13, 1984) which QPAM has been identified in
writing, and the making, funding and maintaining of the Institutional
Loans is exempt under PTE 84-14 provided that no other party to the
transactions described in this Agreement and no "affiliate" of such
other party (as defined in Section V(c) of PTE 84-14) has at this time,
and has not exercised at any time during the immediately preceding
year, the authority to appoint or terminate said QPAM as manager of the
assets of any "plan" identified in writing pursuant to this paragraph
(iv) or to negotiate the terms of said QPAM's management agreement on
behalf of any such identified "plans";
<PAGE> 26
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(v) The Source is one or more "plans", or a separate
account or trust fund comprised of one or more "plans", each of which
has been identified to the Borrower in writing pursuant to this
paragraph (v).
As used in this Section 4.8(b), "plan" or "plans" shall have
the meaning set forth in Title I, Section 3(3) of ERISA.
(c) Each Institution represents and warrants that it is an
"accredited investor" as that term is defined in Rule 501 under the Securities
Act of 1933, as amended, or a "qualified institutional buyer" as that term is
defined in Rule 144A under the Securities Act of 1933, as amended. Each
Institution further represents and warrants that it has received (or John
Hancock Mutual Life Insurance Company has received in the case of Commonwealth
of Pennsylvania State Employees' Retirement System, Mellon Bank, N.A., as
trustee for AT&T Master Pension Trust and Mellon Bank, N.A., as trustee for
NYNEX Master Pension Trust) a copy of the Information Memorandum and has had a
full and adequate opportunity to review the Information Memorandum, to
investigate the business and financial condition of the Borrower and the Project
and to meet with and obtain such information as such Institution has required
from the Borrower or its representatives with respect to the Borrower or the
Project.
SECTION 5. BOND LETTER OF CREDIT FACILITY
Section 5.1 Issuance of and Participation in the Bond Letters
of Credit. (a) The Issuing Bank hereby agrees, subject to the terms and
conditions of this Agreement, including without limitation the satisfaction of
the conditions set forth in Sections 9.1 and 9.5, to issue during the
Construction Period not more than six Bond Letters of Credit in favor of the
relevant Bond Trustee for the account of the Borrower; provided that, at least
10 Business Days prior to the proposed date of issuance of the Relevant Bonds,
the Issuing Bank receives an Extension of Credit Request in the form of Exhibit
B-3.
(b) Effective upon the issuance of each Bond Letter of Credit,
without further action by the Issuing Bank, the Administrative Agent or any
Bank, the Issuing Bank grants to each Bank and each Bank hereby unconditionally
and irrevocably, severally and for itself only, takes an undivided participating
interest in the rights and obligations of the Issuing Bank under, and in
connection with, such Bond Letter of Credit in a fraction equal to such Bank's
Commitment Percentage, and the issuance of such Bond Letter of Credit shall be
deemed to be a confirmation by the Issuing Bank and each Bank of such
participation in such amount.
Section 5.2 Bond Letters of Credit. (a) Each Bond Letter of
Credit shall be substantially in the form of Exhibit C-3 hereto (with such
changes therein as shall be approved by the Issuing Bank and the Majority
Banks), shall be stated to expire on the seventh anniversary of the Closing Date
and shall be in the stated amount requested by the Borrower in the Extension of
Credit Request given with respect thereto (which stated amount shall be equal to
the aggregate outstanding principal amount of the Bonds to which such Bond
Letter of Credit relates plus an amount for accrued interest required by the
rating agencies rating the Bonds); provided that the aggregate stated amount of
the Bond Letters of Credit issued hereunder shall not exceed the Total Bond
Letter of Credit Commitments. At the time of any Bond Letter of Credit
Disbursement
<PAGE> 27
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with respect to a Bond Letter of Credit, the amount available to be drawn under
such Bond Letter of Credit shall be reduced by the amount of such Bond Letter of
Credit Disbursement.
(b) Upon any extension of any Bond L/C Expiration Date with
respect to a Bond Letter of Credit pursuant to Section 5.6, the Issuing Bank
shall issue and deliver a new Bond Letter of Credit in exchange for such Bond
Letter of Credit to reflect the extension of such Bond L/C Expiration Date. The
terms of such new Bond Letter of Credit shall be identical to those of the Bond
Letter of Credit for which it is being exchanged, except that (i) such new Bond
Letter of Credit shall be dated as of the date of issuance and shall be in an
amount equal to the undrawn amount of the replaced Bond Letter of Credit, (ii)
the Bond L/C Expiration Date for such replacement Bond Letter of Credit shall be
such date as so extended and (iii) such new Bond Letter of Credit may contain
such other changes as each of the Issuing Bank, the Majority Banks, the Majority
Institutions, the Borrower and the Bond Trustee in whose favor such Bond letter
of Credit is to be issued shall mutually agree upon.
Section 5.3 Notice of Payments under the Bond Letters of
Credit. The Issuing Bank shall give the Borrower, the Administrative Agent, the
Security Agent and each Bank prompt cable or tested telex notice of each demand
for a Bond Letter of Credit Disbursement received by the Issuing Bank,
specifying (i) the amount of such Bond Letter of Credit Disbursement, (ii) the
date such Bond Letter of Credit Disbursement is to be made and (iii) such Bank's
pro rata share of the amount of such Bond Letter of Credit Disbursement based on
its Commitment Percentage; provided that such notice in respect of any Bond
Letter of Credit Disbursement arising under an Interest Drawing shall be given
to each Bank only in the event the Borrower has not paid in full to the Issuing
Bank on the date of such Bond Letter of Credit Disbursement the Bond
Reimbursement Payment pursuant to Section 5.5 arising in respect of such Bond
Letter of Credit Disbursement.
Section 5.4 Termination of the Bond Letters of Credit. Each
Bond Letter of Credit shall terminate upon the earliest to occur of (i) the
surrender to the Issuing Bank by the Bond Trustee of such Bond Letter of Credit
for cancellation, (ii) the Issuing Bank's honoring of drafts presented under
such Bond Letter of Credit that in the aggregate equal the stated amount of such
Bond Letter of Credit and (iii) the close of business at the office of the
Issuing Bank specified in such Bond Letter of Credit on the Bond L/C Expiration
Date with respect to such Bond Letter of Credit.
Section 5.5 Borrower's Obligations in Respect of Bond Letters
of Credit. (a) Each Bond Letter of Credit Disbursement shall be reimbursed by
the Borrower on the date of such disbursement (such reimbursement payment herein
referred to as a "Bond Reimbursement Payment"). The Borrower may request the
Banks to finance the Borrower's obligation to make a Bond Reimbursement Payment
arising in respect of a Liquidity Drawing through the making of a Bank Liquidity
Loan and may request the Banks to finance the Borrower's obligation to make a
Bond Reimbursement Payment arising in respect of a Refunding Drawing through the
making of a Bank L/C Loan, in each case pursuant to Section 3.1. If the Borrower
fails to make such request in accordance with the applicable provisions of
Section 3.2 or to satisfy the terms and conditions of this Agreement for such
Loan (including those under Section 9.6), or if the Bond Reimbursement Payment
did not arise in respect of a Liquidity Drawing or a Refunding
<PAGE> 28
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Drawing, the Borrower shall, on the applicable L/C Disbursement Date, make such
Bond Reimbursement Payment to the Issuing Bank for its account and for the
account of the Banks. If a Bond Reimbursement Payment shall not be made on the
applicable L/C Disbursement Date, the amount of the unpaid Bond Reimbursement
Payment shall bear interest from the date on which such payment was due until
paid in full at the Bank Default Rate applicable to Base Rate Loans, such
interest being payable on demand of the Issuing Bank.
(b) The Borrower's obligation to make Bond Reimbursement
Payments and payments of interest in respect thereof under this Section 5.5
(such obligations being herein collectively referred to as the "Bond
Reimbursement Obligations") shall be absolute, unconditional and irrevocable,
and shall be observed strictly in accordance with the terms of this Agreement
under all circumstances whatsoever including, without limitation, the following
circumstances: (i) any lack of legality, validity, enforceability or regularity
of any Bond Letter of Credit, this Agreement, any other Loan Document or any
Bond Document; (ii) any amendment or waiver of or any consent to or departure
from all or any of the Loan Documents or any Bond Document; (iii) the existence
of any claim, set-off, defense, counterclaim or other right which the Borrower
may have at any time against the relevant Bond Trustee, the Security Agent, the
Administrative Agent, the Issuing Bank, the Banks or any other Person, whether
in connection with this Agreement, any Bond Letter of Credit, the Loan
Documents, any Bond Document or any unrelated transaction; (iv) any statement or
any other document presented under any Bond Letter of Credit proving to be
forged, fraudulent or invalid in any respect or any statement therein being
untrue or inaccurate in any respect whatsoever; (v) payment by the Issuing Bank
under any Bond Letter of Credit against presentation of a sight draft or
certificate which does not comply strictly with the terms of such Bond Letter of
Credit; and (vi) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing; provided that the Borrower shall not be
obligated to reimburse the Issuing Bank for any Bond Letter of Credit
Disbursement made as a result of the Issuing Bank's gross negligence or wilful
misconduct.
Section 5.6 Extension of Bond L/C Expiration Dates. If the
Borrower wishes to extend the Bond L/C Expiration Date with respect to any Bond
Letter of Credit for an additional period, it shall give the Issuing Bank and
the Administrative Agent written notice to such effect not later than 120 days
prior to such Bond L/C Expiration Date. The Bond L/C Expiration Date with
respect to any Bond Letter of Credit shall not be extended unless written notice
shall have been delivered by the Issuing Bank to the Borrower (with a copy to
the relevant Bond Trustee) and the Administrative Agent no later than 60 days
prior to the then scheduled Bond L/C Expiration Date with respect to such Bond
Letter of Credit, stating that the Issuing Bank has agreed to extend such date
for an additional period and specifying the new expiration date. Subject to
Section 8.7(b) of the Security Deposit Agreement, the Issuing Bank, in its sole
discretion, may or may not agree to extend any scheduled Bond L/C Expiration
Date.
Section 5.7 Reduction of Bond Letters of Credit. (a) The Bond
Trustee in whose favor a Bond Letter of Credit has been issued may, at the
request of the Borrower, without penalty, upon at least five Business Days'
prior written notice to the Issuing Bank, reduce the stated amount of any Bond
Letter of Credit in connection with an optional prepayment or redemption and
cancellation of the Relevant Bonds; provided that (i) each partial reduction of
the stated amount of a Bond Letter of Credit in respect of the principal amount
of the Relevant
<PAGE> 29
21
Bonds shall be in an amount not less than $1,000,000, (ii) the stated amount as
so reduced shall not be less than the sum of the remaining aggregate unpaid
principal amount of the Relevant Bonds that are outstanding, plus interest
thereon in the aggregate amount required by the rating agencies rating such
Bonds, if any, and (iii) such optional prepayment or redemption and cancellation
of the Relevant Bonds is permitted by Section 11.11(a).
(b) On any date on which any of the Bonds are redeemed and
cancelled, the stated amount of the applicable Bond Letter of Credit shall be
reduced as provided in such Bond Letter of Credit.
SECTION 6. VP LETTER OF CREDIT FACILITY
Section 6.1 Issuance of and Participation in the VP Letters of
Credit. (a) The Issuing Bank hereby agrees, subject to the terms and conditions
of this Agreement, to issue on the Closing Date the Construction VP Letter of
Credit in favor of Virginia Power for the account of the Borrower, which the
Borrower is required to provide to Virginia Power pursuant to Section 13.3 of
the Power Purchase Agreement. The Issuing Bank hereby also agrees, subject to
the terms and conditions of this Agreement, to issue on the Commercial
Operations Date the Term VP Letter of Credit in favor of Virginia Power for the
account of the Borrower, which the Borrower is required to provide to Virginia
Power pursuant to Section 13.5 of the Power Purchase Agreement to ensure the
continued availability of the Facility.
(b) Effective upon the issuance of the Construction VP Letter
of Credit, without further action by the Issuing Bank, the Administrative Agent
or any Bank, the Issuing Bank grants to each Bank and each Bank hereby
unconditionally and irrevocably, severally and for itself only, takes an
undivided participating interest in the rights and obligations of the Issuing
Bank under, and in connection with, the Construction VP Letter of Credit in a
fraction equal to such Bank's Commitment Percentage, and the issuance of the
Construction VP Letter of Credit shall be deemed to be a confirmation by the
Issuing Bank and each Bank of such participation in such amount.
(c) Effective upon the issuance of the Term VP Letter of
Credit, without further action by the Issuing Bank, the Administrative Agent or
any Bank, the Issuing Bank grants to each Bank and each Bank unconditionally and
irrevocably, severally and for itself only, takes an undivided participating
interest in the rights and obligations of the Issuing Bank under, and in
connection with, the Term VP Letter of Credit in a fraction equal to such Bank's
Commitment Percentage, and the issuance of the Term VP Letter of Credit shall be
deemed to be a confirmation by the Issuing Bank and each Bank of such
participation in such amount.
Section 6.2 Construction VP Letter of Credit. (a) Upon the
terms and subject to the conditions of this Agreement, including without
limitation the satisfaction of the conditions set forth in Sections 9.1 and 9.4,
the Issuing Bank shall issue and deliver the Construction VP Letter of Credit to
Virginia Power on the Closing Date. The Construction VP Letter of Credit shall
be irrevocable, shall be stated to expire on the Date Certain and shall be
issued in an amount requested by the Borrower in the Extension of Credit Request
given with respect thereto;
<PAGE> 30
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provided that the stated amount of the VP Letter of Credit shall not exceed the
Total VP Letter of Credit Commitment. At the time of any Construction VP Letter
of Credit Disbursement, the amount available to be drawn under the Construction
VP Letter of Credit shall be reduced by the amount of such Construction VP
Letter of Credit Disbursement.
(b) Upon any extension of the Construction VP Expiration Date
pursuant to Section 6.7, the Issuing Bank shall issue and deliver a new
Construction VP Letter of Credit in exchange for the Construction VP Letter of
Credit to reflect the extension of the Construction VP Expiration Date. The
terms of such new Construction VP Letter of Credit shall be identical to those
of the Construction VP Letter of Credit for which it is being exchanged, except
that (i) such new Construction VP Letter of Credit shall be dated as of the date
of issuance and shall be in an amount equal to the undrawn amount of the
replaced Construction VP Letter of Credit, (ii) the Construction VP Expiration
Date for such replacement Construction VP Letter of Credit shall be such date as
so extended and (iii) such new Construction VP Letter of Credit may contain such
other changes as each of the Issuing Bank, the Majority Banks, the Majority
Institutions, the Borrower and Virginia Power shall mutually agree upon.
Section 6.3 Term VP Letter of Credit. (a) Upon the terms and
subject to the conditions of this Agreement, including without limitation the
satisfaction of the conditions set forth in Sections 9.1 and 9.4, the Issuing
Bank shall issue and deliver the Term VP Letter of Credit on the Commercial
Operations Date. The Term VP Letter of Credit shall be irrevocable, shall be
stated to expire on the seventh anniversary of the Closing Date and shall be
issued in an amount requested by the Borrower in the Extension of Credit Request
given with respect thereto; provided that the stated amount of the Term VP
Letter of Credit shall not exceed the excess of (i) the Total VP Letter of
Credit Commitment over (ii) the aggregate amount of the Construction VP Letter
of Credit Disbursements, if any. At the time of any Term VP Letter of Credit
Disbursement, the amount available to be drawn under the Term VP Letter of
Credit shall be reduced by the amount of such Term VP Letter of Credit
Disbursement.
(b) Upon any extension of the Term VP Expiration Date pursuant
to Section 6.7, the Issuing Bank shall issue and deliver a new Term VP Letter of
Credit in exchange for the Term VP Letter of Credit to reflect the extension of
the Term VP Expiration Date. The terms of such new Term VP Letter of Credit
shall be identical to those of the Term VP Letter of Credit for which it is
being exchanged, except that (i) such new Term VP Letter of Credit shall be
dated the date of issuance, (ii) the Term VP Expiration Date for such
replacement Term VP Letter of Credit shall be such date as so extended and (iii)
such new Term VP Letter of Credit may contain such changes as each of the
Issuing Bank, the Majority Banks, the Majority Institutions, the Borrower and
Virginia Power shall mutually agree upon.
Section 6.4 Notice of Payments under the VP Letters of Credit.
The Issuing Bank shall give the Borrower, the Administrative Agent, the Security
Agent and each Bank prompt cable or tested telex notice of each demand for a VP
Letter of Credit Disbursement received by the Issuing Bank, specifying (i) the
amount of such VP Letter of Credit Disbursement, (ii) the date such VP Letter of
Credit Disbursement is to be made and (iii) such Bank's pro rata share of the
amount of such VP Letter of Credit Disbursement based on its Commitment
Percentage.
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Section 6.5 Termination of the VP Letters of Credit. Each of
the VP Letters of Credit shall terminate upon the earliest to occur of (i) the
surrender to the Issuing Bank by Virginia Power of such VP Letter of Credit for
cancellation, (ii) the Issuing Bank's honoring of drafts presented under such VP
Letter of Credit that in the aggregate equal the stated amount of such VP Letter
of Credit and (iii) the close of business at the office of the Issuing Bank
specified in such VP Letter of Credit on the Construction VP Expiration Date or
Term VP Expiration Date, as applicable.
Section 6.6 Borrower's Obligations in Respect of VP Letters of
Credit. (a) Each Construction VP Letter of Credit Disbursement and each Term VP
Letter of Credit Disbursement shall be reimbursed by the Borrower on the date of
such disbursement (such reimbursement payment herein referred to as a
"Construction VP Reimbursement Payment" or "Term VP Reimbursement Payment", as
the case may be). The Borrower may request the Banks to finance the Borrower's
obligation to make a Construction VP Reimbursement Payment or a Term VP
Reimbursement Payment, and interest thereon, through the making of a Bank L/C
Loan pursuant to Section 3.1. If the Borrower fails to make such request in
accordance with the applicable provisions of Section 3.2 or to satisfy the terms
and conditions of this Agreement for such Loan (including those under Section
9.6), the Borrower shall, on the applicable L/C Disbursement Date, make such
Construction VP Reimbursement Payment or Term VP Reimbursement Payment, as the
case may be, to the Issuing Bank for its account and for the account of the
Banks. If a Construction VP Reimbursement Payment or a Term VP Reimbursement
Payment shall not be made on the applicable L/C Disbursement Date, the amount of
the unpaid Construction VP Reimbursement Payment or the unpaid Term VP
Reimbursement Payment, as the case may be, shall bear interest from the date on
which such payment was due until paid in full at the Bank Default Rate
applicable to Base Rate Loans, such interest being payable on demand of the
Issuing Bank.
(b) The Borrower's obligation to make Construction VP
Reimbursement Payments, Term VP Reimbursement Payments and payments of interest
in respect thereof under this Section 6.6 (such obligations being herein
collectively referred to as the "VP Reimbursement Obligations") shall be
absolute, unconditional and irrevocable, and shall be observed strictly in
accordance with the terms of this Agreement under all circumstances whatsoever
including, without limitation, the following circumstances: (i) any lack of
legality, validity, enforceability or regularity of any VP Letter of Credit,
this Agreement or any other Loan Document; (ii) any amendment or waiver of or
any consent to or departure from all or any of the Loan Documents; (iii) the
existence of any claim, set-off, defense, counterclaim or other right which the
Borrower may have at any time against Virginia Power, the Security Agent, the
Administrative Agent, the Issuing Bank, the Banks or any other Person, whether
in connection with this Agreement, any VP Letter of Credit, the Loan Documents
or any unrelated transaction; (iv) any statement or any other document presented
under any VP Letter of Credit proving to be forged, fraudulent or invalid in any
respect or any statement therein being untrue or inaccurate in any respect
whatsoever; (v) payment by the Issuing Bank under any VP Letter of Credit
against presentation of a sight draft or certificate which does not comply
strictly with the terms of such VP Letter of Credit; and (vi) any other
circumstance or happening whatsoever, whether or not similar to any of the
foregoing; provided that the Borrower shall not be obligated to reimburse the
Issuing Bank
<PAGE> 32
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for any VP Letter of Credit Disbursement made as a result of the Issuing Bank's
gross negligence or wilful misconduct.
Section 6.7 Extension of VP Expiration Dates. If the Borrower
wishes to extend the Construction VP Expiration Date or the Term VP Expiration
Date for an additional period, it shall give the Issuing Bank and the
Administrative Agent written notice to such effect not later than 120 days prior
to the Construction VP Expiration Date or the Term VP Expiration Date, as the
case may be, together with evidence that Virginia Power has required such
extension. Neither the Construction VP Expiration Date or the Term VP Expiration
Date shall be extended unless written notice shall have been delivered by the
Issuing Bank to the Borrower (with a copy to Virginia Power) and the
Administrative Agent no later than 60 days prior to the then scheduled
Construction VP Expiration Date or the Term VP Expiration Date, as the case may
be, stating that the Issuing Bank has agreed to extend such date for an
additional period and specifying the new expiration date. Subject to Section
8.7(b) of the Security Deposit Agreement, the Issuing Bank, in its sole
discretion, may or may not agree to extend the then scheduled Construction VP
Expiration Date or Term VP Expiration Date, as the case may be.
SECTION 7. GENERAL PROVISIONS APPLICABLE TO LOANS
AND LETTERS OF CREDIT
Section 7.1 Fees.
(a) Commitment Fees. (i) The Borrower agrees to pay to the
Administrative Agent, for the account of each Bank, for each day of the
Construction Period, a commitment fee computed at the rate of 0.375% per annum
on the amount of such Bank's Commitment Percentage of the maximum Total Bank
Loan Commitment less the sum of (A) the utilized portion of the Total Bank
Project Loan Commitments in effect on such day, (B) the utilized portion of the
Total Bond Letter of Credit Commitments in effect on such day and (C) the
utilized portion of the Total VP Letter of Credit Commitments in effect on such
day.
(ii) The Borrower agrees to pay to each
Institution, for each day of the Institutional Commitment Period, a commitment
fee computed at the rate of 0.375% per annum on the excess, if any, of (x) the
amount of such Institution's Commitment Percentage of the Total Institutional
Commitments in effect on such day over (y) the aggregate principal amount of all
Institutional Loans made by such Institution on or prior to such day.
(iii) Commitment fees payable pursuant to this
Section 7.1(a) shall be payable quarterly in arrears on the last day of each
March, June, September and December, commencing on the first of such dates to
occur after the Closing Date, and on the Construction Period Termination Date
(in the case of commitment fees payable to the Banks) or the Institutional
Commitment Termination Date (in the case of commitment fees payable to the
Institutions), as the case may be, and shall be calculated on the basis of a
365- (or 366-, as the case may be) day year for the actual days elapsed.
<PAGE> 33
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(b) Facility Fees; Closing Fees. (i) The Borrower agrees to
pay to the Administrative Agent on the Closing Date, for the account of the
Co-Agents, a facility fee computed at the rate set forth in the Bank Fee Letter
on the sum of (x) the initial Total Bank Project Loan Commitments (calculated as
if $20,000,000 of Bonds had been issued and the Total Bank Project Loan
Commitments had been reduced in accordance with Section 2.4 prior to such day),
(B) the initial Total Bond Letter of Credit Commitments and (C) the initial
Total VP Letter of Credit Commitments. The Borrower also agrees to pay to the
Administrative Agent on the Closing Date, for the account of the Co-Agents, a
closing fee computed in accordance with the Bank Fee Letter. Such facility fee
and closing fee shall be distributed by the Administrative Agent to the
Co-Agents.
(ii) The Borrower agrees to pay to the Institutions on the
Closing Date, on a pro rata basis, a facility fee computed at the rate set forth
in the Institutional Fee Letter on the amount of the initial Total Institutional
Commitments. The Borrower also agrees to pay to the Institutions on the Closing
Date a closing fee computed and payable in accordance with the Institutional Fee
Letter.
(c) True-Up Obligation Fees. The Borrower agrees to pay to the
Administrative Agent for the account of each Bank, for each day from and
including the Closing Date to but excluding the earlier of (i) the date on which
the Banks are obligated to purchase Participation Interests (as defined in
Section 14.10 (b)(i)) in satisfaction of their True-Up Obligations and (ii) the
Completion Date, a fee computed at the rate of 0.75% per annum on the amount of
such Bank's True-Up Amount on such day; provided that if all or any portion of
such fee shall not be paid when due, such overdue amount shall bear interest at
the Bank Default Rate from the date of such non-payment until such amount is
paid in full (after as well as before judgment). In addition (but without
duplication of any amount payable pursuant to the proviso of the preceding
sentence), if any Event of Default shall occur, such fee shall be in an amount
equal to the percentage per annum which is 2.0% above the rate set forth in the
preceding sentence from the date on which such Event of Default occurred until
the date upon which no Event of Default shall be continuing. Such fee shall be
payable quarterly in arrears on the last day of each March, June, September and
December, commencing on the first of such dates to occur after the Closing Date,
and on the Completion Date, and shall be calculated on the basis of a 365- (or
366-, as the case may be) day year for actual days elapsed; provided that
interest accruing pursuant to the preceding sentence and the proviso of the
first sentence of this Section 7.1(c) shall be payable on demand.
(d) Letter of Credit Fees. So long as any Letter of Credit
shall be in effect, the Borrower agrees to pay (i) to the Administrative Agent,
for the account of the Banks in accordance with their respective Commitment
Percentages, a letter of credit commission with respect to the Letters of Credit
in an amount equal to the percentage per annum which is the Applicable Bank Loan
Margin from time to time for Eurodollar Loans on the average daily undrawn face
amount of the Letters of Credit outstanding during the period of calculation,
and (ii) to the Issuing Bank, for its own account, a fronting fee with respect
to such Letters of Credit in an amount equal to (x) with respect to Letters of
Credit issued prior to the Sixth Amendment Effective Date, 0.20% per annum on
the aggregate stated amount of such Letters of Credit outstanding from time to
time and (y) with respect to Letters of Credit issued on or after the
<PAGE> 34
26
Sixth Amendment Effective Date, 0.30% per annum on the aggregate stated amount
of such Letters of Credit outstanding from time to time; provided that if all or
any portion of the letter of credit commission payable pursuant to clause (i)
above shall not be paid when due, such overdue amount shall bear interest at a
rate per annum equal to 2.0% above the Applicable Bank Loan Margin from time to
time for Eurodollar Loans from the date of non-payment until such amount is paid
in full (after as well as before judgment). In addition (but without duplication
of any amount payable pursuant to the proviso of the preceding sentence), if any
Event of Default shall occur, the letter of credit commission payable pursuant
to clause (i) of the preceding sentence during the period from the date on which
such Event of Default occurred until the date on which no Event of Default shall
be continuing shall be in an amount equal to the percentage per annum which is
2.0% above Applicable Bank Loan Margin from time to time for Eurodollar Loans.
The fees payable pursuant to this paragraph shall be payable quarterly in
arrears on the last day of each March, June, September and December, commencing
on the first of such dates to occur after the initial issuance of a Letter of
Credit, and shall be calculated on the basis of a 360-day year for the actual
days elapsed; provided that interest accruing pursuant to the preceding sentence
and the proviso of the first sentence of this Section 7.1(d) shall be payable on
demand.
(e) Administration Fee. The Borrower agrees to pay to the
Administrative Agent on the Closing Date, and on each anniversary of the Closing
Date, for its own account, an annual administration fee in the amount set forth
in the Bank Fee Letter.
(f) Cancellation Fee. The Borrower agrees to pay to the
Institutions on the Termination Date determined in accordance with the
Institutional Fee Letter, the cancellation fee, if any, referred to therein.
Section 7.2 Pro Rata Treatment and Payments.
(a) Among the Banks. Each borrowing by the Borrower from the
Banks hereunder, each payment by the Banks to the Institutions pursuant to the
True-Up Obligation, each payment by the Borrower on account of any fees pursuant
to Section 7.1(a)(i), 7.1(c) or 7.1(d)(i), and any reduction of the Commitments
of the Banks shall be made pro rata according to the respective Commitment
Percentages of the Banks. Each payment (including each prepayment) by the
Borrower on account of principal of and interest on the Bank Loans shall be made
pro rata according to the respective outstanding principal amounts of the Bank
Loans then held by the Banks. All payments (including prepayments) to be made by
the Borrower hereunder and under the Bank Notes on account of principal of and
interest on the Bank Loans and fees payable pursuant to Section 7.1(a)(i),
7.1(c) or 7.1(d)(i) shall be made without set-off or counterclaim and shall be
made prior to 12:00 Noon, New York City time, on the due date thereof to the
Administrative Agent, for the account of the Banks, at the Administrative
Agent's office specified in Section 14.2, in Dollars and in immediately
available funds. The Administrative Agent shall distribute such payments to the
Banks promptly upon receipt in like funds as received. All payments on account
of facility fees and closing fees pursuant to Section 7.1(b)(i) shall be made
without set off or counterclaim and shall be made prior to 12:00 Noon, New York
City time, on the Closing Date to the Administrative Agent, for the account of
the Co-Agents at the Administrative Agent's office specified in Section 14.2,
in Dollars and in immediately available funds. The Administrative Agent shall
distribute such payments to the Co-
<PAGE> 35
27
Agents promptly upon receipt in like funds as received. All payments on account
of letter of credit fronting fees pursuant to Section 7.1(d)(ii) shall be made
prior to 12:00 Noon, New York City time, on the date thereof to the Issuing
Bank, for its own account, at the Administrative Agent's office specified in
Section 14.2, in Dollars and in immediately available funds. All payments on
account of annual administration fees pursuant to Section 7.1(e) shall be made
without set off or counterclaim and shall be made prior to 12:00 Noon, New York
City time, on the due date thereof to the Administrative Agent, for its own
account, at the Administrative Agent's office specified in Section 14.2, in
Dollars and in immediately available funds. Any other amount received by the
Administrative Agent which is payable to any Bank pursuant to the provisions of
this Agreement shall be distributed by the Administrative Agent to such Bank
promptly upon receipt in like funds as received. The foregoing provisions of
this Section 7.2(a) are subject to the provisions of Section 14.10(b)(iv).
(b) Among the Institutions. Each borrowing by the Borrower
from the Institutions hereunder, except as otherwise provided in the
Institutional Fee Letter or this Agreement, each payment by the Borrower on
account of fees payable to the Institutions pursuant to Section 7.1(a)(ii),
7.1(b)(ii) or 7.1(f) and any reduction of the Commitments of the Institutions
shall be made pro rata according to the respective Commitment Percentages of the
Institutions. Each payment (including each prepayment) by the Borrower on
account of principal of and interest on the Institutional Loans shall, except as
provided in Section 7.5(b), be made pro rata according to the respective
outstanding principal amounts of the Institutional Loans then held by the
Institutions. All payments (including prepayments) to be made by the Borrower
hereunder and under the Institutional Notes on account of principal of and
interest on the Institutional Loans, and fees payable to the Institutions
pursuant to Section 7.1(a)(ii), 7.1(b)(ii) or 7.1(f) shall be made without set
off or counterclaim and shall be made prior to 12:00 Noon, New York City time,
on the due date thereof to the Institutions at their respective offices
specified on Schedule I, in Dollars and in immediately available funds.
(c) Payment Date Adjustments. If any payment hereunder (other
than payments on the Eurodollar Loans) becomes due and payable on a day other
than a Business Day, such payment shall be extended to the next succeeding
Business Day, and, with respect to payments of principal, interest thereon shall
be payable at the then applicable rate during such extension. If any payment on
a Eurodollar Loan becomes due and payable on a day other than a Business Day,
the maturity thereof shall be extended to the next succeeding Business Day
unless the result of such extension would be to extend such payment into another
calendar month, in which event such payment shall be made on the immediately
preceding Business Day.
Section 7.3 Mandatory Prepayments of Loans.
(a) Event of Loss. If an Event of Loss shall occur, (i) all of
the Commitments of the Lenders shall terminate forthwith and (ii) on the Event
of Loss Prepayment Date, the Borrower shall (x) prepay in full, without premium
or penalty, the aggregate principal amount of the then outstanding Loans,
together with accrued interest and fees to the date of prepayment and all other
amounts payable hereunder or under the Security Documents (including pursuant to
Sections 7.7(a) and 7.7(d), but excluding any Make-Whole Premium or Modified
Make-Whole Premium), and (y) if any Letter of Credit is then issued and
outstanding, deposit into the L/C
<PAGE> 36
28
Cash Collateral Subaccount of the Special Payment Account cash in an amount
equal to the Letter of Credit Exposure, for application to the payment of the
Borrower's L/C Reimbursement Obligations in respect of Letter of Credit
Disbursements as provided in the Security Deposit Agreement.
(b) Equity Contributions. If Southern shall be required to
make a Mandatory Equity Contribution or a Contingent Equity Contribution to the
Borrower pursuant to Section 2.1 of the Southern Equity Contribution Agreement,
or if the Cogentrix Obligors shall be required to make a Mandatory Equity
Contribution to the Borrower pursuant to Section 2.1 of the Cogentrix Equity
Contribution Agreement, then:
(i) in the case of a Mandatory Equity Contribution which is
being made by Southern or the Cogentrix Obligors by reason of the
delivery to Southern and the Cogentrix Obligors of a Lenders' Default
Notice, unless the Majority Lenders shall have notified the Borrower
and the Security Agent that the proceeds thereof are to be deposited
into the Construction Account for payment of Project Costs as the
Majority Lenders from time to time shall specify in writing to the
Security Agent, the Borrower shall, on the date of its receipt of the
proceeds of such Mandatory Equity Contribution, prepay on a pro rata
basis the aggregate principal amount of the then outstanding Loans,
together with accrued interest thereon and any other fees, funding
indemnities and any Make-Whole Premium payable in connection therewith,
in an aggregate amount equal to the proceeds of such Mandatory Equity
Contribution; or
(ii) in the case of a Mandatory Equity Contribution which is
being made by Southern or the Cogentrix Obligors on the Construction
Period Termination Date, and no Lenders' Default Notice shall have been
delivered to Southern and the Cogentrix Obligors, the Borrower shall
provide notice to the Administrative Agent and the Institutions at
least five Business Days prior to the date of payment of such Mandatory
Equity Contribution, and shall prepay the Bank Loans in accordance with
this clause (ii) in an amount equal to such Mandatory Equity
Contribution. Such notice shall specify (x) the amount of the Mandatory
Equity Contribution, (y) the date of payment thereof (which shall be
the Completion Date) and (z) whether the prepayment of Bank Loans is to
be of Eurodollar Loans, C/D Rate Loans, Base Rate Loans or a
combination thereof, and, if a combination thereof, the amount of the
prepayment allocable to each. Upon receipt of any such notice pursuant
to this clause (ii), the Administrative Agent shall promptly notify the
Banks thereof. On the date of payment specified in the notice delivered
pursuant to this clause (ii) the Borrower shall prepay, without premium
or penalty (except for any amounts payable pursuant to Section 7.7(a)
and 7.7(d)) and on a pro rata basis, the aggregate outstanding
principal amount of Bank Loans, together with accrued interest thereon
to the date of prepayment, in an amount equal to the proceeds of such
Mandatory Equity Contribution. Prepayments of Bank Loans made pursuant
to this clause (ii) shall be applied to the installments of principal
of the Bank Loans ratably to each of their scheduled maturities; and
(iii) in the case of a Contingent Bond Contribution which is
being made by Southern at any time during the Construction Period:
<PAGE> 37
29
(A) if at the time thereof no Event of Default is in
existence, the Borrower shall provide notice to the
Administrative Agent and the Institutions at least five
Business Days prior to the date of payment of such Contingent
Bond Contribution, and shall prepay the Bank Loans in
accordance with this clause (iii)(A) in an aggregate principal
amount equal to the Bond Contribution Amount. Such notice
shall specify (x) the Bond Contribution Amount, (y) the date
of payment thereof, which shall be the date on which such
Contingent Bond Contribution is payable pursuant to the
Southern Equity Contribution Agreement, and (z) whether the
prepayment of Bank Loans is to be of Eurodollar Loans, C/D
Rate Loans, Base Rate Loans or a combination thereof, and, if
a combination thereof, the amount of the prepayment allocable
to each. Upon receipt of any such notice pursuant to this
clause (iii)(A), the Administrative Agent shall promptly
notify the Banks thereof. On the date of payment specified in
the notice delivered pursuant to this clause (iii)(A) the
Borrower shall prepay, without premium or penalty (except for
any amounts payable pursuant to Sections 7.7(a) and 7.7(d))
and on a pro rata basis, the aggregate outstanding principal
amount of Bank Loans, together with accrued interest thereon
to the date of prepayment, in an amount equal to the proceeds
of the Bond Contribution Amount. Prepayments of Bank Loans
made pursuant to this clause (iii)(A) shall be applied to the
installments of principal of the Bank Loans ratably to each of
their scheduled maturities; or
(B) if at the time thereof an Event of Default is in
existence, the Borrower shall, on the date of its receipt of
the proceeds of such Contingent Bond Contribution, if directed
to do so by the Majority Lenders, prepay on a pro rata basis
the aggregate principal amount of the then outstanding Loans,
together with accrued interest thereon and any other fees,
funding indemnities and any Make-Whole Premium payable in
connection therewith, in an aggregate amount equal to the
proceeds of the Bond Contribution Amount. Prepayments of Loans
made pursuant to this clause (iii)(B) shall be applied to the
installments of principal of the Loans ratably to each of
their scheduled maturities; and
(iv) in the case of a Contingent Increased IDC Contribution
which is being made by Southern at any time during the Construction
Period:
(A) if at the time thereof no Event of Default is in
existence, the Borrower shall provide notice to the
Administrative Agent and the Institutions at least five
Business Days prior to the date of payment of such Contingent
Increased IDC Contribution, and shall prepay the Bank Loans in
accordance with this clause (iv)(A) in an aggregate principal
amount equal to the Increased IDC Prepayment Amount. Such
notice shall specify (x) the Increased IDC Prepayment Amount,
(y) the date of payment thereof, which shall be the date on
which such Contingent
<PAGE> 38
30
Increased IDC Contribution is payable pursuant to the Southern
Equity Contribution Agreement, and (z) whether the prepayment
of Bank Loans is to be of Eurodollar Loans, C/D Rate Loans,
Base Rate Loans or a combination thereof, and, if a
combination thereof, the amount of the prepayment allocable to
each. Upon receipt of any such notice pursuant to this clause
(iv)(A), the Administrative Agent shall promptly notify the
Banks thereof. On the date of payment specified in the notice
delivered pursuant to this clause (iv)(A) the Borrower shall
prepay, without premium or penalty (except for any amounts
payable pursuant to Sections 7.7(a) and 7.7(d)) and on a pro
rata basis, the aggregate outstanding principal amount of Bank
Loans, together with accrued interest thereon to the date of
prepayment, in an amount equal to the proceeds of the
Increased IDC Prepayment Amount. Prepayments of Bank Loans
made pursuant to this clause (iv)(A) shall be applied to the
installments of principal of the Bank Loans ratably to each of
their scheduled maturities; or
(B) if at the time thereof an Event of Default is in
existence, the Borrower shall, on the date of its receipt of
the proceeds of such Contingent Increased IDC Contribution, if
directed to do so by the Majority Lenders, prepay on a pro
rata basis the aggregate principal amount of the then
outstanding Loans, together with accrued interest thereon and
any other fees, funding indemnities and any Make-Whole Premium
payable in connection therewith, in an aggregate amount equal
to the proceeds of the Increased IDC Prepayment Amount.
Prepayments of Loans made pursuant to this clause (iv)(B)
shall be applied to the installments of principal of the Loans
ratably to each of their scheduled maturities.
(c) Buy-Down Amount Proceeds. If the Borrower shall receive
any Buy-Down Amount Proceeds, the Borrower shall, on the date it becomes aware
that such amounts will be payable to it under the Facility Construction
Contract, provide notice thereof to the Administrative Agent and the
Institutions (the "Buy-Down Prepayment Notice"), and shall prepay the Bank Loans
and/or Institutional Loans in accordance with this Section 7.3(c) and Section
7.5 in an amount equal to such Buy-Down Amount Proceeds. The Buy-Down Prepayment
Notice shall specify (i) the amount of the Buy-Down Amount Proceeds and (ii) the
expected date of the prepayment of Loans to be made pursuant to this Section
7.3(c), which shall be the later of (x) the date on which the Borrower receives
such Buy-Down Amount Proceeds and (y) 10 Business Days after the date of the
Buy-Down Prepayment Notice. Upon receipt of any such Buy-Down Prepayment Notice
the Administrative Agent shall promptly notify the Banks thereof. Thereafter,
and on the date of prepayment specified in the Buy-Down Prepayment Notice, the
Borrower shall take the actions required by, and apply the proceeds of such
prepayment to the repayment of the Loans in accordance with, the provisions of
Section 7.5. Prepayments of Loans made pursuant to this Section 7.3(c) shall be
applied ratably to the scheduled installments of principal of such Loans.
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31
(d) Termination of Power Purchase Agreement by Virginia Power.
If Virginia Power elects to terminate the Power Purchase Agreement pursuant to
Section 5.6 thereof, on the date of such termination, (i) all of the Commitments
of the Lenders shall terminate forthwith and (ii) the Borrower shall (x) prepay
in full the aggregate principal amount of the then outstanding Loans, together
with accrued interest and fees to the date of prepayment and all other amounts
payable hereunder or under the Security Documents (including amounts payable
pursuant to Sections 7.7(a) and 7.7(d) and any Make-Whole Premium due pursuant
to Section 7.7(b)), and (y) if any Bond Letter of Credit is then issued and
outstanding, deposit into the L/C Cash Collateral Subaccount of the Special
Payment Account cash in an amount equal to the Letter of Credit Exposure, for
application to the payment of the Borrower's L/C Reimbursement Obligations in
respect of Bond Letter of Credit Disbursements as provided in the Security
Deposit Agreement.
(e) Excess Final Completion Escrow Account Proceeds. If the
amount deposited in the Final Completion Escrow Account on the Completion Date
pursuant to Section 4.3 of the Security Deposit Agreement (together with any
interest or earnings thereon prior to the date of Final Completion of the
Facility) exceeds the aggregate amount of Project Costs required to be expended
following the Completion Date to achieve Final Completion of the Facility, to
satisfy any obligations of the Borrower arising out of disputes concerning
payment for work performed, services rendered or material or equipment furnished
with respect to the Project or the Greenhouse and to pay any unpaid Contingent
Distribution Amount, then, on the date on which Final Completion of the Facility
occurs, the Borrower shall prepay, without premium or penalty (except as
provided in Section 7.7(a) and 7.7(d)) and on a pro rata basis, the aggregate
principal amount of the then outstanding Bank Loans, in an amount equal to the
Final Completion Prepayment Amount. Prepayments of Bank Loans made pursuant to
this Section 7.3(e) shall be applied to the installments of principal of the
Bank Loans ratably to each of their scheduled maturities.
(f) Prepayments Under Greenhouse Loan Agreement. If the
Greenhouse Owner shall at any time or from time to time prepay all or a portion
of the loans outstanding under the Greenhouse Loan Agreement, other than a
mandatory prepayment of loans made pursuant to Section 4.3(b)(ii) of the
Greenhouse Loan Agreement with the proceeds of any payments of Greenhouse
Reserve Replenishment Rent under the Greenhouse Sublease, then the Borrower
shall, on the date it obtains knowledge of such prepayment, provide notice
thereof to the Administrative Agent and the Institutions (the "Greenhouse
Prepayment Notice"), and shall prepay the Bank Loans and/or Institutional Loans
in accordance with this Section 7.3(f) and Section 7.5 in an amount equal to 85%
of the amount of such prepayment of loans under the Greenhouse Loan Agreement
(the "Greenhouse Prepayment Amount"). The Greenhouse Prepayment Notice shall
specify (i) the Greenhouse Prepayment Amount and (ii) the expected date of the
prepayment of Loans to be made pursuant to this Section 7.3(f), which shall be
the later of (x) the date of prepayment of loans under the Greenhouse Loan
Agreement and (y) 10 Business Days after the date of the Greenhouse Prepayment
Notice. Upon receipt of any such Greenhouse Prepayment Notice the Administrative
Agent shall promptly notify the Banks thereof. Thereafter, and on the date of
prepayment specified in the Greenhouse Prepayment Notice, the Borrower shall
take the actions required by, and apply the proceeds of such prepayment to the
repayment of the Loans in accordance with, the provisions of Section 7.5.
Prepayments of Loans
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made pursuant to this Section 7.3(f) shall be applied to the installments of
principal of the Loans in the order that the corresponding prepayment of loans
under the Greenhouse Loan Agreement is applied to the installments of principal
of such loans thereunder.
(g) Non-Restoration Event. If the Borrower shall receive any
Requisition Proceeds in connection with a Non-Restoration Event (as defined in
the Security Deposit Agreement) which are required to be deposited into the
Prepayment Subaccount pursuant to clause (ii) of Section 5.7(b) of the Security
Deposit Agreement, then the Borrower shall, on the date it receives such
Requisition Proceeds, provide notice thereof to the Administrative Agent and the
Institutions (the "Non-Restoration Prepayment Notice"), and shall prepay the
Bank Loans and/or Institutional Loans in accordance with this Section 7.3(g) and
Section 7.5 in an amount equal to such Requisition Proceeds (the
"Non-Restoration Prepayment Amount"). The Non-Restoration Prepayment Notice
shall specify (i) the amount of the Non-Restoration Prepayment Amount and (ii)
the date of the prepayment of Loans to be made pursuant to this Section 7.3(g),
which shall be 10 Business Days after the date of the Non-Restoration Prepayment
Notice. Upon receipt of any such Non-Restoration Prepayment Notice the
Administrative Agent shall promptly notify the Banks thereof. Thereafter, and on
the date of prepayment specified in the Non-Restoration Prepayment Notice, the
Borrower shall take the actions required by, and apply the proceeds of such
prepayment to the repayment of the Loans in accordance with, the provisions of
Section 7.5. Prepayments of Loans made pursuant to this Section 7.3(g) shall be
applied to the installments of principal of the Loans ratably to each of their
scheduled maturities.
(h) Return of Institutional Loan Proceeds. If all or any
portion of the funds on deposit in the Institutional Loan Proceeds Account are
required to be withdrawn and paid to the Institutions pursuant to Section
5.15(c)(v) of the Security Deposit Agreement, the Borrower shall, on the date of
such withdrawal, prepay, on a pro rata basis, the principal amount of the then
outstanding Institutional Loans, in an aggregate amount equal to such amount
required to be withdrawn from the Institutional Loan Proceeds Account and paid
to the Institutions pursuant to Section 5.15(c)(v) of the Security Deposit
Agreement. In addition, the Borrower shall, on the date of any prepayment
pursuant to this Section 7.3(h), be required to pay to the Institutions accrued
interest on the Institutional Loans prepaid and any Make-Whole Premium payable
pursuant to Section 7.7(b) with respect thereto.
(i) Bond Letter of Credit Remarketing Proceeds. The Borrower
shall prepay each Liquidity Loan immediately upon the receipt of remarketing
proceeds in respect of the Bonds purchased with the proceeds of the related
Liquidity Drawing, in an amount equal to the amount of such remarketing
proceeds.
(j) No Reborrowing. Amounts prepaid pursuant to this Section
7.3 may not be reborrowed.
Section 7.4 Optional Prepayments of Loans. (a) The Borrower
may, on any Business Day and from time to time, prepay the Loans, in whole or in
part, upon at least five Business Days' (if during the Construction Period or if
the Loans to be prepaid are Bank Liquidity Loans) or 30 Business Days' (if
otherwise) prior irrevocable notice (each such notice, an "Optional Prepayment
Notice") to the Administrative Agent and each Institution; provided
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that, at such time and after giving effect thereto, no Default or Event of
Default shall have occurred and be continuing; provided, further that the
Borrower may not prepay the Loans prior to the Institutional Commitment
Termination Date if such prepayment would result in a prepayment of any
Institutional Loans under Section 7.5.
(b) Each prepayment of Loans pursuant to this Section 7.4
shall be applied to the prepayment of Bank Loans and/or Institutional Loans in
accordance with Section 7.5 and shall be made without premium or penalty, except
(i) in the case of any prepayment of Bank Loans, any amounts due pursuant to
Sections 7.7(a) and 7.7(d), and (ii) in the case of any prepayment of
Institutional Loans, the Make-Whole Premium due pursuant to Section 7.7(b)
unless, with respect to any Institution, either (x) it consents to receive
payment of the Modified Make-Whole Premium in accordance with Section 7.5(b), in
which case such Institution shall be entitled to receive the Modified Make-Whole
Premium due pursuant to Section 7.7(c), or (y) it has waived its right to
receive a Make-Whole Premium in accordance with Section 7.5(b). Each Optional
Prepayment Notice shall specify (A) the amount of the prepayment (the "Aggregate
Prepayment Amount"), (B) the prepayment date and (C) if such prepayment is to be
made solely to the Banks pursuant to clause (i) or (ii) of Section 7.5, whether
such prepayment is of Eurodollar Loans, C/D Rate Loans, Base Rate Loans or a
combination thereof, and, if of a combination thereof, the amount of the
prepayment allocable to each. Upon receipt of any such Optional Prepayment
Notice the Administrative Agent shall promptly notify each Bank thereof.
Thereafter, and on the prepayment date specified in the Optional Prepayment
Notice, the Borrower shall take such actions required by, and apply the
prepayment in accordance with, Section 7.5.
(c) Partial prepayments of Bank Project Loans made after the
Construction Period Termination Date, and partial prepayments of Bank L/C Loans
and Institutional Loans, pursuant to this Section 7.4 shall at the option of the
Borrower be applied to the installments of principal of the Loans either in the
inverse order of their scheduled maturities or ratably to each of their
scheduled maturities. Partial prepayments pursuant to this Section 7.4 shall be
in an aggregate principal amount of $1,000,000 or a whole multiple in excess
thereof. Amounts of Bank Project Loans prepaid prior to the Construction Period
Termination Date pursuant to this Section 7.4 may be reborrowed, but amounts of
Bank Project Loans prepaid on or after the Construction Period Termination Date
pursuant to this Section 7.4 may not be reborrowed. Amounts of Bank L/C Loans
and Institutional Loans prepaid at any time pursuant to this Section 7.4 may not
be reborrowed.
Section 7.5 Application of Certain Prepayments Among Lenders.
(a) Any prepayments of Loans pursuant to Section 7.3(c), 7.3(f), 7.3(g) or 7.4
shall be applied to the prepayment of Bank Loans, or Bank Loans and
Institutional Loans, in accordance with paragraph (b) below, except:
(i) in the case of any prepayment of Loans made pursuant
to Section 7.4 in connection with a Refinancing Transaction permitted
by Section 11.1(f), the proceeds of the Refinancing Indebtedness
incurred by the Borrower in connection therewith shall be used to
prepay Bank Loans and/or Institutional Loans, in whole or in part, as
the Borrower shall elect, together with accrued interest and fees to
the date of prepayment
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and any other amounts owing to the Banks and/or the Institutions, as
the case may be (including any amounts pursuant to Section 7.7(a),
7.7(b) or 7.7(d));
(ii) in the case of any prepayment of Loans made pursuant
to Section 7.4 (other than as provided in clause (i) above) that is
made either (x) prior to the Construction Period Termination Date or
(y) with the proceeds of Indebtedness incurred by the Borrower solely
to prepay Senior Debt bearing a higher rate of interest than the
Institutional Loans (net of any Interest Rate Hedging Transactions),
such prepayment shall be applied first, to the pro rata prepayment of
the Bank Loans in full, together with accrued interest and fees to the
date of prepayment and any other amounts owing to the Banks hereunder
(including pursuant to Sections 7.7(a) and 7.7(d)), and second, to the
pro rata prepayment of the Institutional Loans in full, together with
accrued interest and fees to the date of prepayment and any other
amount owing to the Institutions hereunder (including any Make-Whole
Premium pursuant to Section 7.7(b)); or
(iii) in the case of any prepayment of Loans made pursuant
to Section 7.4 (other than as provided in clause (i) above) that is
made after the Bank Loans and all L/C Reimbursement Obligations have
been paid in full, such prepayment shall be applied to the pro rata
prepayment of the Institutional Loans in full, together with accrued
interest and fees to the date of prepayment and any other amount owing
to the Institutions hereunder (including any Make-Whole Premium
pursuant to Section 7.7(b)).
(b) On each occasion that the Borrower is required to prepay
Loans pursuant to Sections 7.3(c), 7.3(f) or 7.3(g) or elects to do so pursuant
to Section 7.4 (other than as provided in clause (i), (ii) or (iii) of paragraph
(a) above), such prepayment shall be applied to the pro rata prepayment solely
of Bank Loans unless one or more Institutions elects to receive a pro rata
portion of such prepayment and waives its right to receive a Make-Whole Premium
(in the case of a prepayment pursuant to Section 7.3(c), 7.3(f) or 7.3(g)) or
agrees to receive a Modified Make-Whole Premium (in the case of a prepayment
pursuant to Section 7.4), as the case may be, with respect to the Institutional
Loans held by such Institution. An Institution may exercise its option to
receive a pro rata portion of any such prepayment of Loans (the "Pro Rata
Prepayment Option") by providing an irrevocable notice to the Borrower, within
five Business Days of its receipt of a Buy-Down Prepayment Notice, Greenhouse
Prepayment Notice, Non-Restoration Prepayment Notice or Optional Prepayment
Notice, as the case may be, stating that it is exercising the Pro Rata
Prepayment Option and is waiving any Make-Whole Premium or is agreeing to
receive the Modified Make-Whole Premium, as the case may be, in connection with
such prepayment. The Borrower shall, on the Business Day immediately following
the expiration of the period of five Business Days referred to in the preceding
sentence, provide a second irrevocable notice (the "Final Prepayment Notice") to
the Administrative Agent (which shall promptly forward such notice to the Banks)
and each Institution, specifying (x) the aggregate amount of the prepayment of
Bank Loans and the amount of the prepayment of Institutional Loans, if any, held
by each Institution exercising the Pro Rata Prepayment Option, which amounts
shall be equal to the applicable Pro Rata Prepayment Share, and (y) in the case
of the notice delivered to the Administrative Agent, whether the prepayment of
Bank Loans is of Eurodollar Loans, C/D Rate Loans, Base Rate Loans or a
combination thereof, and, if a combination thereof, the amount of the prepayment
allocable to each. Notwithstanding the
<PAGE> 43
35
foregoing provisions of this Section 7.5(b) or any other provision hereof, the
Institutions shall not be entitled to participate in prepayments, purchases or
redemptions of Bonds or Bank Loans pursuant to Section 10.31(a) hereof.
(c) On the date of prepayment specified in the relevant
Buy-Down Prepayment Notice, Greenhouse Prepayment Notice, Non-Restoration
Prepayment Notice or Optional Prepayment Notice, as the case may be, (i) if such
prepayment of Loans to be made is a prepayment referred to in clause (i), (ii)
or (iii) of paragraph (a) above, the amount specified in the Optional Prepayment
Notice given with respect thereto shall be due and payable to the Lenders, in
accordance with the payment priority set forth in such clause (i), (ii) or
(iii), as the case may be, or (ii) if such prepayment of Loans is a prepayment
referred to in paragraph (b) above, the amounts specified in the Final
Prepayment Notice given with respect thereto shall be due and payable to the
Lenders, in accordance with the pro rata sharing requirements of paragraph (b)
above, in each case, together with accrued interest and fees to such date on the
amounts prepaid and any other payments owing hereunder (including pursuant to
Section 7.7(a), 7.7(b), 7.7(c) or 7.7(d), if applicable).
Section 7.6 Taxes. (a) All payments made by the Borrower under
this Agreement shall be made free and clear of, and without reduction or
withholding for or on account of, any present or future income, stamp or other
taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now
or hereafter imposed, levied, collected, withheld or assessed by any Government
Authority excluding, in the case of the Administrative Agent and each Lender,
net income and franchise taxes imposed on the Administrative Agent or such
Lender by the jurisdiction under the laws of which the Administrative Agent or
such Lender is organized or any political subdivision or taxing authority
thereof or therein, or by any jurisdiction in which such Lender's lending office
is located or any political subdivision or taxing authority thereof or therein
(all such non-excluded taxes, levies, imposts, deductions, charges or
withholdings being hereinafter called "Taxes"). If any Taxes are required to be
withheld from any amounts payable to the Administrative Agent or any Lender
hereunder or under the Notes, the amounts so payable to the Administrative Agent
or such Lender shall be increased to the extent necessary to yield to the
Administrative Agent or such Lender (after payment of all Taxes) interest or any
such other amounts payable hereunder at the rates or in the amounts specified in
this Agreement and the Notes. Whenever any Taxes are payable by the Borrower, as
promptly as possible thereafter, the Borrower shall send to the Administrative
Agent and each Institution a certified copy of an original official receipt
received by the Borrower showing payment thereof. If the Borrower fails to pay
any Taxes when due to the appropriate taxing authority or fails to remit to the
Administrative Agent and each Institution the required receipts or other
required documentary evidence, the Borrower shall indemnify the Administrative
Agent and the Lenders for any incremental taxes, interest or penalties that may
become payable by the Administrative Agent or any Lender as a result of such
failure.
(b) Upon becoming a party to this Agreement, each Lender that
is not incorporated under the laws of the United States of America or a state
thereof agrees that it will deliver to the Borrower and the Administrative Agent
(i) 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 Lender is entitled to receive payments under this
<PAGE> 44
36
Agreement and the relevant Notes payable to it 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. Each Lender which
delivers to the Borrower and the Administrative Agent a Form 1001 or 4224 and
Form W-8 or W-9 pursuant to the preceding sentence further undertakes to deliver
to the Borrower and the Administrative Agent two further copies of 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 the Borrower, and
such extensions or renewals thereof as may reasonably be requested by the
Borrower, certifying in the case of a Form 1001 or 4224 that such Lender is
entitled to receive payments under this Agreement and the relevant Notes without
deduction or withholding of any United States federal income taxes, unless in
any such cases 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 which renders any such form inapplicable or which would
prevent such Lender from duly completing and delivering any such form with
respect to it and such Lender advises the Borrower that it is not capable of
receiving payments without deduction or withholding of United States federal
income tax, or in the case of a Form W-8 or W-9, without an exemption from
United States backup withholding tax.
(c) Each Bank agrees that, as promptly as practicable after
the Borrower shall have notified it that Taxes are or have been required to be
withheld from any amounts payable hereunder or under the Bank Notes, or such
Bank otherwise becomes aware that any such Taxes will be required to be withheld
from future payments, it will, to the extent not inconsistent with such Bank's
internal policies, make, fund or maintain its Bank Loans through another lending
office of such Bank if as a result thereof Taxes would not be required to be so
withheld and if, as determined by such Bank it its sole discretion, the making,
funding or maintaining of such Bank Loans through such other lending office (i)
would be permitted by applicable Requirements of Law and (ii) would not
adversely affect its Bank Loans or such Bank. The Borrower hereby agrees to pay
all reasonable expenses incurred by a Bank in utilizing another lending office
of such Bank as provided in this paragraph.
(d) The agreements in this Section 7.6 shall survive the
termination of this Agreement and the Letters of Credit and the payment of the
Notes and the other amounts payable hereunder.
Section 7.7 Certain Indemnities.
(a) Funding Indemnities. The Borrower agrees to indemnify each
Bank and to hold each Bank harmless from any loss or expense which such Bank may
sustain or incur as a consequence of (a) default by the Borrower in making a
borrowing of, conversion into or continuation of Eurodollar Loans or C/D Rate
Loans after the Borrower has given a notice requesting the same in accordance
with the provisions of this Agreement, (b) default by the Borrower in making any
prepayment after the Borrower has given a notice thereof in accordance with the
provisions of this Agreement or (c) the making of a prepayment of Eurodollar
Loans or C/D Rate Loans on a day which is not the last day of a Bank Loan
Interest Period with respect
<PAGE> 45
37
thereto (including, without limitation, as the result of acceleration of such
Loans pursuant to Section 12.2). Any Bank demanding indemnification for any loss
or expense sustained or incurred by it pursuant to this Section 7.7(a) shall, at
the time of such demand, deliver to the Borrower a certificate documenting in
reasonable detail any such loss or expense. Each determination by a Bank of the
amounts owing to it pursuant to this Section 7.7(a) shall be conclusive and
binding on the Borrower and such Bank in the absence of manifest error.
(b) Make-Whole Protection. In the event, with respect to any
Institution, either (i) the Borrower elects to prepay the Institutional Loans
held by such Institution in accordance with Section 7.4 in whole or in part
(including without limitation in connection with any Refinancing Transaction),
or (ii) the Institutional Loans held by such Institution are prepaid in whole or
in part in accordance with Section 7.3, or (iii) the Institutional Loans held by
such Institution are accelerated in whole or in part following an Event of
Default in accordance with Section 12.2, the Borrower agrees to pay to such
Institution an amount equal to, with respect to the aggregate principal amount
of Institutional Loans held by such Institution which were so prepaid or so
accelerated, the applicable Make-Whole Premium; provided that an Institution
shall not be entitled to receive any Make-Whole Premium in connection with any
prepayment of Institutional Loans referred to in clause (i) or (ii) above if it
has waived its rights to receive a Make-Whole Premium or has agreed to receive a
Modified Make-Whole Premium in lieu thereof in connection with such prepayment,
in each case in accordance with Section 7.5(b); provided, further that no
Make-Whole Premium shall be payable to the Institution in connection with any
prepayment of Institutional Loans pursuant to Section 7.3(a). Any Institution
entitled to payment of any Make-Whole Premium pursuant to this Section shall
deliver to the Borrower a certificate showing in reasonable detail the
calculation of such Make-Whole Premium. Each determination by an Institution of
the amount of any Make-Whole Premium due to it pursuant to this Section 7.7(b)
shall be conclusive and binding on the Borrower and such Institution in the
absence of manifest error.
(c) Modified Make-Whole Protection. In the event, with respect
to any Institution, the Borrower elects to prepay the Institutional Loans held
by such Institution in accordance with Section 7.4 and, in connection with such
prepayment, such Institution has agreed to receive a Modified Make-Whole Premium
in connection with such prepayment, the Borrower agrees to pay to such
Institution an amount equal to, with respect to the aggregate principal amount
of Institutional Loans which were so prepaid, the applicable Modified Make-Whole
Premium. Any Institution entitled to payment of any Modified Make-Whole Premium
pursuant to this Section shall deliver to the Borrower a certificate showing in
reasonable detail the calculation of such Modified Make-Whole Premium. Each
determination by an Institution of the amount of any Modified Make-Whole Premium
due to it pursuant to this Section 7.7(c) shall be conclusive and binding on the
Borrower and such Institution in the absence of manifest error.
(d) Indemnity Regarding Interest Rate Hedging Transactions.
The Borrower agrees to indemnify each Bank, and to hold each Bank harmless from
any loss or out-of-pocket expense which such Person may sustain or incur as a
result of the early termination of any Interest Rate Hedging Transaction (other
than an early termination of an Interest Rate Hedging Transaction by the
Borrower at the time of the occurrence and continuance of a default thereunder
by such Bank or any modification to or amendment of any Interest Rate Hedging
<PAGE> 46
38
Transaction; provided that such Bank delivers to the Borrower a certificate
showing in reasonable detail the calculations of any such loss or expense. Each
determination by any Bank of the amounts owing to it pursuant to this Section
7.7(d) shall be conclusive and binding on the Borrower and such Bank in the
absence of manifest error.
(e) Survival. The provisions of this Section 7.7 shall survive
the termination of this Agreement and the Letters of Credit and the payment of
the Loans and all other amounts payable hereunder.
Section 7.8 Funding into Accounts. For all purposes of this
Agreement, a "borrowing" by the Borrower of a Bank Project Loan or Institutional
Loan under Section 3.1 or 4.1, respectively, shall be deemed to occur upon the
making of a deposit of the proceeds of such Bank Project Loan by the
Administrative Agent into the Construction Account or, if applicable, the
Accounts specified in Section 4.3 of the Security Deposit Agreement, as provided
in Section 3.2 hereof, or the making of a deposit of such Institutional Loan by
the Institutions into the Institutional Loan Proceeds Account, as provided in
Section 4.2 hereof, even if the Security Agent shall not be required to disburse
such funds on such date from the Construction Account, such other Accounts or
the Institutional Loan Proceeds Account, as the case may be, to or for the
account of the Borrower pursuant to the terms of this Agreement or the Security
Deposit Agreement.
Section 7.9 Funding of Letter of Credit Disbursements. (a)
Effective upon the issuance of each Letter of Credit and without further action
on the part of the Security Agent, the Administrative Agent, the Issuing Bank or
any Bank, each Bank shall automatically acquire a participation in the Issuing
Bank's liability under such Letter of Credit in an amount equal to such Bank's
Commitment Percentage. Each Bank shall be liable to the Issuing Bank for its pro
rata share, based upon its Commitment Percentage, of any and all amounts drawn
under any Letter of Credit and honored by the Issuing Bank. Such liability shall
be unconditional and without regard to the occurrence of any Default or Event of
Default; provided that no Bank shall be liable for the payment of any portion of
such liability directly resulting from the Issuing Bank's gross negligence or
wilful misconduct.
(b) On each L/C Disbursement Date for any Letter of Credit
Disbursement, the Issuing Bank shall notify the Administrative Agent, which
shall notify each Bank by telex, telecopy or telephone (promptly confirmed by
telex or telecopy) of its pro rata share of such Letter of Credit Disbursement,
based upon such Bank's Commitment Percentage, and forthwith upon receipt of such
notice each Bank shall make available its pro rata share of such Letter of
Credit Disbursement, based on its Commitment Percentage, to the Issuing Bank by
wire transfer to its office indicated on Schedule 1 in immediately available
funds. If a Bank does not make available to the Issuing Bank its Commitment
Percentage of such Letter of Credit Disbursement on the first Business Day after
such L/C Disbursement Date, such Bank shall pay to the Issuing Bank on demand
such amount, with interest thereon at a rate equal to the daily average Federal
Funds Effective Rate for the period from and including such L/C Disbursement
Date to the date such Bank makes such amount immediately available to the
Issuing Bank. A certificate of the Issuing Bank submitted to any Bank with
respect to any amounts owing under this paragraph (b) shall be conclusive in the
absence of manifest error. If such Bank's Commitment Percentage of
<PAGE> 47
39
such Letter of Credit Disbursement is not in fact made available to the Issuing
Bank by such Bank within three Business Days after such L/C Disbursement Date,
the Administrative Agent shall also be entitled to recover such amount from the
Borrower on demand, together with interest thereon from the date such amount was
made available to the Borrower at the rate per annum applicable to Base Rate
Loans hereunder.
(c) Whenever the Issuing Bank receives any L/C Reimbursement
Payment or any payment of interest in respect thereof under Section 5.5 or 6.6,
the Issuing Bank will pay to each Bank in immediately available funds such
Bank's pro rata share, computed in accordance with its Commitment Percentage, 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 12:00 noon, New York City
time, on such day or (ii) before 2:00 P.M., New York City time, on the next
succeeding Business Day if such payment is received after 12:00 noon, New York
City time, on such day. Any amounts received by the Issuing Bank that are due
and owing to the Banks and remain unpaid to the Banks after the times for
payment set forth in the preceding sentence shall bear interest, payable by the
Issuing Bank, at the Federal Funds Effective Rate.
(d) Each Bank hereby irrevocably authorizes the Issuing Bank
to issue the Letters of Credit under and in accordance with this Agreement, to
pay the amount set forth in any draft or certificate presented under any Letter
of Credit upon presentation of documents which, upon their face, conform to the
terms of such Letter of Credit, to receive from the Borrower reimbursement for
Letter of Credit Disbursements, to receive from the Borrower payment of all
fees, charges and interest in respect of the Letters of Credit and Letter of
Credit Disbursements, and to take such action on such Bank's behalf under the
provisions of this Agreement and to exercise such powers and to perform such
duties hereunder as are specifically delegated to or required of the Issuing
Bank by the terms hereof, together with such powers as are reasonably incidental
thereto.
(e) Subject to the proviso of the last sentence of paragraph
(a) of this Section 7.9, each Bank agrees that its obligation to participate in
connection with the Letters of Credit on the terms and subject to the conditions
of this Agreement shall be irrevocable and unconditional, and each Bank shall
indemnify and hold harmless the 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 Bank to provide, or from any delay in providing, the Issuing Bank with
such Bank's pro rata share, computed in accordance with such Bank's Commitment
Percentage, of the amount of any Letter of Credit Disbursement in accordance
with the provisions of paragraph (b) of this Section 7.9, but no Bank shall be
so liable for any such failure on the part of or caused by any other Bank.
Section 7.10 Additional Letter of Credit Provisions. (a) The
Borrower agrees that neither the Administrative Agent, the Security Agent, the
Issuing Bank, nor any other Lender (nor any of their respective officers or
directors) shall be liable or responsible for: (i) the validity, sufficiency or
genuineness of documents presented to the Issuing Bank under any Letter of
Credit, or of any endorsement(s) thereon, even if such documents should in fact
prove to be in any or all respects invalid, insufficient, fraudulent or forged
or any statement therein prove to
<PAGE> 48
40
be untrue or inaccurate in any respect whatsoever; (ii) payment by the Issuing
Bank against presentation of documents which do not comply strictly with the
terms of the applicable Letter of Credit, including failure of any documents to
bear any reference or adequate reference to the applicable Letter of Credit; or
(iii) any other circumstances whatsoever in making or failing to make payment
under any Letter of Credit, except that the Borrower shall have a claim against
the Issuing Bank, and the Issuing Bank shall be liable to the Borrower, to the
extent, but only to the extent, of any direct (as opposed to consequential)
damages suffered by the Borrower which the Borrower proves were caused by the
Issuing Bank's willful failure to pay under a Letter of Credit after the
presentation to it of a certificate for payment strictly complying with the
terms and conditions of such Letter of Credit (unless the Issuing Bank in good
faith believed itself to be prohibited by law or legal authority from making
such payment). In furtherance and not in limitation of the foregoing, the
Issuing Bank may accept documents that appear on their face to be in order,
without responsibility for further investigation, regardless of any notice or
information to the contrary.
(b) Without limiting the effect of Section 5.5(b), 6.6(b) or
7.10(a), the Borrower and each Bank agrees with the Issuing Bank that:
(i) the Issuing Bank is authorized to make payments
under each Letter of Credit upon the presentation of the documents
provided for therein and without regard to whether the Borrower has
failed to fulfill any of its obligations with respect to any Loan
Document or any other default has occurred thereunder or hereunder;
(ii) the Issuing Bank is authorized to take such action
on its behalf under the provisions of this Agreement and to exercise
such powers and perform such duties as are specifically delegated to or
required of the Issuing Bank by the terms hereof, together with such
powers as are reasonably incidental thereto;
(iii) the Issuing Bank shall be entitled to rely upon any
certificate, notice, demand or other communication (whether by cable,
telegram, telex or other written communication) believed by it to be
genuine and to have been signed or sent by the proper Person or Persons
(and no such reliance or failure shall place the Issuing Bank under any
liability to the Borrower or any Bank or limit or otherwise affect the
Borrower or any Bank's obligations under this Agreement);
(iv) any action, inaction or omission on the part of the
Issuing Bank under or in connection with any Letter of Credit or the
related instruments or documents, if in good faith and in conformity
with such laws, regulations and customs as the Issuing Bank may
reasonably deem to be applicable (including without limitation the laws
of the State of New York and the Uniform Customs), shall be binding
upon the Borrower and each Bank (and shall not place the Issuing Bank
under any liability to the Borrower or any Bank or limit or otherwise
affect the Borrower's or any Bank's obligations under this Agreement);
and
(v) notwithstanding any change or modification, with
or without the consent of the Borrower, in any instruments or
documents called for in any Letter of Credit,
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41
including waiver of noncompliance of any such instruments or documents
with the terms of any Letter of Credit, this Agreement shall be binding
on the Borrower with regard to each Letter of Credit and to any action
taken by the Issuing Bank relative thereto.
(c) Each Letter of Credit shall be subject to the Uniform
Customs and, to the extent not inconsistent therewith, the laws of the State of
New York.
(d) Notwithstanding anything to the contrary in Section 5 or
6, the Issuing Bank shall not at any time be obligated to issue any Letter of
Credit hereunder if such issuance would conflict with, or cause the Issuing Bank
or any Bank to exceed any limits imposed by, any applicable Requirement of Law.
Section 7.11. Payment with Issuing Bank Funds; Timing of
Reimbursement and Other Payments. (a) The Issuing Bank shall make all payments
under any Letter of Credit with its own funds or funds received from the Lenders
in respect of such Lenders' participation in such Letter of Credit (and not with
funds derived from the Borrower, the Bond Issuer and/or any Subsidiary or
Affiliate thereof).
(b) On any day on which payment in respect of a drawing under
any Letter of Credit is made or to be made by the Issuing Bank, (i) neither the
Borrower nor the Bond Issuer shall, prior to 3:00 P.M., New York City time, on
such day (and in any event, prior to the transfer of immediately available funds
to the Letter of Credit Proceeds Account pertaining to such Letter of Credit
(such account being defined in the Trust Indenture applicable to the Relevant
Bonds) in the amount so drawn under such Letter of Credit), transfer any funds
or other property to the Issuing Bank, the Administrative Agent or any Lender
for the reimbursement of, or as collateral security for, any payments made under
such Letter of Credit and (ii) neither the Issuing Bank, the Administrative
Agent nor any Lender shall, prior to 3:30 P.M., New York City time, on such day
(and in any event, prior to the transfer of immediately available funds to the
Letter of Credit Proceeds Account pertaining to such Letter of Credit (such
account being defined in the Trust Indenture applicable to the Relevant Bonds)
in the amount so drawn under such Letter of Credit), (x) apply any funds or
other property transferred to it from the Borrower, the Bond Issuer, the Bond
Trustee or the Remarketing Agent (such parties being defined in the Trust
Indenture applicable to the series of Bonds with respect to which such parties
act in such capacities), or apply or block any funds held in any demand deposit
or other account of the Borrower or the Bond Issuer maintained with the
Administrative Agent, the Issuing Bank or any Lender (the "Borrower Account"),
to the reimbursement of, or as collateral security for, any payments made under
such Letter of Credit or (y) apply any collateral held by the Security Agent
pursuant to the Security Deposit Agreement to the reimbursement of any payments
made under such Letter of Credit.
(c) Neither the Administrative Agent, the Issuing Bank nor any
Lender shall apply any funds or other property transferred to it from the
Borrower, the Bond Issuer, the Bond Trustee or the Remarketing Agent (such
parties being defined in the Trust Indenture applicable to the series of Bonds
with respect to which such parties act in such capacities), or apply or block
any funds held in any Borrower Account to the reimbursement of, or (except for
collateral held by the Security Agent pursuant to the Security Deposit
Agreement) as collateral security for, any
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42
payment to be made in the future under any Letter of Credit. Furthermore,
neither the Administrative Agent, the Issuing Bank nor any Lender shall apply
any collateral held by the Security Agent pursuant to the Security Deposit
Agreement to the reimbursement of any payment to be made in the future under any
Letter of Credit.
SECTION 8. REPRESENTATIONS AND WARRANTIES
The Borrower hereby represents and warrants to each Lender,
the Issuing Bank and the Administrative Agent as follows:
Section 8.1 Organization. (a) The Borrower is a limited
partnership duly organized, validly existing and in good standing under the laws
of the State of Delaware, and is duly qualified to do business and is in good
standing in the Commonwealth of Virginia and in the State of Georgia, the only
jurisdictions in which the conduct of its business or the ownership or lease of
its assets requires such qualification. The Borrower has full partnership power
and authority to construct, own and operate the Project, to conduct its business
as now conducted and as proposed to be conducted by it, to execute, deliver and
perform this Agreement and the other Financing Documents and the Project
Documents to which it is or is to become a party, to borrow hereunder and to
grant the liens and security interests purported to be granted by the Security
Documents.
(b) As of the date hereof and the Closing Date, Southern owns
and will own 100% of the stock of SEWG, SEWG owns and will own 100% the stock of
Birchwood Development and SEI Birchwood, and Birchwood Development and SEI
Birchwood are and will be the sole Partners of the Borrower. As of the date
hereof and the Closing Date, the Borrower does not have, nor will the Borrower
in the future have, any Subsidiaries.
Section 8.2 Authorization; Enforceable Obligations. The
Borrower has taken all necessary partnership and legal action to authorize the
borrowings hereunder on the terms and conditions of this Agreement, to grant the
liens and security interests provided for in the Security Documents to which it
is or is to become a party and to authorize the execution, delivery and
performance of this Agreement and the other Financing Documents and the Project
Documents to which it is or is to become a party. Each of this Agreement and the
other Financing Documents and the Project Documents to which the Borrower is a
party has been duly executed and delivered by the Borrower and constitutes, and
each of the Notes and the Project Documents to which the Borrower is to become a
party will upon execution and delivery thereof by the Borrower constitute, a
legal, valid and binding obligation of the Borrower enforceable against the
Borrower in accordance with its terms, except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the rights of creditors generally and by general principles of equity
(regardless of whether enforcement thereof is sought in a proceeding at law or
in equity).
Section 8.3 No Proceeding or Litigation. No litigation,
investigation or proceeding of or before any arbitrator or Government Authority
is pending or, to the best knowledge of the Borrower, threatened against or
affecting the Borrower or any General Partner,
<PAGE> 51
43
or against or affecting any of their respective properties, rights, revenues or
assets, or the Project, which is reasonably expected to have a Material Adverse
Effect.
Section 8.4 Financial Statements. The balance sheet of the
Borrower as at March 31, 1994 heretofore furnished to the Administrative Agent
and the Lenders and certified by a Responsible Officer of the Borrower, is the
most recent balance sheet prepared by the Borrower prior to the execution and
delivery of this Agreement, and is complete and correct in all material respects
and fairly presents the financial condition of the Borrower on such date, in
conformity with GAAP applied on a consistent basis. All material liabilities,
direct and contingent, of the Borrower on such date are either disclosed in such
balance sheet or have been disclosed in writing by the Borrower to the Co-Agents
and the Institutions prior to the execution and delivery of this Agreement.
Section 8.5 No Legal Bar; Consents. Neither the execution and
delivery of this Agreement or the other Financing Documents or the Project
Documents to which the Borrower is or is to be a party, the consummation of the
transactions herein or therein contemplated, nor compliance with the terms and
provisions hereof or thereof (including without limitation, the matters referred
to in clauses (b) through (e) of Section 8.7), will conflict with, constitute a
default under or result in a breach of, or require any consent by any other
Person (except consents that have been duly obtained or made and are in full
force and effect and the Governmental Approvals listed in Part B of Schedule 6)
under, any Requirement of Law applicable to the Borrower or the Project or the
Partnership Agreement or any other Contractual Obligation to which the Borrower
is a party or by which it is bound.
Section 8.6 Full Disclosure. The Borrower is not aware of any
factual information included in the Information Memorandum which is untrue or
inaccurate in any material respect. There is no fact known to the Borrower which
the Borrower has not disclosed to the Co-Agents and the Institutions in writing
prior to the date hereof which, in the good faith judgment of the Borrower,
could reasonably be expected to have a Material Adverse Effect.
Section 8.7 Governmental Approvals. No Government Approvals
are required in connection with (a) the participation by the Borrower or any
Partner in the transactions contemplated by this Agreement and the other
Financing Documents and the Project Documents to which the Borrower or any
Partner is or is to become a party, (b) the construction, use, ownership or
operation of the Project in accordance with the applicable provisions of the
Financing Documents and the Project Documents and in compliance with all
Requirements of Law (including, without limitation, all applicable Environmental
Laws) or (c) the validity and enforceability of the Power Purchase Agreement,
the Coal Supply Agreement and the other Project Documents as to the Borrower,
except for those Governmental Approvals which are set forth in Schedule 6. In
addition, the Borrower is not aware that, except with respect to the coal
transportation filing referred to in Section 9.2(n), any Governmental Approvals
are required in connection with (i) the transportation of Coal to the Facility
and the use of the Coal for operation of the Facility or (ii) the transportation
and disposal of ash generated by the Facility, except for those Governmental
Approvals which are set forth in Schedule 6. Each of the Governmental Approvals
listed in Part A of Schedule 6 has been duly obtained or made, is in full force
and effect and is not the subject of any pending or, to the best knowledge of
the Borrower, threatened
<PAGE> 52
44
judicial or administrative proceedings, and, except as noted on Schedule 6, if
the applicable statute, rule or regulation provides for a fixed period for
judicial or administrative appeal or review thereof, such period has expired.
None of the Governmental Approvals listed in Part B of Schedule 6 is required to
be obtained prior to the date hereof, and each thereof is customarily obtained
at a later stage of construction of the Facility or after the Commercial
Operations Date. The Borrower reasonably expects that each of the Governmental
Approvals listed in Part B of Schedule 6 can be obtained or made in the normal
course of business as and when required without significant delay.
Section 8.8 No Liens. The execution, delivery and performance
of this Agreement and the other Financing Documents and the Project Documents to
which the Borrower is or is to become a party, the borrowings by the Borrower
hereunder and the use of the proceeds thereof, will not result in, or require,
the creation or imposition of any Lien on any of the properties or revenues of
the Borrower pursuant to any Requirement of Law or Contractual Obligation,
except for the Liens under the Security Documents.
Section 8.9 Solvency. The assets of the Borrower are not less
than the amount of its liabilities, and the Borrower is not in default as to
principal of or interest on any of its obligations.
Section 8.10 No Default. No Default or Event of Default has
occurred and is continuing.
Section 8.11 Business. Prior to the date hereof, the Borrower
has engaged in no business other than the development of the Project and the
negotiation, execution, delivery and performance of the Financing Documents and
the Project Documents to which it is a party, and the Borrower has no
obligations or liabilities other than those directly related to the conduct of
such business. The Borrower is engaged solely in the business of constructing,
owning and operating the Project and activities incidental thereto.
Section 8.12 ERISA. (a) No Reportable Event has occurred
within the five-year period prior to the Closing Date with respect to any Plan
the occurrence of which could reasonably be expected to have a Material Adverse
Effect; no notice of intent to terminate a Plan has been filed nor has any Plan
been terminated where the effect of such termination could reasonably be
expected to have a Material Adverse Effect; no circumstances exist which
constitute grounds under Section 4042 of ERISA on which the PBGC could institute
proceedings to terminate, or appoint a trustee to administrate, a Plan, nor has
the PBGC instituted any such proceedings, where the effect of such proceedings
could reasonably be expected to have a Material Adverse Effect; neither the
Borrower nor any Commonly Controlled Entity has withdrawn under Section 4201 or
4204 of ERISA from a Multiemployer Plan where the effect of such withdrawal
could reasonably be expected to have a Material Adverse Effect; and the Borrower
and each Commonly Controlled Entity has met its minimum funding requirements
under ERISA with respect to each of their Plans and all benefit liabilities
under each Plan are being funded in accordance with all applicable legal
requirements and reasonable actuarial assumptions and methods as set forth in
the Code and ERISA, where the effect of any failure to
<PAGE> 53
45
meet such minimum funding requirements or to so fund such benefit liabilities
could reasonably be expected to have a Material Adverse Effect.
(b) The consummation of the transactions contemplated by this
Agreement and the other Loan Documents will neither result in a "prohibited
transaction" as described in Section 406(a) of ERISA nor a tax under Section
4975 of the Internal Revenue Code of 1986, as amended. The foregoing
representation is made in reliance upon the Institutions' representations in
Section 4.8(b) as to the source of funds to be used to make, fund and maintain
the Institutional Loans.
Section 8.13 Security Documents. Upon the execution and
delivery thereof, the Security Documents to which the Borrower is a party will
be effective to create, in favor of the Security Agent, for the benefit of the
Secured Parties, legal, valid and enforceable liens on and security interests in
all right, title, estate and interest of the Borrower in and to the Collateral
and, on or prior to the Closing Date, all necessary recordings and filings will
have been duly effected in all appropriate public offices so that the liens and
security interests created by each of the Security Documents to which the
Borrower is a party will constitute perfected liens on and security interests in
all right, title, estate and interest of the Borrower in and to the Collateral
described therein (other than any item of Collateral as to which a lien or
security interest cannot be perfected by filing or recording), prior and
superior to all other Liens except Permitted Liens. The recordings and filings
shown on Schedule 7 hereto are all the recordings and filings necessary in order
to establish, protect and perfect in favor of the Security Agent, for the
benefit of the Secured Parties, the liens on and security interests in the
right, title, estate and interest of the Borrower in and to the Collateral
described in the Security Documents (other than any item of Collateral as to
which a security interest cannot be perfected by filing or recording).
Section 8.14 Environmental Matters. (a) Except to the extent
set forth in the Environmental Report, to the best knowledge of the Borrower,
the Site and the Easements do not contain any Hazardous Materials (other than
indigenous naturally occurring substances) or underground storage tanks and
there has occurred no Release of Hazardous Materials in a quantity reportable
under any applicable Environmental Law with respect to the Site, the Easements
or the Facility for which remediation measures are being conducted in compliance
with all Requirements of Law.
(b) To the best knowledge of the Borrower, the Site and the
Easements and the Facility are in compliance with all applicable Environmental
Laws, and there is no Hazardous Material contamination or violation of any
Environmental Law which could materially interfere with the construction or
operation of the Facility.
(c) Neither the Borrower nor, to the best knowledge of the
Borrower, any General Partner or any Affiliate thereof has received from any
Governmental Authority any written complaint, notice of violation, alleged
violation, investigation or advisory action or potential responsibility
regarding the clean up, removal or remediation of any Hazardous Materials or
permit compliance with regard to the Site, the Easements or the Facility, nor is
the Borrower aware that any Government Authority is contemplating delivering to
the Borrower, any General Partner or any Affiliate any such notice.
<PAGE> 54
46
(d) There are no governmental or administrative actions or
judicial proceedings pending or, to the Borrower's best knowledge, threatened
under any Environmental Law to which the Borrower is or will be named as a party
with respect to the Site, the Easements or the Facility, nor are there any
consent decrees or other decrees, consent orders, administrative orders, or
other administrative or judicial requirements (other than administrative
requirements, if any, set forth in the Governmental Approvals listed on Schedule
6) outstanding under any Environmental Law with respect to the Site, the
Easements or the Facility.
(e) To the best knowledge of the Borrower, Hazardous Materials
have not been transferred from the Site or the Easements to any other location
except in compliance with Requirements of Law.
Section 8.15 Federal Regulations. The Borrower is not engaged
nor will engage in the business of extending credit for the purpose of
"purchasing" or "carrying" any "margin stock" within the respective meanings of
each of the quoted terms under Regulations G, T, U and X of the Board of
Governors of the Federal Reserve System as now and from time to time hereafter
in effect. No part of the proceeds of any Loan will be used for "purchasing" or
"carrying" any "margin stock" as so defined or for any purpose which violates,
or which would be inconsistent with, the provisions of the Regulations of such
Board of Governors.
Section 8.16 Taxes. The Borrower has filed or caused to be
filed all tax returns which are required to be filed by it and has paid all
taxes shown to be due and payable on such 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 Government Authority (other than any
taxes, fees or other charges which are not past due or the amount or validity of
which are 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 the Borrower); and no tax Lien has been filed that remains unsatisfied.
Section 8.17 Regulatory Status. (a) Neither the Borrower nor
any Partner is (i) considered an "electric utility company" under Section
2(a)(3) of PUHCA or (ii) subject to regulation under the Federal Power Act, as
amended, except as contemplated by 18 C.F.R. ss. 292.601(c), or (iii) subject to
state law or regulation respecting the rates of electric utilities or the
financial or organizational regulation of electric utilities, or (iv) subject to
regulation under the applicable laws of any state relating to public utilities
or public service corporations. Each of the Borrower and each Partner, if a
"subsidiary company", an "affiliate" or an "associate company" of a "holding
company", as those terms are defined under PUHCA, is exempt from all provisions
of PUHCA.
(b) Neither of the Agents nor any Lender will, solely by
reason of (i) the ownership of the Facility or the operation thereof by the
Borrower, (ii) the making of the Loans and the issuance of the Letters of Credit
hereunder, (iii) the securing of the Secured Obligations by Liens on the Project
and the Project Documents or (iv) any other transaction contemplated by this
Agreement or any of the other Loan Documents or the Project Documents, be deemed
by any Federal or Virginia Government Authority having jurisdiction to be, or to
be subject to regulation as, an "electric utility", "electric corporation",
"electrical company", "public utility
<PAGE> 55
47
holding company", "public service company", "public service corporation" or a
corporation carrying on the services of or exercising any of the powers or
functions of, a "public service enterprise" or organized to conduct the business
of a "public service business".
(c) The Borrower is not an "investment company" or a company
"controlled" by an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
Section 8.18 Offer of Notes. Neither the Borrower, any Partner
nor any of their respective Affiliates nor anyone acting on its or their behalf
has directly or indirectly offered the Notes or any part thereof or any similar
securities for sale to, or solicited any offer to buy any of the same from, or
otherwise approached or negotiated in respect thereof with, anyone other than
the Lenders and not more than 50 other institutional investors, commercial banks
and other financial institutions. Neither the Borrower, any Partner nor anyone
acting on behalf of the Borrower or any Partner has taken or will take any
action which would subject the issuance and sale of the Notes to the
registration and prospectus delivery provisions of the Securities Act of 1933,
as amended, or to the provisions of any state securities law requiring
registration of securities, notification of the issuance or sale thereof or
confirmation of the availability of any exemption from such registration. The
representations made by the Borrower in the preceding sentence are made in
reliance upon and subject to the accuracy of the Banks' representation in
Section 3.13 and the Institutions' representation in Section 4.8(a).
Section 8.19 Sufficiency and Delivery of Project Documents.
(a) The services to be performed, the materials to be supplied and the property
interests, easements and other rights granted pursuant to the Project Documents:
(i) comprise substantially all of the services,
materials and property interests required for the acquisition,
development, construction, installation, completion, operation and
maintenance of the Project in accordance with all material Requirements
of Law and the Project Documents; and
(ii) provide adequate ingress and egress from the Site
and the Easements for any reasonable purpose in connection with the
construction, operation and maintenance of the Facility (including,
without limitation, access for transportation of Coal to, and
electricity and steam from, the Site).
There are no services, materials or rights required for the construction,
operation or maintenance of the Facility in accordance with the Project
Documents, other than (x) those granted to or to be provided to the Borrower
pursuant to the Project Documents or (y) those that can reasonably be expected
to be commercially available at the Site when required.
(b) The representations and warranties of the Borrower
contained in the Project Documents were true and correct on and as of the dates
when made.
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48
Section 8.20 Qualifying Facility. The Borrower has no
knowledge of any facts that would prevent the Facility from being a Qualifying
Facility at the time of the initial delivery of energy from the Facility.
SECTION 9. CONDITIONS PRECEDENT
Section 9.1 Conditions to Effectiveness of Commitments. The
Commitments of the Lenders shall not become effective, and the Credit Facilities
shall not be available for utilization, until the date on which all of the
following conditions precedent shall have been satisfied:
(a) Agreement; Bank Notes. (i) The Administrative Agent and
each Institution shall have received this Agreement, duly executed and
delivered by the parties hereto, with a counterpart for each Bank and
the Issuing Bank; and (ii) the Administrative Agent shall have received
a Bank Project Note, a Bank L/C Note and a Bank Liquidity Note for the
account of each Bank, each conforming to the requirements of this
Agreement and duly executed and delivered by the Borrower.
(b) Security Documents. The Administrative Agent and each
Institution shall have received, with a counterpart for each Bank and
the Issuing Bank, each of the Security Documents, duly executed and
delivered by each party thereto.
(c) Interest Rate Hedging Transactions. The Administrative
Agent and each Institution shall have received evidence that the
Borrower has entered into one or more Interest Rate Hedging
Transactions in compliance with the provisions of Section 10.21.
(d) Certain Project Documents. The Administrative Agent and
each Institution shall have received, with a copy for each Bank and the
Issuing Bank, a true and complete copy of each of the following Project
Documents, certified by the Borrower as such on the Closing Date, each
of which shall be in form and substance satisfactory to the Co-Agents
and the Institutions and in full force and effect:
(i) the Power Purchase Agreement;
(ii) the Steam Sales Agreement;
(iii) the Facility Construction Contract;
(iv) the Construction Contract Guarantees;
(v) the Greenhouse Construction Contract;
(vi) the Operating and Maintenance Agreement;
(vii) the Coal Supply Agreement;
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49
(viii) the Coal Adjustment Agreement;
(ix) the Arch Back-Up Coal Supply Agreement;
(x) the SEI Coal Procurement Letter;
(xi) the Coal Transportation Agreement;
(xii) the CSXT Agreement; and
(xiii) the Ash Disposal Agreement.
In addition, the Administrative Agent and each Institution
shall have received evidence satisfactory to it that each of the
conditions precedent set forth in the Project Documents which are
required to be satisfied on or prior to the Closing Date, if any, have
been satisfied, or waived by the parties thereto with the consent of
the Majority Lenders.
(e) Real Estate Documents. The Administrative Agent and each
Institution shall have received, with a copy for each Bank and the
Issuing Bank, a true and complete copy of each of the Real Estate
Documents (other than the Project Mortgage), certified by the Borrower
as such on the Closing Date, each of which shall be in form and
substance satisfactory to the Co-Agents and the Institutions and in
full force and effect.
(f) Partnership Agreement. The Administrative Agent and each
Institution shall have received, with a copy for each Bank and the
Issuing Bank, a true and complete copy of the Partnership Agreement,
certified by the Borrower as such on the Closing Date, which shall be
in form and substance satisfactory to the Co-Agents and the
Institutions and in full force and effect.
(g) Equity Funding Transactions. The Administrative Agent and
each Institution shall have received evidence satisfactory to it that
(i) the Equity Funding Documents have been duly authorized, executed
and delivered by the parties thereto and are in full force and effect
and (ii) all conditions precedent to the initial Equity Funding Loans
thereunder have been satisfied. In addition, the Administrative Agent
and each Institution shall have received, with a copy for each Bank and
the Issuing Bank, true and complete copies of each of the Equity
Funding Documents, certified by the Borrower as such on the Closing
Date, each of which shall be in form and substance satisfactory to the
Co-Agents and the Institutions.
(h) Greenhouse Transactions. The Administrative Agent and each
Institution shall have received, with a copy for each Bank and the
Issuing Bank, a true and complete copy of each of the following
Greenhouse Documents, certified by the Borrower as such on the Closing
Date, each of which shall be in form and substance satisfactory to the
Co-Agents and the Institutions and in full force and effect:
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50
(i) the Greenhouse Master Lease;
(ii) the Greenhouse Mortgage;
(iii) the Greenhouse Loan Agreement;
(iv) the Greenhouse Sublease;
(v) the Greenhouse Pledge Agreements;
(vi) the Greenhouse Mortgage Assignment;
(vii) the Greenhouse Stock Assignment;
(viii) the Greenhouse Bill of Sale;
(ix) the Greenhouse Nondisturbance Agreement; and
(x) the Greenhouse Deed.
In addition, (x) the Security Agent shall have received the
executed Greenhouse Note and the title insurance policy insuring the
Borrower and the Security Agent that the Greenhouse Mortgage
constitutes a valid first lien of record on the Greenhouse Owner's
leasehold interest in the Leased Land, and (y) each of the
Administrative Agent and the Institutions shall have received evidence
satisfactory to it that (A) the Greenhouse Owner is duly organized,
validly existing and in good standing under the laws of the State of
Delaware, is qualified to do business and is in good standing in the
Commonwealth of Virginia, and has the corporate power and authority to
own the Greenhouse and execute, deliver and perform its obligations
under the Greenhouse Documents to which it is a party, (B) the
conditions precedent set forth in Section 3.3 of the Greenhouse Loan
Agreement have been satisfied, or waived by the parties thereto with
the consent of the Majority Lenders, (C) no event of default under any
of the Greenhouse Documents shall have occurred and be continuing and
(D) the Borrower shall have a first lien on and prior perfected
security interest in the Greenhouse Collateral, prior and superior to
all other Liens, other than Liens permitted under the Greenhouse
Documents.
(i) Insurance Coverage. The Administrative Agent and each
Institution shall have received and found satisfactory, certificates of
or binders for each policy of insurance required under Section 10.8(a),
accompanied by a certification of the Insurance Consultant addressed to
the Agents and the Lenders stating that insurance complying with the
provisions of Section 10.8(a), covering the risks and in the amounts
referred to therein, has been obtained and is in full force and effect,
and that all currently due premiums therefor have been paid in full.
(j) Title Insurance; Survey. The Security Agent shall have
received (i) a policy of title insurance issued by the Title Company,
in form and substance satisfactory
<PAGE> 59
51
to the Co-Agents and the Institutions, with such endorsements and
affirmative coverage as they may reasonably request, and with such
reinsurance (with direct access provisions) as they may reasonably
request, (A) insuring the Security Agent and the Lenders in the amount
of $445,000,000 (subject to a pending disbursement clause) that the
Project Mortgage constitutes a valid first mortgage lien of record on
the Site and the Easements, subject only to such exceptions to title as
shall have been approved by the Co-Agents and the Institutions, and (B)
providing coverage against all mechanics' and materialmen's liens
existing on the date of each Extension of Credit; and (ii) a survey of
the Site and the Easements by a licensed surveyor satisfactory to the
Co-Agents and the Institutions and the Title Company, certified to the
Security Agent and the Title Company pursuant to a certification
satisfactory to the Co-Agents and the Institutions, showing no state of
facts unsatisfactory to the Co-Agents, the Institutions or the Title
Company. The Co-Agents and the Institutions shall also have received
evidence that the premium in respect of such policy has been paid.
(k) Legal Opinions. The Co-Agents and each Institution shall
have received, with a counterpart for each Bank and the Issuing Bank,
the following legal opinions, each dated the Closing Date:
(i) the opinion of Troutman Sanders, counsel
to the Borrower, SEI Birchwood, Birchwood Development,
Southern and SEI, substantially in the form of Exhibit K-1;
(ii) the opinion of McGuire Woods Battle &
Boothe, special Virginia and New York counsel to the Borrower,
SEI Birchwood, Birchwood Development, Southern and SEI,
substantially in the form of Exhibit K-2;
(iii) the opinion of counsel to Virginia
Power, substantially in the form of Exhibit K-3;
(iv) the opinion of McGuire Woods Battle &
Boothe, special counsel to the Greenhouse Owner,
substantially in the form of Exhibit K-4;
(v) the opinion of counsel to the Greenhouse
Operator, substantially in the form of Exhibit K-5;
(vi) the opinion of counsel to the Coal
Supplier, substantially in the form of Exhibit K-6;
(vii) the opinion of counsel to Arch,
substantially in the form of Exhibit K-7;
(viii) the opinion of counsel to CSXT and the
Coal Transporter, substantially in the form of Exhibit K-8;
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52
(ix) the favorable opinion of Williams, Mullen,
Christian & Dobbins, special Virginia counsel to the Co-Agents
and the Institutions, as to such matters relating to the
transactions contemplated by this Agreement as the Co-Agents
or the Institutions may reasonably request; and
(x) the favorable opinion of Simpson Thacher &
Bartlett, special New York counsel to the Co-Agents and the
Institutions, as to such matters relating to the transactions
contemplated by this Agreement as the Co-Agents or the
Institutions may reasonably request.
Such opinions also shall cover such other matters incident to the
transactions contemplated by this Agreement and the other Financing
Documents and the Project Documents as the Co-Agents or the
Institutions may reasonably request.
(l) Coal Report. The Co-Agents and each Institution shall have
received, with a copy for each Bank and the Issuing Bank, a report of
the Coal Consultant with respect to the quality, permitting, operating
expenses, amounts and the ability to mine and dedication to the
Facility of the coal reserves subject to the Coal Supply Agreement and
the Arch Back-Up Coal Supply Agreement, and such other matters relating
to the Coal Supply Agreement, the Arch Back-Up Coal Supply Agreement,
the Coal Supplier and Arch as the Co-Agents or the Institutions shall
reasonably request, which report shall be addressed to the Lenders and
shall be satisfactory in scope, form and substance to the Co-Agents
and the Institutions.
(m) Independent Engineer's Report. The Co-Agents and each
Institution shall have received, with a copy for each Bank and the
Issuing Bank, a report of the Independent Engineer with respect to the
technical and economic feasibility of the Project and the Greenhouse,
the reasonableness of the terms of the Construction Contracts
(including design and specifications, the construction schedule and the
contract price), the capital budget, the status of governmental
approvals and permits, the ability of the Facility to meet regulatory
requirements and the requirements contained in the Power Purchase
Agreement, ash disposal, and such other matters relating to the
Project, the Greenhouse, the Project Documents and the transactions
contemplated hereby and thereby as the Co-Agents or the Institutions
shall reasonably request, which report shall be addressed to the
Lenders and shall be satisfactory in scope, form and substance to the
Co-Agents and the Institutions.
(n) Ornamental Flower Market Report. The Co-Agents and each
Institution shall have received, with a copy for each Bank and the
Issuing Bank, a report of the Ornamental Flower Market Consultant with
respect to the economic viability of the Greenhouse, the capital
budget, the business plan of the Greenhouse Operator, the experience
and ability of the Greenhouse Operator, the ornamental flower market in
which the Greenhouse Operator proposes to compete, the ability of the
Greenhouse to meet the requirements of the Steam Sales Agreement, and
such other matters relating to the Greenhouse Operator and the
production and sale of ornamental flowers as the Co-Agents or the
Institutions shall reasonably request, which report shall be addressed
to the Lenders
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and shall be satisfactory in scope, form and substance to the Co-Agents
and the Institutions.
(o) Environmental Report. The Co-Agents and each Institution
shall have received, with a copy for each Bank and the Issuing Bank,
the Environmental Report, which shall be accompanied by a letter
addressed to the Lenders and the Agents and shall state that they are
entitled to rely on the Environmental Report, and the Environmental
Report shall be satisfactory in scope, form and substance to the
Co-Agents and Institutions.
(p) Perfection of Liens and Security Interests. The financing
statements, instruments and other documents with respect to the filings
and recordings described in Schedule 7 shall be in form and substance
satisfactory to the Security Agent and all such filings and recordings
and all other filings and recordings and other actions that are
necessary in order to establish, protect, preserve and perfect the
Secured Parties' lien on and perfected security interest in all right,
title, estate and interest of the Borrower in and to the Collateral,
prior and superior to all other Liens, existing or future, except
Permitted Liens, shall have been duly made or taken, and all fees,
taxes and other charges relating to such filings and recordings and
other actions shall have been paid by the Borrower; and the Security
Agent, for the benefit of the Secured Parties, shall have a first lien
on and prior perfected security interest in all right, title, estate
and interest of the Borrower in and to the Collateral prior and
superior to all other Liens, except Permitted Liens (other than
mechanics' and materialmen's liens, which shall be insured against
under the Title Policy). In addition, the Security Agent shall have
received (i) authenticated copies or other evidence of all filings,
recordings and other actions obtained or made in order to create and
perfect such first lien on and perfected security interest in the
right, title, estate and interest of the Borrower in and to the
Collateral and (ii) copies of Uniform Commercial Code search reports
with respect to each "Debtor" specified in Schedule 7 in each
jurisdiction in which financing statements are to be filed confirming
that no security interest under the Uniform Commercial Code exists with
respect to the properties or assets of such Person.
(q) Notices to Proceed. The Borrower shall have issued the
Notice to Proceed under the Facility Construction Contract and the
Greenhouse Owner shall have issued the Notice to Proceed under the
Greenhouse Construction Contract.
(r) Governmental Approvals. All Governmental Approvals listed
on Part A of Schedule 6, or otherwise required to commence construction
of the Project, shall have been duly obtained or made, shall be in full
force and effect and shall not be the subject of any pending judicial
or administrative proceedings, and, if the applicable statute, rule or
regulation provides for a fixed period or periods for judicial or
administrative appeal or review thereof, such periods shall have
expired. The Administrative Agent and each Institution shall have
received, with a copy for each Bank and the Issuing Bank, true and
complete copies of all such Governmental Approvals, certified by the
Borrower as such.
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(s) Qualifying Facility. (i) The Facility shall be a
qualifying cogeneration facility within the meaning of PURPA and the
rules and regulations of the FERC set forth at 18 C.F.R. Subpart 292,
as amended; and (ii) the Order Granting Application for Certification
as a qualifying cogeneration facility issued on October 15, 1993 by
FERC (x) shall not have been withdrawn or revoked by subsequent order
and the fixed period for judicial or administrative appeal or review
thereof shall have expired and (y) shall not be the subject of any
pending administrative or judicial proceedings. The Administrative
Agent and each Institution shall have received, with a copy for each
Bank and the Issuing Bank, a true and complete copy of the FERC order
referred to above and of the application therefor, certified by the
Borrower as such.
(t) Evidence of Authorization. The Co-Agents and each
Institution shall have received, with a copy for each Bank and the
Issuing Bank: (i) copies, certified on the Closing Date, of (A) all
partnership action of the Borrower authorizing the execution, delivery
and performance by the Borrower of this Agreement and each other
Financing Document and each Project Document to which the Borrower is
or is to be a party, (B) all corporate action of each Partner and SEI
authorizing the execution, delivery and performance by it of the
Financing Documents and Project Documents to which it is a party, (C)
all corporate action of Southern authorizing the execution, delivery
and performance by Southern of the Equity Funding Documents to which it
is a party; (ii) certificates, dated the Closing Date, as to the
incumbency and signature of each individual signing any Loan Document
or Project Document on behalf of the Borrower, each Partner, SEI or
Southern; (iii) certified copies of the articles of incorporation and
by-laws of each Partner, SEI and Southern; (iv) evidence of the
existence and good standing of the Borrower and each Partner in the
State of Delaware and of the Borrower's and each Partner's
authorization to do business and good standing in the Commonwealth of
Virginia and the State of Georgia, and evidence of the existence and
good standing of Southern and SEI in the State of Delaware and, in the
case of SEI, Virginia; and (v) all certificates and other documents
required to be delivered by the Greenhouse Owner as a condition to the
initial borrowing under the Greenhouse Loan Agreement.
(u) Financial Statements. The Co-Agents and each Institution
shall have received, with a copy for each Bank and the Issuing Bank, a
copy of the most recent audited financial statements of each of
Southern, the Contractors, Arch and CSX (which shall be prepared on a
consolidating basis), the most recent publicly available financial
statements of Virginia Power and the most recent unaudited financial
statements of the Coal Transporter, the Greenhouse Operator and the
Coal Supplier. Each of such financial statements shall be satisfactory
to the Co-Agents and the Institutions, and no material adverse change
shall have occurred in the business, operations or financial condition
of any of the Persons referred to in the preceding sentence since the
date of such financial statements.
(v) Fees. All fees payable by the Borrower on or prior to the
Closing Date pursuant to Section 7.1, the Bank Fee Letter or the
Institutional Fee Letter shall have been paid.
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(w) Financial Projections. The Co-Agents and each Institution
shall have received, with a copy for each Bank and the Issuing Bank,
reasonably detailed financial projections for the Project covering the
period through the twentieth anniversary of the Commercial Operations
Date (the "Base Case Projections"), including therein projections of
revenues, operating expenses, cash flow, debt service and other related
items for the Project, in form and substance satisfactory to the
Co-Agents and each Institution and showing an average Debt Service
Coverage Ratio for the period from the Commercial Operations Date to
the Bank Loan Final Maturity Date of at least 1.45 to 1.00 and a Debt
Service Coverage Ratio in each year of at least 1.35 to 1.00 (in each
case after giving effect to any Interest Rate Hedging Transactions),
certified as of the Closing Date by the chief financial officer of the
Borrower or of SEI Birchwood, as a General Partner, as being based on
reasonable assumptions and prepared in good faith in full consideration
of all information known to such officer, after due inquiry.
(x) Construction Budget. The Administrative Agent and each
Institution shall have received from the Borrower, with a copy for each
Bank, a budget, in form and substance satisfactory to the
Administrative Agent and each Institution, for all anticipated costs to
be incurred in connection with the construction and start-up of the
Project, including in such budget all construction and non-construction
costs, the financing to be provided to the Greenhouse Owner pursuant to
the Greenhouse Loan Agreement and all interest, taxes and other
carrying costs relating to the Project, and such other information as
the Administrative Agent or any Institution may reasonably request. The
budget will contain an appropriate number of budget categories (each, a
"Budget Category"), which will detail the timing and value of drawdowns
in each such Budget Category, and the total of all amounts to be drawn
down in respect of such Budget Category (with respect to each Budget
Category, the "Budget Category Amount"). The Budget Category Amount for
(i) the Completion Date funding of the Debt Service Reserve Account
shall be at least the Required Initial Debt Service Reserve Deposit
Amount, (ii) the Completion Date funding of the Repair and Maintenance
Account shall be at least the Initial Repair and Maintenance Reserve
Amount and (iii) the Heat Rate Bonus shall be $6,000,000.
(y) Additional Matters. The Administrative Agent and each
Institution shall have received each additional document, instrument or
item of information reasonably requested by it; and all corporate and
other proceedings, and all documents, instruments and other legal
matters in connection with the transactions contemplated by this
Agreement, shall be satisfactory in form and substance to the
Administrative Agent and each Institution.
Section 9.2 Conditions to Each Bank Project Loan and
Institutional Loan. The obligation of the Banks to make any Bank Project Loan or
the Institutions to make any Institutional Loan requested to be made by it
(including its initial Loan) on the Closing Date or any other Borrowing Date is
subject to the satisfaction, immediately prior to or concurrently with the
making of such Loan, of the following conditions precedent:
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(a) No Default. No Default or Event of Default shall have
occurred and be continuing on such Borrowing Date, or shall occur
after giving effect to the Loans to be made on such date.
(b) Representations and Warranties. Each of the
representations and warranties of the Borrower in this Agreement and
the other Loan Documents shall be true and correct in all material
respects on and as of such Borrowing Date as if made on and as of such
date, except for the representations and warranties set forth in the
first sentence of Section 8.1(b) and the representations and warranties
set forth in Sections 8.4 and 8.6, which shall be true and correct on
and as of the Closing Date.
(c) Project Documents. (i) Each of the Principal Project
Documents shall be in full force and effect; (ii) each of the
Significant Project Participants shall have complied in all material
respects with its covenants and obligations under the Principal Project
Documents; and (iii) no event or condition shall then exist (including
without limitation an event of Force Majeure) which permits or requires
any Significant Project Participant to cancel or terminate (with the
giving of notice if required) its performance under a Principal Project
Document in accordance with the terms thereof.
(d) Independent Engineer's Certificate. With respect to each
borrowing of Bank Project Loans (other than Debt Service Loans) and
Institutional Loans on any Borrowing Date other than the Closing Date,
the Administrative Agent and the Institutions shall have received, with
a copy for each Bank and the Issuing Bank, a certificate of the
Independent Engineer (the "Independent Engineer's Certificate") dated
not more than five days prior to such Borrowing Date, (i) identifying
the Project Costs that have been properly incurred and are due and
payable on such Borrowing Date (relying on the Contractors' monthly
application for payment provided for under each of the Construction
Contracts) and (ii) stating that (A) construction of the Facility is
proceeding in the manner provided for in the Facility Construction
Contract and the Facility Contractor has not failed to achieve any of
the milestones set forth in the Project Milestone Schedule (as defined
in the Facility Construction Contract) scheduled to be completed prior
to such date (or if it has failed to meet a milestone, the percentage
of the Contract Price (as defined in the Facility Construction
Contract) paid to the Facility Contractor, after giving effect to the
Loans and Equity Funding Loans requested to be made on or prior to such
Borrowing Date, does not exceed the percentage of completion of the
Project, as determined in accordance with Section 4.2.1 of the Facility
Construction Contract), (B) construction of the Greenhouse is
proceeding in the manner provided for in the Greenhouse Construction
Contract and the Greenhouse Contractor has not failed to achieve any of
the milestones set forth in the Project Schedule (as defined in the
Greenhouse Construction Contract) scheduled to be completed prior to
such date, (or if it has failed to meet a milestone, the percentage of
the Contract Price (as defined in the Greenhouse Construction Contract)
paid to the Greenhouse Contractor, after giving effect to the Loans and
Equity Funding Loans requested to be made on or prior to such Borrowing
Date, the proceeds of which are to be used to make Greenhouse loans,
does not exceed the percentage of completion of the Greenhouse, as
determined in accordance with Section 4.2.1 of the Greenhouse
Construction Contract), (C) as of the date of such
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Independent Engineer's Certificate, and without giving effect to any
Loans made on such date, the estimated cost of completing the Project
does not exceed the sum of (1) the Total Available Project Credit and
(2) the amount on deposit in the Construction Account and the
Institutional Loan Proceeds Account, (D) in its judgment, subject to
the occurrence of a Force Majeure event, Substantial Completion of the
Facility should occur prior to Date Certain and Final Completion of the
Greenhouse should occur prior to June 1, 1996, and (E) to the best of
its knowledge, no events or changes have occurred since the date of the
last Independent Engineer's Certificate that would have a material
adverse effect on the Project or the Greenhouse.
(e) Continuation of Title and Priority. On such Borrowing
Date, the Security Agent shall have received from the Title Company a
continuation endorsement of the mortgagee's title insurance policy
referred to in Section 9.1(j) covering the Loans to be made on such
date and indicating that since the date of the previous such
endorsement (or, if none, since the effective date of said title
insurance policy), there has been no change in the state of title to
the Project and that there are no Liens affecting the Project which may
take priority over the Lien of the Project Mortgage with respect to the
Loans then being made. If there is any charge for such endorsement,
such endorsement shall have been issued at regular rates, without
hazard or extra premium and without any indemnification of the Title
Company by the Borrower or any other Person for any risk the Title
Company is otherwise assuming. Such endorsement shall reflect that no
Liens arising from labor and services performed and materials furnished
through the date of the Loans have been filed in King George County,
Virginia prior to the date of such endorsement, except for Permitted
Liens (as defined in the Facility Construction Contract). The Title
Company and the Security Agent shall have received any and all
affidavits, lien waivers, certificates and other documents, in form and
substance satisfactory to the Administrative Agent and the Majority
Institutions, that may be required by the Title Company as a condition
to issuing the endorsement referred to above.
(f) No Material Adverse Change. On or prior to such
Borrowing Date, there shall not have occurred (x) a material adverse
change in the financial condition of the Borrower or (y) a material
adverse change in the financial condition of any other Significant
Project Participant which could reasonably be expected to have a
Material Adverse Effect.
(g) Governmental Approvals. Each of the Governmental Approvals
listed in Part B of Schedule 6, except for such Governmental Approvals
which are not required to be obtained prior to such Borrowing Date and
are customarily obtained at a later stage of construction of the
Facility or after the Commercial Operations Date, shall have been duly
obtained or made, shall be in full force and effect and shall not be
the subject of any pending or, to the best knowledge of the Borrower,
threatened judicial or administrative proceedings.
(h) Financial Projections. Either (i) the Base Case
Projections delivered on the Closing Date pursuant to Section 9.1(w)
shall remain true and accurate in all material
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respects on such Borrowing Date, or (ii) the Borrower shall have
furnished to the Administrative Agent and each Institution, with a copy
for each Bank and the Issuing Bank, revised Base Case Projections
prepared in the form of the Base Case Projections delivered pursuant to
Section 9.1(w) and certified by the chief financial officer of the
Borrower or of SEI Birchwood, as a General Partner, as being based on
reasonable assumptions and prepared in good faith in full consideration
of all information known to such officer, after due inquiry, and such
revised Base Case Projections shall indicate that there has occurred no
change from the Base Case Projections delivered pursuant to Section
9.1(w) which could reasonably be expected to have a Material Adverse
Effect.
(i) Extension of Credit Request. The Administrative Agent,
the Institutions and the Independent Engineer shall have received, at
least 10 Business Days prior to the requested Borrowing Date, an
Extension of Credit Request with respect to the Loan requested to be
made on such Borrowing Date, in substantially the form of Exhibit B-1
or B-2, as the case may be.
(j) Reserved Amounts. After giving effect to such borrowing of
Bank Project Loans and/or Institutional Loans on such Borrowing Date
and the use of the proceeds thereof as specified in the Extension of
Credit Request delivered pursuant to paragraph (i) above (including to
fund the Debt Service Reserve Account or the Repair and Maintenance
Account, to pay all or a portion of the Heat Rate Bonus, if any, to the
Facility Contractor or deposit the maximum unpaid Heat Rate Bonus in
the Final Completion Escrow Account, the Available Loan Commitments
shall be equal to or greater than the Reserved Amounts.
(k) Institutional Notes. If the Institutions are making
Institutional Loans on such date, (i) each Institution shall have
received an Institutional Note conforming to the requirements of
Section 4.3(a), either registered in the name of the Institution making
such Loan (or its nominee) or payable to the order of such Institution,
as such Institution shall request, in the principal amount of such
Institution's Institutional Loan and duly executed and delivered by the
Borrower and (ii) each Institution shall have received (with a copy to
the Administrative Agent) an opinion of counsel to the Borrower, dated
the date of such Institutional Loan, to the effect that the
Institutional Notes issued on such date have been duly and validly
authorized and issued by the Borrower and constitute legal, valid and
binding obligations of the Borrower enforceable against the Borrower in
accordance with their respective terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors generally
and by general principles of equity (regardless of whether enforcement
thereof is sought in a proceeding at law or in equity).
(l) Other Lenders' Notice. The Institutions shall not have
received from the Administrative Agent (if such proposed Loan is an
Institutional Loan) or the Administrative Agent shall not have received
from the Majority Institutions (if such proposed Loan is a Bank Project
Loan), on or before the date which is five Business Days prior to the
requested Borrowing Date, a notice stating that, in the good faith
judgment of the Administrative Agent or such Institutions, as the case
may be, one or more of the
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conditions precedent set forth in this Section 9.2 have not been
satisfied as of such date and are not likely to be satisfied on the
Borrowing Date (specifying such conditions precedent and the reason or
reasons that they are not satisfied).
(m) Greenhouse Loan Agreement. If all or a portion of the
proceeds of such Loan are to be used by the Borrower to make a loan
under the Greenhouse Loan Agreement, the Administrative Agent and the
Institutions shall have received a certificate of a Responsible Officer
of the Borrower stating that (i) to the best of his knowledge (after
due inquiry), no event of default under the Greenhouse Loan Agreement
or Greenhouse Sublease has occurred and is continuing on such Borrowing
Date, unless such event of default has been waived by the Borrower with
the consent of the Administrative Agent and the Majority Institutions,
and (ii) all conditions to such loan set forth in the Greenhouse Loan
Agreement (other than the condition that the Borrower obtain a Loan
under this Agreement) have been satisfied, or waived with the consent
of the Administrative Agent and the Majority Institutions, and such
certificate shall be accompanied by all documents, opinions and
certificates received by the Borrower pursuant to Section 3.4 of the
Greenhouse Loan Agreement in connection with such borrowing.
(n) Coal Transportation Agreement Filing. The contract summary
of the railroad transportation contract referred to in Section 2.6 of
the Coal Transportation Agreement shall have been filed with the
Interstate Commerce Commission and no protest or other action with
respect thereto shall have occurred within the 30-day period following
such filing.
Section 9.3 Additional Conditions to Bank Project Loans. The
obligation of the Banks to make any Bank Project Loan shall be subject to the
satisfaction on the Borrowing Date, in addition to the conditions set forth in
Section 9.2, of the following conditions precedent:
(a) Institutional Loans. (i) With respect to the initial Bank
Project Loans to be made by the Banks, each of the Institutions shall
have made its initial Institutional Loan pursuant to Section 4.1 on or
prior to the Borrowing Date on which such initial Bank Project Loans
are made; and (ii) with respect to each Bank Project Loan to be made
after the Institutional Commitment Termination Date, the aggregate
principal amount of the Institutional Loans theretofore made by the
Institutions (whether or not then outstanding) shall be equal to
$135,000,000.
(b) Maintenance of True-Up Ratio. After giving effect to such
proposed Bank Project Loan and all other Extensions of Credit on such
Borrowing Date, the Relative Bank Exposure will not exceed the Relative
Institutional Exposure.
(c) Interest Rate Election Notice. The Administrative Agent
shall have received, on or before the time required for its receipt
pursuant to Section 3.2, an Interest Rate Election Notice with respect
to the Bank Project Loan requested to be made on such Borrowing Date,
substantially in the form of Exhibit M.
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Section 9.4 Conditions to VP Letters of Credit Issuance. The
obligation of the Issuing Bank to issue the Construction VP Letter of Credit on
the Closing Date or to issue the Term VP Letter of Credit shall be subject to
the satisfaction of the following conditions precedent on such date of issuance:
(a) Satisfaction of Conditions in Section 9.2. The conditions
precedent set forth in paragraphs (a), (b), (c) and (e) through (h) of
Section 9.2 shall have been satisfied on such date (regardless of
whether a Loan was made on such date).
(b) Extension of Credit Request. The Administrative Agent
shall have received an Extension of Credit Request with respect to the
Construction VP Letter of Credit or the Term VP Letter of Credit, as
the case may be, in substantially the form of Exhibit B-3.
(c) Commercial Operations Date. In the case of the issuance of
the Term VP Letter of Credit, the Commercial Operations Date shall have
occurred on or prior to such date.
(d) Expiration of Construction VP Letter of Credit. In the
case of the issuance of the Term VP Letter of Credit, the Construction
VP Letter of Credit shall have expired or been terminated on or prior
to such date.
Section 9.5 Conditions to Bond Letters of Credit Issuance. The
obligation of the Issuing Bank to issue any Bond Letter of Credit shall be
subject to the satisfaction of the following conditions precedent on such date
of issuance:
(a) Satisfaction of Conditions in Section 9.2. The conditions
precedent set forth in paragraphs (a) through (h) of Section 9.2 shall
have been satisfied on such date (regardless of whether a Loan was made
on such date).
(b) Compliance With Section 10.25 Regarding Issuance of the
Relevant Bonds. The provisions of Section 10.25 shall have been
complied with and the Issuing Bank shall have received true and correct
copies, certified as such by the Borrower, of the Bond Documents
entered into in connection with the issuance and sale of the Relevant
Bonds and the legal opinions referred to in Section 10.25.
(c) Rating. The Relevant Bonds shall have received from
Standard & Poor's Ratings Services a rating that is at least equal to
the then current rating by such rating agency of the long-term
unsecured debt of the Issuing Bank.
(d) Initial Institutional Loans. Each of the Institutions
shall have made its initial Institutional Loan pursuant to Section 4.1
on or prior to such date.
(e) Extension of Credit Request. The Administrative Agent
shall have received an Extension of Credit Request with respect to such
Bond Letter of Credit, in substantially the form of Exhibit B-3.
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(f) Additional Matters. All other documents and legal matters
in connection with the issuance of such Bond Letter of Credit and the
Relevant Bonds shall be satisfactory in form and substance to the
Administrative Agent and the Majority Institutions.
Section 9.6 Conditions to Bank L/C Loans and Bank Liquidity
Loans. The obligation of the Banks to make any Bank L/C Loan or Bank Liquidity
Loan requested to be made by it on a Borrowing Date is subject to the
satisfaction of the following conditions on such date:
(a) Satisfaction of Conditions in Section 9.2. The conditions
precedent set forth in paragraphs (a), (b), (c), (f), (g) and (h) of
Section 9.2 shall have been satisfied on such date (regardless of
whether a Loan was made on such date).
(b) Extension of Credit Request. The Administrative Agent
shall have received, on or before the time required for its receipt
pursuant to Section 3.2, an Extension of Credit Request with respect to
such Bank L/C Loan or Bank Liquidity Loan, in substantially the form of
Exhibit B-1.
(c) Interest Rate Election Notice. In the case of a Bank L/C
Loan, the Administrative Agent shall have received, on or before the
time required for its receipt pursuant to Section 3.2, an Interest Rate
Election Notice with respect to such Bank L/C Loan, substantially in
the form of Exhibit M.
Section 9.7 Representations. Upon the making of each Extension
of Credit hereunder on a Credit Extension Date (including the initial Extension
of Credit on the Closing Date), the Borrower shall be deemed to make a
representation and warranty to the Agents and the Lenders as of such Credit
Extension Date that (a) there has been no material adverse change in the
financial condition of the Borrower, (b) to the Borrower's best knowledge, there
has been no material adverse change in the financial condition of any other
Significant Project Participant which could reasonably be expected to have a
Material Adverse Effect and (c) to the Borrower's best knowledge, the conditions
set forth in paragraphs (c) and (g) of Section 9.2 have been satisfied on such
Credit Extension Date.
SECTION 10. AFFIRMATIVE COVENANTS
So long as any Commitments remain in effect, any Letter of
Credit remains outstanding and until payment in full of the Loans and all other
Secured Obligations hereunder or under any of the Security Documents, the
Borrower hereby agrees that:
Section 10.1 Use of Proceeds.
(a) The proceeds of the Loans (other than any Bank L/C Loans
or Bank Liquidity Loans) shall be deposited into the Construction Account or the
Institutional Loan Proceeds Account, as the case may be, or, in the case of
certain Bank Project Loans made by the Borrower on the Completion Date, the
Accounts specified in Section 4.3 of the Security Deposit
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Agreement, in each case, for application as provided in paragraph (b) of this
Section and in the Security Deposit Agreement.
(b) The proceeds of the Loans shall be used as follows:
(i) the proceeds of the Bank Project Loans shall be
used solely for (A) the payment of Project Costs and (B) the repayment
of Equity Funding Loans on the Completion Date to the extent permitted
by Section 10.1(c);
(ii) the proceeds of the Bank L/C Loans shall be used
solely for (x) the financing of VP Reimbursement Obligations under the
Construction VP Letter of Credit or the Term VP Letter of Credit, (y)
the financing of Bond Reimbursement Obligations arising in respect of
Refunding Drawings under any Bond Letter of Credit and (z) the
refinancing of any Bank Liquidity Loans outstanding on the applicable
Bond L/C Expiration Date; and
(iii) the proceeds of Bank Liquidity Loans shall be
used solely for the financing of Bond Reimbursement Obligations arising
in respect of Liquidity Drawings; and
(iv) the proceeds of the Institutional Loans shall be
used solely for (A) the payment of Project Costs and (B) the repayment
of Bank Loans and, if at such time no Default or Event of Default shall
have occurred and be continuing, the Equity Funding Loans.
(c) The proceeds of Bank Project Loans made on the Completion
Date may, at the option of the Borrower, be used to repay Equity Funding Loans
in the event there are any Project Cost Savings, in an amount not to exceed 15%
of the Project Cost Savings; provided that, after giving effect to any borrowing
and any prepayment of Loans on the Completion Date, the Senior Debt to Capital
Ratio on the Completion Date shall be 0.85 to 0.15; provided, further that the
following conditions shall have been satisfied on the Completion Date:
(i) the Administrative Agent and the Institutions shall
have received a written request from the Borrower setting forth the
amount of Project Cost Savings and the principal amount of Bank Project
Loans that the Borrower requests be applied to the repayment of Equity
Funding Loans pursuant to this paragraph (c);
(ii) no Default or Event of Default shall have occurred
and be continuing;
(iii) the Administrative Agent and the Institutions shall
have received a certificate from the Independent Engineer confirming
the amount of Project Cost Savings set forth in the written request of
the Borrower delivered pursuant to clause (i) above;
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(iv) (x) the Required Completion Date Reserve Deposits
referred to in clauses (ii) through (iv) of the definition thereof
shall have been deposited into the Repair and Maintenance Account, the
Final Completion Escrow Account and the Project Control Account, as the
case may be; (y) the Contingent Distribution, in an amount equal to
$13,700,000, shall have been distributed; and (z) the Required Debt
Service Reserve Amount as of the Completion Date shall have been
deposited into the Debt Service Reserve Account; and
(v) the Administrative Agent and the Institutions shall
have received revised Base Case Projections, in form and substance
satisfactory to them, which shall give effect to any such repayment of
Equity Funding Loans with the proceeds of Bank Project Loans on the
Completion Date and shall otherwise be in the same form as the Base
Case Projections delivered pursuant to Section 9.1(w), certified by the
chief financial officer of the Borrower or of SEI Birchwood, for so
long as it is a General Partner, as being based on reasonable
assumptions and prepared in good faith in full consideration of all
information known to such officer, after due inquiry, and such revised
Base Case Projections shall show, for each calendar year through the
Institutional Loan Maturity Date, a projected Debt Service Coverage
Ratio of at least 1.35 to 1.00.
Section 10.2 Project Reports. The Borrower shall furnish to
the Administrative Agent, each Lender and, in the case of paragraphs (a) and (b)
below, the Independent Engineer the following:
(a) Monthly Construction Progress Report. Concurrently with
the delivery of each Extension of Credit Request during the
Construction Period with respect to Loans to be made on a Monthly
Construction Disbursement Date (or on or before the last Business Day
of any calendar month during the Construction Period in which no
Extension of Credit Request is delivered), a report executed by a
Responsible Officer of the Borrower (i) specifying, separately with
respect to each of the Facility and the Greenhouse, the amount of
Project Costs expended since the Closing Date as well as during the
preceding calendar month and the amount of Project Costs estimated to
be required to complete the Facility and the Greenhouse, (ii) providing
an assessment of the overall construction progress of the Facility and
the Greenhouse since the date of the last report and since the Closing
Date, together with an assessment of how such progress compares to the
respective construction schedules, (iii) specifying the estimated
Commercial Operations Date and, with respect to each of the Facility
and the Greenhouse, the estimated dates of Substantial Completion and
Final Completion, (iv) providing a detailed description of any and all
material problems (including but not limited to actual and anticipated
cost overruns, if any) encountered or anticipated in connection with
the construction of the Facility or the Greenhouse since the date of
the last report, together with an assessment of how such problems may
impact the construction schedule and a detailed description of the
proposed solutions to any such problems and (v) a discussion or
analysis of such other matters related to the Project as the
Administrative Agent or any Institution may reasonably request.
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(b) Contractor Reports. During the Construction Period,
promptly after receipt thereof, a copy of each report delivered by the
Facility Contractor or Greenhouse Contractor to the Borrower pursuant
to the Facility Construction Contract or Greenhouse Construction
Contract, respectively.
(c) Operating Reports. Following the Commercial Operations
Date, promptly after receipt thereof, a copy of (i) each annual
operating report furnished to the Borrower by the Facility Operator
pursuant to Section 6.2 of the Operating and Maintenance Agreement and
(ii) each annual operating report furnished to the Greenhouse Owner by
the Greenhouse Operator pursuant to Section 5.4 of the Greenhouse Loan
Agreement.
(d) Coal Report. No later than 30 days after the end of each
fiscal year of the Borrower, an updated Coal Report prepared by the
Coal Consultant, which shall cover the matters referred to in Section
9.1(l) and otherwise be in a form reasonably satisfactory to the
Administrative Agent and the Majority Institutions.
(e) Environmental Compliance Report. No later than 30 days
after the end of each fiscal year of the Borrower, a certificate of a
Responsible Officer of the Borrower, with such supporting information
as may be reasonably requested by the Administrative Agent or Majority
Institutions, certifying as to whether the Borrower is in compliance
with Section 10.27 (and, if the Borrower is not in compliance with
Section 10.27 at such time, such certificate shall include a statement
as to the nature of such non-compliance and the steps being taken by
the Borrower to remedy the same).
Section 10.3 Financial Statements. The Borrower shall
furnish or cause to be furnished to the Administrative Agent and each Lender:
(a) as soon as available, but in any event within 120 days
after the end of each fiscal year of each Reporting Party, a copy of
the balance sheet of such Reporting Party as of the end of such fiscal
year and the related statements of income, retained earnings (or, in
the case of the Borrower, changes in partner capital) and of cash flow
of such Reporting Party for such fiscal year, setting forth in each
case in comparative form the figures for the previous fiscal year,
reported on without a "going concern" or like qualification or
exception, or qualification as to the scope of the audit, by
independent public accountants of national standing which, in the case
of the Borrower and the Greenhouse Operator, are reasonably acceptable
to the Administrative Agent and the Majority Institutions; and
(b) as soon as available, but in any event within 45 days
after the end of each of the first three quarterly periods of each
fiscal year of each Reporting Party, the unaudited balance sheet of
such Reporting Party as of the end of such quarterly period and the
related unaudited statements of income and retained earnings (or, in
the case of the Borrower, changes in partner capital) and of cash flow
of such Reporting Party for such quarterly period and for the portion
of the fiscal year through the end of such fiscal quarter, setting
forth in each case in comparative form the figures for the previous
period, certified by the chief executive officer or chief financial
officer of such Reporting Party
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as fairly stating in all material respects the financial condition of
such Reporting Party as at the end of such quarterly period and the
results of its operations and its cash flows for such period (subject
to normal year-end audit adjustments);
all such financial statements to be complete and correct in all material
respects and to be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein (except for
changes approved or required by the independent public accountants certifying
such statements and disclosed therein).
Section 10.4 Certificates; Other Information. The Borrower
shall furnish or cause to be furnished to the Administrative Agent and each
Lender:
(a) concurrently with the delivery of the financial statements
of the Borrower referred to in paragraphs (a) and (b) of Section 10.3,
a certificate of a Responsible Officer of the Borrower stating that, to
the best of his knowledge after due inquiry, the Borrower during the
period covered by such financial statements has observed and performed
in all material respects all of its covenants and other agreements
contained in this Agreement and the other Loan Documents, and that such
Responsible Officer is not aware of any Default or Event of Default
hereunder at any time during such period or on the date of such
certificate (or, if any such Default or Event of Default shall have
occurred, a statement setting forth the nature thereof and the steps
being taken by the Borrower to remedy the same);
(b) no later than 5 Business Days prior to each Quarterly
Distribution Date, reasonably detailed financial projections in respect
of the Project's operations during the twelve-month period that
commenced on the most recent Quarterly Calculation Date, certified by
the chief financial officer of the Borrower or of SEI Birchwood, for so
long as it is a General Partner, as being prepared in good faith in
full consideration of all information known to such officer, after due
inquiry, at such time, and as being based on reasonable assumptions;
(c) no later than 5 Business Days prior to each Quarterly
Distribution Date, a certificate of the chief financial officer of the
Borrower or of SEI Birchwood, for so long as it is a General Partner,
setting forth a calculation, which shall be reasonably satisfactory to
the Administrative Agent and the Majority Institutions, of each of the
Historical Debt Coverage Ratio and the Projected Debt Coverage Ratio as
at the most recent Quarterly Calculation Date, and providing or
attaching such information as is necessary to make such calculations;
(d) promptly after delivery or receipt thereof, a copy of each
material notice, demand or other communication delivered by or received
by the Borrower pursuant to any Project Document, any Equity Funding
Document or any Bond Document;
(e) promptly after the obtaining or filing thereof, as the
case may be, a copy of (i) each Governmental Approval or other consent
or approval obtained by the Borrower, or obtained by the Facility
Contractor or the Greenhouse Contractor and delivered to the
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Borrower pursuant to the relevant Construction Contract, in each case
after the Closing Date, (ii) each filing made by the Borrower with any
Government Authority other than FERC, except such as are routine or
ministerial in nature and in respect of which a failure to file could
not reasonably be expected to have a Material Adverse Effect, and (iii)
each filing made by or on behalf of the Borrower or any General Partner
with FERC;
(f) no later than 30 days after the end of each calendar year,
a certificate executed by a Responsible Officer of the Borrower
specifying in reasonable detail all sales, transfers and other
dispositions of assets and property of the Borrower during the
preceding calendar year which were made without the consent of the
Majority Lenders in accordance with Section 11.7(c);
(g) concurrently with the delivery thereof to the Security
Agent, a copy of each certificate, request, direction or notice
delivered by the Borrower pursuant to the Security Deposit Agreement;
and
(h) promptly, such additional financial and other information
with respect to the Borrower or the Project and, to the extent such
information can reasonably be obtained by the Borrower, any other
Project Participant, as the Administrative Agent or any Institution may
reasonably request.
Section 10.5 Accounts. The Borrower shall deposit and maintain
in each of the Account the amounts required by the Security Deposit Agreement at
the times required thereby; provided that, in the case of the Debt Service
Reserve Account, the Borrower may deliver one or more Debt Service Letters of
Credit in accordance with the Security Deposit Agreement in lieu of the amounts
required to be deposited therein. The amounts on deposit in each of the Accounts
shall be subject to the terms of, and disbursed in accordance with, this
Agreement and the Security Deposit Agreement.
Section 10.6 Maintenance of Existence, Properties, Etc.;
Taxes. (a) The Borrower shall at all times preserve and maintain its legal
existence as a Delaware limited partnership and all Governmental Approvals and
other rights, franchises, privileges and consents necessary for the maintenance
of its existence and the construction, ownership and operation of the Project.
(b) The Borrower shall pay and discharge all taxes,
assessments and governmental charges or levies imposed on it or on its income or
profits or on any of its property prior to the date on which penalties, fines or
interest attach thereto and all lawful claims which, if unpaid, might become a
Lien on the property of the Borrower; provided that the Borrower shall have the
right to contest in good faith the validity or amount of any such tax,
assessment, charge, levy or claim by proper proceedings timely instituted and
may permit such contested item to remain unpaid during the period of such
contest if (a) the Borrower diligently pursues such contest, (b) the Borrower
sets aside on its books adequate reserves in accordance with GAAP with respect
to the contested items, (c) during the period of such contest the enforcement of
any contested item is effectively stayed and any Lien with respect thereto is
effectively removed of record and (d) such contest (i) will not interfere with
the construction or operation of the Project and (ii)
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does not involve any substantial danger of a sale, forfeiture or loss of any
part of the Project, title thereto or any interest therein; provided, further
that the Borrower shall promptly pay or cause to be paid any final judgment
enforcing any such tax, assessment, charge, levy or claim and cause the same to
be satisfied of record.
Section 10.7 Books and Records; Inspection of Property;
Discussions. The Borrower shall keep proper books of record and account in which
full, true and correct entries in accordance with GAAP consistently applied
shall be made of all of its dealings and transactions, and the Borrower shall
permit representatives of the Administrative Agent, the Security Agent, the
Lenders and the Independent Engineer to visit and inspect its properties, to
examine and make abstracts from any of its books of record and account and to
discuss its affairs, finances and accounts with its principal officers,
engineers and independent accountants, all at such times during business hours
and at such intervals as the Administrative Agent, the Security Agent, any
Lender or the Independent Engineer may reasonably request. The Independent
Engineer and representatives of the Administrative Agent, the Security Agent and
the Lenders shall have the right to inspect the Project from time to time upon
notice to a representative of the Borrower and to witness and verify all tests,
investigations and inspections referred to in the Construction Contracts and the
Power Purchase Agreement. Without limiting the generality of the foregoing
provisions of this Section 10.7, the Borrower shall permit the Independent
Engineer to make such inspections of the Project and the Greenhouse, and shall
provide to the Independent Engineer such information with respect to the Project
and the Greenhouse, as the Independent Engineer may from time to time reasonably
request in order for it to prepare for submission to the Lenders, if and when
requested by the Administrative Agent or any Institution, an annual updated
Independent Engineer's Report covering the relevant matters referred to in
Section 9.1(m) and such other matters with respect to the Borrower, the Project
and the Greenhouse as the Administrative Agent or any Institution may reasonably
request.
Section 10.8 Insurance.
(a) Required Insurance. The Borrower shall at all times carry
and maintain, or cause to be carried and maintained, at least the following
insurance coverages with respect to the Project, the Site and the Easements, in
each case with insurers authorized to do business in the Commonwealth of
Virginia rated "A-" or better, with a minimum size rating of "X", by Best's
Rating Service (or otherwise acceptable to the Majority Lenders after
consultation with the Insurance Consultant):
(A) (i) from and after the Closing Date until the date on
which all testing of the Facility has been completed and Substantial
Completion of the Facility has occurred, blanket builder's risk
insurance, and (ii) from and after the Closing Date until the date on
which all Secured Obligations have been paid in full, "all risk"
property insurance (to the extent not duplicative of blanket builder's
risk insurance obtained pursuant to clause (i) above), such builder's
risk insurance and "all risk" property insurance to be subject to
customary "all risk" forms including, in each case, flood, earth
movement, transit, comprehensive boiler, turbine and machinery and
operational testing insurance covering physical loss or damage with
respect to the Project, including (1) coverage for the buildings,
structures, turbines, boiler and machinery, equipment facilities,
fixtures and
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other properties constituting a part of the Project (including
equipment in which the Borrower has an insurable interest), (2)
coverage for removal of debris, (3) transit coverage, including ocean
marine coverage, if applicable (unless insured by the supplier), with a
per occurrence limit sufficient to cover the full insurable value of
any items in transit but in no event less than $10,000,000, and (4)
off-site coverage with a per occurrence limit of the greater of
replacement cost and $2,000,000. Such policies shall at all times
insure an amount not less than the higher of (i) the full replacement
cost of the Project or (ii) 100% of the aggregate principal amount of
all outstanding Loans and Bonds (less the amount then on deposit in the
Debt Service Reserve Account), and shall be in such form as shall be
reasonably satisfactory to the Majority Lenders; provided, however,
that flood and earthquake coverage each may be subject to an annual
aggregate limit of $50,00,000, and transit and off-site coverage may be
subject to the limits specified in clauses (3) and (4) of the preceding
sentence. The policies shall be written on a no coinsurance basis and
shall contain a stipulated value/gap coverage endorsement. The policies
shall also be endorsed to provide that (1) losses shall be adjusted as
provided in Section 10.8(b), (2) the Security Agent and the Secured
Parties are included as "Additional Insureds", as their interests may
appear, but shall not be liable for the payment of any premiums, and
(3) any payment thereunder for loss or damage shall be made to the
Security Agent, as sole loss payee for deposit under the Security
Deposit Agreement. The policies may provide for deductible amounts of
up to $250,000 per occurrence, unless otherwise agreed by the Majority
Lenders;
(B) from and after the Closing Date until the Commercial
Operations Date, delayed opening coverage for a period of 12 months for
any delay in the commencement of operations of the Facility caused by
damage or loss to any property covered under clause (A) above
(including damage or loss to key equipment in transit). Such policy
shall be in a minimum amount equal to 12 months of debt service and
continuing expenses and may provide that insurance proceeds will not be
payable with respect to up to the first 30 days of such delay in the
operation of the Facility, and shall be in such form as shall be
reasonably satisfactory to the Majority Lenders;
(C) from and after the Commercial Operations Date, business
interruption insurance insuring perils and property covered under
clause (A) above with respect to the Project, in such form as shall be
reasonably satisfactory to the Majority Lenders and with limits in
amounts sufficient to cover the payment of all debt service and
continuing expenses during a period of at least twelve months; provided
that the applicable policy may provide that the insurance proceeds will
not be payable with respect to up to the first 45 days of each business
interruption;
(D) comprehensive or commercial general liability insurance on
an "occurrence" basis or, subject to the proviso to paragraph (G)
below, on a "claims made" basis, against claims for "bodily injury" and
"property damage" occurring on, in or about the Project, the Site and
the Easements and the adjoining streets, sidewalks and passageways, in
a minimum amount of $1,000,000 coverage per occurrence with respect to
personal injury or death to any one or more persons or damage to
property and not less than $2,000,000 in the aggregate for such
coverage, which insurance shall (i) be in such form as shall be
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reasonably satisfactory to the Majority Lenders, (ii) contain "broad
form" and other endorsements covering, among other things, products and
completed operations, contractual liability, broad form property
damage, explosion, collapse and underground hazards, and (iii) be
endorsed to include as "Additional Insureds" the Security Agent and the
Secured Parties and their respective successors, assigns, agents,
officers, shareholders, directors and employees, as their interests may
appear;
(E) business automobile liability insurance against claims for
bodily injury, death or property damage arising out of the use of all
owned, non-owned and hired vehicles by the Borrower, its agents and
employees, including loading and unloading, such insurance to be in the
amount of at least $1,000,000 coverage per occurrence with respect to
bodily injury or death to one or more persons or damage to property and
to be in such form as shall be reasonably satisfactory to the Majority
Lenders;
(F) workers' compensation insurance as required by Virginia
law and employers liability insurance with a minimum limit of
$1,000,000 per occurrence or in such other amounts as from time to time
shall be required by Requirements of Law;
(G) excess "umbrella" liability insurance with respect to the
Project on an "occurrence" basis or, subject to the proviso to this
paragraph (G), a "claims made" basis against risks of the types
described in clauses (D) and (E) above and in excess of the employers
liability insurance described in clause (F) above, in an amount which
results in a combined amount of primary and excess insurance required
hereby of not less than $25,000,000 for any occurrence and not less
than $25,000,000 in the aggregate on an annual basis and in such form
as shall be satisfactory to the Majority Lenders; provided that if such
insurance is written on a "claims made" basis and the policy is not
renewed, the Borrower shall obtain for such policy an extended
reporting period coverage or "tail" of at least three years past the
final day of coverage of such policy and shall provide the
Administrative Agent and the Institutions with evidence that such
extended reporting period coverage or "tail" has been obtained;
(H) aircraft liability insurance, if exposure exists, in an
amount not less than $25,000,000 for owned, hired and non-owned
aircraft;
(I) unless covered by the insurance referred to in paragraphs
(D) and (G) above, railroad protective liability insurance, if exposure
exists, in an amount not less than $25,000,000;
(J) insurance against loss resulting from employee dishonesty
and theft of negotiable instruments, with a minimum limit of $1,000,000
per occurrence; and
(K) such additional insurance as shall be required pursuant to
the provisions of the Power Purchase Agreement, the Facility
Construction Contract, the Operating and Maintenance Agreement and any
other Project Document;
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provided that in the event any insurance (including the limits or deductible
thereof) required to be maintained pursuant to clause (G) above shall not be
available and commercially feasible in the commercial insurance markets (taking
into account in determining "commercial feasibility" the Borrower's obligations
under the Loan Documents and the Project Documents and its ability to
self-insure without impairing the Accounts), the Majority Lenders agree 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 written reports prepared by two
independent insurance advisors of recognized national standing (one of which may
be the Borrower's insurance advisor and one of which may be the Lenders'
insurance consultant) certifying that such insurance is not reasonably available
and commercially feasible in the commercial insurance market for similar
electric generation projects (and, in any case where the required amount is not
so available, certifying as to the maximum amount which is so available) and
explaining in detail the basis for such conclusions, the form and substance of
such reports to be reasonably satisfactory to the Majority Lenders; (ii) at any
time after the granting of any such waiver (but not more than twice in each
calendar year), the Administrative Agent or any Institution may request, and the
Borrower shall furnish to the Administrative Agent and the Institutions within
30 days after such request, supplemental reports reasonably acceptable to the
Majority Lenders from such insurance advisors updating their prior reports and
reaffirming such conclusion; and (iii) any such waiver shall be effective only
so long as such insurance shall not be available and commercially feasible in
the commercial insurance market, it being understood that the failure of the
Borrower to timely furnish any such supplemental report shall be conclusive
evidence that such waiver is no longer effective because such condition no
longer exists, but that such failure is not the only way to establish such
non-existence.
(b) Policy Provisions. All insurance policies maintained in
accordance with clause (A), (B), or (C) of this Section 10.8 (x) shall contain
either the New York standard mortgagee clause or 438 BFU, and (y) shall provide
that so long as no Event of Default shall have occurred and be continuing,
property losses, if any, shall be adjusted with the Borrower and shall be made
payable to the Borrower or its order, except that as to any insured loss in
excess of $1,000,000, such loss shall be adjusted with the Borrower but final
settlement will be made with the concurrence of the Security Agent, which
concurrence shall not be unreasonably withheld, and shall be payable solely to
the Security Agent for deposit in the Special Payment Account pursuant to the
Security Deposit Agreement. All insurance policies maintained in accordance with
this Section 10.8: (i) shall provide that no cancellation, termination or
material change in such insurance shall be effective until at least 45 days (10
days in the case of non-payment of premium) after the insurer shall have given
written notice thereof to the Security Agent, (ii) except for the insurance
referred to in paragraph (F) above, shall contain a waiver of any rights of
subrogation of the insurer against the Additional Insureds and a waiver of any
rights of the insurer to any setoff or counterclaim or any other deduction,
whether by attachment or otherwise, in respect of any liability of any of the
Additional Insureds, (iii) in the case of the insurance referred to in
paragraphs (D) and (G) above, shall provide that all the provisions thereof,
except the limits of liability (which shall be applicable to all insureds as a
group) and liability for premiums (which shall be solely a liability of the
Borrower) shall operate in the same manner as if there were a separate policy
covering each such insured, without right of contribution from any other
insurance which may be carried by any insured covering a loss which
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is also covered under the insurance policies maintained by the Borrower pursuant
to this Section 10.8, and (iv) shall provide that the Additional Insureds and
the loss payees shall have no obligation or liability for premiums, commissions,
assessments or calls in connection with such insurance.
(c) Reports, Etc. The Borrower will advise the Administrative
Agent and the Lenders in writing promptly of any default in the payment of any
premium and of any other act or omission on the part of the Borrower which may
invalidate or render unenforceable, in whole or in part, any insurance being
maintained by the Borrower pursuant to this Section 10.8. The Borrower will also
deliver to the Administrative Agent and the Institutions, promptly upon request
and in any event within 30 days after the end of each fiscal year of the
Borrower, a certificate signed by an authorized officer of an independent
insurance broker of recognized national standing (x) attaching certificates of
all insurance policies relating to the Facility, the Greenhouse, the Site and
the Easements, and stating that all premiums then due thereon have been paid and
that the same are in full force and effect and (y) stating that such insurance
policies comply with the requirements of this Section 10.8. If requested by the
Administrative Agent or any Institution, the Borrower will either (i) deliver
copies of such insurance policies to the Administrative Agent and the
Institutions or (ii) make such policies available for examination by the
Administrative Agent or any Institution at the offices of the Borrower.
(d) Other Insurance. Nothing in this Section 10.8 shall
prohibit the Borrower from maintaining, at its expense, insurance on or with
respect to the Facility, the Greenhouse, the Site or the Easements, naming the
Borrower as insured and/or loss payee, unless such insurance would conflict with
or otherwise limit the availability of insurance required to be maintained under
Section 10.8(a); provided that such insurance shall not reduce the amount of
insurance proceeds that would be payable to the beneficiaries pursuant to
policies of insurance maintained under Section 10.8(a) and the Borrower shall
have obtained and delivered to the Administrative Agent and the Lenders evidence
satisfactory to the Majority Lenders to such effect.
(e) Application of Payments. Except as provided in Section
10.8(b), all payments received by any Lender or the Borrower under any insurance
policy obtained by the Borrower pursuant to Section 10.8(a) shall promptly be
deposited in the Special Payment Account pursuant to the Security Deposit
Agreement for application in accordance with the provisions thereof.
Section 10.9 Completion of Facility; Maintenance of
Properties. (a) The Borrower shall use its best efforts to cause the Facility
and the Greenhouse to be duly constructed and completed in accordance with the
terms of the Facility Construction Contract and the Greenhouse Construction
Contract, respectively.
(b) The Borrower, at its expense, shall keep the Facility in
good working order and condition and cause the Facility to be maintained and
operated, and all repairs, replacements and renewals with respect thereto and
all additions and betterments thereto to be made, in each case (i) in compliance
with the terms of the Power Purchase Agreement (including, without limitation,
Article 6 thereof), the Steam Sales Agreement, the Coal Supply Agreement and the
other Project Documents and the Financing Documents, (ii) in compliance with the
maintenance
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procedures prescribed or recommended by, and sufficient to keep in effect the
warranties of, manufacturers and/or vendors of the various components of the
Facility, to the extent consistent with prudent operating practices in the
cogeneration industry with respect to coal-fired cogeneration facilities, and
(iii) in accordance with the practices, standards and procedures customary in
the cogeneration industry with respect to coal-fired cogeneration facilities.
Section 10.10 Maintenance of Title. The Borrower shall at all
times after the Closing Date maintain title in fee simple to, or a valid
leasehold interest in, or a valid right of way or easement or license over, all
real property at the time necessary for the construction, operation and
maintenance of the Project.
Section 10.11 "As Built" Surveys. The Borrower shall deliver
to the Administrative Agent, the Institutions, the Independent Engineer and the
Title Company, no later than 180 days after the date on which Final Completion
with respect to the Facility shall have occurred, a copy of an "as built" survey
of the Site (other than the Leased Land) and the Easements, showing the location
of the Facility within the boundaries of the Site (other than the Leased Land),
prepared by a licensed surveyor reasonably acceptable to the Administrative
Agent and Majority Institutions, certified to the Administrative Agent, the
Institutions and the Title Company pursuant to a surveyor's certification
reasonably satisfactory to them and showing no state of facts unsatisfactory to
the Title Company. The Borrower shall also deliver to the Administrative Agent
and the Institutions, promptly following its receipt thereof, a copy of the "as
built" survey of the Leased Land delivered to the Borrower pursuant to the
Greenhouse Loan Agreement, certified by a licensed surveyor reasonably
acceptable to the Administrative Agent and the Majority Institutions and showing
the location of the Greenhouse to be within the boundaries of the Leased Land,
which shall be reasonably satisfactory in form and substance to the
Administrative Agent and the Majority Institutions.
Section 10.12 Maintenance of Qualifying Facility Status. The
Borrower shall either (a) maintain the Facility as a Qualifying Facility, or (b)
obtain and maintain in full force and effect all Governmental Approvals and
other approvals necessary to operate the Facility as an IPP and to sell power to
Virginia Power under the Power Purchase Agreement; provided that, in the case of
clause (b) above:
(i) all Governmental Approvals, if any, required for
Subsidiaries of Southern to own at least the Requisite Partnership
Interest shall have been obtained and shall be in full force and
effect;
(ii) all of the terms of the Power Purchase Agreement
(including, without limitation, the rates set forth in Article 10
thereof) shall have been approved without modification by (x) FERC, if
approval by FERC is then required under applicable Requirements of Law,
and (y) any other Government Authority, if approval by such other
Government Authority is required under applicable Requirements of Law,
and all of such approvals shall remain in full force and effect without
modification;
(iii) all Governmental Approvals (in addition to those
referred to in clause (ii) of this proviso), including (if required) a
certificate of public convenience and necessity
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issued by the Virginia State Corporation Commission, and other
approvals necessary to own and operate the Facility as an IPP and to
sell power to Virginia Power under the Power Purchase Agreement shall
have been obtained and shall be in full force and effect;
(iv) no regulation by any Government Authority is imposed
on the Administrative Agent, the Security Agent or any Lender as a
result of the Governmental Approvals referred to in clauses (ii) and
(iii) of this proviso or as a result of the Facility operating as an
IPP; and
(v) the terms of the Governmental Approvals and other
approvals referred to in clauses (ii) and (iii) of this proviso and the
ownership or operation of the Facility as an IPP could not reasonably
be expected to have a Material Adverse Effect.
Section 10.13 Governmental Approvals. The Borrower shall
obtain and maintain in full force and effect all Governmental Approvals and
consents and approvals of any other Person necessary for the construction,
ownership and operation of the Project, including without limitation the
Governmental Approvals listed on Schedule 6.
Section 10.14 Compliance With Laws. The Borrower shall comply
with all Requirements of Law applicable to the Borrower or the Project, and with
the terms of all Governmental Approvals obtained by the Borrower, except to the
extent a failure to comply therewith could not reasonably be expected to have a
Material Adverse Effect.
Section 10.15 Employee Plans. For each Plan adopted by the
Borrower, if any, the Borrower shall (a) within the remedial amendment period
applicable under Section 401(b) of the Code, seek and receive determination
letters from the Internal Revenue Service to the effect that such Plan is
qualified within the meaning of Section 401(a) of the Code, (b) from and after
the date of adoption of any Plan, cause such Plan to be qualified within the
meaning of Section 401(a) of the Code and to be operated and administered in all
material respects in accordance with the requirements of ERISA and Section
401(a) of the Code, (c) not take any steps to terminate any such Plan if any
such steps, either individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect, (d) not violate any applicable
provision of ERISA relating to such Plan or the regulations and published
interpretations under ERISA if such violation could reasonably be expected to
result in a Material Adverse Effect, and (e) not incur any material liabilities
under ERISA.
Section 10.16 Assignments of Additional Contracts;
Maintenance of Liens of the Security Documents; Future Project Mortgages. The
Borrower shall:
(a) promptly upon the request of the Security Agent, the
Administrative Agent or the Majority Institutions, assign as security
to the Security Agent, by an instrument satisfactory in form and
substance to the Security Agent, the Borrower's right, title and
interest in, to and under any Additional Contract entered into by the
Borrower, and cause the other party or parties to such Additional
Contract to execute and deliver to the Security Agent a Consent to
Assignment with respect thereto;
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(b) promptly upon the request of the Security Agent, the
Administrative Agent or the Majority Institutions and at the Borrower's
expense, execute and deliver, or cause the execution and delivery of,
and thereafter register, file or record in each appropriate
governmental office, any document or instrument supplemental to or
confirmatory of the Security Documents or otherwise deemed by the
Security Agent, the Administrative Agent or the Majority Institutions
to be necessary or desirable for the creation or perfection of the
liens and security interests purported to be created by the Security
Documents; and
(c) if the Borrower shall at any time acquire any real
property or leasehold or other interest in real property not covered by
the Project Mortgage, promptly upon such acquisition (or on the Closing
Date, if such acquisition occurred prior thereto) execute, deliver and
record a supplement to the Project Mortgage, satisfactory in form and
substance to the Security Agent, subjecting such real property or
leasehold or other interest to the lien and security interest created
by the Project Mortgage.
Section 10.17 Notices. The Borrower shall, as soon as
practicable and in any event within five Business Days after any Borrower
Representative obtains actual knowledge of any of the following, give notice to
the Administrative Agent and each Institution of:
(a) the occurrence of any Default or Event of Default, an
Event of Loss (and the Event of Loss Prepayment Date in connection
therewith) or a Damage Event;
(b) the occurrence of any material default under any Project
Document, any event of Force Majeure under any Principal Project
Document, and the occurrence of a default or event of default under
Article 7 of the Greenhouse Loan Agreement or Section 15.01 of the
Greenhouse Sublease;
(c) any litigation or proceeding affecting the Project or the
Borrower in which the amount involved is $250,000 or more or in which
injunctive or similar relief is sought;
(d) any material dispute, litigation, investigation or
proceeding which may exist at any time between the Borrower and any
Government Authority;
(e) the execution and delivery of each Additional Contract and
each amendment or supplement to any Project Document (together with a
copy thereof);
(f) any request for a redetermination of the Base Coal
Compensation Price in accordance with Article 10 of the Power Purchase
Agreement and, following such a request, a copy of all notices, reports
and other written communications delivered or received by the Borrower
in connection therewith;
(g) any loss or damage to the Collateral in excess of
$250,000;
(h) at least 30 days prior thereto, the expected
occurrence of the Commercial Operations Date and the Completion Date;
and
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(i) the occurrence of any Reportable Event with respect to any
Plan; the incurrence of any lien in favor of PBGC or any Plan; the
institution of proceedings or the taking of any other action by PBGC or
the Borrower or any Commonly Controlled Entity to terminate, withdraw
or partially withdraw from any Plan; or the Reorganization or
Insolvency of any Multiemployer Plan, which in any such case could
reasonably be expected to have a Material Adverse Effect.
Each notice pursuant to this Section shall be accompanied by a statement of a
Responsible Officer of the Borrower setting forth details of the occurrence
referred to therein and stating what action the Borrower proposes to take with
respect thereto.
Section 10.18 Greenhouse Adverse Change. If the Majority Banks
or the Majority Institutions reasonably determine that a material adverse change
has occurred in the financial condition, business, operations or prospects of
the Greenhouse or the Greenhouse Operator that could reasonably be expected to
materially impair the Greenhouse Operator's ability to perform its obligations
under Section 5.03(b) and (c) of the Greenhouse Sublease [relating to the
requirement that it take a minimum amount of steam], then:
(a) the Borrower shall, within 60 days after a written request
therefor by either the Majority Banks or the Majority Institutions,
submit a plan (the "QF Plan"), reasonably acceptable to the Majority
Lenders, to the Administrative Agent and the Lenders, describing the
actions to be taken by the Borrower in order to maintain the Facility
as a Qualifying Facility;
(b) the Borrower shall promptly cause funds on deposit in the
Greenhouse Reserve Account to be applied as provided in Section 5.9 of
the Security Deposit Agreement, to the extent necessary;
(c) the Borrower shall use its best efforts (including, if the
QF Plan provides for the expenditure of moneys, the expenditure by the
Borrower of Excess Cash Flow to the extent that it is a prudent and
economic business decision to do so taking into account all other
options, except as such expenditure may be limited from time to time by
legal or regulatory requirements) to implement the QF Plan; and
(d) if the QF Plan concludes (which conclusion is reasonably
acceptable to the Majority Lenders) that the most prudent and economic
business option is to submit the Power Purchase Agreement to FERC for
approval of the rates and the other jurisdictional terms therein, with
a view to operating the Facility as an IPP, and contains the
information required by clause (y) of the second proviso to this
paragraph (d), the Borrower shall submit the Power Purchase Agreement
to FERC for such approval; provided that such submission to FERC shall
not be permitted unless (i) under applicable Requirements of Law the
Borrower may make such submission to FERC and continue to operate the
Facility as a Qualifying Facility until it shall have received FERC
approval and notified FERC that it desires to operate the Facility as
an IPP (it being understood that the Borrower shall not so notify FERC
except in accordance with the following proviso) and (ii) any
application or other written materials included in such submission
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of the Power Purchase Agreement to FERC shall be reasonably acceptable
to the Administrative Agent and the Majority Institutions and shall
indicate that the Borrower intends, and is required under this
Agreement, to continue to operate the Facility as a Qualifying Facility
until certain conditions shall have been satisfied; provided, further
that (x) the Borrower shall maintain the Facility as a Qualifying
Facility unless and until the requirements of clause (ii) of Section
12.1(q) shall have been satisfied, and (y) such QF Plan shall describe
the actions to be taken by the Borrower to maintain the Facility as a
Qualifying Facility until the requirements referred to in clause (x) of
this proviso have been complied with.
If any QF Plan delivered pursuant to clause (a) above is not reasonably
acceptable to the Majority Lenders, the Administrative Agent or the Majority
Institutions shall notify the Borrower of such determination and the reasons
therefor, and the Borrower shall have an additional period of 30 days following
receipt of such notification to submit an alternative QF Plan reasonably
acceptable to the Majority Lenders. For purposes of this Section 10.18, it is
agreed that the Majority Banks and Majority Institutions would be reasonable in
determining that a "material adverse change in the financial condition,
business, operations or prospects" of the Greenhouse Operator shall have
occurred if the Greenhouse Operator shall not, prior to August 30, 1996, have
entered into a commitment for an adequate working capital facility with an
Acceptable Issuer (as defined in the Greenhouse Loan Agreement) or another bank
which is reasonably acceptable to the Majority Lenders, in the amount of
$10,000,000 (exclusive of the Greenhouse Letter of Credit referred to in the
Security Deposit Agreement), or such lesser amount as may be reasonably
demonstrated to the Administrative Agent and Majority Institutions as being
adequate to finance the operations of the Greenhouse Operator.
Section 10.19 Ownership of the Borrower. The Borrower shall
cause Southern's ownership interest (direct or indirect) in the Borrower to be
reduced to (and thereafter not to exceed) the Maximum Partnership Interest prior
to the Initial Synchronization Date for the Facility, unless either (a) the
Borrower has ceased to maintain the Facility as a Qualifying Facility in
compliance with the provisions of Section 10.12 or (b) as a result of any change
in one or more Requirements of Law occurring after the date hereof, the Facility
will not cease to be a Qualifying Facility as a result of the direct or indirect
ownership by Southern of more than the Maximum Partnership Interest.
Section 10.20 Performance and Enforcement of Other Agreements.
The Borrower shall duly perform and observe all of the covenants, agreements and
conditions on its part to be performed and observed under the Security Deposit
Agreement and each other Financing Document to which the Borrower is a party,
and shall duly perform and observe in all material respects all of the
covenants, agreements and conditions on its part to be performed and observed
under the Project Documents.
Section 10.21 Interest Rate Hedging Transactions. The Borrower
shall, on or immediately prior to the Closing Date, enter into and at all times
thereafter maintain in effect one or more Interest Rate Hedging Transactions
with one or more Interest Rate Hedging Counterparties, so as to fix the maximum
interest rate payable by the Borrower on at least 80% of the Total Loan
Commitments for a period of at least 15 years following the Completion Date,
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pursuant to documentation which is satisfactory in form and substance to the
Administrative Agent and Majority Institutions. The Borrower shall offer the
Banks and their Affiliates that qualify as Interest Rate Hedging Counterparties
described in clause (i) of the definition thereof an opportunity to bid on the
Interest Rate Hedging Transactions, and may enter into an Interest Rate Hedging
Transaction with an Interest Rate Hedging Counterparty described in clause (ii)
of the definition thereof only if none of the Interest Rate Hedging
Counterparties described in clause (i) of the definition thereof is willing or
able to provide an Interest Rate Hedging Transaction that satisfies the
requirements of this Section 10.21 for a fee to be determined between such Bank
or such Affiliate and the Borrower at such time. The obligations of the Borrower
to each Interest Rate Hedging Counterparty described in clause (i) of the
definition thereof shall be equally and ratably secured with the Secured
Obligations pursuant to the Security Documents, but the obligations of the
Borrower to each Interest Rate Hedging Counterparty described in clause (ii) of
the definition thereof shall be unsecured.
Section 10.22 Equity Funding Loans. (a) The Borrower shall
deliver to the Administrative Agent, the Institutions and the Independent
Engineer, at least 10 Business Days prior to the proposed Equity Funding Loan
Borrowing Date with respect to each Equity Funding Loan, a copy of the Equity
Funding Loan Borrowing Certificate to be given to the Equity Funding Loan Agent
with respect to such Equity Funding Loan. The Borrower agrees that if it shall
have received a notice from the Administrative Agent or the Majority
Institutions on or prior to the fourth Business Day before such proposed Equity
Funding Loan Borrowing Date stating that, in the good faith judgment of the
Administrative Agent or such Institutions, as the case may be (in the case of
clause (i) below, after consultation with the Independent Engineer), (i) one or
more items identified in such Equity Funding Loan Borrowing Certificate as
constituting "Project Costs" do not constitute "Project Costs" or (ii) the
conditions precedent set forth in paragraph (a), (b), (c), (f), (g), (h) or (m)
of Section 9.2 have not been satisfied on such date and are not likely to be
satisfied on the proposed Equity Funding Loan Borrowing Date (specifying such
conditions precedent and the reasons they are not or will not be satisfied)
(regardless of whether a Loan is to be made on such proposed Equity Funding Loan
Borrowing Date), then the Borrower shall (x) in the case of clause (i) above,
reduce the amount of the Equity Funding Loan proposed to be borrowed on such
Equity Funding Loan Borrowing Date by the aggregate dollar amount of such items,
or (y) in the case of clause (ii) above, not submit such Equity Funding Loan
Borrowing Certificate to the Equity Funding Loan Agent or borrow any Equity
Funding Loans requested to be borrowed in such Equity Funding Loan Borrowing
Certificate.
(b) The Borrower shall use the proceeds of Equity Funding
Loans solely for the payment of Project Costs and for the prepayment of Bank
Loans.
Section 10.23 Operating Budgets. (a) The Borrower shall, not
later than 15 days before the Commercial Operations Date is estimated to occur,
adopt an operating budget (the "Operating Budget") of Debt Service, proposed
Distributions and Cash Operating Costs, including allowances for reserves and
contingencies, for the first Operating Year; and no later than 15 days prior to
the beginning of each Operating Year thereafter, the Borrower shall similarly
adopt an Operating Budget for such Operating Year. Copies of the Operating
Budget for each Operating Year shall be furnished at least 60 days before final
adoption thereof to the Administrative Agent,
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each Lender and the Independent Engineer. In the event that the aggregate amount
of Cash Operating Costs included in the Operating Budget for any Operating Year
exceeds by more than 10% the aggregate amount of Cash Operating Costs for such
Operating Year specified in the Base Case Projections delivered pursuant to
Section 9.1(w) on the Closing Date, then the Operating Budget for such Operating
Year shall not be adopted without the approval by the Administrative Agent (if
such excess is less than 15%) or the Administrative Agent and the Majority
Institutions (if such excess is 15% or more), in each case in consultation with
the Independent Engineer, which approval shall not be unreasonably withheld;
provided that, with respect to the initial Operating Budget, if the
Administrative Agent or the Administrative Agent and the Majority Institutions
have a right to approve such Operating Budget pursuant to this Section 10.23(a)
and fail to do so within 30 days after their receipt thereof, the Borrower and
the Administrative Agent or the Borrower and the Administrative Agent and the
Majority Institutions, as the case may be, shall work in good faith with the
Independent Engineer to resolve any disagreements with a view to resolving any
such disagreements at least 15 days prior to the Commercial Operations Date.
Each Operating Budget shall be prepared on the basis of requirements for each
month within the relevant Operating Year, showing the Debt Service, proposed
Distributions and Cash Operating Costs (broken down into major categories) for
such month.
(b) The Borrower shall furnish to the Administrative Agent and
each Lender, promptly upon receipt thereof, each annual operating budget
delivered by the Greenhouse Operator pursuant to Section 5.4 of the Greenhouse
Loan Agreement.
Section 10.24 Annual Opinion of Counsel. The Borrower shall
furnish to the Administrative Agent and the Lenders within 90 days after the end
of each calendar year, beginning with 1994, an opinion of counsel addressed to
the Agents and each Lender (a) stating that such action has been taken with
respect to the filing, recording, re-filing and re-recording of the Security
Documents and/or financing statements and continuation statements with respect
thereto as is necessary to protect and preserve the liens on and security
interests in and to the Collateral purported to be created by the Security
Documents, and reciting the details of such action or referring to prior
opinions of counsel in which such details are given and (b) stating what, if
any, action of the foregoing nature may reasonably be expected to become
necessary during the next succeeding twelve months in order to protect and
preserve the liens on and security interests in the Collateral purported to be
created by the Security Documents.
Section 10.25 Issuance of Bonds. During the Construction
Period the Borrower may, on not more than six occasions, enter into Bond
Documents for the issuance of, and issue pursuant to such Bond Documents, Bonds
in an aggregate principal amount not exceeding $50,000,000 less the amount, if
any, by which the sum of the aggregate amount of Bank Project Loans made to the
Borrower to and including the date of such issuance plus the Total Bank L/C Loan
Commitments in effect after giving effect to such issuance, exceeds
$215,976,000; ; provided that the Borrower shall notify the Administrative
Agent, the Security Agent and the Lenders of such proposed issuance of Bonds at
least 60 days prior to such issuance and, on the date of issuance of such Bonds,
each of the following conditions shall have been satisfied:
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(a) Bond Terms. (i) The terms of such Bonds shall be
substantially the same as set forth in the Base Case Projections
delivered pursuant to Section 9.1(w) and shall otherwise be
satisfactory to the Majority Lenders and the Issuing Bank; (ii) if such
Bonds are to be supported by a Bond Letter of Credit, they will not be
secured by the Collateral; and (iii) if such Bonds are not to be
supported by a Bond Letter of Credit, they will be equally and ratably
secured by the Collateral with the Secured Obligations pursuant to the
Security Documents; provided that the Borrower shall not enter into
Bond Documents for the issuance of, or issue pursuant to such Bond
Documents, Unsupported Bonds without the prior written consent of the
Majority Lenders.
(b) Other Conditions. The conditions set forth in paragraphs
(a) through (h) of Section 9.2 shall have been satisfied and, if such
Bonds are to be supported by a Bond Letter of Credit, the conditions
set forth in Section 9.5 shall have been satisfied.
(c) Bond Documents. The Administrative Agent and each
Institution shall have received, with a copy for each Bank, true and
complete copies of each of the Bond Documents executed in connection
with such issuance and sale of such Bonds, certified by the Borrower as
such on the date of issuance of such Bonds, each of which shall be
satisfactory in form and substance to the Majority Lenders.
(d) Legal Opinions. The Administrative Agent (with a copy for
each Bank) and each Institution shall have received the respective
opinions of counsel to the Bond Issuer, to the placement agent for the
Bonds and to the relevant Bond Trustee, addressed to them but otherwise
in the form delivered by such counsel in connection with the issuance
and sale of such Bonds, which opinions of counsel shall be reasonably
satisfactory in form and substance to the Administrative Agent and the
Majority Institutions.
(e) Modifications of Loan Documents. The Borrower shall have
entered into such amendments, supplements and modifications of the Loan
Documents as the Majority Lenders shall deem necessary or desirable in
connection with the issuance of such Bonds; provided that no such
amendment, supplement or modification of any Loan Document may be
entered into unless it complies with the provisions of Section 8.7 of
the Security Deposit Agreement.
(f) Additional Matters. All proceedings to be taken in
connection with the issuance of such Bonds, and all documents incident
thereto, shall be reasonably satisfactory in form and substance to the
Administrative Agent, the Majority Institutions and their respective
counsel; and the Lenders shall have received copies of all documents
and opinions of counsel which the Administrative Agent or any
Institution may reasonably request in connection with the issuance of
such Bonds and of all corporate and partnership proceedings in
connection therewith, in form and substance reasonably satisfactory to
the Administrative Agent and the Majority Institutions.
Section 10.26 Coordination of Unit Reliability Test With
Virginia Power. The Borrower shall coordinate any Unit Reliability Test (as
defined in the Facility Construction
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Contract) to be conducted by the Facility Contractor with Virginia Power, with a
view to having the Facility dispatched at full load during such testing, and, in
furtherance thereof and to the extent necessary, the Borrower shall offer to
reduce the Energy Purchase Price (as defined in the Power Purchase Agreement)
payable by Virginia Power during such Unit Reliability Tests to such amounts as
shall be acceptable to Virginia Power or, if required by Virginia Power, to
waive completely the payment of such Energy Purchase Price during such testing.
Section 10.27 Environmental Matters. The Borrower shall
comply, and shall use reasonable efforts to ensure that the other Significant
Project Participants shall comply, in all material respects with any and all
Requirements of Law and requirements of insurance policies, if any, with respect
to the management, use, storage, transmission, presence, containment,
remediation, clean-up or removal of Hazardous Materials on, from or affecting
the Site, shall pay, or cause to be paid, immediately when due the costs of
containment, remediation, clean-up or removal of any Hazardous Materials or the
threat of release of any Hazardous Materials on the Site required to be
contained, remediated, cleaned-up or removed pursuant to any Requirements of Law
or requirements of insurance policies and shall keep the Site, and cause the
Site to be kept, free of any Lien pursuant to such Requirements of Law. The
Borrower will not, and will use reasonable efforts to ensure that none of the
Significant Project Participants will, voluntarily release, discharge, transport
or dispose of any Hazardous Materials on or from the Site except in compliance
in all material respects with all Requirements of Law and requirements of
insurance policies, if any, and, if any Hazardous Materials shall be released,
discharged or disposed of, whether voluntarily or involuntarily, in violation of
any Requirement of Law or requirement of insurance policies, the Borrower will
immediately contain, remediate, clean-up or remove or cause to be contained,
remediated, cleaned-up or removed from the Site such Hazardous Materials to the
extent required to be contained, remediated, cleaned-up or removed by any
Requirement of Law or requirement of insurance policies. The Borrower will not
install nor permit to be installed in the Facility or the Greenhouse asbestos or
any substance containing asbestos (other than a substance which is not a
Hazardous Material). If the Borrower fails to comply with any of the foregoing
provisions, the Security Agent, the Administrative Agent and each Institution
will have the right (but not the obligation) to do whatever it deems reasonably
necessary to cure any such default or to comply with such Requirements of Law or
requirements of insurance policies. The Borrower will promptly investigate any
release, suspected release or discovery of Hazardous Materials on or from the
Site, and any other environmental condition that might reasonably be expected to
have a Material Adverse Effect. The Borrower will promptly notify the Security
Agent and the Lenders of the discovery of any condition (including the presence
of Hazardous Materials, endangered or threatened species, or historic resources)
that might reasonably be expected to have a Material Adverse Effect. The
Borrower will give, and to the extent that it has a right to do so under the
Greenhouse Documents, cause the Greenhouse Owner and the Greenhouse Operator to
give, the Security Agent and the Lenders and their agents, employees and
contractors access to the Site following reasonable notice to the Borrower, the
Greenhouse Owner or the Greenhouse Operator, as the case may be, to enable the
Security Agent and the Lenders to take such action as they deem reasonably
necessary to cure any such default or to comply with such Requirements of Law or
requirements of insurance policies. The Security Agent, the Administrative Agent
and each Institution will have the right (but will not be obligated), at the
expense of the Borrower at any time that the Majority Lenders have reason to
believe that a material liability under Environmental Laws to the Borrower or
the Project could
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result from any activity or event occurring at or near the Site, to conduct an
environmental audit of the Site, at such times as shall be deemed reasonable by
the Majority Lenders (after consultation with the Environmental Consultant and
the Borrower), and the Borrower will cooperate, and will use reasonable efforts
to cause the Greenhouse Owner and Greenhouse Operator to cooperate, in the
conduct of such environmental audit. The conduct of such an audit shall not be
construed as participating in the management of the Project or the Greenhouse
but rather as protecting a security interest. At the request of the Borrower,
the Security Agent will provide the Borrower with a copy of the report prepared
with such environmental audit.
Section 10.28 Termination of Facility Operator. Following the
occurrence of any of the matters or events specified in Section 8.2 or 8.3 of
the Operations and Maintenance Agreement, the Borrower shall, upon the written
request of the Majority Lenders, terminate the Operations and Maintenance
Agreement pursuant to Section 8.2 thereof or remove the Facility Operator
pursuant to Section 8.3 thereof, as shall be specified in such request.
Section 10.29 Real Estate Post-Closing Matters. (a) The
Administrative Agent and the Institutions shall have received (i) within thirty
(30) days after the Closing Date, (x) an update of the survey of the Site and
Easements delivered pursuant to Section 9.1(j), showing no state of facts which
the Administrative Agent or the Majority Institutions (after consultation with
the Title Company) reasonably determined to be unsatisfactory; (y) an
endorsement to the policy of title insurance delivered pursuant to Section
9.1(j) and an endorsement to the policy of title insurance delivered to the
Borrower with respect to the Greenhouse Mortgage, which shall revise the survey
exceptions thereof to incorporate the updated survey delivered pursuant to
clause (x) above; and (z) a copy of an amendment to the Access and Utility
Easement in form reasonably satisfactory to the Security Agent which has been
recorded in the recorder's office of King George County, Virginia.
(b) The Borrower shall have submitted an application for the
Virginia Department of Transportation permit required for the installation of
the water intake and outfall pipes across State Route 3 on or before June 30,
1994, and shall provide the Administrative Agent and the Institutions with a
copy of such application.
Section 10.30 Submission of Application for Recertification of
Facility. The Borrower shall submit to FERC, within 90 days of the effective
date of the Fifth Amendment to this Agreement, an application for the
recertification of the Facility as a Qualifying Facility based on the revised
ownership of the partnership interests in the Borrower.
Section 10.31 Bond Repurchase Covenants. (a) So long as any of
the Bonds are outstanding, on each Bank Loan Installment Payment Date, the
Borrower shall, in addition to its other obligations hereunder, at its election,
either (i)(A) retire, (B) purchase and immediately cancel or (C) redeem an
aggregate principal amount of Bonds or (ii) prepay Bank Loans (other than Bank
Liquidity Loans) pursuant to Section 7.4 hereof, in an amount equal to the
product of (x) the aggregate principal amount of Bonds outstanding on the
Construction Period Termination Date and (y) 50% of the percentage set forth in
Schedule 3 attached hereto (as adjusted from time to time pursuant to Section
3.4(b) hereof); provided, however, that in any event the Borrower shall on or
before the sixtieth Bank Loan Installment Payment Date retire, purchase and
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cancel or redeem Bonds in an aggregate amount equal to 50% of the aggregate
principal amount of Bonds outstanding on the Construction Period Termination
Date; provided, further, that no Bond Reimbursement Obligation arising in
respect of this Section 10.31 may be financed under this Project Loan Agreement.
(b) Retirements, purchase and cancellations or redemptions of
Bonds pursuant to this Section 10.31 shall be in an aggregate principal amount
of $100,000 or a whole multiple in excess thereof.
(c) Bond Reimbursement Obligations (and interest thereon and
all other amounts owing with respect thereto) arising in respect of drawings on
any Bond Letter of Credit made pursuant to this Section 10.31 shall be treated,
for all purposes of the Security Deposit Agreement, in the same manner as Bank
Loans and shall be given the same priority pro rata as Bank Loans and in all
other respects shall be treated in the same manner as Bank Loans due on a
Scheduled Senior Debt Service Payment Date.
(d) For each of years 16 through 22 following the Construction
Period Termination Date, the Borrower agrees that it shall not retire, purchase
and cancel or redeem Bonds in an aggregate principal amount in excess of
$3,000,000 annually.
SECTION 11. NEGATIVE COVENANTS
So long as any Commitments remain in effect, any Letter of
Credit shall remain outstanding and until payment in full of the Loans and all
other Secured Obligations hereunder or under any of the Security Documents, the
Borrower hereby agrees that:
Section 11.1 Limitations on Indebtedness. The Borrower shall
not create, incur, assume or permit to exist any Indebtedness, except for:
(a) Indebtedness of the Borrower in respect of the Loans, the
Equity Funding Loans, the L/C Reimbursement Obligations and the
Interest Rate Hedging Transactions described in Section 10.21;
(b) accounts payable arising, and accrued expenses incurred,
in the ordinary course of the Borrower's business (and not in
connection with indebtedness for borrowed money or under Capital
Leases) which are payable in accordance with customary practices and
are unsecured and are paid within the specified time, if any, but in
any event not more than 90 days from the date such Indebtedness arises
or is incurred (or 180 days from the date such Indebtedness arises or
is incurred if the Borrower is in good faith contesting the validity or
amount thereof and such non-payment could not reasonably be expected to
have a Material Adverse Effect);
(c) Junior Subordinated Debt;
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(d) Indebtedness secured by Liens permitted by Section 11.2(c)
or constituting rent payable under leases permitted by Section 11.15;
(e) Bonds issued in accordance with the provisions of
Section 10.25; and
(f) Indebtedness of the Borrower incurred solely for the
purpose of prepaying (or, in the case of Bonds, defeasing), and the
proceeds of which are applied solely to the prepayment (or, in the case
of Bonds, defeasing) of, a portion of the Senior Debt (a "Refinancing
Transaction"); provided that:
(i) immediately prior to such Refinancing Transaction
and after giving effect thereto, no Default or Event of
Default shall have occurred and be continuing;
(ii) the aggregate principal amount of Senior Debt
outstanding after giving effect to such Refinancing
Transaction will not exceed the aggregate principal amount of
Senior Debt outstanding immediately prior thereto;
(iii) the Borrower shall have delivered to the
Administrative Agent and the Lenders reasonably detailed
financial projections for the Project covering the period
through the twentieth anniversary of the Commercial Operations
Date and which give effect to such Refinancing Transaction,
which projections shall be reasonably satisfactory to the
Majority Lenders and certified by the chief financial officer
of the Borrower or of SEI Birchwood, for so long as it is a
General Partner, as being based on reasonable assumptions and
as being prepared in good faith in full consideration of all
information known to such officer, after due inquiry, at such
time;
(iv) the projected Debt Service Coverage Ratio in the
projections delivered pursuant to clause (iii) above shall in
each fiscal year of the Borrower be equal to or greater than
the Debt Service Coverage Ratio included in the Base Case
Projections delivered on or prior to the Closing Date pursuant
to Section 9.1(w);
(v) such Indebtedness is (x) unsecured, or (y)
secured equally and ratably with the existing Senior Debt
secured pursuant to the Security Documents and the holders of
such Indebtedness shall have agreed in writing to be bound by
the terms thereof;
(vi) the terms of such Indebtedness, and the
documentation evidencing such Indebtedness, are reasonably
satisfactory to the Majority Lenders; and
(vii) the proposed holders of such Indebtedness are
banks, financial institutions or investors reasonably
acceptable to the Majority Lenders.
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In determining the "Majority Lenders" for the purposes of this
paragraph (f), the Senior Debt to be prepaid when the Refinancing
Transaction occurs shall not be deemed to be outstanding.
Section 11.2 Limitations on Liens. The Borrower shall not
create, incur, assume or permit to exist any Lien upon any of its property,
assets or revenues, whether now owned or hereafter acquired, except for:
(a) Liens created pursuant to the Security Documents
(including without limitation as the Security Documents may be amended
or supplemented to permit Unsupported Bonds to be secured equally and
ratably with the other Senior Debt secured pursuant to the Security
Documents);
(b) Liens arising under the Project Documents;
(c) Liens securing purchase money obligations incurred to
finance discrete items of equipment not comprising an integral part of
the Project that extend only to the equipment being financed, provided
that the principal and interest payments with respect to obligations
secured thereby and the rent payable with respect to leases permitted
by Section 11.15 do not exceed $250,000 in any fiscal year of the
Borrower;
(d) Permitted Liens;
(e) Liens securing Refinancing Indebtedness permitted by
clause (f) of Section 11.1; and
(f) in addition to the Liens permitted by clauses (a) through
(e) of this Section, Liens securing obligations (which do not
constitute Indebtedness) in an aggregate amount not exceeding $250,000
at any time outstanding.
Section 11.3 Limitations on Guarantee Obligations. The
Borrower shall not create, incur or assume any Guarantee Obligations.
Section 11.4 Limitations on Distributions. The Borrower shall
not (i) declare or make any distributions on or in respect of the Partnership
Interests nor make any other payment on account of, or purchase, redeem, retire
or otherwise acquire, any Partnership Interests, whether in cash or other
property, or (ii) make any payment of principal or interest on any Junior
Subordinated Debt or redeem, purchase or otherwise acquire any Junior
Subordinated Debt, except that (A) on the Completion Date, from the proceeds of
Bank Project Loans or Equity Funding Loans permitted to be borrowed for such
purpose, and/or on the date of Final Completion of the Facility, from funds on
deposit in the Final Completion Escrow Account and available for such purpose
pursuant to Section 5.9 of the Security Deposit Agreement, the Borrower may make
the Contingent Distribution, in an aggregate amount equal to the Contingent
Distribution Amount, and (B) on any Quarterly Distribution Date (or within three
Business Days thereafter) occurring on or after the Initial Repayment Date, the
Borrower may make cash
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distributions to the Partners and/or payments of principal or interest on any
Junior Subordinated Debt; provided that at the time thereof, and immediately
after giving effect thereto:
(1) no Specified Default or Event of Default shall have
occurred and be continuing;
(2) in the case of cash distributions or payments made
pursuant to clause (B) above, such distributions or payments are made
solely from and to the extent of funds on deposit in the Distributions
Account; and
(3) in the case of cash distributions or payments made
pursuant to clause (B) above, such Quarterly Distribution Date is not a
Cash Trap Date;
and provided, further that, in the case of cash distributions or payments made
pursuant to clause (B) above, prior to making any such distribution or payment,
the Borrower shall have furnished to the Administrative Agent, the Security
Agent and the Lenders the certificate required by Section 10.4(c). Any cash
distribution or payment made pursuant to the provisions of this Section 11.4
shall be free and clear of all Liens created by the Security Documents.
Section 11.5 Limitations on Investment, Loans and Advances.
The Borrower shall not make any advance, loan, extension of credit or capital
contribution to, or purchase stocks, bonds, notes or other securities of, or
make any other investment in, any other Person, other than (a) Permitted
Investments and (b) the secured loans made to the Greenhouse Owner pursuant to
Article 3 of the Greenhouse Loan Agreement with the proceeds of Loans and Equity
Funding Loans.
Section 11.6 Limitations on Transactions with Affiliates and
Others. The Borrower 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 (other than the Financing
Documents and Project Documents in existence on the Closing Date) with, any
Partner or any Affiliate of the Borrower or any Partner or any officer, director
or employee of the Borrower or any Partner or any of their respective
Affiliates, except for (a) sales of Partnership Interests to Southern or any of
its Subsidiaries, (b) transactions in the ordinary course of business and
(except to the extent otherwise required by law or approved in writing by the
Majority Lenders) upon commercially reasonable terms substantially no less
favorable to the Borrower than the Borrower could obtain, or could become
entitled to, in an arm's-length transaction with a Person which is not an
Affiliate and (c) Junior Subordinated Debt otherwise permitted under this
Agreement.
Section 11.7 Limitations on Disposition of Assets. The
Borrower shall not convey, sell, lease, assign, transfer or otherwise dispose of
any property or assets, whether now owned or hereafter acquired, except for:
(a) sales of electric power pursuant to the Power Purchase
Agreement, sales of steam pursuant to the Steam Sales Agreement and
sales of any other by-products of the fuel combustion process of the
Facility;
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(b) sales or other dispositions of obsolete, worn out or
defective equipment, provided that such equipment is reasonably
promptly replaced by the Borrower with suitable substitute equipment of
substantially the same character and quality and at least equivalent
useful life and utility;
(c) sales or other dispositions in the ordinary course of
business of assets or property not required in connection with the
proper and efficient operation and maintenance of the Facility,
provided that (i) at the time of such disposition and after giving
effect thereto, no Default or Event or Default is in existence and (ii)
the Borrower shall not in any calendar year dispose of property
pursuant to this paragraph (c) having a fair market value as of the
respective time or times of the disposition exceeding $1,000,000 in the
aggregate; and
(d) sales of Permitted Investments for cash or other Permitted
Investments.
Section 11.8 Limitations on Fundamental Changes. The Borrower
shall not (a) enter any merger or consolidation, change its form of organization
or its business, or liquidate, wind up or dissolve itself, of suffer any
liquidation or dissolution, (b) convey, sell, lease, assign, transfer or
otherwise dispose of all or substantially all of its property or assets, whether
now owned or hereafter acquired, (d) acquire all or substantially all of the
assets or the business of any Person or (e) organize or create any Subsidiary;
provided that nothing in clause (a) of this Section 11.8 shall restrict (i) any
transfer of a Partnership Interest made in accordance with Section 11.13 or (ii)
any withdrawal of a Partner from the Borrower so long as after giving effect to
such withdrawal no Default or Event of Default shall occur.
Section 11.9 Limitations on Change Orders. (a) The Borrower
shall not enter into any Change Order under the Facility Construction Contract
(i) that will increase the Contract Price (as defined therein) by more than (x)
$200,000 per Change Order or (y) $ 500,000 in the aggregate with respect to all
Change Orders under the Facility Construction Contract or (ii) which would
change the design or specifications of the Facility in any material respect or
change the Guaranteed Completion Date, the Payment Schedule, the Project
Milestone Schedule, the Performance Guarantees or the requirements for
Substantial Completion or Final Completion (as such terms are defined in the
Facility Construction Contract), unless the Borrower shall have received the
prior written consent of (A) in the case of any Change Order referred to in
clause (i) above which will not result in an increase in the Contract Price of
more than $3,000,000 in the aggregate with respect to all Change Orders under
the Facility Construction Contract, the Administrative Agent, or (B) in the case
of any Change Order referred to in clause (ii) above or if such Change Order
will result in an increase in the Contract Price by more than $3,000,000 in the
aggregate with respect to all Change Orders under the Facility Construction
Contract, the Majority Lenders.
(b) The Borrower shall not provide its consent under the
Greenhouse Loan Agreement which would permit the Greenhouse Owner or Greenhouse
Operator to enter into any Change Order under the Greenhouse Construction
Contract (i) that has a cost exceeding $100,000 in the aggregate with respect to
all Change Orders under the Greenhouse Construction Contract or (ii) which would
change the design or specifications of the Greenhouse in any material respect
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or diminish the liability or obligation of the Greenhouse Contractor with
respect to Final Completion of the Greenhouse or the Greenhouse's performance or
the ability of the Greenhouse Contractor to meet the Greenhouse Construction
Schedule, unless the Borrower shall have received the prior written consent of
(A) in the case of any Change Orders referred to in clause (i) above which,
together with all other Change Orders under the Greenhouse Construction
Contract, have an aggregate cost not exceeding $600,000, the Administrative
Agent, or (B) in the case of any Change Order referred to in clause (ii) above
or if such Change Order, together with all other Change Orders under the
Greenhouse Construction Contract, have an aggregate cost exceeding $600,000, the
Majority Lenders.
Section 11.10 Limitations on Nature of Business. The Borrower
shall not engage at any time in any business other than the construction,
operation and ownership of the Project.
Section 11.11 Limitations on Optional Payments and
Modifications of Debt Instruments; Limitation on Payments of Equity Funding
Loans. (a) The Borrower shall not (i) make any optional payment or prepayment or
redemption of any Senior Debt (other than the Loans in accordance with Section
7.4 or the Senior Debt prepaid in connection with a Refinancing Transaction
permitted by Section 11.1(f)) unless such payment, prepayment or redemption is
being made pro rata with a concurrent prepayment of the Loans pursuant to
Section 7.4; (ii) defease any Senior Debt (other than the Bonds from amounts
constituting Excess Cash Flow or from the proceeds of Junior Subordinated Debt);
or (iii) amend, modify or change, or consent or agree to any amendment,
modification or change with respect to, (x) any of the terms of the Equity
Funding Documents, the Bond Documents, any Interest Rate Hedging Agreement or
the documents evidencing or relating to any Refinancing Indebtedness or (y) any
of the subordination provisions contained in any documents evidencing or
relating to any Junior Subordinated Debt, in each case without the prior written
consent of the Majority Lenders.
(b) Except to the extent permitted by Section 10.1(b)(iv) or
10.1(c) with respect to the proceeds of Institutional Loans and Bank Project
Loans, respectively, the Borrower shall not prepay or repay any principal amount
of the Equity Funding Loans, or make any payments in respect of interest on
overdue amounts of principal thereof or interest thereon, and, in any event, the
Borrower shall under no circumstances make any payment in respect of the
principal of or interest on any Equity Funding Loan with any Proceeds received
by the Borrower from time to time, including without limitation, in connection
with an Event of Loss.
Section 11.12 Limitations on Amendment, Termination or
Extension of Project Documents; Limitation on Exercise of Remedies under
Greenhouse Documents. (a) The Borrower shall not, without the prior written
consent of the Majority Lenders, agree to or acquiesce in (i) the cancellation,
suspension or termination of any Project Document (except upon the expiration of
the stated term thereof), (ii) the assignment, release or relinquishment of the
rights or obligations of any other Project Participant except (x) as
contemplated by the Security Documents or (y) as permitted without the consent
of the Borrower by the terms of such Project Document, or (iii) any amendment,
supplement or modification of, or consent or waiver with respect to any of the
provisions of, any Project Document to which the Borrower is a party or with
respect to which the consent of the Borrower is required; provided that, except
as set forth in the following proviso, the Borrower may, upon prior written
notice to the Administrative
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Agent and the Institutions, (A) amend, supplement or otherwise modify, or waive
in writing any provision of, any Project Document (other than the Power Purchase
Agreement, the Greenhouse Sublease, the Construction Contract Guarantees and,
except to the extent provided in Section 11.9, the Construction Contracts) in
any manner (x) which does not alter in any material respect the rights or
obligations of the respective parties thereto and (y) which could not reasonably
be expected to have a Material Adverse Effect, and (B) enter into Change Orders
under the Facility Construction Contract and the Greenhouse Construction
Contract that do not require the Majority Lenders' consent under the provisions
of Section 11.9; provided, further, that the Borrower shall not consent to the
addition of additional coal reserves to the Arch Mines (as defined in the Arch
Back-Up Coal Supply Agreement) pursuant to paragraph 8 of the Arch Back-Up Coal
Supply Agreement without the prior written consent of the Administrative Agent
and the Majority Institutions, which shall not be unreasonably withheld or
delayed.
(b) The Borrower shall not, without the prior written consent
of the Majority Lenders, (i) terminate the Greenhouse Sublease or exercise any
purchase option thereunder, or (ii) exercise, or cause the Greenhouse Owner to
exercise, any rights or remedies under any Greenhouse Document following any
default thereunder, including without limitation any right to terminate the
lending commitments of the Borrower under the Greenhouse Loan Agreement, to
declare loans, advances, rent and/or other amounts owing under the Greenhouse
Loan Agreement, the Greenhouse Mortgage or the Greenhouse Sublease to be
immediately due and payable, or to foreclose on or exercise other remedies with
respect to all or any portion of the Greenhouse Collateral.
Section 11.13 Limitations on Sale or Issuance of Partnership
Interests. The Borrower shall not (a) permit or consent to the transfer (by
assignment, sale or otherwise) of any general partnership interest in the
Borrower, or issue any additional general partnership interest in the Borrower,
to any Person without the prior written consent of the Majority Lenders (which
consent shall not be unreasonably withheld), or (b) permit or consent to the
transfer (by assignment, sale or otherwise) of any limited partnership interest
in the Borrower, or issue any additional limited partnership interest in the
Borrower, (x) to any Person which, together with its Affiliates, would own in
the aggregate, after giving effect to such transfer or issuance, Partnership
Interests entitling such Person and its Affiliates to receive 50% or more of the
profits and losses of the Borrower, without the prior written consent of the
Majority Lenders (which consent shall not be unreasonably withheld), or (y) to
any Person not specified in clause (x) above, unless such Person is a Qualified
Limited Partner Transferee; provided that, in addition to the requirements
contained in clauses (a) and (b) above, the Borrower further agrees that it
shall not permit or consent to any such transfer of any Partnership Interest, or
issue any additional Partnership Interest, to any Person unless:
(A) after giving effect to such transfer or issuance, no
Default or Event of Default under Section 12.1(g)(i) (relating to the
agreements of the Borrower in Section 10.19) or 12.1(p) shall occur and
be continuing;
(B) after giving effect to such transfer or issuance, the
Facility shall remain a Qualifying Facility (unless the IPP Conversion
Date shall have occurred);
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(C) such Person is a partnership, corporation, business trust
or unincorporated association;
(D) such Person shall have pledged such Partnership Interest
to the Security Agent on behalf of the Secured Parties pursuant to, and
shall have executed and delivered to the Security Agent, a General
Partner Interest Pledge Agreement or Limited Partner Interest Pledge
Agreement, as the case may be, substantially in the form of Exhibit F-1
or F-2, respectively, which shall be in full force and effect; and
(E) the Borrower shall have obtained and delivered to the
Administrative Agent and the Institutions at least 10 Business Days
prior to such transfer or issuance, the following financial statements:
(1) a balance sheet of such Person (or, if such
Person is a member of a consolidated group, such Person's
consolidated group) as of its most recent fiscal quarter and
statements of income, retained earnings and changes in cash
flows for such fiscal quarter, prepared in accordance with
GAAP and certified by a Responsible Officer of such Person as
fairly presenting the financial condition of such Person (or,
if such Person is a member of a consolidated group such
Person's consolidated group); and
(2) a balance sheet of such Person (or, if such
Person is a member of a consolidated group, such Person's
consolidated group) as of its most recent fiscal year and
statements of income, retained earnings and changes in cash
flows for such fiscal year, prepared in accordance with GAAP
and audited by, and carrying the unqualified report of,
independent certified public accountants of nationally
recognized standing.
For purposes of this Section 11.13, the Borrower acknowledges and agrees that it
shall be reasonable for the Majority Lenders to withhold consent to any transfer
or issuance of a general partnership interest in the Borrower, or to any
transfer or issuance of a limited partnership interest in the Borrower referred
to in clause (b)(x) above, to any Person which (i) does not, at the time of such
transfer or issuance, meet the requirements of clauses (a), (b) and (c) in the
definition of "Qualified Limited Partner Transferee" or (ii) does not have
knowledge and experience in the management of or investment in power generating
facilities.
Section 11.14 Assignment of Coal Supply Agreement. The
Borrower shall not provide any consent required to be given by it under any
provision of the Coal Supply Agreement to any assignment by the Coal Supplier of
its rights, interests or obligations under the Coal Supply Agreement or to any
transfer of the properties or assets owned by, or the capital stock of, the Coal
Supplier, without the prior written consent of the Majority Lenders (which
consent shall not be unreasonably withheld).
Section 11.15 Limitations on Leases. The Borrower shall not
enter into, or be or become liable under, any agreement for the lease, hire or
use of any real property or of any personal property, except for leases (whether
or not Capital Leases) the aggregate annual rental
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under which, together with the aggregate annual principal and interest payments
under purchase money obligations permitted by Section 11.2(c), shall not exceed
$100,000 in any fiscal year of the Borrower.
Section 11.16 Fiscal Year. The Borrower shall not change its
fiscal year except on 60 days' prior written notice to the Security Agent, the
Administrative Agent and each Institution.
Section 11.17 Change of Office. The Borrower shall not change
the location of its chief executive office or principal place of business from
900 Ashwood Parkway, Suite 500, Atlanta, Georgia 30338-4780, unless the Borrower
shall have given the Security Agent, the Administrative Agent and each
Institution at least 60 days' prior written notice thereof and all action
necessary or advisable in the Security Agent's opinion to protect and perfect
the liens and security interests with respect to the right, title, estate and
interest of the Borrower in and to the Collateral created by the Security
Documents to which the Borrower is a party shall have been taken.
Section 11.18 Change of Name. The Borrower shall not change
its name except on 60 days' prior written notice to the Security Agent, the
Administrative Agent and each Institution.
Section 11.19 Tax Exempt Status of Bonds. In the event Bonds
are issued in accordance with Section 10.25, the Borrower shall not (a) take any
action that would cause interest on such Bonds to cease to be excluded from
gross income for federal income tax purposes, or (b) omit to take any action
necessary to cause interest on such Bonds to remain excluded from gross income
for federal income tax purposes.
SECTION 12. EVENTS OF DEFAULT
Section 12.1 Events of Default. The Lenders shall have the
rights and remedies specified in Section 12.2 if any of the following events
shall occur and be continuing (whatever the reason for such event and whether it
shall be voluntary or involuntary, or come about or be effected by operation of
law, or otherwise):
(a) The Borrower shall fail to pay (i) any principal of or any
interest or Make-Whole Premium or Modified Make-Whole Premium on any
Loan, (ii) any commitment fee or letter of credit fee referred to in
Section 7.1(a), 7.1(c) or 7.1(d), respectively, or the cancellation fee
referred to in Section 7.1(f), or (iii) any L/C Reimbursement
Obligation, or any interest thereon, in each case when due in
accordance with the terms hereof, and any such amount shall remain
unpaid for five Business Days; or
(b) The Borrower shall fail to pay any administrative fee
referred to in Section 7.1(e) or any other amount payable hereunder or
under the other Loan Documents when due in accordance with the terms
hereof or thereof and such fee or other amounts shall
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remain unpaid for a period of 10 Business Days after the Borrower shall
have received written notice thereof from the Administrative Agent or
any Institution; or
(c) Any representation or warranty made or deemed made by the
Borrower herein or in any other Loan Document or in any certificate or
document furnished at any time by the Borrower under or in connection
with this Agreement or any other Loan Document, or, prior to the Equity
Funding Termination Date, any representation or warranty made or deemed
made by Southern in any Southern Document or in any certificate or
document furnished at any time by Southern under or in connection with
any Southern Document, shall prove to have been incorrect in any
material respect on the date made or deemed made and either (i) such
incorrectness has resulted in a Material Adverse Effect or (ii) such
incorrectness could reasonably be expected to result in a Material
Adverse Effect and the facts or circumstances which caused such
representation or warranty to be materially incorrect are not corrected
within 30 days after the Borrower shall have received written notice
thereof from the Administrative Agent or any Institution; or
(d) (i) Prior to the Equity Funding Termination Date, any
Southern Document or Cogentrix Document shall for any reason cease to
be valid and in full force and effect or shall cease to constitute the
legal, valid and binding obligation of Southern, Cogentrix, Cogentrix
Holdings or First Union National Bank of North Carolina, as the case
may be, or Southern, Cogentrix, Cogentrix Holdings or First Union
National Bank of North Carolina, as the case may be, shall so assert in
writing; (ii) the full amount of the Mandatory Equity Contribution to
be made by Southern or the Cogentrix Obligors or any Contingent Equity
Contribution to be made by Southern shall not have been received by the
Security Agent on behalf of the Borrower on the applicable Equity
Contribution Date or Southern shall fail to make any payment under the
Equity Funding Guarantee or any Construction Contract Guarantee as and
when due thereunder or First Union National Bank of North Carolina
shall fail to honor any request for drawing under the Cogentrix Letter
of Credit; or (iii) Southern or the Cogentrix Obligors shall fail to
perform or observe in any material respect any other covenant or
obligation contained in any Southern Document or Cogentrix Document, as
the case may be, and such default or failure shall continue beyond the
applicable grace period, if any, provided under such Southern Document
or Cogentrix Document (or, in the case of Southern's obligations under
Section 5.3(a) of the Southern Equity Contribution Agreement and
Section 9(a) of the Equity Funding Guarantee or Cogentrix's obligations
under Section 5.3(a) of the Cogentrix Equity Funding Agreement, such
failure to perform shall continue for more than 30 days after the
Borrower shall have received written notice thereof from the
Administrative Agent or any Institution); or
(e) (i) The Borrower, any other Significant Project
Participant or, prior to the Equity Funding Termination Date, Southern
or Cogentrix shall commence any case or other proceeding (A) under any
existing or future law of any jurisdiction, domestic or foreign,
relating to bankruptcy, insolvency, reorganization or relief of
debtors, seeking to have an order for relief entered with respect to
it, or seeking to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation,
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dissolution, composition or other relief with respect to it or its
debts, or (B) seeking appointment of a receiver, trustee, custodian or
other similar official for it or for all or any substantial part of its
assets, or the Borrower, any other Significant Project Participant or,
prior to the Equity Funding Termination Date, Southern or Cogentrix
shall make a general assignment for the benefit of its creditors; or
(ii) there shall be commenced against the Borrower, any other
Significant Project Participant or, prior to the Equity Funding
Termination Date, Southern or Cogentrix any case or other proceeding of
a nature referred to in clause (i) above which (A) results in the entry
of an order for relief or any such adjudication or appointment or (B)
remains undismissed, undischarged or unbonded for a period of 60 days;
or (iii) there shall be commenced against the Borrower, any other
Significant Project Participant or, prior to the Equity Funding
Termination Date, Southern or Cogentrix any case or other proceeding
seeking issuance of a warrant of attachment, execution, distraint or
similar process against all or any substantial part of its assets which
results in the entry of an order for any such relief which shall not
have been vacated, discharged, or stayed or bonded pending appeal
within 60 days from the entry thereof; or (iv) the Borrower, any other
Significant Project Participant or, prior to the Equity Funding
Termination Date, Southern or Cogentrix shall take any action in
furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in clause (i), (ii) or (iii)
above; or (v) the Borrower, any other Significant Project Participant
or, prior to the Equity Funding Termination Date, Southern or Cogentrix
shall generally not, or shall be unable to, or shall admit in writing
its inability to, pay its debts as they become due; provided that the
occurrence of any of the acts or events referred to in clauses (i)
through (v) above with respect to a Significant Project Participant
(other than the Borrower) shall be an Event of Default under this
Section 12.1(e) only if, and at such time as, such acts or events could
reasonably be expected to have a Material Adverse Effect; or
(f) (i) The Borrower shall fail to maintain the insurance
required by clause (A), (B) or (C) of Section 10.8(a); or (ii) the
Borrower shall fail to maintain the insurance required by any other
clause of Section 10.8(a), or shall otherwise default in the observance
or performance of any other agreement contained in Section 10.8, and
such failure or default shall continue unremedied for a period of five
Business Days; or
(g) (i) The Borrower shall default in the observance or
performance of any agreement contained in Section 10.19; or (ii) the
Borrower shall default in the observance or performance of any
agreement contained in Section 11 hereof or in Section 4.4 or 4.5 of
the Security Deposit Agreement and such default shall remain unremedied
for a period of 30 days after a Borrower Representative obtains actual
knowledge thereof; or
(h) (i) The Borrower shall default in the observance or
performance of any agreement contained in Section 10.7, 10.24 or 10.25
of this Agreement and such default shall continue unremedied for a
period of 60 days after the Borrower shall have received written notice
thereof from the Administrative Agent or any Institution; or (ii) the
Borrower shall default in the observance or performance of any other
agreement contained in this Agreement or the other Loan Documents
(other than the agreements specified in paragraphs (a), (b), (f), (g)
and clause (i) of this paragraph (h) of this Section 12.1), and
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such default shall continue unremedied for a period of 30 days after
the Borrower shall have received written notice thereof from the
Administrative Agent or any Institution, provided that, except with
respect to a default in the agreements set forth in Sections 10.12,
10.18 and 10.22, such 30-day period shall be extended (x) to such
longer period, not exceeding 180 days (inclusive of such initial 30-day
period), as shall be required in order to cure such default or (y) at
the option of the Majority Lenders, to such period longer than 180 days
as the Majority Lenders shall determine, and notify the Borrower
thereof in writing, will not have a Material Adverse Effect, in either
case if, and only so long as (A) such default is capable of being
remedied but cannot be remedied within such initial 30-day period, (B)
the Borrower has commenced, within such initial 30-day period, and
continues to diligently pursue, a remedy to such default and (C) no
other Default or Event of Default shall have occurred and be
continuing; or
(i) (i) Any Security Document shall cease, for any reason, to
be in full force and effect (except for (x) the Southern Equity
Contribution Agreement if the Completion Date shall have occurred and
the Mandatory Equity Contribution and any Contingent Equity
Contribution to be made by Southern shall have been made and (y) the
Cogentrix Equity Contribution Agreement if the Completion Date shall
have occurred and the Mandatory Equity Contribution to be made by
Cogentrix shall have been made) or the Borrower, Southern, Cogentrix,
Cogentrix Holdings or any Partner which is a Subsidiary of Southern,
Cogentrix or Cogentrix Holdings shall so assert in writing; or (ii) any
Security Document shall cease to be effective to grant a perfected Lien
to the Security Agent for the benefit of the Secured Parties on the
Collateral described therein (other than on an immaterial portion
thereof) with the priority purported to be created thereby, unless
either (x) such cessation shall have been rescinded within five
Business Days after a Borrower Representative obtains actual knowledge
thereof, or (y) such cessation is as a result of action by the Security
Agent or any Secured Party; or
(j) An event of default under any Bond Indenture or Section 7
of the Equity Funding Loan Agreement shall have occurred and be
continuing; or
(k) Any Governmental Approval which shall at the time be
necessary (i) for the execution and delivery by Southern, the Borrower
or any of the other Significant Project Participants of any of the
Financing Documents or Project Documents to which it is a party, or for
the performance by Southern, the Borrower or any of the other
Significant Project Participants of its rights and obligations under
any of the Financing Documents or Project Documents to which it is a
party (other than any Governmental Approval necessary for any Person
other than the Borrower which is party to any Real Estate Document, any
Greenhouse Document or the Partnership Agreement), (ii) for the
construction, ownership or operation of the Project as contemplated by
the Project Documents or (iii) for the grant by the Borrower of the
Liens created under the Security Documents, the validity and
enforceability of the Security Documents, the perfection of the Liens
purported to be created thereunder or the exercise by the Security
Agent of its rights and remedies thereunder, shall not be obtained,
renewed, maintained or complied with in all material respects, or shall
be revoked, terminated, withdrawn, suspended, modified or withheld or
shall cease to be in full force and effect, and (except in the case
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of the matters referred to in the foregoing clause (iii)) such failure
to obtain, renew, maintain or comply or such revocation, termination or
other event shall continue unremedied for 30 days after notice to the
Borrower from the Administrative Agent or any Institution; or any
proceeding shall be commenced by or before any Governmental Authority
for the purpose of so revoking, terminating, withdrawing, suspending,
modifying or withholding any such Governmental Approval and such
proceeding is not dismissed within 60 days; provided that such failure
to obtain, renew, maintain or comply with, or such revocation,
termination, withdrawal, suspension, modification, withholding or
cessation, or such proceeding, shall constitute an Event of Default
only if, and at such time as, it could reasonably be expected to have a
Material Adverse Effect; or
(l) (i) Any Project Document shall at any time cease to be
valid and binding and in full force and effect for any reason (or, in
the case of the Arch Back-Up Coal Supply Agreement, Arch shall so
assert in writing); or (ii) any Project Document shall be terminated
prior to the scheduled expiration date thereof for any reason
whatsoever; or (iii) any material provision of any Project Document
(other than any provision in the Greenhouse Sublease providing for the
payment of rent or any provision in the Greenhouse Loan Agreement with
respect to the repayment of loans thereunder) shall be declared null
and void or the validity or enforceability thereof shall be contested
in writing by, in the case of the Arch Back-Up Coal Supply Agreement,
Arch or any Government Authority, or, in the case of any other Project
Document, any Government Authority; or (iv) any Project Participant
shall fail to perform or observe in any material respect any covenant
or obligation contained in any Project Document (other than, in the
case of the Greenhouse Sublease and the Greenhouse Loan Agreement, any
failure by the Greenhouse Operator or the Greenhouse Owner to pay rent
or to repay loans thereunder, respectively) and such failure shall
continue beyond the applicable grace period, if any, provided for in
such Project Document; provided that for purposes of this Section
12.1(l) only, (x) on or after the IPP Conversion Date, "Project
Documents" shall not include the Steam Sales Agreement or any
Greenhouse Document and (y) "Project Documents" shall not include the
Coal Supply Agreement to the extent that, at the time of the occurrence
of any of the events described in clause (i), (ii) or (iii) above with
respect to the Coal Supply Agreement or the Coal Supplier, (A) the Arch
Back-Up Coal Supply Agreement is valid and binding on Arch and in full
force and effect, and Arch shall not have asserted otherwise in
writing, and (B) none of the events described in clause (ii) or (iii)
above shall have occurred with respect to the Arch Back-Up Coal Supply
Agreement or Arch; and provided, further that the events referred to in
clauses (i) through (iv) above with respect to a Project Document
(other than the Power Purchase Agreement, the Facility Construction
Contract or the Greenhouse Construction Contract or, in the case of
clauses (i) and (ii), the Partnership Agreement) shall not be an Event
of Default under this Section 12.1(l) if (A) such events are cured
within 60 days of the date of occurrence of such event, or (B)(1) such
Project Document is replaced within 60 days of the date of such event
with a substitute Project Document in form and substance satisfactory
to the Majority Lenders, the party or parties to which (other than the
Borrower) are acceptable to the Majority Lenders (or within such longer
period, not exceeding 120 days (inclusive of such initial 60-day
period), as shall be required to obtain an acceptable substitution
Project Document so long as the Borrower is diligently seeking the
same), and (2) such
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substitute Project Document shall have been assigned to the Security
Agent to the same extent as the Project Document being replaced; or
(m) One or more final judgments or decrees (which are not
appealable or which have not been stayed pending appeal or as to which
all rights to appeal have expired or been exhausted) shall be entered
against the Borrower involving in the aggregate a liability in excess
of $500,000 and such judgments or decrees shall remain in effect and
unstayed for a period of at least 30 days; or
(n) Southern shall, prior to the Equity Funding Termination
Date, (i) default in the payment of any principal of or interest on any
indebtedness of Southern for borrowed money under agreements or
instruments involving in the aggregate in excess of $10,000,000 beyond
the period of grace, if any, provided for therein, or (ii) default in
the observance or performance of any other agreement or condition
relating to any such indebtedness or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other event
of default shall occur, the effect of which default or other event of
default is to cause, or permit the holder or holders of such
indebtedness (or a trustee or agent on behalf of such holder or
holders) to cause, with the giving of notice if required, such
indebtedness to become due prior to its stated maturity; or
(o) The Completion Date shall not have occurred on or prior to
the Date Certain; or
(p) Wholly-owned Subsidiaries of Southern shall cease to own
at any time at least the Requisite Partnership Interest; or
(q) The Facility shall lose its certification as a Qualifying
Facility, unless either (i) prior to the date of such loss of
certification, the requirements of clause (b) of Section 10.12 shall
have been satisfied, or (ii) (x) on the date of such loss of
certification and at all times thereafter until the Facility shall
reacquire its certification as a Qualifying Facility, (A) all
Governmental Approvals, if any, required for Subsidiaries of Southern
to own at least the Requisite Partnership Interest shall have been
obtained and are in full force and effect, (B) all Governmental
Approvals and other approvals necessary for the Borrower to own and
operate the Facility as an IPP and to sell power to Virginia Power
under the Power Purchase Agreement shall have been obtained and shall
be in full force and effect and (C) no regulation by any Government
Authority is imposed on the Administrative Agent, the Security Agent or
any Lender as a result of the Governmental Approvals referred to in
subclause (B) above or as a result of the loss of such certification
and the operation of the Facility as an IPP and (y) in the good faith
judgment of the Majority Lenders, the terms of such Governmental
Approvals and other approvals referred to in clause (x)(B) above and
the ownership and operation of the Facility as an IPP could not
reasonably be expected to have a Material Adverse Effect; or
(r) (i) At any time prior to the date on which the Commitments
no longer remain in effect, no Bond Letter of Credit remains
outstanding and the Loans and all other Secured Obligations have been
paid in full, there shall not be in full force and effect a
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VP Letter of Credit, a Substitute VP Letter of Credit or Substitute VP
Security; or (ii) the Administrative Agent and the Institutions shall
fail to receive, at least 60 days prior to the scheduled expiration of
any VP Letter of Credit (or, in the case of a VP Letter of Credit
scheduled to expire on or after the Bank Loan Final Maturity Date, 120
days) or at least 120 days prior to the scheduled expiration of any
Substitute VP Letter of Credit or Substitute VP Security, evidence
satisfactory to them that the expiration of such Letter of Credit or
Substitute VP Security has been extended to a later date or that a new
VP Letter of Credit or Substitute VP Letter of Credit will be issued,
or that new Substitute VP Security will be delivered, upon the
scheduled expiration of the then existing VP Letter of Credit,
Substitute VP Letter of Credit or Substitute VP Security, as the case
may be.
Section 12.2 Rights and Remedies Following an Event of
Default. If any Event of Default shall occur and be continuing, then:
(1) If such Event of Default is an Event of Default specified
in clause (i) or (ii) of Section 12.1(e) with respect to the Borrower,
automatically (A) the obligation of the Issuing Bank to issue any or all of the
Letters of Credit immediately shall terminate, (B) the Commitments immediately
shall terminate and (C) the Loans, the Notes and all unpaid L/C Reimbursement
Obligations, all interest accrued and unpaid thereon, any Make-Whole Premium
payable with respect to the Institutional Notes (to the extent permitted by
applicable law) and all other amounts owing by the Borrower hereunder and under
the Notes immediately shall become due and payable, without presentment, demand,
protest, or notice of any kind, all of which are hereby expressly waived by the
Borrower; and
(2) If such Event of Default is an Event of Default specified
in Section 12.1(a) or 12.1(b) with respect to any amounts payable to the Banks
or the Issuing Bank hereunder or under the other Loan Documents, or if the
Institutional Loans and the Institutional Notes shall be declared due and
payable pursuant to paragraph (3) below (whether or not such declaration is
subsequently rescinded and annulled as provided in the last paragraph of this
Section 12.2), then the Administrative Agent may, and if requested by the
Majority Banks, the Administrative Agent shall, by notice to the Borrower and
the Security Agent, (A) declare the obligation of the Issuing Bank to issue any
or all of the Letters of Credit terminated, whereupon the same shall forthwith
terminate; and/or (B) declare the Commitments of the Banks terminated and
declare the entire unpaid principal amount of the Bank Loans and the Bank Notes,
all unpaid L/C Reimbursement Obligations, all interest accrued and unpaid
thereon, and all other amounts owing by the Borrower hereunder to the Banks and
the Agents and under the Bank Notes to be forthwith due and payable, whereupon
the Commitments of the Banks shall terminate and such unpaid principal amount of
the Bank Loans and Bank Notes, all unpaid L/C Reimbursement Obligations, all
interest accrued and unpaid thereon, and all such other amounts shall become and
be forthwith due and payable, without presentment, demand, protest, or notice of
any kind, all of which are hereby expressly waived by the Borrower; and/or (C)
demand that the Borrower immediately pay to the Security Agent an amount equal
to the full amount that can then be drawn under the Letters of Credit, whereupon
the Borrower shall immediately make such payment to the Security Agent, which
shall hold such payment as collateral security for the Secured Obligations in
accordance with Section 4.5 of the Security Deposit Agreement; provided
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that (x) no such action taken by the Administrative Agent shall have the effect
of terminating, reducing or altering in any respect the terms of the Letters of
Credit outstanding at the time and (y) no such action by the Administrative
Agent or the Majority Banks under this paragraph (2) shall have the effect of
terminating, reducing or altering in any respect the terms of the True-Up
Obligation of the Banks in favor of the Institutions set forth in Section
14.10(b); and
(3) If such Event of Default is an Event of Default specified
in Section 12.1(a) or 12.1(b) with respect to any amounts payable to the
Institutions hereunder or under the other Loan Documents, or if the Bank Loans
and the Bank Notes shall be declared due and payable pursuant to paragraph (2)
above (whether or not such declaration is subsequently rescinded and annulled as
provided in the last paragraph of this Section 12.2), then the Majority
Institutions may, by notice to the Borrower, declare the Total Institutional
Commitments terminated and declare the entire unpaid principal amount of the
Institutional Loans and Institutional Notes, all interest accrued and unpaid
thereon, any Make-Whole Premium payable with respect to the Institutional Notes
(to the extent permitted by applicable law), and all other amounts owing by the
Borrower hereunder to the Institutions and under the Institutional Notes, to be
forthwith due and payable, whereupon the Total Institutional Commitments shall
terminate and such unpaid principal amount of the Institutional Loans and
Institutional Notes, all interest accrued and unpaid thereon, any Make-Whole
Premium and all such other amounts shall become and be forthwith due and
payable, without presentment, demand, protest, or notice of any kind, all of
which are hereby expressly waived by the Borrower; and
(4) If such Event of Default is an Event of Default other than
one specified in paragraph (1), (2) or (3) above, the Required Secured Parties
may, by notice to the Borrower and the Security Agent, (A) declare the
obligation of the Issuing Bank to issue any or all of the Letters of Credit
terminated, whereupon the same shall forthwith terminate; and/or (B) declare all
of the Commitments terminated and declare the entire unpaid principal amount of
the Loans and the Notes, all unpaid L/C Reimbursement Obligations, all interest
accrued and unpaid thereon, any Make-Whole Premium payable with respect to the
Institutional Notes (to the extent permitted by applicable law) and all other
amounts owing by the Borrower hereunder to the Lenders and the Agents and under
the Notes to be forthwith due and payable, whereupon all of the Commitments of
the Lenders shall terminate and such unpaid principal amount of the Loans and
Notes, all unpaid L/C Reimbursement Obligations, all interest accrued and unpaid
thereon, any Make-Whole Premium and all such other amounts shall become and be
forthwith due and payable, without presentment, demand, protest, or notice of
any kind, all of which are hereby expressly waived by the Borrower; and/or (C)
demand that the Borrower immediately pay to the Security Agent an amount equal
to the full amount that can then be drawn under the Letters of Credit, whereupon
the Borrower shall immediately make such payment to the Security Agent, which
shall hold such payment as collateral security for the Secured Obligations in
accordance with Section 4.5 of the Security Deposit Agreement; provided that no
such action taken by the Required Secured Parties under this paragraph (4) shall
have the effect of terminating, reducing or altering in any respect the terms of
(x) the Letters of Credit outstanding at the time or (y) the True-Up Obligation
of the Banks in favor of the Institutions set forth in Section 14.10(b); and
provided, further that if the Required Secured Parties take the action referred
to in clause (B) of this paragraph (4), then the Administrative Agent or the
Issuing Bank may take the action referred to in clauses (A) and (C) of this
paragraph (4); and
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98
(5) If any Event of Default shall occur and be continuing, the
Issuing Bank may, in its sole discretion, by notice to the Borrower, declare the
obligation of the Issuing Bank to issue any or all of the Letters of Credit
terminated, whereupon the same shall forthwith terminate; and
(6) During any period that an Event of Default shall be in
existence and any event of default under Article 7 of the Greenhouse Loan
Agreement or Section 15.01 of the Greenhouse Sublease shall also be in
existence, the Borrower shall, or shall direct the Greenhouse Owner to, as the
case may be, at the request of the Security Agent and to the extent permitted to
do so under the relevant Greenhouse Document (or the Security Agent may do so on
behalf of the Borrower or the Greenhouse Owner, as the case may be), (i) declare
the lending commitments of the Borrower under the Greenhouse Loan Agreement to
be immediately terminated, and/or (ii) declare loans, advances, rent and/or
other amounts owing under the Greenhouse Loan Agreement or Greenhouse Sublease
to be immediately due and payable, and/or (iii) foreclose on the Greenhouse
Collateral or exercise any other rights or remedies provided to the Borrower or
the Greenhouse Owner under the Greenhouse Documents; and
(7) If any Event of Default shall occur and be continuing, the
Security Agent and the Lenders may exercise any and all rights or remedies in
their respective capacities under the Security Documents in accordance with the
provisions thereof, as well as their rights and remedies under applicable law.
In case of a default in the payment or performance of any provision hereof or of
the Notes or of the Security Documents, the Borrower will pay to each Secured
Party such further amount as shall be sufficient to cover the cost and expenses
of collection, including, without limitation, reasonable attorneys' fees,
expenses and disbursements. No course of dealing and no delay on the part of any
Secured Party in exercising any right, power or remedy shall operate as a waiver
thereof or otherwise prejudice such rights, powers or remedies. The foregoing
provisions of this paragraph (7) are subject to the terms of the Security
Deposit Agreement.
At any time after the principal of and accrued interest on the
Bank Notes and/or the Institutional Notes are declared due and payable, the
Majority Banks (if the Bank Notes have been declared due and payable pursuant to
paragraph (2) above) or the Majority Institutions (if the Institutional Notes
have been declared due and payable pursuant to paragraph (3) above) or the
Required Secured Parties (if the Notes have been declared due and payable
pursuant to paragraph (4) above), by written notice to the Borrower, the
Administrative Agent and the other Lenders, may rescind and annul any such
declaration and its consequences with respect to the Bank Notes (in the case of
a rescission and annulment by the Majority Banks) or the Institutional Notes (in
the case of a rescission and annulment by the Majority Institutions) or all of
the Notes (in the case of a rescission and annulment by the Required Secured
Parties) if (x) the Borrower has paid all overdue interest on such Notes, the
principal of and any Make-Whole Premium on any such Notes which have become due
otherwise than by reason of such declaration, and interest on such overdue
principal and (to the extent permitted by applicable law) overdue interest, at
the Bank Default Rate or the Institution Default Rate, as the case may be, (y)
all Events of Default, other than nonpayment of amounts which have become due
solely by reason of such declaration, and all conditions and events which
constitute Defaults or Events of Default have been cured or waived, and (z) no
judgment or decree has been entered for the payment of
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any monies due pursuant to such Notes or this Agreement. No such rescission and
annulment referred to in the proviso in the preceding sentence shall extend to
or affect any subsequent Default or Event of Default or impair any right
consequent thereon.
SECTION 13. THE ADMINISTRATIVE AGENT AND THE SECURITY AGENT
Section 13.1 The Administrative Agent.
(a) Appointment of Administrative Agent. Each Bank and the
Issuing Bank hereby designates and appoints Credit Suisse as its agent under
this Agreement and the other Loan Documents, and each Bank and the Issuing Bank
authorizes Credit Suisse, as the agent for such Bank, to take such action on its
behalf under the provisions of this Agreement and the other Loan Documents and
to exercise such powers and perform such duties as are expressly delegated to
the Administrative Agent by the terms of this Agreement and the other Loan
Documents, together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in this Agreement or in
any other Loan Document, the Administrative Agent shall not have any duties or
responsibilities, except those expressly set forth herein, or be a trustee of or
have any fiduciary relationship with any Bank or the Issuing Bank, and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
shall otherwise exist against the Administrative Agent. None of the Co-Agents,
in their capacity as Co-Agents, shall have any duties or responsibilities under
this Agreement or any fiduciary relationship with the Administrative Agent or
the Issuing Bank or any Bank, and no implied covenants, functions,
responsibilities, duties or liabilities shall be read into this Agreement or any
other Loan Document or otherwise exist against any Co-Agent in its capacity as a
Co-Agent hereunder.
(b) Delegation of Duties. The Administrative Agent may execute
any of its duties under this Agreement and the other Loan Documents by or
through agents 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 to any Bank or the Issuing Bank for the negligence or
misconduct of any agents or attorneys-in-fact selected by it with reasonable
care.
(c) Exculpatory Provisions. Neither the Administrative Agent
nor any of its officers, directors, employees, agents, attorneys-in-fact or
Affiliates shall be (i) liable to any of the Banks or the Issuing Bank for any
action lawfully taken or omitted to be taken by it or such Person under or in
connection with this Agreement or any other Loan Document (except for its or
such Person's own gross negligence or willful misconduct) or (ii) responsible in
any manner to any of the Banks or the Issuing Bank for any recitals, statements,
representations or warranties made by the Borrower, Southern or any other
Project Participant or any officer thereof contained in this Agreement or any
other Loan Document or any Project Document or in the Information Memorandum or
in any certificate, report, statement or other document referred to or provided
for in, or received by the Administrative Agent or any Bank or the Issuing Bank
under or in connection with, this Agreement or any other Loan Document or any
Project Document or the Information Memorandum or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
the Bank Notes or any other Loan Document or any Project
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Document or for any failure of the Borrower, Southern or any other Project
Participant to perform its obligations hereunder or thereunder. The
Administrative Agent shall not be under any obligation to any Bank or the
Issuing Bank to ascertain or to inquire as to the observance or performance of
any of the agreements contained in, or conditions of, this Agreement or any
other Loan Document or any Project Document, or to inspect the properties, books
or records of the Borrower, Southern or any other Project Participant.
(d) Reliance by Administrative Agent. The Administrative Agent
shall be entitled to rely, and shall be fully protected in relying, upon any
Bank Note, writing, resolution, notice, consent, certificate, affidavit, letter,
cablegram, telegram, telecopy, telex or teletype message, statement, order or
other document or conversation believed by it to be genuine and correct and to
have been signed, sent or made by the proper Person or Persons and upon advice
and statements of legal counsel (including, without limitation, counsel to the
Borrower), independent accountants and other experts selected by the
Administrative Agent. The Administrative Agent may deem and treat the payee of
any Bank Note as the owner thereof for all purposes unless a written notice of
assignment, negotiation or transfer thereof shall have been filed with the
Administrative Agent. The Administrative Agent shall be fully justified in
failing or refusing to take any action under this Agreement or any other Loan
Document unless it shall first receive such advice or concurrence of the
Majority Banks as it deems appropriate or it shall first be indemnified to its
satisfaction by the Banks and the Issuing Bank 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 and the Bank Notes
and the other Loan Documents in accordance with a request of the Majority Banks,
and such request and any action taken or failure to act pursuant thereto shall
be binding upon all the Banks and the Issuing Bank and all future holders of the
Bank Notes.
(e) Notice of Default. The Administrative Agent shall not be
deemed to have knowledge or notice of the occurrence of any Default or Event of
Default hereunder unless the Administrative Agent has received notice from any
Lender or the Borrower or Southern, describing such Default or Event of Default
and stating that such notice is a "notice of default". In the event that the
Administrative Agent receives such a notice, the Administrative Agent shall give
notice thereof to the Banks and the Security Agent.
(f) Non-Reliance on Administrative Agent and Other Banks. Each
Bank and the Issuing Bank expressly acknowledges that neither the Administrative
Agent nor any of its officers, directors, employees, agents, attorneys-in-fact
or Affiliates has made any representations or warranties to it and that no act
by the Administrative Agent hereafter taken, including any review of the affairs
of the Borrower or Southern, shall be deemed to constitute any representation or
warranty by the Administrative Agent to any Bank or the Issuing Bank. Each Bank
and the Issuing Bank represents to the Administrative Agent that it has,
independently and without reliance upon the Administrative Agent or any other
Bank or the Issuing Bank, and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, operations, property, financial and other condition and
creditworthiness of the Borrower, Southern and the other Project Participants
and made its own decision to extend credit under the Bank Loan Facility, the VP
Letter of Credit Facility and the
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Bond Letter of Credit Facility and to enter into this Agreement. Each Bank and
the Issuing Bank also represents that it will, independently and without
reliance upon the Administrative Agent or any other Bank or the Issuing Bank,
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 Loan Documents,
and to make such investigation as it deems necessary to inform itself as to the
business, operations, property, financial and other condition and
creditworthiness of the Borrower, Southern, the other Project Participants and
any other Person. Except for notices, reports and other documents expressly
required to be furnished to the Banks or the Issuing Bank by the Administrative
Agent hereunder, the Administrative Agent shall not have any duty or
responsibility to provide any Bank or the Issuing Bank with any credit or other
information concerning the business, operations, property, condition (financial
or other), prospects or creditworthiness of the Borrower, Southern, the other
Project Participants or any other Person which may come into the possession of
the Administrative Agent or any of its officers, directors, employees, agents,
attorneys-in-fact or Affiliates.
(g) Indemnification. The Banks and the Issuing Bank agree to
indemnify the Administrative Agent in its capacity as such and its directors,
officers, employees and agents (to the extent not reimbursed by the Borrower and
without limiting the obligation of the Borrower to do so), severally according
to their Commitment Percentages, 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 the Bank
Loans and all other Secured Obligations payable to the Banks or the Issuing Bank
hereunder) be imposed on, incurred by or asserted against the Administrative
Agent in any way relating to or arising out of this Agreement, any of the other
Loan Documents or the Project Documents or any documents contemplated by or
referred to herein or therein or the transactions contemplated hereby or thereby
or any action taken or omitted by the Administrative Agent under or in
connection with any of the foregoing; provided that no Bank or the Issuing Bank
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 the Administrative Agent's gross negligence
or willful misconduct. The agreements in this Section shall survive the payment
of the Bank Loans and all other Secured Obligations payable to the Banks or the
Issuing Bank hereunder.
(h) Administrative Agent in Its Individual Capacity. The
Administrative Agent and its Affiliates may make loans to, issue letters of
credit in favor of, accept deposits from and generally engage in any kind of
business with the Borrower, Southern and their respective Affiliates as though
the Administrative Agent were not the Administrative Agent hereunder and under
the other Loan Documents. With respect to its Bank Loans made or renewed by it,
any Bank Note issued to it and its rights as the Issuing Bank under the VP
Letter of Credit Facility and the Bond Letter of Credit Facility, the
Administrative Agent shall have the same rights and powers under this Agreement
and the other Loan Documents as any Bank and may exercise the same as though it
were not the Administrative Agent, and the terms "Bank", "Banks" and "Issuing
Bank" shall include the Administrative Agent in its individual capacity.
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(i) Successor Administrative Agent. Subject to the appointment
of a successor Administrative Agent as provided below, Credit Suisse (and any
successor thereto as Administrative Agent), (i) may resign as Administrative
Agent under this Agreement and the other Loan Documents by giving at least 30
days notice thereof to the Banks, the Issuing Bank, the Security Agent, the
Institutions and the Borrower or (ii) may be removed for cause as Administrative
Agent under this Agreement and the other Loan Documents by the Majority Banks by
at least 30 days notice thereof to the Administrative Agent, the other Banks,
the Issuing Bank, the Security Agent, the Institutions and the Borrower. Upon
any such resignation or removal, the Majority Banks shall appoint from among the
Banks a successor Administrative Agent for the Banks and the Issuing Bank, which
successor Administrative Agent shall be reasonably acceptable to the Borrower
(unless an Event of Default has occurred and is continuing). If no successor
Administrative Agent shall have been appointed by the Majority Banks and shall
have accepted such appointment within 30 days after the giving of such notice of
resignation or removal, as the case may be, then the resigning or removed
Administrative Agent may, on behalf of the Banks and the Issuing Bank, appoint a
successor Administrative Agent, which shall be a Bank or any other bank with an
office in New York, New York having a combined capital and surplus of not less
than $500,000,000 and which shall be reasonably acceptable to the Borrower
(unless an Event of Default has occurred and is continuing). Upon the acceptance
of its appointment as Administrative Agent hereunder by a successor
Administrative Agent, such successor Administrative Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Administrative Agent, and the retiring Administrative Agent
shall be discharged from its duties and obligations hereunder, without any other
or further act or deed on the part of the retiring Administrative Agent or any
of the parties to this Agreement or any holders of the Bank Notes. After any
retiring Administrative Agent shall cease to be the Administrative Agent
hereunder, the provisions of this paragraph (i) shall continue in effect for its
benefit in respect of any actions taken or omitted to be taken by it while it
was acting as Administrative Agent under this Agreement and the other Loan
Documents.
(j) Relationship With Institutions. Notwithstanding any
provision to the contrary elsewhere in this Agreement or the other Loan
Documents, the Administrative Agent shall not have any duties or
responsibilities (except to the extent expressly provided in Section 14.10(b)),
to or on behalf of, be a trustee of, or have any fiduciary relationship with,
any Institution, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities of the Administrative Agent to or on behalf of any
Institution shall be read into this Agreement or any other Loan Document or
shall otherwise exist; and the provisions of Section 13.1 shall be binding upon
and inure to the benefit of solely the Banks, the Administrative Agent and the
Borrower.
Section 13.2 The Security Agent. As provided in the Security
Deposit Agreement, each of the Lenders irrevocably designates and appoints
Credit Suisse as the security agent for such Lender, to take such action on its
behalf under the provisions of the Security Deposit Agreement, this Agreement
and the other Loan Documents and to exercise such powers and perform such duties
as are expressly delegated to the Security Agent by the terms of the Security
Deposit Agreement, this Agreement and the other Loan Documents, together with
such other powers as are reasonably incidental thereto. Each of the Lenders
agrees that the provisions of Article II of the Security Deposit Agreement,
which sets forth the agency provisions
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concerning the Security Agent, are hereby incorporated by reference in this
Agreement in full and shall be binding on the parties hereto.
SECTION 14. MISCELLANEOUS
Section 14.1 Amendments and Waivers. (a) Neither this
Agreement, any Note, any other Loan Document, nor any term hereof or thereof may
be amended, supplemented or otherwise modified except in accordance with the
provisions of Section 8.7 of the Security Deposit Agreement. Any such waiver and
any such amendment, supplement or modification shall apply equally to each of
the Lenders and shall be binding upon the Borrower, the Lenders, the
Administrative Agent, the Security Agent, the Co-Agents and all future holders
of the Notes. In the case of any waiver of a Default or Event of Default, the
Borrower, the Lenders, the Co-Agents, the Security Agent and the Administrative
Agent shall be restored to their former position and rights hereunder and under
the outstanding Notes and any other Loan Documents, and any Default or Event of
Default waived shall be deemed to be cured and not continuing; but no such
waiver shall extend to any subsequent or other Default or Event of Default, or
impair any right consequent thereon.
(b) The Borrower will not solicit, request or negotiate for or
with respect to any proposed waiver or amendment of any of the provisions of
this Agreement or the Loans or the Notes unless each Lender shall be informed
thereof by the Borrower and shall be afforded the opportunity of considering the
same and shall be supplied by the Borrower with sufficient information to enable
it to make an informed decision with respect thereto. The Borrower will not,
directly or indirectly, pay or cause to be paid any remuneration, whether by way
of supplemental or additional interest, fees or otherwise, to any Lender as
consideration for or as an inducement to entering into any waiver or amendment
of any of the terms and provisions of this Agreement or the Loans or the Notes
unless such remuneration is concurrently offered, on the same terms, ratably to
all of the Lenders. Nothing in this Section 14.1(b) shall prohibit the Lenders
from determining as among themselves the manner in which any fee payable
generally to the Lenders with respect to any waiver or amendment shall be
allocated among the Lenders.
Section 14.2 Notices. All notices, requests and demands to or
upon the respective parties hereto to be effective shall be in writing
(including by telex, telecopy or telegraph), and, unless otherwise expressly
provided herein, shall be deemed to have been duly given or made when delivered
by hand or, in the case of notice given by mail, private courier, overnight
delivery service or telecopy, when received, or, in the case of telegraphic
notice, when delivered to the telegraph company, or, in the case of telex
notice, when sent, answerback received, addressed as follows in the case of the
Borrower and the Administrative Agent, as set forth in Schedule 1 in the case of
the Lenders, as set forth in the Security Deposit Agreement in the case of the
Security Agent, and as notified to the parties from time to time in the case of
the Independent Engineer, or to such other address as may be hereafter notified
in accordance with this Section 14.2 by the respective parties hereto and any
future holders of the Notes:
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The Borrower: Birchwood Power Partners, L.P.
c/o SEI Birchwood, Inc.
900 Ashwood Parkway, Suite 500
Atlanta, Georgia 30338-4780
Attention: President
Telecopy: 404-393-9871
The Administrative Agent: Credit Suisse
Tower 49
12 East 49th Street
New York, New York 10017
Attention: Project Finance
Telecopy: 212-238-5390
Telex: 420149
provided that any notice, request or demand to or upon the Administrative Agent
or any Lender pursuant to Section 3.2, 3.5, 4.2, 5.2, 5.4, 5.6, 6.2, 6.3, 6.5,
6.7, 7.4, 7.9(b) or 14.10(b) shall not be effective until received.
Section 14.3 No Waiver; Cumulative Remedies. No failure to
exercise and no delay in exercising, on the part of the Administrative Agent,
the Security Agent or any Lender, any right, remedy, power or privilege
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges herein provided are
cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.
Section 14.4 Survival of Representations and Warranties. All
representations and warranties made hereunder and in any document, certificate
or statement delivered pursuant hereto or in connection herewith shall survive
the execution and delivery of this Agreement and the Notes.
Section 14.5 Payment of Expenses and Taxes; Indemnification.
(a) The Borrower agrees (i) to pay or reimburse the Administrative Agent, the
Co-Agents and the Institutions, in accordance with paragraph (b) below, for all
their respective out-of-pocket costs and expenses incurred in connection with
the preparation and execution of, and any amendment, supplement or modification
to, this Agreement, the Notes and the other Loan Documents and any other
documents prepared in connection herewith or therewith, and the consummation of
the transactions contemplated hereby and thereby and by Sections 9.5 and 10.25
in connection with the issuance of Bonds and the Bond Letters of Credit,
including, without limitation, the reasonable fees and expenses of Simpson
Thacher & Bartlett as special counsel to the Administrative Agent, the Co-Agents
and the Institutions, the reasonable fees and expenses of Williams, Mullen,
Christian & Dobbins as special Virginia counsel to the Administrative Agent, the
Co-Agents of the Institutions, the reasonable fees and expenses of Debevoise &
Plimpton, special counsel to the Institutions with respect to intercreditor
matters, the reasonable fees and
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expenses of the Independent Engineer, the Independent Insurance Consultant, the
Environmental Consultant, the Coal Consultant and the Ornamental Flower Market
Consultant incurred in connection with the performance of their respective
duties under this Agreement (including, without limitation, the preparation by
the Independent Engineer and the Coal Consultant of the annual updated Coal
Report and Independent Engineer's Report, respectively, to be provided to the
Lenders as contemplated in this Agreement), the out-of-pocket expenses and
counsel fees and disbursements incurred by the Administrative Agent and the
Co-Agents in connection with the syndication of the Commitments to the Banks,
the reasonable fees and expenses (including reasonable counsel fees) of the
Security Agent, the reasonable out-of-pocket expenses of the Administrative
Agent in connection with the administration of this Agreement and the other Loan
Documents, and all fees, taxes, other charges and costs and expenses relating to
the recordings, filings and other actions referred to in Section 8.13 (the
foregoing costs and expenses in this clause (i) being herein called
"Reimbursable Expenses"); (ii) to pay or reimburse each Lender, the
Administrative Agent and the Security Agent for all of their respective
out-of-pocket costs and expenses incurred in connection with the enforcement or
preservation of any rights under this Agreement, the Notes, the other Loan
Documents and any other documents prepared in connection herewith or therewith,
including, without limitation, the reasonable fees and disbursements of counsel
for the Administrative Agent, the Security Agent, the Issuing Bank and the other
Lenders; (iii) to pay or reimburse each Lender, the Administrative Agent and the
Security Agent for any and all recording and filing fees and any and all
liabilities with respect to, or resulting from any delay (not resulting from the
gross negligence or wilful misconduct of such Lender, the Administrative Agent
or the Security Agent, as the case may be) in paying, stamp, excise and other
taxes, if any, which may be payable or determined to be payable in connection
with the execution and delivery of, or consummation of any of the transactions
contemplated by, or any amendment, supplement or modification of, or any waiver
or consent under or in respect of, this Agreement, the Notes or the other Loan
Documents; and (iv) to pay, indemnify, and hold each Lender (including the
Issuing Bank), each Co-Agent, the Administrative Agent and the Security Agent,
and the directors, officers, employees, agents and stockholders of each Lender
(including the Issuing Bank), each Co-Agent, the Administrative Agent and the
Security Agent (each such Person, an "Indemnified Person"), harmless from and
against any and all other direct (as opposed to consequential) liabilities,
obligations, losses, damages, penalties, claims, actions, judgments, suits,
costs, expenses and disbursements of any kind or nature whatsoever (including,
without limitation, the reasonable fees and disbursements of counsel in
connection therewith) arising under, relating to or resulting from any demand,
claim, suit, proceeding or action of any kind or nature whatsoever of any third
party (including, without limitation, any holder of any Bond, the Bond Issuer,
any Bond Trustee or any underwriter, placement agent or remarketing agent for
the Bonds) against or affecting an Indemnified Person (1) with respect to the
execution, delivery, enforcement and performance of this Agreement, the Notes,
the other Loan Documents and the Project Documents or the transactions
contemplated hereby or thereby, (2) with respect to the offering and sale of the
Bonds, (3) with respect to a default by the Borrower in the performance of its
respective agreements, rights or obligations contained in this Agreement, the
other Loan Documents or the Project Documents, or any other instrument or
agreement entered into by the Borrower in connection herewith or therewith, (4)
resulting from injury to or death of any person whomsoever, and damage to or
loss or destruction of any property whatsoever, which in any way arises in
connection with, is incidental to or is caused by the construction or operation
of the Facility or any activity on or near the Site or the
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Project, (5) in any way relating to or arising out of the Project, or the
manufacture, financing, construction, purchase, acceptance, rejection,
ownership, acquisition, delivery, nondelivery, preparation, installation,
storage, maintenance, repair, transfer of title, abandonment, possession,
rental, use, operation, environmental clean-up, condition, sale, return,
importation, exportation or other application or disposition of all or any part
of any interest in the Project, or (6) resulting from the violation of any
Environmental Law or the existence or Release of any Hazardous Materials at the
Project or any other property of the Borrower (including, without limitation,
clean-up costs, response costs, costs of corrective action and natural resources
damages) (all the matters indemnifiable under clauses (i) through (iv) above,
collectively, the "indemnified liabilities"); provided, that the Borrower shall
have no obligation to any Indemnified Person under clause (iv) above with
respect to indemnified liabilities arising from the gross negligence or willful
misconduct of such Indemnified Person. Each Indemnified Person claiming any
right to indemnity under clause (iv) of the preceding sentence by reason of the
institution of any action against such Indemnified Person shall notify the
Borrower thereof and shall consult with the Borrower from time to time in
connection with the defense of such action. In case any such action shall be
brought against such Indemnified Person, the Borrower shall be entitled to
assume the defense thereof or to participate in such action with counsel of its
choice and at its expense (and if the Borrower assumes the defense of such
action the Borrower shall not thereafter be responsible for the fees and
expenses of any separate counsel retained by such Indemnified Person); provided
that any counsel retained by the Borrower shall be reasonably satisfactory to
such Indemnified Person. Notwithstanding the Borrower's election to assume the
defense of such action, such Indemnified Person shall have the right to employ
separate counsel and to participate in the defense of such action, and the
Borrower shall bear the reasonable fees and expenses of such separate counsel,
if (i) the counsel chosen by the Borrower to represent such Indemnified Person
determines that such representation would present such counsel with a conflict
of interest, (ii) the defendants in, or targets of, any such action include both
such Indemnified Person and the Borrower, and such Indemnified Person shall have
concluded, on advice of counsel, that there may be legal defenses available to
it which are different from or additional to those available to the Borrower,
(iii) the Borrower shall not have employed counsel satisfactory to such
Indemnified Person to represent such Indemnified Person within a reasonable time
after notice of the institution of any such action, or (iv) the Borrower shall
authorize such Indemnified Person to employ separate counsel at the Borrower's
expense; provided that the Borrower shall not be required to pay the fees and
expenses of more than one such separate counsel for all of the Banks or more
than one such separate counsel for all of the Institutions.
(b) Reimbursable Expenses incurred on or prior to the Closing
Date shall be reimbursed by the Borrower on the Closing Date, and Reimbursable
Expenses incurred after the Closing Date shall be reimbursed by the Borrower
from time to time within 30 days after demand; provided in each case that such
Reimbursable Expenses are approved by the Borrower (which approval shall not be
unreasonably withheld) and shall be evidenced by reasonably satisfactory
documentation therefor, and provided, further, that nothing herein shall relieve
the Borrower of its obligation to reimburse such Reimbursable Expenses if the
Closing Date does not occur for any reason. The agreements in this Section shall
survive repayment of the Loans and all of the other Secured Obligations.
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Section 14.6 Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the Borrower, the Banks, the Issuing
Bank, the Institutions, the Administrative Agent, the Co-Agents, all future
holders of the Notes and their respective successors and assigns, except that
the Borrower may not assign or transfer any of its rights or obligations under
this Agreement without the prior written consent of each Lender and the Issuing
Bank, and none of the Banks or Institutions may assign or transfer, or grant any
participations in, its rights or obligations hereunder except in accordance with
Sections 14.7 and 14.8, respectively.
Section 14.7 Permitted Bank Transfers and Participations. (a)
Any Bank may, in the ordinary course of its commercial banking business and in
accordance with applicable law, at any time sell to one or more banks or other
financial institutions or institutional investors ("Loan Participants")
participating interests in any Bank Loan made by such Bank, the Bank Notes held
by such Bank, the Commitment of such Bank or any other interest of such Bank
hereunder and under the other Loan Documents. In the event of any such sale by a
Bank of a participating interest to a Loan Participant, such Bank's obligations
under this Agreement to the other parties to this Agreement shall remain
unchanged, such Bank shall remain solely responsible for the performance
thereof, such Bank shall remain the holder of such Bank Notes for all purposes
of this Agreement and the other Loan Documents, and the Borrower, the
Administrative Agent and the Security Agent shall continue to deal solely and
directly with such Bank in connection with such Bank's rights and obligations
under this Agreement and the other Loan Documents. The Borrower agrees that each
Loan Participant shall be deemed to have the right of setoff in respect of its
participating interest in amounts owing under this Agreement and any Bank Note
to the same extent as if the amount of its participating interest were owing
directly to it as a Bank under this Agreement or any Bank Note, provided that,
in purchasing such participating interest, such Loan Participant shall be deemed
to have agreed to share with the Banks the proceeds thereof as provided in
Section 14.9(a) as fully as if it were a Bank hereunder. The Borrower also
agrees that each Loan Participant shall be entitled to the benefits of Sections
3.11, 7.6 and 7.7(a) with respect to its participation in the Commitments and
the Bank Loans outstanding from time to time; provided that (i) no Loan
Participant shall be entitled to receive any greater amount pursuant to such
Sections than the transferor Bank would have been entitled to receive in respect
of the amount of the participation transferred by such transferor Bank to such
Loan Participant had no such transfer occurred, (ii) no Loan Participant shall
be entitled to any indemnification by the Borrower pursuant to Section 7.6 to
the extent that, at the time of its purchase of a participating interest in the
Bank Loans, it cannot make the representation specified in the first sentence of
Section 7.6(b) and (iii) each Loan Participant shall be bound by the
confidentiality provisions contained in Section 14.14. In no event shall a Bank
that sells a participating interest be obligated to the Loan Participant to take
or refrain from taking any action hereunder or under any of the other Loan
Documents except that such Bank may agree that it will not, without the consent
of such Loan Participant, agree to (A) increase or extend the term of the
Commitment of such Bank, (B) reduce the principal of, or interest payable on,
the Bank Loans of such Bank or any fees or other amounts payable to such Bank
hereunder, (C) postpone the date fixed for any payment of the principal of, or
interest on, the Bank Loans of such Bank or other amounts payable to such Bank
hereunder, (D) change the percentage of the Commitments of the Banks or of the
aggregate unpaid principal amount of the Bank Loans which shall be required for
the Banks or any of them to take any action hereunder,
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or (E) provide its consent to a release of Collateral pursuant to Section 8.7(f)
of the Security Deposit Agreement.
(b) Any Bank may, in the ordinary course of its commercial
banking business and in accordance with applicable law, at any time sell to any
Qualified Financial Institution (all such purchasers, collectively, "Purchasing
Banks") all of its Commitments, Loans, rights and obligations under this
Agreement and the Bank Notes held by it (or any part of such Commitments, Loans,
rights and obligations provided that, after giving effect to such sale, the
transferor Bank and such Purchasing Bank each have Commitments and/or Bank Loans
aggregating not less than $5,000,000) pursuant to a Transfer Supplement,
substantially in the form of Exhibit L-1 (a "Bank Transfer Supplement"),
executed by such Purchasing Bank, such transferor Bank (and, in the case of a
Purchasing Bank that is not then a Bank, the Administrative Agent) and delivered
to the Administrative Agent for its acceptance and recording in the Register (as
hereinafter defined); provided that no Bank shall sell or transfer an interest
pursuant to this Section 14.7(b) to any Person which, at the time of such
transfer, would be unable to make or maintain Bank Loans of any Type hereunder
(unless the transferor Bank is then unable to make or maintain Loans of such
Type hereunder) or which, at the time of such transfer, would be entitled to
payments from the Borrower under Section 3.11 or 7.6 in excess of the payments
(if any) to which the transferor Bank is then entitled. Upon such execution,
delivery, acceptance and recording, from and after the Transfer Effective Date
determined pursuant to such Bank Transfer Supplement, (x) the Purchasing Bank
thereunder shall be a party hereto and shall be bound by the provisions hereof
and of the Security Deposit Agreement and, to the extent provided in such Bank
Transfer Supplement, shall have the rights and obligations of a Bank hereunder
and of a Secured Party under the Security Deposit Agreement, with its Commitment
as set forth in such Bank Transfer Supplement, and (y) the transferor Bank
thereunder shall, to the extent provided in such Bank Transfer Supplement, be
released from its obligations under this Agreement arising after the Transfer
Effective Date (and, in the case of a Bank Transfer Supplement covering all or
the remaining portion of a transferor Bank's Commitments, Loans, rights and
obligations under this Agreement, such transferor Bank shall cease to be a party
hereto and to the Security Deposit Agreement); provided that such transferor
Bank shall continue to be bound by the confidentiality provisions set forth in
Section 14.14(b). Such Bank Transfer Supplement shall be deemed to amend this
Agreement to the extent, and only to the extent, necessary to reflect the
addition of such Purchasing Bank as a Bank party hereto and the resulting
adjustment of Commitment Percentages and Commitments arising from the purchase
by such Purchasing Bank of all or a portion of the Commitments, Loans, rights
and obligations of such transferor Bank under this Agreement and the Bank Notes
held by it. On the Transfer Effective Date determined pursuant to such Bank
Transfer Supplement, or as soon as possible thereafter, the Borrower, at its own
expense, shall execute and deliver to the Administrative Agent in exchange for
the Bank Project Note, Bank L/C Note and Bank Liquidity Note held by the
transferor Bank (which Bank Notes shall be surrendered to the Administrative
Agent for delivery to the Borrower), a new Bank Project Note, Bank L/C Note and
Bank Liquidity Note to the order of such Purchasing Bank reflecting the
Commitment of such Purchasing Bank and outstanding Bank Loans obtained by it
pursuant to such Bank Transfer Supplement and, if the transferor Bank has
retained a Commitment and Bank Loans hereunder, a new Bank Project Note, Bank
L/C Note and Bank Liquidity Note to the order of the transferor Bank reflecting
the Commitment of such transferor Bank and outstanding Bank Loans retained
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by it hereunder. Such new Bank Notes shall be in the form of the Bank Notes
replaced thereby. The Bank Notes surrendered by the transferor Bank shall be
returned by the Administrative Agent to the Borrower marked "canceled".
(c) The Administrative Agent shall maintain at its address
referred to in Section 14.2 a copy of each Bank Transfer Supplement delivered to
it and a register (the "Register") for the recordation of the names and
addresses of the Banks and the Commitments of, and principal amount of the Bank
Loans owing to, each Bank from time to time. The entries in the Register shall
be conclusive, in the absence of manifest error, and the Borrower, the
Administrative Agent, the Security Agent and the Banks may treat each Person
whose name is recorded in the Register as the owner of the Bank Loans recorded
therein for all purposes of this Agreement. The Register shall be available for
inspection by the Borrower or any Bank, the Issuing Bank, any Institution or the
Security Agent at any reasonable time and from time to time upon reasonable
prior notice.
(d) Upon its receipt of a Bank Transfer Supplement executed by
a transferor Bank and Purchasing Bank (and, in the case of a Purchasing Bank
that is not then a Bank, by the Borrower and the Administrative Agent), together
with payment to the Administrative Agent by the transferor Bank (unless such
transfer is part of the initial general syndication of the Bank Loans and the
Commitments) of a registration and processing fee of $2,000, the Administrative
Agent shall (i) promptly accept such Bank Transfer Supplement and (ii) on the
Transfer Effective Date determined pursuant thereto record the information
contained therein in the Register and give notice of such acceptance and
recordation to the Banks, the Issuing Bank, the Institutions, the Security Agent
and the Borrower.
(e) Nothing herein shall prohibit any Bank from pledging or
assigning any Bank Note to any Federal Reserve Bank in accordance with
applicable law.
(f) A sale by a Bank of its rights and obligations under this
Agreement and the Bank Notes held by it pursuant to the foregoing provisions of
this Section 14.7 shall not release the Borrower from its obligations to said
Bank under Section 14.5(a)(iv) relating to events that occurred prior to the
date of such sale.
Section 14.8 Permitted Institution Transfers. (a) Any
Institution may, in accordance with applicable law, at any time sell to any
financial institution, insurance company or other institutional investor (all
such purchasers, collectively, "Purchasing Institutions") all of its
Commitments, Loans, rights and obligations under this Agreement and the
Institutional Notes held by it (or any part of such Commitments, Loans, rights
and obligations provided that, after giving effect to such sale, each of the
transferor Institution and its Affiliates collectively have, and the Purchasing
Institution and its Affiliates collectively have, Commitments and/or
Institutional Loans aggregating not less than $1,000,000) pursuant to a Transfer
Supplement, substantially in the form of Exhibit L-2 (an "Institutional Transfer
Supplement"), executed by such Purchasing Institution and such transferor
Institution; provided that, prior to the Transfer Effective Date referred to
below, such Purchasing Institution shall have also executed and delivered a
representation letter addressed to the Borrower to the effect that the
representations set forth in Section 4.8 will be true and correct as to it on
such Transfer Effective Date; provided,
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further that no Institution shall sell or transfer an interest pursuant to this
Section 14.8(a) to any Person which, at the time of such transfer, would be
entitled to payments from the Borrower under Section 7.6 in excess of the
payments (if any) to which the transferor Institution is then entitled. Upon
such execution and delivery, from and after the Transfer Effective Date
determined pursuant to such Institutional Transfer Supplement, (x) the
Purchasing Institution thereunder shall be a party hereto and shall be bound by
the provisions hereof and of the Security Deposit Agreement and, to the extent
provided in such Institutional Transfer Supplement, shall have the rights and
obligations of a Institution hereunder and of a Secured Party under the Security
Deposit Agreement, with its Commitment as set forth in such Institutional
Transfer Supplement, and (y) the transferor Institution thereunder shall, to the
extent provided in such Institutional Transfer Supplement, be released from its
obligations under this Agreement arising after the Transfer Effective Date (and,
in the case of a Institutional Transfer Supplement covering all or the remaining
portion of a transferor Institution's rights and obligations under this
Agreement, such transferor Institution shall cease to be a party hereto and to
the Security Deposit Agreement); provided that such transferor Institution shall
continue to be bound by the confidentiality provisions set forth in Section
14.14(b). Such Institutional Transfer Supplement shall be deemed to amend this
Agreement to the extent, and only to the extent, necessary to reflect the
addition of such Purchasing Institution as a Institution party hereto and the
resulting adjustment of Commitment Percentages and Commitments arising from the
purchase by such Purchasing Institution of all or a portion of the rights and
obligations of such transferor Institution under this Agreement and the
Institutional Note or Notes held by it. On the Transfer Effective Date
determined pursuant to such Institutional Transfer Supplement, or as soon as
possible thereafter, the Borrower, at its own expense, shall execute and deliver
to the transferor Institution in exchange for the Institutional Note or Notes
held by the transferor Institution, a new Institutional Note or Notes payable to
the order of, or registered in the name of, such Purchasing Institution (as such
Purchasing Institution shall request) reflecting the outstanding Institutional
Loans obtained by it pursuant to such Institutional Transfer Supplement and, if
the transferor Institution has retained any Institutional Loans hereunder, a new
Institutional Note or Notes payable to the order of, or registered in the name
of, the transferor Institution (as such transferor Institution shall request)
reflecting the outstanding Institutional Loans retained by it hereunder. Such
new Institutional Notes shall be in the form of the Institutional Note replaced
thereby. Any Institutional Note surrendered by the transferor Institution shall
be returned to the Borrower marked "cancelled".
(b) A sale by an Institution of its rights and obligations
under this Agreement and the Institutional Notes held by it pursuant to the
foregoing provisions of this Section 14.8 shall not release the Borrower from
its obligations to said Institution under Section 14.5(a)(iv) relating to events
that occurred prior to the date of such sale.
Section 14.9 Set-off. In addition to any rights and remedies
of the Lenders provided by law, each Lender shall have the right, without prior
notice to the Borrower, any such notice being expressly waived by the Borrower
to the extent permitted by applicable law, upon the occurrence and during the
continuance of an Event of Default, to set-off and appropriate and apply any and
all deposits (general or special, time or demand, provisional or final), in any
currency, and any other credits, indebtedness or claims, in any currency, in
each case whether direct or indirect, absolute or contingent, matured or
unmatured, at any time held or owing by
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such Lender to or for the credit or the account of the Borrower, against any and
all of the respective obligations of the Borrower now or hereafter existing
under the Loan Documents, irrespective of whether or not such Lender or any
other Lender shall have made any demand hereunder and although such obligations
may be contingent or unmatured; provided that following any such set-off by a
Lender, such Lender shall be liable to the other Lenders to the extent provided
in Section 8.2 of the Security Deposit Agreement. Each Lender agrees promptly to
notify the Borrower, the Administrative Agent, each Institution and the Security
Agent after any such set-off and application made by such Lender; provided that
the failure to give such notice shall not affect the validity of such set-off
and application.
Section 14.10 Agreements Among Lenders.
(a) Limitation on Relationship. Paragraph (b) of this Section
14.10 and Article VIII of the Security Deposit Agreement set forth certain
agreements and obligations between the Banks and the Issuing Bank on the one
hand and the Institutions on the other hand. Except as provided in paragraph (b)
of this Section 14.10 and Article VIII of the Security Deposit Agreement,
neither the Banks nor the Issuing Bank shall have any duties or responsibilities
to or on behalf of, or any fiduciary relationship with, the Institutions, and
the Institutions shall not have any duties or responsibilities to or on behalf
of, or any fiduciary relationship with, the Banks or the Issuing Bank, in each
case under or in connection with this Agreement or any other Loan Document.
Without limiting the generality of the foregoing, no implied covenants,
functions, responsibilities, duties, obligations or liabilities between the
Banks and the Issuing Bank on the one hand, and the Institutions on the other
hand, shall be read into this Agreement or any other Loan Document or shall
otherwise exist. In addition, none of the Lenders, nor any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates shall be (i)
liable to any of the other Lenders for any action lawfully taken or omitted to
be taken by such Person under or in connection with this Agreement or any other
Loan Document (except for action taken or omitted to be taken in violation of
any provisions of this Agreement or the other Loan Documents) or (ii)
responsible in any manner to any of the other Lenders for any of the matters
referred to in clause (ii) of Section 13.1(c); provided that nothing in this
paragraph (a) shall in any way limit or be deemed to limit or release any Lender
from its obligations under paragraph (b) of this Section 14.10 and Article VIII
of the Security Deposit Agreement or the Security Agent from any of its
obligations to the Institutions under the Security Documents.
(b) Bank True-Up Obligation. The Banks hereby acknowledge that
it would be desirable if, at all times during the Construction Period, the
Relative Bank Exposure were equal to the Relative Institution Exposure.
Accordingly, because the Borrower may at any time during the Construction Period
obtain Institutional Loans from the Institutions in a relatively greater
proportion than the Bank Project Loans from the Banks, the Banks hereby
irrevocably and unconditionally agree with the Institutions as follows:
(i) True-Up Obligation. Each Bank severally agrees
that, effective upon an acceleration of the Institutional Loans prior
to the Completion Date in accordance with Section 12.2 following an
Event of Default (whether or not the Bank Loans are accelerated), such
Bank shall automatically purchase at par, without any further act of
the Lenders except as provided elsewhere in this Section 14.10(b), an
undivided participation
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interest in the outstanding Institutional Notes (a "Participation
Interest") in an amount equal to the True-Up Amount applicable to such
Bank. The Participation Interest purchased by each Bank in the
Institutional Notes shall entitle such Bank to receive, on a pro rata
basis with the holders of such Institutional Notes based on the
percentage of the undivided participation interest in the Institutional
Notes purchased by such Bank, an amount equal to the purchase price of
the Participation Interest paid to the Institutions pursuant to the
preceding sentence, together with interest accrued thereon at the
True-Up Default Rate as provided in clause (x) below, but shall not
entitle such Bank to receive any Make-Whole Premium payable on the
Institutional Notes, which shall continue to be payable to the holders
thereof.
(ii) Calculation of True-Up Amount. Following an
acceleration of the Institutional Loans pursuant to Section 12.2, if
the Institutions shall determine that amounts are payable to them under
the Banks' True-Up Obligation hereunder, they shall as soon as
practicable thereafter provide a written payment request to the
Administrative Agent. Promptly following the receipt of such a request,
the Institutions and the Administrative Agent shall jointly calculate
the True-Up Amount applicable to each Bank and the Administrative Agent
shall notify the Banks and the Security Agent thereof, which
notification to the Banks shall contain the calculations by which the
True-Up Amount applicable to each Bank was determined.
(iii) Purchase Mechanics. No later than five Business
Days after the notification to the Banks referred to in clause (ii)
above, each Bank shall purchase from the Institutions on a pro rata
basis, without recourse or representation or warranty by the
Institutions (other than that such Interests are being assigned free
and clear of any Liens), Participation Interests in the outstanding
Institutional Notes (pro rata among said Notes) in an amount equal to
the True-Up Amount applicable to such Bank, by wire transfer of such
amount to the Administrative Agent at its office specified on Schedule
1. The Administrative Agent will, prior to the close of business on
each Business Day during such five Business Day period, wire transfer
to each Institution at its address on Schedule 1 (or such other address
notified in writing to the Administrative Agent) such Institution's pro
rata share (as notified to the Administrative Agent in writing at the
time the True-Up Amount was calculated pursuant to clause (ii) above)
of the aggregate amount of available funds received from the Banks on
such date in respect of the True-Up Obligation. Although the
Administrative Agent agrees to perform ministerial activities with
respect to the Institutions' collection of amounts due from the Banks
in respect of the True-Up Obligation, in no event shall the
Administrative Agent be obligated for collecting any unpaid True-Up
Amounts from the Banks or be liable to any Institution for the failure
by any Bank to pay any such amount.
(iv) Non-Payment of True-Up Amount. If a Bank fails to
pay all or any portion of the True-Up Amount applicable to such Bank
prior to the expiration of the period of five Business Days referred to
in clause (ii) above, such unpaid True-Up Amount of such Bank shall
bear interest at the Institution Default Rate from and excluding the
last day of such five Business Day period to and including the date
paid by the Bank. In addition, following the expiration of such five
Business Day period with
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respect to any such Bank and until all of the True-Up Amount payable by
such Bank, together with accrued interest thereon, has been paid in
full, all payments of or collections with respect to the Bank Loans
made by such Bank or interest thereon or any other amount due to such
Bank hereunder that is received by the Administrative Agent shall be
paid by the Administrative Agent first, to the Institutions in payment
of the unpaid True-Up Amount of such Bank, together with interest
thereon, until such amounts shall be paid in full, and second, to such
Bank.
(v) Voting Rights. The Lenders agree that the
provisions set forth in Section 8.8 of the Security Deposit Agreement
(relating to certain intercreditor matters) shall in all respects
govern the voting rights of the Lenders with respect to the
Participation Interests purchased by the Banks pursuant to this Section
14.10(b).
(vi) Obligations Several and Unconditional.
Notwithstanding anything herein to the contrary, each Bank's obligation
under this Section 14.10(b) to purchase Participation Interests if any
True-Up Amount is owing by such Bank shall be several and not joint
with the other Banks, but shall be irrevocable and unconditional and
without regard to any then existing Events of Default (including a
bankruptcy of the Borrower), any failure by the Borrower to pay any
fees pursuant to Section 7.1(c), a failure of the other Banks to
perform their respective obligations hereunder or any other
circumstance. In addition, this Section 14.10(b) is not intended to,
nor shall it, confer any rights on the Borrower.
(vii) True-Up Unwind. If, at any time following the
purchase by any Bank of a Participation Interest under this Section
14.10(b) following the acceleration of the Institutional Loans in
accordance with Section 12.2, the Majority Institutions or the Required
Secured Parties shall rescind and annul such acceleration as provided
in the last paragraph of Section 12.2, concurrently therewith such
purchase of the Participation Interest by such Bank shall automatically
be rescinded, and the purchase price paid by such Bank therefor, in an
amount equal to the True-Up Amount applicable to such Bank, shall be
promptly returned by the Institutions, on a pro rata basis, to such
Bank, without interest thereon.
(viii) Specific Performance. The Banks agree that the
Institutions shall be entitled to injunctive or other equitable relief
for the failure by any Bank to perform its obligations under this
Section 14.10(b), and such Bank shall not plead in defense thereto that
there is an adequate remedy at law.
(ix) Payment Rights. The Borrower agrees that each Bank
purchasing a Participating Interest may exercise all rights of payment
(including, without limitation, rights of set-off with respect to such
Participating Interest) as fully as if such Bank were the direct holder
of the Institutional Loans represented by such Participating Interest;
provided that each Institution agrees that in the event it shall
receive any payment with respect to the Participation Interests
purchased by the Banks, it shall promptly deliver such amounts to the
Banks.
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(x) Interest Payable. The Borrower agrees that the
portion of the Institutional Loans purchased by any Bank pursuant to
this Section 14.10(b) shall, from and after the effective date of such
purchase, bear interest at the True-Up Default Rate.
(xi) Certain Defined Terms. For purposes of this
Section 14.10(b), the following terms shall have the meanings
specified below:
"Total Lender Commitments": at any time, the sum of
(i) the Total Bank Loan Commitments then in effect and (ii)
the Total Institutional Commitments then in effect.
"Total Lender Exposure": at any time, the sum of (i)
the Total Bank Exposure on such date and (ii) the aggregate
outstanding principal amount of Institutional Loans on such
date (after giving effect to any prepayment of Institutional
Loans with the proceeds of funds transferred from the
Institutional Loan Proceeds Account on or prior to such date
pursuant to Section 7.3(h)).
"True-Up Amount": as of any date of determination,
with respect to each Bank, the amount by which (i) the product
of (x) such Bank's True-Up Percentage and (y) the Total Lender
Exposure on such date, exceeds (ii) such Bank's Commitment
Percentage of the Total Bank Exposure on such date.
"True-Up Default Rate": for any day, the higher of
the Bank Default Rate and the Institution Default Rate.
"True-Up Percentage": with respect to any Bank on any
date of determination, a fraction, the numerator of which is
equal to such Bank's Commitment Percentage of the Total Bank
Loan Commitments then in effect, and the denominator of which
is the Total Lender Commitments then in effect.
Section 14.11 Counterparts. This Agreement may be executed by
one or more of the parties to this Agreement on any number of separate
counterparts, and all of said counterparts taken together shall be deemed to
constitute one and the same instrument. A set of the copies of this Agreement
signed by all the parties shall be lodged with the Borrower, the Administrative
Agent and the Institutions.
Section 14.12 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.
Section 14.13 Limitation of Recourse. There shall be full
recourse to the Borrower and all of its assets and properties for the
liabilities of the Borrower under this Agreement, the Notes and the other Loan
Documents and the Obligations, but, subject to the provisions of the following
sentence, in no event shall Southern or any of its Affiliates (other
<PAGE> 123
115
than the Borrower) or any Partner (collectively, the "Non-Recourse Parties"), or
any officer, director or holder of any equity interest in the Borrower or any
Non-Recourse Party, be personally liable or obligated for such liabilities and
obligations of the Borrower, except as may be specifically provided in any other
Loan Document or Project Document to which such Non-Recourse Party is a party.
Nothing herein contained shall limit or be construed to (i) release any
Non-Recourse Party from liability for its fraudulent actions, misappropriation
of funds or willful misconduct, or from any of its obligations or liabilities
under any agreement executed by such Non-Recourse Party in its individual
capacity in connection with any Loan Document or Project Document or (ii) limit
in any respect the enforceability in accordance with their respective terms on a
full recourse basis of any Southern Document against Southern, or against SEI,
of the Operating and Maintenance Agreement, the Construction Contracts or the
SEI Coal Procurement Letter. The provisions of this Section 14.13 shall survive
the termination of this Agreement.
Section 14.14 Confidentiality Undertaking. (a) The
Administrative Agent and each Lender agrees, and each successor or assignee
thereof, by becoming a party to this Agreement (either directly or indirectly
through a participation agreement), shall be deemed to have agreed, to keep
confidential (and to cause its officers, directors and employees to keep
confidential) the provisions of the Project Documents and the Information
Memorandum and any written information that is obtained pursuant to the terms of
this Agreement or any other Loan Document (collectively, the "Confidential
Material"), except that the Administrative Agent and each Lender may disclose
the Confidential Material (i) to its officers, directors, employees and
Affiliates (provided such persons are informed of the confidential nature of the
Confidential Material and the restrictions imposed by this Section 14.14), (ii)
to its attorneys and accountants who have a need for such information (provided
such persons are informed of the confidential nature of the Confidential
Material and the restrictions imposed by this Section 14.14), (iii) to its
agents, representatives and other professional consultants or advisors who have
agreed in writing to be bound by the restrictions with respect to the
Confidential Material contained in this Section 14.14, (iv) upon the order of
any Government Authority, (v) upon the request or demand of, or in connection
with any investigation or audit by (1) any Government Authority, if such request
or demand shall have the force of law, or (2) any Government Authority
regulating the business of banking or insurance (including the National
Association of Insurance Commissioners), (vi) any nationally recognized rating
agency (provided such persons are informed of the confidential nature of the
Confidential Material and the restrictions imposed by this Section 14.14), (vii)
to the extent such information was or becomes available to any Lender by a
Person who is not bound by a confidentiality agreement so far as such Lender is
aware, (viii) to the extent such information is now or hereafter enters the
public domain through no action on the part of such Lender in violation of this
Section 14.14, (ix) to a prospective Loan Participant, Purchasing Bank or
Purchasing Institution who agrees in writing to be bound by the restrictions
with respect to the Confidential Material contained in this Section 14.14 and
(x) in connection with the exercise of any remedy following an Event of Default
under this Agreement, the Security Documents or the other Loan Documents. In the
case of disclosure by a Lender under clause (iv) or (v) of the preceding
sentence (other than routine disclosures to regulatory authorities), such Lender
shall use its best efforts to notify the Borrower before making any such
disclosure so that the Borrower may seek an appropriate protective order.
<PAGE> 124
116
(b) In addition, the Administrative Agent and each Lender
agrees, and each successor or assignee thereof, by becoming a party to this
Agreement (either directly or indirectly through a participation agreement),
shall be deemed to have agreed, not to use or disclose any Confidential Material
relating to the Power Purchase Agreement in any way that is detrimental to
Virginia Power in connection with any other project involving Virginia Power as
a purchaser of electric energy and/or capacity. The provisions of this paragraph
(b) shall survive the termination of the Commitments and the repayment of the
Loans and shall be binding on the Administrative Agent and the Lenders, and each
successor or assignee thereof that becomes a party to this Agreement, until the
termination of the Power Purchase Agreement, or such earlier date on which
disclosure of the relevant Confidential Material would be permitted pursuant to
clause (vii) or (viii) of paragraph (a) above.
(c) In the event of any breach or threatened breach by the
Administrative Agent or a Lender of the terms of this Section 14.14, the
Borrower shall be entitled to injunctive or other equitable relief, and the
Administrative Agent or such Lender, as the case may be, shall not plead in
defense thereto that there would be an adequate remedy at law.
SECTION 14.15 GOVERNING LAW. THIS AGREEMENT AND THE NOTES AND
THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT AND THE NOTES
SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW
OF THE STATE OF NEW
YORK.
Section 14.16 Submission To Jurisdiction; Waivers. The
Borrower hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents, or
for recognition and enforcement of any judgment in respect thereof, to
the non-exclusive general jurisdiction of the courts of the State of
New York, the courts of the United States of America for the Southern
District of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought
in such courts and waives any objection that it may now or hereafter
have to the venue of any such action or proceeding in any such court or
that such action or proceeding was brought in an inconvenient court and
agrees not to plead or claim the same;
(c) agrees that nothing herein shall affect the right to
effect service of process in any manner permitted by law or shall limit
the right to sue in any other jurisdiction; and
(d) waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal action or proceeding
referred to in this Section any special, exemplary, punitive or
consequential damages, other than, in the case of punitive damages,
with respect to any Lender or the Administrative Agent which engages in
willful misconduct.
<PAGE> 125
117
Section 14.17 Acknowledgements. The Borrower hereby
acknowledges that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement, the Notes and the other Loan
Documents;
(b) neither the Administrative Agent, any Co-Agent nor any
Lender has any fiduciary relationship to the Borrower, and the
relationship between the Administrative Agent, the Co-Agents, the
Security Agent, and the Lenders, on one hand, and the Borrower, on the
other hand, is solely that of creditor and debtor; and
(c) no joint venture exists between the Borrower and the
Lenders.
Section 14.18 Security Agent as Third Party Beneficiary. The
provisions of and rights created by this Agreement shall inure to, and are
intended for, the benefit of the Security Agent, to the extent provided herein,
and the Security Agent shall be deemed a third party beneficiary with respect
thereto, entitled to enforce directly and in its own name any rights or claims
it may have under this Agreement, including without limitation under Sections 12
and 13.2.
SECTION 14.19 WAIVERS OF JURY TRIAL. THE BORROWER, THE
ADMINISTRATIVE AGENT, THE CO-AGENTS AND THE LENDERS HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS AGREEMENT OR THE NOTES OR ANY OTHER LOAN DOCUMENT AND FOR ANY
COUNTERCLAIM THEREIN.
Section 14.20 Integration. The parties hereto agree that upon
the execution and delivery of this Agreement, the Amended and Restated Lenders'
Combined Term Sheet (the "Term Sheet") sent under a cover letter dated April 28,
1994 from certain of the Lenders to the Borrower (including any amendments
thereto) shall expire and be of no further force and effect, and the "Financial
Closing Date" under the Term Sheet shall be the Closing Date hereunder.
<PAGE> 126
118
IN WITNESS WHEREOF, the parties hereto have caused this Loan
and Reimbursement Agreement to be duly executed and delivered in New York, New
York, by their proper and duly authorized officers as of the day and year first
above written.
BIRCHWOOD POWER PARTNERS, L.P.
By: SEI Birchwood, Inc., a General Partner
By:
----------------------------------
Name:
Title:
By: Birchwood Development Corp., a General
Partner
By:
----------------------------------
Name:
Title:
CREDIT SUISSE, as Administrative Agent,
Issuing Bank and as a Bank
By:
--------------------------------------
Name:
Title:
By:
--------------------------------------
Name:
Title:
<PAGE> 127
119
BANQUE PARIBAS, NEW YORK BRANCH as
a Co-Agent and as a Bank
By:
---------------------------------
Name:
Title:
By:
---------------------------------
Name:
Title:
BARCLAYS BANK PLC, as a Co-Agent and as a
Bank
By:
---------------------------------
Name:
Title:
UNION BANK OF CALIFORNIA, as a Co-Agent
and as a Bank
By:
---------------------------------
Name:
Title:
JOHN HANCOCK MUTUAL LIFE INSURANCE
COMPANY, as an Institution
By:
---------------------------------
Name:
Title:
JOHN HANCOCK VARIABLE LIFE
INSURANCE COMPANY, as an Institution
By:
---------------------------------
Name:
<PAGE> 128
120
MELLON BANK, N.A., AS TRUSTEE FOR
AT&T MASTER PENSION TRUST, as an
Institution
By:
---------------------------------
Name:
Title:
MELLON BANK, N.A., AS TRUSTEE FOR
NYNEX MASTER PENSION TRUST, as an
Institution
By:
---------------------------------
Name:
Title:
COMMONWEALTH OF PENNSYLVANIA
STATE EMPLOYES' RETIREMENT SYSTEM,
as an Institution
By: John Hancock Mutual Life Insurance
Company, as Investment Adviser
By:
----------------------------
Name:
Title:
<PAGE> 129
121
ALLSTATE INSURANCE COMPANY, as an
Institution
By:
-----------------------------
Name:
Title:
By:
-----------------------------
Name:
Title:
ALLSTATE LIFE INSURANCE COMPANY, as
an Institution
By:
------------------------------
Name:
Title:
By:
------------------------------
Name:
Title:
ALLSTATE LIFE INSURANCE COMPANY OF
NEW YORK, as an Institution
By:
-------------------------------
Name:
Title:
By:
-------------------------------
Name:
Title:
<PAGE> 130
122
NEW YORK LIFE INSURANCE COMPANY, as
an Institution
By:
----------------------------------
Name:
Title:
<PAGE> 131
COMPOSITE
(through 4/96)
of
Annex A:
DEFINITIONS
The terms defined herein relate to the Project Loan Agreement
(as defined below) and certain other Loan Documents executed, or to be executed,
in connection with the transactions contemplated by the Project Loan Agreement.
If, and to the extent that, the Project Loan Agreement shall be amended,
modified or supplemented from time to time pursuant to the terms thereof, this
Annex and the Annex to each Loan Document that incorporates this Annex shall be,
or be deemed to have been, amended, modified or supplemented concurrently with
the execution and delivery of each such amendment, modification or supplement of
the Project Loan Agreement, in order to conform the definitions herein to the
new or amended definitions set forth in or required by each such amendment,
modification or supplement of the Project Loan Agreement. The meanings given to
terms defined herein shall be equally applicable to both the singular and plural
forms of such terms.
"Access and Utility Easement Agreement": the Access and
Utility Easement, dated as of April 21, 1994, among Frank B. Taylor and Laura
Stuart Taylor, the Greenhouse Operator and the Borrower, amended, supplemented
or otherwise modified from time to time in accordance with Section 11.12(a) of
the Project Loan Agreement.
"Accounts": the Institutional Loan Proceeds Account, the
Construction Account, the Accrued Interest Account, the Repair and Maintenance
Account, the Debt Service Reserve Account, the Project Control Account, the
Additional Collateral Account, the Special Payment Account, the Final Completion
Escrow Account, the Insurance and Property Tax Reserve Account, the Greenhouse
Reserve Account, Bond Transfer Accounts and the Distributions Account.
"Accrued Interest Account": the Accrued Interest Account
established and maintained pursuant to the Security Deposit Agreement.
"Additional Collateral Account": the Additional Collateral
Account established and maintained pursuant to the Security Deposit Agreement.
"Additional Contract": any contract entered into by the
Borrower after the execution and delivery of the Project Loan Agreement,
providing for (i) the transmission or sale by the Borrower of any of the
Facility's electrical or steam output; (ii) the supply or
<PAGE> 132
2
transportation of Coal to the Facility; (iii) the removal of ash or other
by-products from the Facility; or (iv) the financing or leasing of equipment or
the supply of goods or services essential to the operation of the Facility
(other than employment contracts and contracts involving less than $500,000
annually or having a maximum term (including renewal options) of less than six
months).
"Administrative Agent": Credit Suisse, in its capacity as
administrative agent for the Banks, or any successor in such capacity appointed
pursuant to Section 13.1(i) of the Project Loan Agreement.
"Affiliate": as applied to any Person, any other Person
directly or indirectly controlling, controlled by, or under common control with,
that Person. For the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling," "controlled by" and "under common
control with"), as applied to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of that Person, whether through the ownership of voting securities or
partnership or other ownership interests or by contract or otherwise; provided
that any Person owning, directly or indirectly, 10% or more of the securities
having ordinary voting power for the election of directors or other members of
the governing body of a corporation, or 10% or more of the partnership or other
ownership interests of any other Person, is deemed to control such corporation
or other Person.
"Agents": the Administrative Agent and the Security Agent.
"Aggregate Prepayment Amount": as defined in Section 7.4(b) of
the Project Loan Agreement.
"Agreement": as used in any Loan Document, such Loan Document,
as amended, supplemented or otherwise modified and in effect from time to time.
"Annual O&M Bonus": as defined in Section 1.2 of the Security
Deposit Agreement.
"Anticipated Commercial Operations Date": as defined in the
Power Purchase Agreement.
"Applicable Bank Loan Margin": for each Type of Bank Loan
during the applicable period set forth in Schedule 2 to the Project Loan
Agreement, the rate per annum set forth under the relevant column heading in
said Schedule 2.
"Applicable Institutional Loan Margin": with respect to each
Institutional Loan, the "Applicable Institutional Loan Margin" determined in
accordance with the Institutional Note evidencing such Institutional Loan.
"Arch": Arch Mineral Corporation.
<PAGE> 133
3
"Arch Back-Up Coal Supply Agreement": the Agreement dated as
of May 18, 1994 among Arch, Cumberland River Coal Company, ACS Sales Company,
the Coal Transporter and the Borrower, as amended, supplemented or otherwise
modified from time to time in accordance with Section 11.12(a) of the Project
Loan Agreement.
"Ash Disposal Agreement": the Ash Disposal Agreement dated as
of May 6, 1994 between JTM Industries, Inc. and the Borrower, relating to ash
hauling and disposal services in respect of the Facility, as amended,
supplemented or otherwise modified from time to time in accordance with the
provisions of Section 11.12(a) of the Project Loan Agreement.
"Available Loan Commitments": at any time, the excess of (a)
the Total Loan Commitments (other than the Total Bank L/C Loan Commitments) over
(b) the aggregate principal amount of Loans (other than Bank L/C Loans and Bank
Liquidity Loans) then outstanding.
"Bank Commitment Percentage": at any time:
(a) with respect to any Bank, a fraction (expressed as a
percentage), the numerator of which is the sum of (i) the aggregate
unpaid principal amount of Bank Loans then outstanding, (ii) the unused
portion of the Total Bank Loan Commitments then in effect and (iii) the
Letter of Credit Exposure at such time, and the denominator of which is
the Total Exposure; and
(b) with respect to any Interest Rate Hedging Counterparty, a
fraction (expressed as a percentage), the numerator of which is the
aggregate amount of Swap Termination Obligations calculated as of such
day, and the denominator of which is the Total Exposure.
As used in this definition, "Total Exposure" means, at any time, the sum of (i)
the aggregate unpaid principal amount of Loans then outstanding, (ii) the unused
portion of the Total Bank Loan Commitments then in effect, (iii) the Letter of
Credit Exposure at such time and (iv) the aggregate amount of Swap Termination
Obligations calculated as of such day.
"Bank Default Rate": (a) with respect to any Base Rate Loan,
for each date during the applicable period, the rate applicable pursuant to
paragraph (b) of Section 3.7 of the Project Loan Agreement plus 2.0%, (b) with
respect to any C/D Rate Loan or Eurodollar Loan, during the Bank Loan Interest
Period with respect thereto, the rate applicable during such Bank Loan Interest
Period pursuant to paragraph (a) or (c), as the case may be, of Section 3.7 of
the Project Loan Agreement plus 2.0% and (c) with respect to any other amount
payable by the Borrower, the Base Rate plus the Applicable Bank Loan Margin for
Base Rate Loans plus 2.0%.
"Bank Fee Letter": the letter agreement dated the date of the
Project Loan Agreement among the Co-Agents, the Administrative Agent and the
Borrower setting forth certain fees payable by the Borrower to the
Administrative Agent and the Banks.
<PAGE> 134
4
"Bank L/C Loans": Bank Loans the proceeds of which are to be
used solely as provided in Section 10.1(b)(ii) of the Project Loan Agreement.
"Bank L/C Note": as defined in Section 3.3(b) of the Project
Loan Agreement.
"Bank Liquidity Loan": Bank Loans the proceeds of which are to
be used solely to finance Bond Reimbursement Obligations arising in respect of
Liquidity Drawings as provided in Section 10.1(b)(iii) of the Project Loan
Agreement.
"Bank Liquidity Note": as defined in Section 3.3(c) of the
Project Loan Agreement.
"Bank Loan Commitment Period": (a) with respect to Bank
Project Loans, the period commencing on and including the first day of the
Construction Period to and including the last day thereof, (b) with respect to
Bank L/C Loans made to finance Construction VP Reimbursement Payments, the
period commencing on and including the first day of the Construction Period to
and including the termination of the Construction VP Letter of Credit in
accordance with Section 6.5 of the Project Loan Agreement, (c) with respect to
Bank L/C Loans made to finance Term VP Reimbursement Payments, the period
commencing on and including the date on which the Term VP Letter of Credit is
issued to and including the termination thereof in accordance with Section 6.5
of the Project Loan Agreement and (d) with respect to Bank L/C Loans and Bank
Liquidity Loans made to finance Bond Reimbursement Payments under a Bond Letter
of Credit, the period commencing on and including the date on which such Bond
Letter of Credit is issued to and including the termination thereof in
accordance with Section 5.4 of the Project Loan Agreement; provided that Bank
L/C Loans made to refinance Bank Liquidity Loans may be made only on the
applicable Bond L/C Expiration Date.
"Bank Loan Facility": the construction and term credit
facility provided by the Banks to the Borrower pursuant to Section 3 of the
Project Loan Agreement, under which the Banks will make Bank Loans from time to
time in accordance with the terms thereof.
"Bank Loan Final Maturity Date": the fifteenth anniversary of
the Commercial Operations Date.
"Bank Loan Installment Payment Date": as defined in Section
3.4(a) of the Project Loan Agreement.
"Bank Loan Interest Payment Date": (a) as to any Base Rate
Loan, the last day of March, June, September and December of each year,
commencing with the first such day to occur after the Closing Date, and the date
on which such Loan is paid or converted into a Bank Loan of another Type, (b) as
to any Eurodollar Loan having a Bank Loan Interest Period of three months or
less and any C/D Rate Loan having a Bank Loan Interest Period of 90 days or
less, the last day of such Bank Loan Interest Period, and (c) as to any
Eurodollar Loan or C/D Rate Loan having a Bank Loan Interest Period longer than
three months or 90 days, respectively, each
<PAGE> 135
5
day which is three months or 90 days, respectively, or a whole multiple thereof,
after the first day of such Bank Loan Interest Period, and the last day of such
Bank Loan Interest Period.
"Bank Loan Interest Period": (a) with respect to any
Eurodollar Loan:
(i) initially, the period commencing on the borrowing or
conversion date, as the case may be, with respect to such Eurodollar
Loan and ending one, two, three or six months (or, if available to all
of the Banks, nine months, twelve months or longer) thereafter, as
selected by the Borrower in its notice of borrowing or notice of
conversion, as the case may be, given with respect thereto; and
(ii) thereafter, each period commencing on the last day of
the next preceding Bank Loan Interest Period applicable to such
Eurodollar Loan and ending one, two, three or six months (or, if
available to all of the Banks, nine months, twelve months or longer)
thereafter, as selected by the Borrower by irrevocable notice to the
Administrative Agent not less than three Business Days prior to the
last day of the then current Bank Loan Interest Period with respect
thereto; and
(b) with respect to any C/D Rate Loan:
(i) initially, the period commencing on the borrowing or
conversion date, as the case may be, with respect to such C/D Rate Loan
and ending 30, 60, 90 or 180 days (or, if available to all of the
Banks, 270 days) thereafter, as selected by the Borrower in its notice
of borrowing or notice of conversion, as the case may be, given with
respect thereto; and
(ii) thereafter, each period commencing on the last day of
the next preceding Bank Loan Interest Period applicable to such C/D
Rate Loan and ending 30, 60, 90 or 180 days (or, if available to all of
the Banks, 270 days) thereafter, as selected by the Borrower by
irrevocable notice to the Administrative Agent not less than two
Business Days prior to the last day of the then current Bank Loan
Interest Period with respect thereto;
provided that all of the foregoing provisions relating to Bank Loan Interest
Periods are subject to the following:
(1) if any Bank Loan Interest Period pertaining to a
Eurodollar Loan would otherwise end on a day that is not a Business
Day, such Bank Loan Interest Period shall be extended to the next
succeeding Business Day unless the result of such extension would be to
carry such Bank Loan Interest Period into another calendar month, in
which event such Bank Loan Interest Period shall end on the immediately
preceding Business Day;
<PAGE> 136
6
(2) if any Bank Loan Interest Period pertaining to a C/D Rate
Loan would otherwise end on a day that is not a Business Day, such Bank
Loan Interest Period shall be extended to the next succeeding Business
Day;
(3) any Bank Loan Interest Period pertaining to a Eurodollar
Loan that begins on the last Business Day of a calendar month (or on a
day for which there is no numerically corresponding day in the calendar
month at the end of such Bank Loan Interest Period) shall end on the
last Business Day of a calendar month;
(4) the Borrower shall select Bank Loan Interest Periods so as
not to require a payment or prepayment of any Eurodollar Loan or C/D
Rate Loan during a Bank Loan Interest Period for such Loan; and
(5) the Borrower shall not select a Bank Loan Interest Period
that ends after the Bank Loan Final Maturity Date.
"Bank Loans": as defined in Section 3.1 of the Project Loan
Agreement.
"Bank Notes": collectively, the Bank Project Notes, the Bank
L/C Notes and the Bank Liquidity Notes.
"Bank Project Loans": Bank Loans the proceeds of which are
to be used solely to pay Project Costs and otherwise as provided in Section
10.1(b)(i) of the Project Loan Agreement.
"Bank Project Note": as defined in Section 3.3(a) of the
Project Loan Agreement.
"Bank Transfer Supplement": as defined in Section 14.7(b) of
the Project Loan Agreement.
"Bankruptcy Code": Title 11, Unites States Code, as amended
from time to time.
"Banks": the banks and other financial institutions which are
identified as "Banks" in, and are from time to time party to, the Project Loan
Agreement.
"Base Case Projections" as defined in Section 9.1(w) of the
Project Loan Agreement.
"Base Fuel Compensation Price": as defined in Section 10.2 of
the Power Purchase Agreement.
"Base Rate": for any day, a rate per annum (rounded upwards,
if necessary, to the next 1/16 of 1%) equal to the greater of (a) the Federal
Funds Effective Rate as in effect at such time plus 0.5% and (b) the per annum
rate of interest from time to time publicly announced by the Administrative
Agent at its principal office in the United States as its base lending rate for
<PAGE> 137
7
domestic (United States) commercial loans (which rate may not be the lowest rate
of interest charged by the Administrative Agent in connection with extensions of
credit to its other customers). For purposes hereof, "Federal Funds Effective
Rate" means, with respect to each day, the rate per annum (rounded upward, 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 Business Day next succeeding such
day; provided that (i) if such day is not a Business Day, the Federal Funds
Effective Rate for such day shall be such rate on such transactions on the next
preceding Business Day as so published on the next succeeding Business Day, and
(ii) if no such rate is so published on such next succeeding Business Day, the
Federal Funds Effective Rate for such day shall be the average rate quoted to
the Administrative Agent on such day on such transactions as the Administrative
Agent may reasonably determine. If for any reason the Administrative Agent shall
have determined (which determination shall be conclusive absent manifest error)
that it is unable to ascertain the Federal Funds Effective Rate for any reason,
the Base Rate shall be determined without regard to clause (a) of the first
sentence of this definition until the circumstances giving rise to such
inability no longer exist. Any change in the Base Rate due to a change in the
rate referred to in clause (b) of the first sentence of this definition or in
the Federal Funds Effective Rate shall be effective as of the opening of
business on the date of such change in the rate referred to in such clause (b)
or the Federal Funds Effective Rate, respectively.
"Base Rate Loans": Bank Loans the rate of interest applicable
to which is based on the Base Rate.
"Basic Monthly O&M Fee": as defined in Section 1.2 of the
Security Deposit Agreement.
"Birchwood Development": Birchwood Development Corp., a
Delaware corporation.
"Bond Contribution Amount": as defined in the Southern Equity
Contribution Agreement.
"Bond Documents": collectively, the Bonds and each other
instrument or agreement entered into by the Borrower, the Bond Issuer or any
Bond Trustee in connection with the issuance, sale and marketing from time to
time of the Bonds, including without limitation any Bond Indenture, sale
agreement between the Bond Issuer and the Borrower, Bond purchase agreement,
official statement and remarketing agreement, as amended, supplemented or
otherwise modified from time to time in accordance with Section 11.11(a) of the
Project Loan Agreement.
"Bond Indenture": with respect to each issuance of Bonds, the
indenture executed by the Bond Issuer and the relevant Bond Trustee pursuant to
which such Bonds are issued.
"Bond Issuer": the Industrial Development Authority of King
George County, Virginia.
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8
"Bond L/C Expiration Date": with respect to each Bond Letter
of Credit, the seventh anniversary of the Closing Date, or such later date to
which the Bond L/C Expiration Date with respect to such Bond Letter of Credit
has been extended in accordance with Section 5.6 of the Project Loan Agreement.
"Bond Letter of Credit": each irrevocable direct pay letter of
credit to be issued by the Issuing Bank in favor of the Bond Trustee on any
Business Day during the Construction Period pursuant to Section 5.1(a) of the
Project Loan Agreement, substantially in the form of Exhibit C-3 to the Project
Loan Agreement (with such changes therein as shall be acceptable to the Issuing
Bank and the Majority Banks), as amended, supplemented or otherwise modified
from time to time in accordance with its terms, and any replacement therefor
issued pursuant to Section 5.2(b) of the Project Loan Agreement.
"Bond Letter of Credit Disbursement": any payment or
disbursement made by or on behalf of the Issuing Bank under any Bond Letter of
Credit.
"Bond Letter of Credit Facility": the letter of credit
facility provided by the Issuing Bank and the Banks to the Borrower pursuant to
Section 5 of the Project Loan Agreement, under which the Issuing Bank agrees to
issue the Bond Letters of Credit in accordance with the terms thereof.
"Bond Pledge Agreement": a pledge agreement to be entered into
among the Borrower, the Security Agent and a bond pledge agent with respect to
an issue of Bonds, which shall provide for the pledge of Bonds that are
purchased with the proceeds of a drawing under the related Bond Letter of Credit
and not immediately remarketed and shall be satisfactory in form and substance
to the Administrative Agent and the Majority Institutions.
"Bond Reimbursement Obligations": as defined in Section 5.5(b)
of the Project Loan Agreement.
"Bond Reimbursement Payment": as defined in Section 5.5(a) of
the Project Loan Agreement.
"Bonds": the Series 1994A, Series 1994B, Series 1995, Series
1996A and, if issued, Series 1996B tax-exempt private activity bonds issued or
to be issued by the Bond Issuer at the request of the Borrower pursuant to one
or more Bond Indentures in accordance with Section 10.25 of the Project Loan
Agreement, in an original aggregate principal amount not to exceed $50,000,000.
"Bond Transfer Accounts": the Bond Transfer Account-Series
1994A, the Bond Transfer Account-Series 1994B, the Bond Transfer Account-Series
1995, the Bond Transfer Account-Series 1996A and the Bond Transfer
Account-Series 1996B, established and identified as such pursuant to Section
3.1(a) of the Security Deposit Agreement.
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"Bond Trustee": with respect to each issuance of Bonds, the
trustee under the Bond Indenture pursuant to which such Bonds are issued, and
its successors in such capacity appointed in the manner provided for in such
Bond Indenture.
"Borrower": Birchwood Power Partners, L.P., a Delaware limited
partnership.
"Borrower Account": as defined in Section 7.11(b) of the
Project Loan Agreement.
"Borrower Representative": any officer or member of the
management committee of the Borrower or, for so long as it shall be a General
Partner, of SEI Birchwood.
"Borrower Stock Assignment": the Borrower Stock Assignment
made by the Borrower in favor of the Security Agent, substantially in the form
of Exhibit H to the Project Loan Agreement, as amended, supplemented or
otherwise modified from time to time.
"Borrower's Greenhouse Expenses": all payments of any kind
(whether in the form of a capital contribution, investment, loan, advance,
expense payment or otherwise) made by the Borrower to or for the benefit of the
Greenhouse Owner or Greenhouse Operator which are either (a) in excess of
$250,000 in any calendar year or (b) are in any amount to the extent that such
payments have been made for more than six consecutive months; provided that the
Borrower's Greenhouse Expenses shall exclude (i) loans made to the Greenhouse
Owner pursuant to the Greenhouse Loan Agreement, (ii) payments pursuant to the
Steam Sales Agreement and (iii) the proceeds of any withdrawals from the
Greenhouse Reserve Account.
"Borrowing Date": (a) with respect to Bank Loans, any of the
Closing Date, any Monthly Construction Disbursement Date or any Scheduled Senior
Debt Service Payment Date on which the Borrower requests Bank Project Loans, or
any Business Day on which the Borrower requests Bank L/C Loans or Bank Liquidity
Loans, in each case pursuant to Section 3.2 of the Project Loan Agreement; and
(b) with respect to Institutional Loans, any of the Closing Date or any Monthly
Construction Disbursement Date on which the Borrower requests Institutional
Loans pursuant to Section 4.2 of the Project Loan Agreement.
"Business Day": a day other than a Saturday, Sunday or other
day on which commercial banks in New York City are authorized or required by law
to close and (with respect to Eurodollar Loans only) on which deposits in
foreign currencies and exchange between banks may be carried on in London,
England.
"Business Interruption Insurance Proceeds": any and all
proceeds of any insurance, indemnity, warranty or guaranty payable from time to
time with respect to the partial or complete interruption of the operation of
the Project.
"Buy-Down Amount Proceeds": any and all amounts paid by the
Facility Contractor to the Borrower pursuant to Section 8.1 or 8.6 of the
Facility Construction Contract
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or by the Parent Guarantor to the Borrower pursuant to the Facility Construction
Contract Guarantee in respect thereof.
"Buy-Down Prepayment Notice": as defined in Section 7.3(c) of
the Project Loan Agreement.
"Capital Lease": any lease of property, real or personal, the
obligations of the lessee in respect of which are required in accordance with
GAAP to be capitalized on a balance sheet of the lessee.
"Cash Operating Costs": for any period, the sum of the
following for the Borrower (determined without duplication): (i) all salaries,
bonuses, employee benefits and other compensation paid plus (ii) the cost of
Coal, limestone and other materials and utilities paid, including the
transportation costs paid for transporting Coal, limestone and such other
materials and utilities to the Facility, plus (iii) ash disposal costs paid plus
(iv) insurance premiums paid plus (v) costs of operating and maintaining the
Project (including, without limitation, Major Maintenance Expenses and other
payments made under the Operating and Maintenance Agreement) paid plus (vi) rent
paid under leases permitted by Section 11.15 of the Project Loan Agreement plus
(vii) amounts paid by the Borrower to the Greenhouse Owner pursuant to the Steam
Sales Agreement plus (viii) amounts deposited in the Repair and Maintenance
Account plus (ix) real and personal property, use, sales and similar taxes paid
plus (x) fees paid for accounting, legal and other professional services plus
(xi) general and administrative expenses paid plus (xii) capital expenditures
paid plus (xiii) ongoing fees and expenses of any Bond Trustee, the Security
Agent and the Administrative Agent paid (including, without limitation, amounts
paid pursuant to Section 6.7 of the Security Deposit Agreement or Section 14.5
of the Project Loan Agreement) plus (xiv) the Basic Monthly O&M Fee and Annual
O&M Bonus paid to the Facility Operator pursuant to the Operations and
Maintenance Agreement plus (xv) all other cash expenditures relating to
operating costs of the Project paid plus (xvi) federal, state and local income
taxes paid, if any; provided that there shall be excluded from the foregoing
items costs that are paid with amounts withdrawn from the Repair and Maintenance
Account.
"Cash Release Date": each Quarterly Distribution Date that
immediately follows a Quarterly Calculation Date on which neither the Historical
Debt Coverage Ratio nor the Projected Debt Coverage Ratio was less than 1.25 to
1.0.
"Cash Trap Date": each Quarterly Distribution Date immediately
following a Quarterly Calculation Date on which either the Historical Debt
Coverage Ratio or the Projected Debt Coverage Ratio was less than 1.20 to 1.0.
"Casualty Insurance Proceeds": any and all proceeds of any
insurance, indemnity, warranty or guaranty payable from time to time with
respect to any damage to, or destruction in whole or in part of, the Project.
"C/D Assessment Rate": for any day as applied to any C/D Rate
Loan, the net annual assessment rate (rounded upward, if necessary, to the
nearest 1/100th of 1%) determined
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11
by the Administrative Agent to be payable on such day to the Federal Deposit
Insurance Corporation or any successor ("FDIC") for FDIC's insuring time
deposits made in Dollars at offices of the Administrative Agent in the United
States.
"C/D Base Rate": with respect to each day during each Bank
Loan Interest Period pertaining to a C/D Rate Loan, the rate of interest per
annum determined by the Administrative Agent to be the arithmetic average
(rounded upward, if necessary, to the nearest 1/16th of 1%) of the respective
rates determined by the Administrative Agent as the average rate bid at 10:00
A.M., New York City time, or as soon thereafter as practicable, on the first day
of such Bank Loan Interest Period, by a total of three certificate of deposit
dealers of recognized standing selected by the Administrative Agent for the
purchase at face value from the Administrative Agent of its certificates of
deposit in an amount comparable to the C/D Rate Loan of the Administrative Agent
to which such Bank Loan Interest Period applies and having a maturity comparable
to such Bank Loan Interest Period.
"C/D Rate": with respect to each day during each Bank Loan
Interest Period pertaining to a C/D Rate Loan, a rate per annum determined for
such day in accordance with the following formula (rounded upward, if necessary,
to the nearest 1/100th of 1%):
C/D Base Rate + C/D Assessment Rate
------------------------------
1.00 - C/D Reserve Percentage
"C/D Rate Loans": Bank Loans the rate of interest applicable
to which is based upon the C/D Rate.
"C/D Rate Tranche": as defined in Section 3.6 of the Project
Loan Agreement.
"C/D Reserve Percentage": for any day as applied to any C/D
Rate Loan, 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) (the "Board"), for determining the maximum reserve requirement
for a Depositary Institution (as defined in Regulation D of the Board) in
respect of new non-personal time deposits in Dollars.
"Change Order": (a) with respect to the Facility, a "Change"
(as defined in Section 1.1 of the Facility Construction Contract), or (b) with
respect to the Greenhouse, a "Change" defined in Section 1.1 of the Greenhouse
Construction Contract.
"Closing Date": May 25, 1994.
"Co-Agents": Banque Paribas, New York Branch, Barclays Bank
PLC, Credit Suisse and Union Bank.
"Coal": the coal purchased by the Borrower pursuant to the
Coal Supply Agreement, the SEI Coal Procurement Letter or the Arch Back-Up Coal
Supply Agreement for the operation of the Facility.
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12
"Coal Adjustment Agreement": the Special Adjustment Agreement
dated as of July 22, 1993 among the Coal Supplier, the Coal Transporter and the
Borrower, as amended, supplemented or otherwise modified from time to time in
accordance with Section 11.12(a) of the Project Loan Agreement.
"Coal Consultant": John T. Boyd Company, or such other coal
consultant reasonably acceptable to the Borrower as the Majority Lenders may
designate to examine and advise the Lenders with respect to the matters referred
to in Section 9.1(l) of the Project Loan Agreement and to prepare the annual
Coal Report update required to be delivered pursuant to Section 10.2(d) of the
Project Loan Agreement.
"Coal Report": the report of the Coal Consultant delivered
pursuant to Section 9.1(l) of the Project Loan Agreement.
"Coal Supplier": (i) collectively, Neweagle Industries, Inc.,
a Virginia corporation, Neweagle Coal Sales Corp., a Virginia corporation,
Laurel Creek Co., Inc., a Delaware corporation, and Rockspring Development,
Inc., a Delaware corporation, or (ii) subject to compliance with the provisions
of Section 11.14 of the Project Loan Agreement, their respective successors and
assigns.
"Coal Supply Agreement": the Coal Supply Agreement dated as of
July 22, 1993, as amended by First Amendment dated as of May 18, 1994, between
the Borrower and the Coal Supplier, as may be further amended, supplemented or
otherwise modified from time to time in accordance with Section 11.12(a) of the
Project Loan Agreement.
"Coal Transportation Agreement": the Coal Transportation
Agreement dated as of July 22, 1993, as amended by First Amendment dated as of
April 28, 1994, between the Borrower and the Coal Transporter, as may be further
amended, supplemented or otherwise modified from time to time in accordance with
Section 11.12(a) of the Project Loan Agreement.
"Coal Transporter": ER&L Birchwood, Inc., a Delaware
corporation and a wholly-owned direct subsidiary of CSXT and a wholly-owned
indirect subsidiary of CSX.
"Code": the Internal Revenue Code of 1986, as amended from
time to time.
"Collateral": collectively, the Mortgaged Property, the
Security Deposit Collateral, the Southern Equity Contribution Collateral, the
Partner Collateral, and any Bonds (and the proceeds thereof) pledged pursuant to
a Bond Pledge Agreement.
"Commercial Operations Date": as defined in Section 1.5 of the
Power Purchase Agreement.
"Commitment": (a) as to any Bank, its Commitment Percentage of
the Total Bank Project Loan Commitments, the Total Bank L/C Loan Commitments,
the Total VP Letter of
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Credit Commitments and the Total Bond Letter of Credit Commitments; and (b) as
to any Institution, its Commitment Percentage of the Total Institutional
Commitments.
"Commitment Percentage": (a) with respect to any Bank, the
percentage set forth next to such Bank's name under the caption "Commitment
Percentage" on Part A of Schedule 1 to the Project Loan Agreement, as the same
may from time to time be modified or amended in accordance with Section 14.7 of
the Project Loan Agreement or otherwise in accordance with the terms thereof and
(b) with respect to any Institution, the percentage set forth next to such
Institution's name under the caption "Commitment Percentage" on Part B of
Schedule 1 to the Project Loan Agreement, as the same may from time to time be
modified or amended in accordance with Section 14.8 of the Project Loan
Agreement or otherwise in accordance with the terms thereof.
"Commonly Controlled Entity": an entity, whether or not
incorporated, which is under common control with the Borrower within the meaning
of Section 4001 of ERISA or is part of a group which includes the Borrower and
which is treated as a single employer under Section 414 of the Code.
"Completion Date": the date on which the following conditions
shall have been satisfied:
(a) the Commercial Operations Date shall have occurred and all
of the conditions set forth in Section 2.3 of the Power Purchase
Agreement shall have been satisfied;
(b) the Facility shall have been completed and accepted
(except for punchlist items) by the Borrower in accordance with Section
6.4.1 of the Facility Construction Contract, and the Greenhouse shall
have been completed and accepted (except for punchlist items) by the
Greenhouse Owner in accordance with Section 3.3 of the Greenhouse
Construction Contract;
(c) the Administrative Agent and the Institutions shall have
received, with a counterpart for each Bank, the Facility Completion
Certificate duly executed and delivered by the Borrower and the
Independent Engineer and the Greenhouse Completion Certificate duly
executed and delivered by the Borrower, the Greenhouse Owner, the
Greenhouse Operator and the Independent Engineer;
(d) the Administrative Agent and the Institutions shall have
received evidence in form and substance reasonably satisfactory to the
Administrative Agent and the Majority Institutions that either (i) all
Project Costs necessary to achieve Final Completion of the Facility and
the Greenhouse shall have been paid in full and there shall be no
disputes concerning payment for work performed, services rendered or
material or equipment furnished with respect to the Project or the
Greenhouse involving any potential liability to the Borrower
(collectively, "Disputes"); or (ii) there shall have been deposited
into the Final Completion Escrow Account pursuant to Section 4.3 of the
Security Deposit
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14
Agreement an amount equal to the sum of (x) 150% of the amount,
determined in good faith by the Borrower, the Administrative Agent and
Majority Institutions (after consultation with the Independent
Engineer), sufficient to pay all punchlist items and other Project
Costs necessary to achieve Final Completion of the Facility and the
Greenhouse, (y) 100% of the amount, determined in good faith by the
Borrower, the Administrative Agent and the Majority Institutions, which
would fully cover any potential liability of the Borrower with respect
to any pending Disputes and (z) the unpaid amount of the maximum Heat
Rate Bonus which is, or could be, owing to the Facility Contractor
following the Completion Date;
(e) (i) the Initial Repair and Maintenance Reserve Amount
shall have been deposited on or prior to such day in the Repair and
Maintenance Account; and (ii) the Borrower shall have applied at least
$3,500,000 of the proceeds of the Bank Project Loans and Equity Funding
Loans for initial working capital purposes or deposited such amount
into the Project Control Account on the Completion Date for such
purposes;
(f) all Governmental Approvals and other consents and
approvals referred to in Section 8.7 of the Project Loan Agreement,
including without limitation those listed in Part B of Schedule 6
thereof (other than filings required to be made on a later date by
the terms of such Governmental Approvals), shall have been duly
obtained or made and shall be in full force and effect, none of such
Governmental Approvals or other consents or approvals shall be the
subject of any pending or threatened judicial or administrative
proceedings, and if the applicable statute, rule or regulation provides
for a fixed period for judicial or administrative appeal or review
thereof, such period shall have expired. In addition, a copy of each
such Governmental Approval, consent or approval shall have been
delivered to the Administrative Agent (with a copy for each Bank) and
the Institutions; and
(g) the Equity Funding Termination Date shall have occurred;
provided that, for purposes hereof, the provisions of clause (iii) of
the definition of "Equity Funding Termination Date" shall be deemed to
have been satisfied if there are no unpaid amounts owing by Southern
under the Construction Contract Guarantees at such time.
"Consents to Assignment": collectively, (i) each Consent to
Assignment, each substantially in the form of one of Exhibits I-1 to I-10, to be
executed and delivered by each of the parties (other than the Borrower) to each
Project Document in effect on the Closing Date, and (ii) with respect to each
Additional Contract, the Consent to Assignment to be executed by the parties
thereto (other than the Borrower) as provided in Section 10.16 of the Project
Loan Agreement, which shall be in form and substance reasonably satisfactory to
the Administrative Agent and the Majority Institutions.
"Construction Account": the Construction Account established
and maintained pursuant to the Security Deposit Agreement.
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15
"Construction Contracts": collectively, the Facility
Construction Contract and the Greenhouse Construction Contract.
"Construction Contract Guarantees": collectively, the Facility
Construction Contract Guarantee and the Greenhouse Construction Contract
Guarantee.
"Construction Period": the period from and including the
Closing Date to and including the Construction Period Termination Date.
"Construction Period Termination Date": the earlier of (a) the
Completion Date and (b) Date Certain.
"Construction Progress Report": the report of the Borrower
required to be delivered pursuant to Section 10.2(a) of the Project Loan
Agreement.
"Construction VP Expiration Date": the Date Certain, or such
later date to which the Construction VP Expiration Date has been extended in
accordance with Section 6.7 of the Project Loan Agreement.
"Construction VP Letter of Credit": the irrevocable direct pay
letter of credit to be issued by the Issuing Bank in favor of Virginia Power on
the Closing Date pursuant to Section 6.2(a) of the Project Loan Agreement,
substantially in form of Exhibit C-1 to the Project Loan Agreement, as amended,
supplemented or otherwise modified from time to time in accordance with its
terms, and any replacement therefor issued pursuant to Section 6.2(b) of the
Project Loan Agreement.
"Construction VP Letter of Credit Disbursement": any payment
or disbursement made by or on behalf of the Issuing Bank under the Construction
VP Letter of Credit.
"Construction VP Reimbursement Payment": as defined in Section
6.6(a) of the Project Loan Agreement.
"Contingent Bond Contribution": as defined in the Southern
Equity Contribution Agreement.
"Contingent Distribution": any payment of cash distributions
to Partners affiliated with Southern in accordance with clause (ii)(A) of
Section 11.4 of the Project Loan Agreement, in an aggregate amount not to exceed
the Contingent Distribution Amount.
"Contingent Distribution Amount": an aggregate amount equal to
the lesser of (i) $13,700,000 and (ii) the amount, if any, by which (x) the
Initial Budgeted Amount plus the Increased IDC Contribution Amount, if any,
contributed to the Borrower pursuant to the Southern Equity Contribution
Agreement exceeds (y) the aggregate amount of all Project Costs which have been
or are required to be incurred in order to achieve the occurrence of the
Completion Date
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16
and Final Completion of the Facility and the Greenhouse (including, in any
event, the Required Completion Date Reserve Deposits).
"Contingent Equity Contribution": as defined in the Southern
Equity Contribution Agreement.
"Contingent Increased IDC Contribution": as defined in the
Southern Equity Contribution Agreement.
"Contractors": collectively, the Facility Contractor and the
Greenhouse Contractor.
"Contractual Obligations": as to any Person, any provision of
any security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Credit Extension Date": (a) as to any Loan, the Borrowing
Date therefor, (b) as to any issuance of a VP Letter of Credit, the Closing Date
(in the case of the Construction VP Letter of Credit) or the Commercial
Operations Date (in the case of the Term VP Letter of Credit), and (c) as to any
issuance of a Bond Letter of Credit, the Business Day during the Construction
Period on which such Bond Letter of Credit is issued.
"Credit Facilities": as defined in 2.1 of the Project Loan
Agreement.
"CSX": CSX Corporation.
"CSXT": CSX Transportation, Inc., a Virginia corporation.
"CSXT Agreement": the Amended and Restated Agreement dated as
of May 18, 1994 between the Borrower and CSXT pursuant to which CSXT agrees to
cause the Coal Transporter to perform its obligations under the Coal
Transportif any, ation Agreement and the Coal Adjustment Agreement, as amended,
supplemented or otherwise modified from time to time in accordance with Section
11.12(a) of the Project Loan Agreement.
"CT Corporation Agreement": the letter agreement dated as of
May 13, 1994 from the Borrower to The Corporation Trust Company and Corporate
Trinity Company, as amended, supplemented or otherwise modified in accordance
with Section 11.12(a) of the Project Loan Agreement.
"Damage Event": as defined in Section 1.2 of the Security
Deposit Agreement.
"Date Certain": June 1, 1997.
"Debt Service": for any period, the sum (determined without
duplication) of: (a) all amounts payable by the Borrower during such period
pursuant to the Project Loan Agreement and the Notes in respect of principal of,
and interest on, the Loans, (b) all amounts, if any
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17
payable by the Borrower to the Issuing Bank in respect of reimbursements for
Letter of Credit Disbursements, (c) all amounts, if any, payable by the Borrower
(minus the amounts, if any, receivable by the Borrower, to the extent such
amounts have actually been received by the Borrower, or may be set off or
applied by the Borrower against amounts payable by the Borrower) during such
period under any Interest Rate Hedging Transaction, (d) principal and interest
on the Bonds, if any, due and payable during such period, (e) Bond Letter of
Credit fees (including fronting fees) and fees in respect of the True-Up
Obligation, (f) VP Letter of Credit fees (including fronting fees), commitment
fees and administrative agent fees payable pursuant to the Project Loan
Agreement, (g) all other amounts in respect of principal, interest and other
fees and expenses payable by the Borrower during such period to any of the
Lenders pursuant to the Loan Documents and (h) all principal, interest and fees
payable with respect to any Refinancing Indebtedness or any purchase money
obligations permitted by Section 11.2(a) of the Project Loan Agreement; provided
that, for purposes of calculating "Historical Debt Coverage Ratio", "Projected
Debt Coverage Ratio" and "Debt Service Coverage Ratio", "Debt Service" shall not
include any General Indemnity Proceeds received by the Borrower. For the purpose
hereof, if the interest payable on any Loans or other Senior Debt for any period
is not determinable in advance because the interest rate is not a fixed rate, it
shall be assumed that such Loans or other Senior Debt will bear interest during
such period at the average interest rate in effect with respect thereto during
the six months immediately preceding such period.
"Debt Service Coverage Ratio": for any period, the ratio of
(i) Project Cash Flow for such period to (ii) the Debt Service for such period.
"Debt Service Letter of Credit": a letter of credit, in an
acceptable form to the Security Agent, established in favor of the Security
Agent by a bank which at all times is rated at least A+ by Standard & Poor's and
at least A1 by Moody's, which letter of credit is a substitute for a like amount
of cash required to be on deposit in the Debt Service Reserve Account; provided
that no such letter of credit shall be deemed a "Debt Service Letter of Credit"
unless the Borrower has no direct or indirect reimbursement obligations or
liabilities to the issuer of such letter of credit or to any other Person in
respect of draws under such letter of credit.
"Debt Service Loans": Bank Project Loans the proceeds of which
are to be used to pay principal, interest and/or fees, or the Swap Obligations,
as the case may be, due on the outstanding Senior Debt.
"Debt Service Reserve Account": the Debt Service Reserve
Account established and maintained pursuant to the Security Deposit Agreement.
"Default": any of the events specified in Section 12.1 of the
Project Loan Agreement, whether or not any requirement for the giving of notice,
the lapse of time, or both, or any other condition set forth in said Section
12.1, has been satisfied.
"Delay Damages Proceeds": as defined in Section 1.2 of the
Security Deposit Agreement.
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"Distribution": any distribution on or in respect of the
Partnership Interests, any payment on account of, or in connection with the
purchase, redemption, retirement or other acquisition of, Partnership Interests,
or any payment of principal or interest on, or in connection with any
redemption, purchase or other acquisition of, Junior Subordinated Debt.
"Distributions Account": the Distributions Account established
and maintained pursuant to the Security Deposit Agreement.
"Dollars" and "$": dollars in lawful currency of the United
States of America.
"Domestic Dollar Loans": collectively, C/D Rate Loans and Base
Rate Loans.
"Easements": any easement, license, right-of-way or similar
real property interest or right that is the subject of an Easement Agreement.
"Easement Agreements": (i) the Waterline and Pumping Station
Easement Agreement, (ii) the Access and Utility Easement Agreement, (iii) the
Stormwater and Surface Water Runoff Easement Agreement, and (iv) each other
agreement entered into prior to the execution and delivery of the Project Loan
Agreement granting or assigning to the Borrower ownership of or other rights in
respect of any easement, license, right-of-way or similar real property interest
or right relating to the Facility or the Site or to the transportation and
delivery of Coal, lime, water, ash, electricity or steam to or from the Facility
or the Site or to ingress or egress to or from the Facility or the Site, each
such agreement to be satisfactory in form and substance to the Administrative
Agent and the Majority Institutions.
"Environmental Consultant": Rust Environment & Infrastructure,
or such other environmental consultant reasonably acceptable to the Borrower as
the Majority Lenders may designate to examine and advise the Lenders with
respect to environmental matters concerning the Site and the Project.
"Environmental Law": any and all Federal, state, local or
municipal laws, rules, orders, regulations, statutes, ordinances, codes, decrees
or requirements of any Government Authority relating to the protection of the
environment or natural resources, or to emissions, discharge, Releases or
threatened Releases of Hazardous Materials into the environment including,
without limitation, ambient air, surface water, groundwater or land, or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous Materials, as now or
hereafter may be in effect.
"Environmental Report": the reports entitled "Phase I
Environmental Assessment, SEI Birchwood Power Facility, Parcel A, King George
County, Virginia" and "Phase I Environmental Assessment, SEI Birchwood Power
Facility, Parcel B, King George County, Virginia" prepared by the Environmental
Consultant, each dated April 1994.
"Equity Contribution Amount": as defined in Section 1.2 of the
Southern Equity Contribution Agreement.
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"Equity Contribution Dates": as defined in Section 1.1 of the
Equity Contribution Agreement.
"Equity Contribution Proceeds": any and all payments made or
due and payable by Southern on account of the Mandatory Equity Contribution or
any Contingent Equity Contribution.
"Equity Funding Banks": the banks which are identified as the
"Banks" in, and are from time to time party to, the Equity Funding Loan
Agreement.
"Equity Funding Commitments": the "Total Commitments" from
time to time in effect under the Equity Funding Loan Agreement.
"Equity Funding Documents": collectively, the Equity Funding
Loan Agreement, the Equity Funding Guarantee and the Southern Equity
Contribution Agreement.
"Equity Funding Guarantee": the Guarantee made by Southern in
favor of the Equity Funding Banks and the administrative agent and co-agents
under the Equity Funding Loan Agreement, substantially in the form of Exhibit D
to the Equity Funding Loan Agreement, as amended, supplemented or otherwise
modified from time to time in accordance with Section 11.11(a) of the Project
Loan Agreement.
"Equity Funding Loan Agent": Credit Suisse, in its capacity as
administrative agent for the Equity Funding Banks, or any successor in such
capacity appointed pursuant to subsection 8.9 of the Equity Funding Loan
Agreement.
"Equity Funding Loan Agreement": the Credit Agreement dated as
of May 18, 1994 among the Borrower, the co-agents named therein, the Equity
Funding Banks and Credit Suisse, as administrative agent for the Equity Funding
Banks thereunder, as amended, supplemented or otherwise modified from time to
time in accordance with Section 11.11(a) of the Project Loan Agreement.
"Equity Funding Loan Borrowing Certificate": a "Borrowing
Certificate" as defined in the Equity Funding Loan Agreement.
"Equity Funding Loan Borrowing Date": a "Borrowing Date" as
defined in the Equity Funding Loan Agreement.
"Equity Funding Loans": the revolving credit and bid loans
made by the Equity Funding Banks to the Borrower during the Construction Period
pursuant to the Equity Funding Loan Agreement.
"Equity Funding Termination Date": the date on which (i) the
Equity Funding Loans and all other amounts owing under the Equity Funding Loan
Agreement have been paid in full and the lending commitments thereunder
terminated, (ii) the Mandatory Equity
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Contribution and any Contingent Equity Contribution has been made to the
Borrower in accordance with Section 2.1 of the Southern Equity Contribution
Agreement and (iii) Southern shall have paid all amounts owing by it under the
Construction Contract Guarantees.
"ERISA": the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"Eurocurrency Reserve Requirements": for any day as applied to
a Eurodollar Loan, the aggregate (without duplication) of the rates (expressed
as a decimal fraction) of reserve requirements in effect on such day (including,
without limitation, basic, supplemental, marginal and emergency reserves under
any regulations of the Board of Governors of the Federal Reserve System or other
Government Authority having jurisdiction with respect thereto) dealing with
reserve requirements prescribed for eurocurrency funding (currently referred to
as "Eurocurrency Liabilities" in Regulation D of such Board) maintained by a
member bank of such System.
"Eurodollar Base Rate": with respect to each day during each
Bank Loan Interest Period pertaining to a Eurodollar Loan, the rate per annum
equal to the average (rounded upward, if necessary, to the nearest 1/16th of 1%)
of the respective rates notified to the Administrative Agent by each of the
Reference Banks as the rate at which such Reference Bank is offered Dollar
deposits at or about 11:00 A.M., London time, two Business Days prior to the
beginning of such Bank Loan Interest Period in the London interbank eurodollar
market for delivery on the first day of such Bank Loan Interest Period, for the
number of days comprised therein and in an amount comparable to the amount of
its Eurodollar Loan to be outstanding during such Bank Loan Interest Period.
"Eurodollar Loans": Bank Loans the rate of interest applicable
to which is based upon the Eurodollar Rate.
"Eurodollar Rate": with respect to each day during each Bank
Loan Interest Period pertaining to a Eurodollar Loan, a rate per annum
determined for such day in accordance with the following formula (rounded
upward, if necessary, to the nearest 1/100th of 1%):
Eurodollar Base Rate
----------------------------------------
1.00 - Eurocurrency Reserve Requirements
"Eurodollar Tranche": as defined in Section 3.6 of the Project
Loan Agreement.
"Event of Default": any of the events specified in Section
12.1 of the Project Loan Agreement, provided that any requirement for the giving
of notice, the lapse of time, or both, or any other condition, has been
satisfied.
"Event of Loss": (a) the actual or constructive total loss of
all or substantially all of the Facility, or the condemnation, confiscation or
seizure of, or requisition of title to, or requisition by any Government
Authority of the use (for an indefinite period of time or for a period of time
in excess of twelve months) of, all or substantially all of the Facility; or
(b)(i) the
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loss, destruction or damage of, or (ii) the condemnation, confiscation or
seizure of, or requisition of title to, or requisition by any Government
Authority of the use of (in each case in this clause (ii) for an indefinite
period or for a period in excess of twelve months) such portion of the Project
as shall render the Facility unable to operate on a commercially feasible basis,
unless (in the case of this clause (b)): (w) no Event of Default shall have
occurred and be continuing at the time of occurrence of or immediately after
giving effect to any of the events specified in this clause (b), (x) it is
feasible to restore, rebuild or replace the affected portion of the Project, (y)
in the opinion of the Majority Lenders after consultation with the Independent
Engineer, sufficient funds are or will be available to the Borrower (A) to
restore, rebuild or replace the affected portion of the Project so that the
Facility will be able to operate on a commercially feasible basis and (B) to pay
all Debt Service until such restoration, rebuilding or replacement is completed
and (z) no party (other than the Borrower) to any Principal Project Document has
the right to terminate such Principal Project Document at any time during the
period of restoration, rebuilding or replacement as a result of any of the
events specified in this clause (b) unless such right has been waived in writing
in a manner reasonably satisfactory to the Security Agent. For the purpose of
clause (b) of this definition, the Event of Loss shall be deemed to have
occurred on the date on which the Security Agent shall notify the Borrower in
writing that one or more of the conditions (specifying the same) set forth in
clauses (w), (x), (y) and (z) has not been satisfied.
"Event of Loss Prepayment Date": in the case of an Event of
Loss described in clause (a) of the definition thereof, the earlier of (i) the
date which is 90 days after the date of such Event of Loss and (ii) the date on
which the insurance proceeds are received with respect to such Event of Loss;
and in the case of an Event of Loss described in clause (b) of the definition
thereof, the later of (x) the date on which such Event of Loss is deemed to have
occurred and (y) the earlier of the date on which the insurance proceeds are
received with respect to such Event of Loss or the date 90 days after such Event
of Loss is deemed to have occurred.
"Excess Cash Flow": as of any date of determination, the
amount available to be transferred from the Project Control Account to the
Distributions Account pursuant to clause twelfth of Section 5.3(a) of the
Security Deposit Agreement on such date.
"Extension of Credit": any of (a) the making of a Bank Project
Loan, (b) the making of a Bank L/C Loan, (c) the making of a Bank Liquidity
Loan, (d) the making of an Institutional Loan, (e) the issuance of a VP Letter
of Credit or (f) the issuance of a Bond Letter of Credit.
"Extension of Credit Request": a written request by the
Borrower for an Extension of Credit, substantially in the form of Exhibit B-1,
B-2 or B-3 of the Project Loan Agreement.
"Facility": the pulverized coal-fired cogeneration facility
having a nameplate rating of 220 megawatts to be constructed on the Site
pursuant to the Facility Construction Contract, consisting of the turbines,
boilers, fuel handling equipment and all other equipment installed on the
Borrower's side of the Interconnection Point that is not Interconnection
Facilities (as such terms are defined in the Power Purchase Agreement).
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22
"Facility Completion Certificate": a certificate substantially
in the form of Exhibit J-1 of the Project Loan Agreement, signed by the Borrower
and the Independent Engineer.
"Facility Construction Contract": the Amended and Restated
Agreement for Engineering, Procurement and Construction Services dated as of
April 19, 1994 between the Facility Contractor and the Borrower, as amended,
supplemented or otherwise modified from time to time in accordance with Section
11.12(a) of the Project Loan Agreement.
"Facility Construction Contract Guarantee": the Guaranty dated
as of May 18, 1994 made by the Parent Guarantor in favor of the Borrower, as
amended, supplemented or otherwise modified from time to time in accordance with
Section 11.12(a) of the Project Loan Agreement.
"Facility Construction Schedule": the schedule for the
Construction of the Facility prepared by the Borrower and the Facility
Contractor and approved by the Co-Agents, the Institutions and the Independent
Engineer, as set forth on Schedule 8 to the Project Loan Agreement.
"Facility Contractor": SEI.
"Facility Operator": SEI.
"Federal Funds Effective Rate": as defined in the definition
of "Base Rate".
"FERC": the Federal Energy Regulatory Commission or any
successor or analogous federal Government Authority.
"Final Completion": (a) with respect to the Facility, as
defined in Section 1.1 of the Facility Construction Contract, and (b) with
respect to the Greenhouse, as defined in Section 1.1 of the Greenhouse
Construction Contract.
"Final Completion Escrow Account": the Final Completion Escrow
Account established and maintained pursuant to the Security Deposit Agreement.
"Final Completion Prepayment Amount": the amount transferred
from the Final Completion Escrow Account to the Prepayment Subaccount on the
date of Final Completion of the Facility pursuant to clause second of Section
5.9(b) of the Security Deposit Agreement.
"Financing Documents": collectively, the Loan Documents, the
Interest Rate Hedging Agreements with an Interest Rate Hedging Counterparty
specified in clause (ii) of the definition thereof, the Bond Documents and the
Equity Funding Documents.
"Force Majeure": with respect to any Project Document, as
defined in such Project Document.
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23
"GAAP": generally accepted accounting principles in the United
States of America in effect from time to time.
"General Indemnity Payment Proceeds": any and all proceeds of
any insurance maintained by the Borrower or any indemnity, warranty, liquidated
damages or guaranty in favor of the Borrower under any Project Document or
Financing Document which are payable to the Borrower and are not required to be
paid by the Borrower to another Person upon the Borrower's receipt thereof, and
which does not constitute Casualty Insurance Proceeds, Business Interruption
Insurance Proceeds, Requisition Proceeds or Liquidated Damages Proceeds.
"General Partner Interest Pledge Agreements": the collective
reference to the separate General Partner Interest Pledge Agreements made by
each General Partner of the Borrower from time to time in favor of the Security
Agent for the benefit of the Secured Parties, substantially in the form of
Exhibit F-1 to the Project Loan Agreement, as amended, supplemented or otherwise
modified from time to time in accordance with the terms thereof.
"General Partners": (a) on the date of execution and delivery
of the Project Loan Agreement, the collective reference to SEI Birchwood and
Birchwood Development, in their capacity as owners of general partnership
interests in the Borrower; and (b) thereafter, subject to compliance with the
provisions of the Partnership Agreement and of Section 11.13(a) of the Project
Loan Agreement, each owner from time to time of a general partnership interest
in the Borrower.
"GNP Index": the Gross National Product Implicit Price
Deflator as presently issued by the Department of Commerce Bureau of Economic
Analysis in the publication entitled "Economic Indicators" published by the
Government Printing Office, or, if said historical index is no longer available
or is converted to a different standard reference base or is otherwise revised,
such historical index as the Borrower and the Administrative Agent may select
that measures all goods and services in the economy adjusted for real price
change.
"GNP Index Multiplier": for any calendar year, the sum of (a)
the Inflation Factor for the calendar year immediately preceding such calendar
year and (b) 1.0.
"Government Authority": any nation or government, any state or
other political subdivision thereof, and any entity exercising legislative,
judicial, regulatory or administrative functions of or pertaining to government.
"Governmental Approvals": authorizations, consents, approvals,
waivers, exemptions, variances, franchises, to the permissions, permits and
licenses of, and filings and declarations with, any Government Authority.
"Greenhouse": the approximately 36 acre greenhouse complex to
be constructed on the Leased Land pursuant to the Greenhouse Construction
Contract, as more particularly described in Section 1.1 of the Greenhouse
Construction Contract.
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24
"Greenhouse Bill of Sale": the Bill of Sale dated May 18, 1994
from the Greenhouse Operator, as seller, to the Greenhouse Owner, as buyer.
"Greenhouse Collateral": the Greenhouse and all other property
mortgaged, pledged or assigned to the Borrower or the Greenhouse Owner pursuant
to the Greenhouse Documents as security for the payment of the obligations under
the Greenhouse Loan Agreement or the Greenhouse Sublease, respectively.
"Greenhouse Completion Certificate": a certificate
substantially in the form of Exhibit J-2 of the Project Loan Agreement, signed
by the Borrower, the Greenhouse Owner, the Greenhouse Operator and the
Independent Engineer.
"Greenhouse Construction Contract": the Construction Contract
dated as of April 19, 1994 between the Greenhouse Contractor and the Greenhouse
Operator, as assigned by the Greenhouse Operator to, and assumed by, the
Greenhouse Owner pursuant to the Assignment and Assumption Agreement dated as of
May 18, 1994, as amended, supplemented or otherwise modified from time to time
in accordance with Section 11.12(a) of the Project Loan Agreement.
"Greenhouse Construction Contract Guarantee": the Guaranty
dated as of May 18, 1994 made by the Parent Guarantor in favor of the Greenhouse
Owner, as amended, supplemented or otherwise modified from time to time in
accordance with Section 11.12(a) of the Project Loan Agreement.
"Greenhouse Construction Schedule": the schedule for the
construction of the Greenhouse prepared by the Greenhouse Operator and the
Greenhouse Contractor and approved by the Co-Agents, the Institutions and the
Independent Engineer, as set forth in Schedule 9 to the Project Loan Agreement.
"Greenhouse Contractor": SEI.
"Greenhouse Deed": the Deed of Bargain and Sale dated as of
May 18, 1994 from the Greenhouse Operator, as Grantor, to the Greenhouse Owner,
as Grantee.
"Greenhouse Documents": collectively, the Greenhouse Loan
Agreement, the Greenhouse Note, the Greenhouse Bill of Sale, the Greenhouse
Mortgage, the Greenhouse Nondisturbance Agreement, the Greenhouse Master Lease,
the Greenhouse Pledge Agreements, the Greenhouse Stock Assignment, the
Greenhouse Construction Contract, the Greenhouse Sublease and the Greenhouse
Deed.
"Greenhouse Loan Agreement": the Loan and Contribution
Agreement dated as of May 18, 1994 between the Greenhouse Owner and the
Borrower, as amended, supplemented or otherwise modified from time to time in
accordance with Section 11.12(a) of the Project Loan Agreement.
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25
"Greenhouse Master Lease": the Deed of Master Lease dated as
of May 18, 1994 between the Borrower, as Master Landlord, and the Greenhouse
Owner, as Master Tenant, as amended, supplemented or otherwise modified from
time to time in accordance with Section 11.12(a) of the Project Loan Agreement.
"Greenhouse Mortgage": the Deed of Trust, Security Agreement
and Assignment of Leases and Rents dated as of May 18, 1994 by and between the
Greenhouse Owner, as grantor, Lawyers Title Insurance Corporation, as Trustee,
for the benefit of the Borrower, as amended, supplemented or otherwise modified
from time to time in accordance with Section 11.12(a) of the Project Loan
Agreement.
"Greenhouse Mortgage Assignment": the Collateral Assignment of
Greenhouse Note, Loan Agreement and Mortgage dated as of May 18, 1994 from the
Borrower, as assignor, to the Security Agent, as assignee, as amended,
supplemented or otherwise modified from time to time in accordance with Section
11.11(a) of the Project Loan Agreement.
"Greenhouse Nondisturbance Agreement": the Nondisturbance,
Attornment and Subordination Agreement dated as of May 18, 1994 by and between
the Security Agent and the Greenhouse Operator, as amended, supplemented or
otherwise modified from time to time in accordance with Section 11.12(a) of the
Project Loan Agreement.
"Greenhouse Note": the promissory note executed by the
Greenhouse Owner in the form of Exhibit A to the Greenhouse Loan Agreement,
payable to the order of the Borrower, and any and all renewals, reinstatements,
rearrangements, enlargements or extensions thereof or of any promissory note or
notes given therefor, as amended, supplemented or otherwise modified from time
to time in accordance with Section 11.12(a) of the Project Loan Agreement.
"Greenhouse Operator": Dominion Growers of Fredericksburg,
Inc., a Virginia corporation.
"Greenhouse Operator Pledge Agreements": the collective
reference to (i) the Stock Pledge Agreement made by Johannes VanWingerden, the
sole stockholder of the Greenhouse Operator in favor of the Greenhouse Owner,
and (ii) following the Closing Date, the other Stock Pledge Agreements made by
each transferee of Johannes VanWingerden in favor of the Greenhouse Owner, in
each case, substantially in the form of Exhibit __ to the Greenhouse Sublease,
as amended, supplemented or otherwise modified from time to time in accordance
with Section 11.12(a) of the Project Loan Agreement.
"Greenhouse Owner": Greenhost, Inc., a Delaware corporation.
"Greenhouse Owner Pledge Agreement": the Stock Pledge
Agreement dated as of May 18, 1994 made by Corporate Trinity Company, the sole
stockholder of the Greenhouse Owner, in favor of the Borrower, substantially in
the form of Exhibit C to the Greenhouse Loan Agreement, as amended, supplemented
or otherwise modified from time to time in accordance with Section 11.12(a) of
the Project Loan Agreement.
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26
"Greenhouse Pledge Agreements": collectively, the Greenhouse
Owner Pledge Agreement and the Greenhouse Operator Pledge Agreements.
"Greenhouse Prepayment Amount": as defined in Section 7.3(f)
of the Project Loan Agreement.
"Greenhouse Prepayment Notice": as defined in Section 7.3(f)
of the Project Loan Agreement.
"Greenhouse Prepayment Proceeds": with respect to any optional
or mandatory prepayment of loans pursuant to the Greenhouse Loan Agreement,
other than a mandatory prepayment of loans made with the proceeds of any
payments of Greenhouse Reserve Replenishment Rent under the Greenhouse Sublease,
85% of the proceeds thereof.
"Greenhouse Reserve Account": the Greenhouse Reserve Account
established and maintained pursuant to the Security Deposit Agreement.
"Greenhouse Reserve Replenishment Rent": any payments of
Supplemental Rent made pursuant to Section 15.06 of the Greenhouse Sublease
following a Greenhouse Reserve Withdrawal Event and until such time as the
amount of funds on deposit in the Greenhouse Reserve Account equals $2,000,000.
"Greenhouse Reserve Withdrawal Event": as defined in Section
1.2 of the Security Deposit Agreement.
"Greenhouse Stock Assignment": the Greenhouse Stock Assignment
dated as of May 18, 1994 between the Greenhouse Owner and the Borrower, as
amended, supplemented or otherwise modified from time to time in accordance with
Section 11.12(a) of the Project Loan Agreement.
"Greenhouse Sublease": the Deed of Sublease dated as of May
18, 1994 between the Greenhouse Owner, as sublessor, and the Greenhouse
Operator, as sublessee, as amended, supplemented or otherwise modified from time
to time in accordance with Section 11.12(a) of the Project Loan Agreement.
"Guarantee Obligation": as to any Person (the "guaranteeing
person"), any obligation of (a) the guaranteeing person or (b) another Person
(including, without limitation, any bank under any letter of credit) to induce
the creation of which the guaranteeing person has issued a reimbursement,
counter indemnity or similar obligation, in either case guaranteeing or in
effect guaranteeing any Indebtedness, lease, dividends or other obligations (the
"primary obligations") of any other third Person (the "primary obligor") in any
manner, whether directly or indirectly, including, without limitation, any
obligation of the guaranteeing person, whether or not contingent, (i) to
purchase any such primary obligation or any property constituting direct or
indirect security therefor, (ii) to advance or supply funds (1) for the purchase
or payment of any such primary obligation or (2) to maintain working capital or
equity capital of the primary
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obligor or otherwise to maintain the net worth or solvency of the primary
obligor, (iii) to purchase property, securities or services primarily for the
purpose of assuring the owner of any such primary obligation of the ability of
the primary obligor to make payment of such primary obligation or (iv) otherwise
to assure or hold harmless the owner of any such primary obligation against loss
in respect thereof; provided, however, that the term Guarantee Obligation shall
not include (x) endorsements of instruments for deposit or collection in the
ordinary course of business, (y) obligations of the Borrower contained in any
Project Document on the Closing Date and (z) indemnity and "hold harmless"
provisions in the CT Corporation Agreement or in contracts (including Additional
Contracts) entered into by the Borrower in the ordinary course of business after
the Closing Date.
"Hazardous Materials": (a) any petroleum or petroleum
products, flammable explosives, radioactive materials, asbestos in any form that
is or could become friable, urea formaldehyde foam insulation and
polychlorinated biphenyls (PCB) to the extent regulated under any Environmental
Law; and (b) any chemicals, materials or substances defined as or included in
the definition of "hazardous substances", "hazardous wastes", "hazardous
materials", "extremely hazardous wastes", "restricted hazardous wastes", "toxic
substances", "toxic pollutants", "contaminants" or "pollutants", or words of
similar import, under any applicable Environmental Law.
"Heat Rate Bonus": as defined in Section 8.5 of the Facility
Construction Contract.
"Historical Debt Coverage Ratio": as of any Quarterly
Calculation Date, the ratio of (i) Project Cash Flow of the Borrower for the
six-month period ending on such Quarterly Calculation Date to (ii) Debt Service
for such six-month period.
"Increased IDC Contribution Amount": as defined in the
Southern Equity Contribution Agreement.
"Increased IDC Prepayment Amount":
(a) if the Applicable Institutional Loan Margin
(determined in accordance with the relevant Institutional Notes) of the initial
Institutional Loans made by the Institutions is 2.62%, but the Applicable
Institutional Loan Margin (determined in accordance with the relevant
Institutional Notes) of the subsequent Institutional Loans made by the
Institutions is 2.40%, $1,120,000; or
(b) if the Applicable Institutional Loan Margin
(determined in accordance with the relevant Institutional Notes) of both of the
Institutional Loans made by the Institutions is 2.62%, $2,239,000.
"Indebtedness": of any Person at any date, (a) all
indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services, (b) any other indebtedness of such Person which
is evidenced by a note, bond, debenture or similar instrument,
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(c) all obligations of such Person under Capital Leases, (d) all obligations of
such Person pursuant to Interest Rate Hedging Transactions, (e) all obligations
of such Person in respect of acceptances issued or created for the account of
such Person and (f) all liabilities secured by any Lien on any property owned by
such Person even though such Person has not assumed or otherwise become liable
for the payment thereof.
"Independent Engineer": Black & Veatch, Engineers-Architects,
a Missouri partnership, or such other engineering firm reasonably acceptable to
the Borrower as the Majority Lenders may designate.
"Independent Engineer's Certificate": as defined in Section
9.2(d) of the Project Loan Agreement.
"Independent Engineer's Report": the report of the Independent
Engineer delivered pursuant to Section 9.1(m) of the Project Loan Agreement.
"Inflation Factor": for any calendar year (the "test year"),
the quotient obtained by dividing (a) the GNP Index for the test year minus the
GNP Index for the calendar year immediately preceding the test year, by (b) the
GNP Index for the calendar year immediately preceding the test year.
"Information Memorandum": the Birchwood Power Partners, L.P.
Non-Recourse Financing Amended and Restated Private Information Memorandum for
the Project dated May 18, 1994, prepared by the Borrower and delivered to the
Co-Agents and Institutions.
"Initial Budgeted Amount": $438,365,000.
"Initial Funding Period": the period from and including the
Closing Date to and including August 22, 1994.
"Initial Repair and Maintenance Reserve Amount": $1,000,000.
"Initial Repayment Date": the first Loan Installment Payment
Date to occur on or after the later of (i) the date which is three months after
the Completion Date and (ii) the date which is six months after the Commercial
Operations Date.
"Initial Synchronization Date": as defined in Section 1.23 of
the Power Purchase Agreement.
"Insolvency": with respect to any Multiemployer Plan, the
condition that such Plan is insolvent within the meaning of Section 4245 of
ERISA.
"Institution Default Rate": for any day with respect to any
Institutional Loan, the rate per annum equal to the rate of interest borne by
the Institutional Note evidencing such Loan plus 2.00%.
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29
"Institutional Commitment Period": the period from and
including the Closing Date to and including the Institutional Commitment
Termination Date.
"Institutional Commitment Termination Date": February 15,
1995.
"Institutional Fee Letter": the letter agreement dated the
date of the Project Loan Agreement between the Institutions and the Borrower,
setting forth certain fees payable by the Borrower to the Institutions.
"Institutional Loan Facility": the construction and term loan
facility provided by the Institutions to the Borrower pursuant to Section 4 of
the Project Loan Agreement, under which the Institutions will make Institutional
Loans from time to time in accordance with the terms thereof.
"Institutional Loan Final Maturity Date": the twentieth
anniversary of the Commercial Operations Date.
"Institutional Loan Installment Payment Date": as defined in
Section 4.4(a) of the Project Loan Agreement.
"Institutional Loan Proceeds Account": the Institutional Loan
Proceeds Account established and maintained pursuant to the Security Deposit
Agreement.
"Institutional Loans": as defined in Section 4.1 of the
Project Loan Agreement.
"Institutional Note": as defined in Section 4.3 of the Project
Loan Agreement.
"Institutional Note Register": as defined in Section 4.7(a) of
the Project Loan Agreement.
"Institutional Transfer Supplement": as defined in Section
14.8(a) of the Project Loan Agreement.
"Institutions": the financial institutions, insurance
companies and other institutional investors which are identified as
"Institutions" in, and are from time to time party to, the Project Loan
Agreement.
"Insurance and Property Tax Reserve Account": the Insurance
and Property Tax Reserve Account established and maintained pursuant to the
Security Deposit Agreement.
"Insurance Consultant": Gale, Smith & Co. Inc., or such other
insurance consultant reasonably acceptable to the Borrower as the Majority
Lenders may designate.
"Interest Drawing": as defined in the relevant Bond Letter of
Credit.
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"Interest Rate Election Notice": a written notice by the
Borrower delivered in connection with a borrowing of Bank Loans, substantially
in the form of Exhibit M to the Project Loan Agreement.
"Interest Rate Hedging Agreement": the agreement or agreements
entered into, or to be entered into, by the Borrower and one or more Interest
Rate Hedging Counterparties in connection with each Interest Rate Hedging
Transaction, as amended, supplemented or otherwise modified from time to time in
accordance with Section 11.11(a) of the Project Loan Agreement.
"Interest Rate Hedging Counterparty": (i) any Co-Agent or any
Affiliate thereof whose long-term unsecured debt securities are rated A- or
better by Standard & Poor's or A3 or better by Moody's or (ii) any other
financial institution whose long-term unsecured debt securities are rated AA- or
better by Standard & Poor's or Aa3 or better by Moody's, in each case at the
time of such Co-Agent's, such Affiliate's or such other financial institution's
entry into an Interest Rate Hedging Transaction with the Borrower.
"Interest Rate Hedging Transaction": any interest rate
protection agreement, interest rate swap transaction, interest rate "cap" or
"collar" transaction, interest rate future, interest rate option or other
interest rate hedging transaction.
"Investor Percentage": at any time:
(a) with respect to any Institution, a fraction (expressed as
a percentage), the numerator of which is the sum of (i) the aggregate unpaid
principal amount of Institutional Loans then outstanding held by such
Institution and (ii) the unused Institutional Loan Commitment of such
Institution then in effect, and the denominator of which is the Total Investor
Exposure at such time; and
(b) with respect to the Unsupported Bondholders, a fraction
(expressed as a percentage), the numerator of which is the aggregate unpaid
principal amount of Unsupported Bonds then outstanding, and the denominator of
which is the Total Investor Exposure at such time.
For purposes of this definition, "Total Investor Exposure" means, at any time,
the sum of (i) the aggregate unpaid principal amount of Institutional Loans then
outstanding, (ii) the aggregate unpaid principal amount of Unsupported Bonds
then outstanding and (iii) the unused portion of the Total Institutional
Commitments then in effect.
"IPP": an independent power production facility which is not a
Qualifying Facility.
"IPP Conversion Date": the date, if any, on which the Facility
shall cease to be a Qualifying Facility and shall become an IPP in compliance
with all relevant provisions of the Project Loan Agreement.
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"Issuing Bank": Credit Suisse, or when the context requires,
Credit Suisse, New York Branch, or any successor or assign, and shall be
interpreted accordingly throughout the Loan Documents.
"Junior Subordinated Indebtedness": unsecured indebtedness of
the Borrower for borrowed money that is evidenced by an instrument or
instruments containing the subordination provisions set forth in Exhibit N to
the Project Loan Agreement.
"L/C Cash Collateral Subaccount": as defined in Section 3.1(a)
of the Security Deposit Agreement.
"L/C Disbursement Date": the date on which any Letter of
Credit Disbursement is made.
"L/C Reimbursement Date": each date upon which any L/C
Reimbursement Obligation arises and the payment thereof is not financed with the
proceeds of a Bank L/C Loan or Bank Liquidity Loan under the Project Loan
Agreement.
"L/C Reimbursement Obligations": collectively, Bond
Reimbursement Obligations and VP Reimbursement Obligations.
"L/C Reimbursement Payments": collectively, Bond Reimbursement
Payments and VP Reimbursement Payments.
"Leased Land": that portion of the Site that is subject to the
Greenhouse Master Lease.
"Lenders": the Banks, the Issuing Bank and the Institutions.
"Lenders' Default Notice": as defined in Section 1.2 of the
Southern Equity Contribution Agreement.
"Letter of Credit Disbursement": any Construction VP Letter of
Credit Disbursement, any Term VP Letter of Credit Disbursement or any Bond
Letter of Credit Disbursement.
"Letter of Credit Exposure": on any date with respect to all
Letters of Credit then outstanding, the sum of (i) the aggregate undrawn portion
of the respective stated amounts of such Letters of Credit on such date and (ii)
the aggregate amount of L/C Reimbursement Obligations on such date which have
not been reimbursed by the Borrower from its own funds or financed with the
proceeds of a Bank L/C Loan or a Bank Liquidity Loan.
"Letters of Credit": collectively, the Bond Letters of Credit
and the VP Letters of Credit.
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"Lien": any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), charge or other
security interest or any preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including, without
limitation, any conditional sale or other title retention agreement and any
lease having substantially the same economic effect as any of the foregoing).
"Limited Partner Interest Pledge Agreement": the collective
reference to the separate Limited Partner Interest Pledge Agreements made by
each Limited Partner of the Borrower from time to time in favor of the Security
Agent for the benefit of the Secured Parties, substantially in the form of
Exhibit F-2 to the Project Loan Agreement, as amended, supplemented or otherwise
modified from time to time in accordance with the terms thereof.
"Limited Partners": (a) on the date of the execution and
delivery of the Project Loan Agreement, SEI Birchwood, in its capacity as the
owner of all of the limited partnership interests of the Borrower; and (b)
thereafter, subject to compliance with the provisions of the Partnership
Agreement and of Section 11.13(b) of the Project Loan Agreement, each owner from
time to time of a limited partnership interest in the Borrower.
"Liquidity Drawing": a Tender Drawing -- Principal or a Tender
Drawing -- Interest (as each such term is defined in the relevant Bond Letter of
Credit), the proceeds of which are to be used to fund tenders of the relevant
Bonds in connection with a remarketing of the Bonds.
"Liquidity Loan Termination Date": with respect to Bank
Liquidity Loans the proceeds of which are used to finance Bond Reimbursement
Obligations in respect of a Liquidity Drawing under a Bond Letter of Credit, the
applicable Bond L/C Expiration Date of such Bond Letter of Credit.
"Loan Documents": the Project Loan Agreement, the Notes, each
Interest Rate Hedging Agreement with an Interest Rate Hedging Counterparty
specified in clause (i) of the definition thereof and the Security Documents.
"Loan Installment Payment Date": each of (i) the last day of
each March, June, September and December occurring on the first such day to
occur after the Commercial Operations Date, to and including the Bank Loan Final
Maturity Date (in the case of Bank Loans) or the Institutional Loan Final
Maturity Date (in the case of Institutional Loans) and (ii) the Bank Loan Final
Maturity Date (in the case of Bank Loans) or the Institutional Loan Final
Maturity Date (in the case of Institutional Loans).
"Loan Participants": as defined in Section 14.7(a) of the
Project Loan Agreement.
"Loans": collectively, the Bank Project Loans, the Bank L/C
Loans, the Bank Liquidity Loans and the Institutional Loans.
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"Majority Banks": at any time, Banks the Commitment
Percentages of which at such time aggregate at least 66 2/3%.
"Majority Institutions": at any time, Institutions and
Unsupported Bondholders (acting through the relevant Bond Trustee) the Investor
Percentages of which at such time aggregate at least 66 2/3%.
"Majority Lenders": at any time, each of (i) Banks,
Institutions and Unsupported Bondholders (acting through the relevant Bond
Trustee) the Senior Creditor Percentages of which at such time aggregate at
least 66 2/3%; and (ii) Banks the Commitment Percentages of which at such time
aggregate at least 66 2/3% and (iii) Institutions and Unsupported Bondholders
(acting through the relevant Bond Trustee) the Investor Percentages of which at
such time aggregate at least 66 2/3%; provided, however, that if at any time on
or after the first day of the fourteenth year following the Commercial
Operations Date, the Senior Creditor Percentage of either the Banks or the
Institutions is less than 20% of the Total Senior Creditor Exposure (as defined
in the definition of "Senior Creditor Percentage"), then "Majority Lenders"
shall be determined without reference to clause (ii) or (iii) above; provided,
further, that on and after the date on which the Bank Loans and all amounts
payable to the Banks, the Issuing Bank and the Administrative Agent under the
Loan Documents have been paid in full, no Letter of Credit is outstanding and
all of the Commitments of the Banks have been terminated, "Majority Lenders"
shall be determined without reference to clause (ii) above and clause (i) above
shall be calculated without reference to "Banks".
"Make-Whole Premium": a premium, determined as of the date of
any optional prepayment pursuant to Section 7.4 of the Project Loan Agreement,
any mandatory prepayment pursuant to Section 7.3 of the Project Loan Agreement
in respect of which the Make-Whole Premium is payable, or any acceleration
pursuant to Section 12.2 thereof, in respect of each Institutional Loan (or the
portion thereof) to be prepaid or each Institutional Loan being accelerated,
equal to the amount (but not less than zero) obtained by subtracting (i) the sum
of the unpaid principal amount of such Institutional Loan (or the portion
thereof) being prepaid or accelerated and the amount of interest thereon accrued
to the prepayment date or date of acceleration, as the case may be, from (ii)
the sum of the Current Values of each scheduled interest payment and principal
payment (each such amount of principal or interest being referred to herein as
an "Amount Payable") being prepaid or accelerated that would otherwise have
become due after the date of such determination if such Institutional Loan were
not being prepaid or accelerated. The "Current Value" of any Amount Payable
means such Amount Payable discounted on a quarterly basis to its present value
on the date of determination in accordance with the following formula:
Current Value = Amount Payable
--------------
(1 + d/p)(n)
where "d" is the sum of (a) 50 basis points and (b) the Treasury Yield per annum
expressed as a decimal, and "n" is an exponent (which need not be an integer)
equal to the number of
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34
quarterly periods and portions thereof (any such portion of a period to be
determined by dividing the number of days in such portion of such period by the
total number of days in such period, both computed on the basis of twelve 30-day
months in a 360-day year) from the date of such determination to the scheduled
payment date of the Amount Payable, and "p" is 4. The "Treasury Yield"
applicable to each Amount Payable shall be the yield to maturity implied by the
yields reported, as of 10:00 a.m. (New York City time) on the Business Day next
preceding the date fixed for prepayment or the date of acceleration, as the case
may be, with respect to the principal amount being prepaid or accelerated, on
the display designated as "Page 678" on the Telerate Service (or such other
display as may replace such Page 678) for actively traded U.S. Treasury
securities having a maturity equal to the then remaining weighted average life
of the Institutional Loan being prepaid or accelerated (the "Remaining Life") of
such principal amount as of such date, computed by dividing (x) the amount
referred to in clause (i) above into (y) the total of the products obtained by
multiplying (A) the amount of each remaining required repayment of principal by
(B) the number of years (calculated to the nearest one-twelfth) which will
elapse between the date as of which such computation is made and the due date of
such payment. If the Remaining Life is not equal to the constant maturity of a
U.S. Treasury security for which a weekly average yield is given, the Treasury
Yield shall be obtained by linear interpolation (calculated to the nearest
one-twelfth of a year) from the weekly average yields of (a) the actively traded
U.S. Treasury security with a maturity closest to and greater than the Remaining
Life and (b) the actively traded U.S. Treasury security with a maturity closest
to and less than the Remaining Life, except that if the Remaining Life is less
than one year, the weekly average yield on actively traded U.S. Treasury
securities adjusted to a constant maturity of one year shall be used. The
Treasury Yield shall be computed to the fifth decimal place (one thousandth of a
percentage point) and then rounded to the fourth decimal place (one hundredth of
a percentage point).
"Mandatory Equity Contribution": as defined in the Southern
Equity Contribution Agreement.
"Material Adverse Effect": a material adverse effect on (a)
the business, operations or financial condition of the Borrower, (b) the ability
of the Borrower to perform its obligations under the Loan Documents and the
Project Documents, or (c) the validity or enforceability of the Loan Documents
or the Project Documents or the rights, interests and remedies of the Lenders
under the Loan Documents.
"Maximum Partnership Interest": with respect to any Person,
(i) 50% of all general partnership interests in the Borrower and (ii)
Partnership Interests entitling such Person to receive 50% of the profits and
losses of the Borrower.
"Modified Make-Whole Premium": (a) with respect to any
optional prepayment of Institutional Loans pursuant to Section 7.4 of the
Project Loan Agreement with funds transferred from the Additional Collateral
Account pursuant to Section 5.6(b) of the Security Deposit Agreement, such
Institution's Pro Rata Share (as defined below) of the product of (x) the
aggregate amounts payable to the Banks pursuant to Section 7.7(a) or 7.7(d) of
the Project Loan Agreement in connection with such prepayment and (y) a
fraction, the numerator of which
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35
is the aggregate principal amount of Institutional Loans to be prepaid in
connection with such prepayment and the denominator of which is the aggregate
principal amount of Bank Loans to be prepaid in connection with such
prepayment; and (b) with respect to any other optional prepayment pursuant to
Section 7.4 of the Project Loan Agreement of Institutional Loans held by an
Institution exercising the Pro Rata Prepayment Option which has agreed to
receive the Modified Make-Whole Premium, a premium, determined as of the date
of such optional prepayment, calculated in accordance with the definition of
"Make-Whole Premium", except that, for purposes of the formula used to
determine "Current Value" in such definition, "d" shall be the sum of (i) 100
basis points and (ii) the Treasury Yield per annum expressed as a decimal. For
purposes of this definition, "Pro Rata Share", with respect to any Institution
exercising the Pro Rata Prepayment Option in connection with an optional
prepayment of Institutional Loans, is equal to a fraction, the numerator of
which is equal to the aggregate principal amount of Institutional Loans held by
such Institution on the date of such prepayment and the denominator of which is
equal to the aggregate principal amount of Institutional Loans held by all
Institutions exercising the Pro Rata Prepayment Option on the date of such
prepayment.
"Monthly Construction Disbursement Date": in any calendar
month during the Construction Period, the single Business Day in such calendar
month designated by the Borrower as the date on which the Borrower proposes to
borrow Bank Project Loans and/or Institutional Loans under the Project Loan
Agreement to pay Project Costs.
"Moody's": Moody's Investor Services, Inc.
"Mortgaged Property": the "Trust Property" as defined in the
Project Mortgage.
"Multiemployer Plan": a Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"Non-Restoration Prepayment Amount": as defined in Section
7.3(g) of the Project Loan Agreement.
"Non-Restoration Prepayment Notice": as defined in Section
7.3(g) of the Project Loan Agreement.
"Note Exchange Date": the first date on which interest is
payable (and has been paid) on the Institutional Loans following the second
borrowing of Institutional Loans pursuant to Section 4.1 of the Project Loan
Agreement.
"Notes": collectively, the Bank Notes and Institutional Notes.
"Notice to Proceed": (a) with respect to the Facility, as
defined in Section 1.1 of the Facility Construction Contract, or (b) with
respect to the Greenhouse, as defined in Section 1.1 of the Greenhouse
Construction Contract.
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36
"Operating and Maintenance Agreement": the Amended and
Restated Facility Operations and Maintenance Agreement dated as of May 18, 1994
between the Borrower and the Facility Operator, as amended, supplemented or
otherwise modified from time to time in accordance with Section 11.12(a) of the
Project Loan Agreement.
"Operating Budget": as defined in Section 10.23 of the Project
Loan Agreement.
"Operating Year": the consecutive twelve-month period
commencing on the Commercial Operations Date, and each consecutive twelve-month
period thereafter commencing on each anniversary of the Commercial Operations
Date.
"Optional Prepayment Notice": as defined in Section 7.4(a) of
the Project Loan Agreement.
"Ornamental Flower Market Consultant": Context Consulting, or
such other consultant reasonably acceptable to the Borrower as the Majority
Lenders may designate to examine and advise the Lenders with respect to the
Greenhouse, the Greenhouse Operator and the ornamental flower market.
"Parent Guarantor": Southern, as guarantor under the
Construction Contract Guarantees.
"Partner Collateral": the "Collateral" as defined in each
General Partner Pledge Agreement and each Limited Partner Pledge Agreement.
"Partners": collectively, the General Partners and the Limited
Partners.
"Partnership Agreement": the Limited Partnership Agreement of
the Borrower dated as of July 21, 1993, as amended by a First Amendment dated as
of April 27, 1994 and by a Second Amendment dated as of May 18, 1994, between
Birchwood Development, in its capacity as a general partner, and SEI Birchwood,
in its respective capacities as a general partner and as the sole limited
partner.
"Partnership Interests": collectively, the general partnership
interests and limited partnership interests in the Borrower.
"PBGC": the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA.
"Permitted Investments": collectively, (a) direct obligations
of the United States or of any agency or political subdivision thereof, or
obligations guaranteed as to principal and interest by the United States or by
any agency or political subdivision thereof, in any case maturing not more than
90 days from the date of acquisition thereof; (b) certificates of deposit issued
by any bank having capital, surplus and undivided profits of at least
U.S.$500,000,000 and a long-term unsecured senior debt rating of at least "A" by
Standard & Poor's and "A2" by
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37
Moody's, in any case maturing not more than 90 days from the date of acquisition
thereof; and (c) commercial paper rated "P-1" or better by Moody's or "A-1" or
better by Standard & Poor's, in any case maturing not more than 90 days from the
date of acquisition thereof.
"Permitted Liens": (i) Liens for taxes, assessments or
governmental charges which are not yet due or which are being Contested (as
defined below); (ii) Liens in connection with worker's compensation,
unemployment insurance, old-age pensions or other social security benefits or
obligations; (iii) mechanics', materialmen's, warehousemen's, carriers' or other
like Liens arising in the ordinary course of business securing obligations
incurred in connection with the Project which are not yet due or which are fully
bonded or are being Contested; (iv) Liens incurred or created in the ordinary
course of business in connection with or to secure the performance of bids,
tenders, contracts (other than for the payment of money), leases, statutory
obligations, surety bonds or appeal bonds; (v) Liens of judgments or awards
fully covered by insurance or with respect to which an appeal or proceeding for
review is being prosecuted by a Contest; (vi) the exceptions to title set forth
in Schedule B of the title insurance policy delivered to the Security Agent
pursuant to Section 9.1(j) of the Project Loan Agreement; and (vii) any
easements, rights-of-way, licenses and similar encumbrances incurred or created
in the ordinary course of business which do not singularly or in the aggregate
interfere with the use or impair the value of the Borrower's property or assets
or impair the rights or interests of the Lenders with respect to the Collateral.
For purposes of this definition, "Contest" means, with respect to any taxes,
assessments, governmental charges or levies or any Lien or other claim (each, a
"Claim"), a contest pursued in good faith challenging the validity or amount of
any such Claim by proper proceedings timely instituted if (a) the Borrower
diligently pursues such contest, (b) the Borrower sets aside on its books
adequate reserves in accordance with GAAP with respect to the contested Claim,
(c) during the period of such contest the enforcement of any contested Claim is
effectively stayed and any Lien asserted thereby is effectively removed of
record and (d) such contest (i) will not interfere with the construction or
operation of the Project and (ii) does not involve any substantial danger of a
sale, forfeiture or loss of any part of the Project, title thereto or any
interest therein.
"Person": an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint venture,
Government Authority or other entity of whatever nature.
"Plan": at a particular time, any employee benefit plan which
is covered by ERISA and in respect of which the Borrower or a Commonly
Controlled Entity is (or, if such plan were terminated at such time, would under
Section 4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5)
of ERISA.
"Power Purchase Agreement": the Power Purchase and Operating
Agreement effective July 13, 1990 between SEI Birchwood and Virginia Power, as
assigned by SEI Birchwood to, and assumed by, the Borrower pursuant to an
Assignment and Assumption Agreement dated as of May 18, 1994 among SEI
Birchwood, the Borrower and Virginia Power, and as amended, supplemented or
otherwise modified from time to time in accordance with Section 11.12(a) of the
Project Loan Agreement.
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38
"Prepayment Subaccount": as defined in the Security Deposit
Agreement.
"Principal Project Documents": collectively, the Construction
Contracts, the Construction Contract Guarantees, the Power Purchase Agreement,
the Steam Sales Agreement, the Operating and Maintenance Agreement, the Coal
Supply Agreement, the Arch Back-Up Coal Supply Agreement, the SEI Coal
Procurement Letter, the Coal Transportation Agreement, the CSXT Agreement, the
Coal Adjustment Agreement, the Ash Disposal Agreement, the Real Estate
Documents, the Greenhouse Documents (to the extent not specified above) and the
Partnership Agreement, together with any replacement or substitute agreement for
any of the foregoing.
"Proceeds": all cash and other property, real, personal or
mixed, tangible or intangible, received upon the sale, exchange, collection or
other disposition of the Collateral or proceeds thereof, and, in any event,
including, but not limited to, Casualty Insurance Proceeds, Business
Interruption Insurance Proceeds, Requisition Proceeds, Buy-Down Amount Proceeds,
Delay Damages Proceeds, General Indemnity Payments Proceeds, Greenhouse
Prepayment Proceeds, Mandatory Equity Contribution Proceeds and all proceeds of
the Contingent Bond Contribution, if any, and the Contingent Increased IDC
Contribution, if any.
"Project": the Facility, the Site and all licenses, permits
and easements and other real property interests and rights relating to the
Facility or the Site which are owned or leased by the Borrower or in which the
Borrower has any rights, including, without limitation, the Easements.
"Project Cash Flow": for any period, the amount, if any, by
which Project Revenues for such period exceed the sum of (i) Cash Operating
Costs (excluding the Basic O&M Monthly Fee and the Annual O&M Bonus) for such
period plus (ii) the Borrower's Greenhouse Expenses, if any, for such period
plus (or minus) (iii) decreases (or increases) in cash working capital of the
Borrower from the prior period.
"Project Control Account": the Project Control Account
established and maintained pursuant to the Security Deposit Agreement.
"Project Cost Savings": the amount, if any, by which (a) the
sum of (i) the Initial Budgeted Amount and (ii) the Increased IDC Contribution
Amount, if any, contributed to the Borrower pursuant to the Southern Equity
Contribution Agreement on or prior to such date, exceeds (b) the aggregate
amount of all Project Costs which have been or are required to be incurred in
order to achieve the occurrence of the Completion Date and Final Completion of
the Facility and of the Greenhouse, including, in any event, (x) the Required
Completion Date Reserve Deposits specified in clauses (ii) through (v) of the
definition thereof and (y) the Required Debt Service Reserve Amount as of the
Completion Date.
"Project Costs": all costs and expenses incurred or to be
incurred by the Borrower to develop, design, finance, construct, test and
start-up the Project in the manner contemplated by the Principal Project
Documents and to achieve Final Completion of the Facility, including without
limitation (a) the amounts payable by the Borrower pursuant to the Facility
Construction
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39
Contract; (b) all costs and expenses payable by the Borrower in connection with
the performance by it of its covenants in the Facility Construction Contract;
(c) the costs of acquiring and preparing the Site and the Easements; (d) the
cost of owner-furnished equipment (including the fuel storage facility), spare
parts, power and water for construction and start-up, and utility
interconnection costs; (e) the cost of interconnecting the Facility with the
Greenhouse and of any equipment owned by the Borrower that is located on the
Leased Land; (f) the secured construction loans not exceeding $20,079,000
principal amount and capital contribution not exceeding $7,000,000 which the
Borrower has agreed to make to the Greenhouse Owner pursuant to the Greenhouse
Loan Agreement; (g) initial working capital (not exceeding $3,500,000) for the
Project, (h) the cost of insurance and bonds; (i) consulting fees of the
Independent Engineer, Insurance Consultant, Coal Consultant, Environmental
Consultant and Ornamental Flower Market Consultant; (j) legal, accounting,
engineering and financing fees and expenses, and interest during construction;
(k) other fees and expenses associated with arranging the financing contemplated
by the Project Loan Agreement, the Equity Funding Loan Agreement and the Bond
Documents, including placement agent and underwriting fees and other issuance
costs of the Bonds; (l) ad valorem taxes, real and personal property taxes and
sales, use and excise taxes; (m) general and administrative expenses directly
attributable to the Project; (n) the funding of the Debt Service Reserve Account
on the Completion Date in the amount of the Required Debt Service Reserve
Amount; (o) the funding of the Repair and Maintenance Account on the Completion
Date in the amount of the Initial Repair and Maintenance Reserve Amount, (p) the
Heat Rate Bonus (not exceeding $6,000,000), if any, payable to the Facility
Contractor in accordance with Section 8.5 of the Facility Construction Contract;
(q) project development and construction management fees, including without
limitation the development fee to be paid to Affiliates of Southern on the
Closing Date in an aggregate amount not to exceed $1,700,000; and (r) the
Contingent Distribution Amount, if any, payable on the Completion Date to
Partners affiliated with Southern; excluding, however, (i) the repayment of the
principal amount of Equity Funding Loans and any payment of interest on overdue
amounts of principal thereof and interest thereon and (ii) any costs, expenses,
fees and other amounts payable in connection with the issuance and sale by the
Borrower, or the assignment or transfer by any Partner, of a general or limited
partnership interest in the Borrower. In addition, for purposes of calculating
"Contingent Distribution Amount", "Project Costs" shall not include any amounts
in clause (r) above.
"Project Documents": collectively, the Principal Project
Documents, the CT Corporation Letter and, when entered to, each Additional
Contract.
"Project Loan Agreement": the Loan and Reimbursement Agreement
dated as of May 18, 1994 among the Borrower, the Banks, the Institutions, the
Co-Agents, the Issuing Bank and the Administrative Agent, as amended,
supplemented or otherwise modified from time to time in accordance with the
terms thereof.
"Project Mortgage": the Credit Line Deed of Trust, Assignment
and Security Agreement made by the Borrower, as Grantor, to Lawyers Title
Insurance Corporation, as trustee for the use and benefit of the Security Agent,
as Beneficiary, substantially in the form of Exhibit E of the Project Loan
Agreement, as amended, supplemented or otherwise modified from time to time.
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"Project Participants": collectively, the Borrower, the
Facility Contractor, the Greenhouse Contractor, the Parent Guarantor, Virginia
Power, the Facility Operator, the Coal Supplier, Arch, the Coal Transporter,
CSXT, the Greenhouse Owner, the Greenhouse Operator, the Partners and each other
Person from time to time party to a Project Document (including without
limitation, SEI as a party to the SEI Coal Procurement Letter).
"Project Revenues": for any period, the sum of (i) all
revenues received by the Borrower from the sale of electrical energy pursuant to
the Power Purchase Agreement and from the sale of steam pursuant to the Steam
Sales Agreement, (ii) any other operating revenues received by the Borrower for
such period, (iii) all payments received by the Borrower of any scheduled
repayment of loans or any mandatory prepayment of loans pursuant to the
Greenhouse Loan Agreement with the proceeds of rent payable pursuant to Section
3.01 of the Greenhouse Sublease, (iv) any General Indemnity Payment Proceeds and
(v) the earnings on Permitted Investments on deposit in the Accounts to the
extent distributed to the Project Control Account pursuant to the Security
Deposit Agreement.
"Projected Debt Coverage Ratio": as of any Quarterly
Calculation Date, the ratio of (i) Projected Project Cash Flow as of such date
to (ii) Projected Debt Service as of such date.
"Projected Debt Service": as of any Quarterly Calculation
Date, the projected Debt Service for the twelve-month period ending on the
fourth succeeding Quarterly Calculation Date.
"Projected Project Cash Flow": as of any Quarterly Calculation
Date, the projected Project Cash Flow for the twelve-month period ending on the
fourth succeeding Quarterly Calculation Date. Such Projected Project Cash Flow
shall be determined by using the same amount for Project Cash Flow for the
immediately preceding twelve-month period, and then adjusting such amount for
the effect thereon of any planned or anticipated changes during such succeeding
twelve-month period in the operation or maintenance of the Facility (as
determined in good faith by the Borrower, which determination shall be
reasonably acceptable to the Administrative Agent, upon consultation with the
Independent Engineer).
"Pro Rata Prepayment Option": as defined in Section 7.5(b) of
the Project Loan Agreement.
"Pro Rata Prepayment Share": with respect to any mandatory
prepayment of Loans pursuant to Section 7.3(c), 7.3(f) or 7.3(g) of the Project
Loan Agreement, or any optional prepayment of Loans pursuant to Section 7.4 of
the Project Loan Agreement (other than as provided in clause (i), (ii) or (iii)
of Section 7.5(a) thereof):
(a) if none of the Institutions exercises the Pro Rata
Prepayment Option in connection with such prepayment in accordance with
Section 7.5(b) of the Project Loan Agreement, (i) the Pro Rata
Prepayment Share of the Banks shall be equal to the Aggregate
Prepayment Amount, the Buy-Down Amount Proceeds, the Non-Restoration
Prepayment Amount or the Greenhouse Prepayment Amount, as the case may
be, and (ii) the Pro Rata Prepayment Share of the Institutions shall be
zero; and
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41
(b) if any of the Institutions exercises the Pro Rata
Prepayment Option with respect to such prepayment in accordance with
Section 7.5(b) of the Project Loan Agreement (the "Electing
Institutions"), then:
(A) the Pro Rata Prepayment Share of the Banks shall
be equal to the product of (1) the Aggregate Prepayment
Amount, the Buy-Down Amount Proceeds, the Non-Restoration
Prepayment Amount or the Greenhouse Prepayment Amount, as the
case may be, and (2) a fraction, the numerator of which shall
be the Total Bank Exposure on the date of the Optional
Prepayment Notice, the Buy-Down Prepayment Notice, the
Non-Restoration Prepayment Notice or the Greenhouse Prepayment
Notice, as the case may be, and the denominator of which shall
be the sum of (x) the Total Bank Exposure and (y) the
aggregate outstanding principal amount of Institutional Loans
held by all of the Electing Institutions, in each case on the
date of the Optional Prepayment Notice, the Buy-Down
Prepayment Notice, the Non-Restoration Prepayment Notice or
the Greenhouse Prepayment Notice, as the case may be;
(B) the Pro Rata Prepayment Share of each Electing
Institution shall be equal to the product of (1) the Aggregate
Prepayment Amount, the Buy-Down Amount Proceeds, the
Non-Restoration Prepayment Amount or the Greenhouse Prepayment
Amount, as the case may be, and (2) a fraction, the numerator
of which shall be the aggregate outstanding principal amount
of Institutional Loans held by such Electing Institution on
the date of the Optional Prepayment Notice, the Buy-Down
Prepayment Notice, the Non-Restoration Prepayment Notice or
the Greenhouse Prepayment Notice, as the case may be, and the
denominator of which shall be the sum of (x) the Total Bank
Exposure and (y) the aggregate outstanding principal amount of
Institutional Loans held by all of the Electing Institutions,
in each case on the date of the Optional Prepayment Notice,
the Buy-Down Prepayment Notice, the Non-Restoration Prepayment
Notice or the Greenhouse Prepayment Notice, as the case may
be; and
(C) the Pro Rata Prepayment Share of each Institution
which is not an Electing Institution shall be zero.
"Purchasing Banks": as defined in Section 14.7(b) of the
Project Loan Agreement.
"Purchasing Institutions": as defined in Section 14.8(a) of
the Project Loan Agreement.
"PUHCA": the Public Utility Holding Company Act of 1935, as
amended.
"PURPA": the Pubic Utility Regulatory Policies Act of 1978, as
amended from time to time.
"QF Plan": as defined in Section 10.18 of the Project Loan
Agreement.
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42
"Qualified Financial Institution": (a) Any bank satisfactory
to the Issuing Bank that has capital, surplus and undivided profits of at least
$500,000,000 and that is either organized under the laws of the United States or
any state thereof or has a branch office or agency located in the United States,
and (b) any other bank or financial institution approved by the Administrative
Agent and the Borrower (which approval will not be unreasonably withheld) and
satisfactory to the Issuing Bank.
"Qualified Limited Partner Transferee": any Person which, at
the effective time of the relevant transfer or issuance, (a) is a partnership,
corporation, business trust or unincorporated association, (b) individually, or
if a member of a consolidated group, with such Person's consolidated group, has
a tangible net worth (as defined in accordance with GAAP) of $25,000,000 or
more, (c) has not been convicted or pleaded guilty or no contest to any felony
within the previous five years, and (d) has knowledge and experience in
financial and business matters such that it is capable of evaluating the merits
and risks of the investment in the Borrower; provided that, after giving effect
to such transfer or issuance, more than 50% of the limited partnership interests
will be held by Persons which have knowledge and experience in the management of
or investment in power generating facilities.
"Qualifying Facility": a cogeneration facility meeting all of
the requirements for a "qualifying cogeneration facility" set forth in PURPA and
in Part 292 of the rules and regulations of FERC under PURPA.
"Quarterly Calculation Date": the last day of each March,
June, September and December of each year, commencing on the first of such days
to occur after the Commercial Operations Date.
"Quarterly Distribution Date": the last day of each calendar
month immediately succeeding the month in which a Quarterly Calculation Date
occurs (or, if any such date is not a Business Day, the immediately preceding
Business Day), commencing on the first of such dates to occur after the initial
Quarterly Calculation Date.
"Real Estate Documents": collectively, the Project Mortgage,
the Easement Agreements, the Greenhouse Mortgage Assignment and the Virginia
Power First Refusal Agreement.
"Reference Banks": Barclays Bank PLC, Credit Suisse and Union
Bank.
"Refinancing Indebtedness": Indebtedness incurred by the
Borrower which is permitted by clause (f) of Section 11.1 of the Project Loan
Agreement.
"Refinancing Transaction": as defined in clause (f) of Section
11.1 of the Project Loan Agreement.
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"Refunding Drawing": a drawing on a Bond Letter of Credit on
the applicable Bond L/C Expiration Date, the proceeds of which are to be used to
repay in full the Relevant Bonds or the purchase price of the Relevant Bonds.
"Register": as defined in Section 14.7(c) of the Project Loan
Agreement.
"Registered Institutional Notes": as defined in Section 4.7(a)
of the Project Loan Agreement.
"Reimbursable Expenses": as defined in Section 14.5 of the
Project Loan Agreement.
"Relative Bank Exposure": on any day, the number obtained by
dividing (i) the Total Bank Exposure on such date by (ii) the sum of (x) the
Total Bank Project Loan Commitments (calculated based on the assumption that all
of the Bonds have been issued prior to such day and that the Total Bank Project
Loan Commitments have been reduced by a corresponding amount in accordance with
Section 2.4 of the Project Loan Agreement), (y) the Total VP Letter of Credit
Commitments and (z) the Total Bond Letter of Credit Commitments.
"Relative Institution Exposure": on any day, the number
obtained by dividing (x) the aggregate principal amount of Institutional Loans
then outstanding by (b) the Total Institutional Commitments then in effect.
"Release of Hazardous Materials": the release of any Hazardous
Material into or upon or under any land or water or air, or otherwise into the
environment, including, without limitation, by means of burial, disposal,
discharge, emission, injection, spillage, leakage, seepage, leaching, dumping,
pumping, pouring, escaping, emptying, placement and the like.
"Relevant Bonds": with respect to any Bond Letter of Credit,
the Bonds which are or are proposed to be supported by such Bond Letter of
Credit.
"Reorganization": with respect to any Multiemployer Plan, the
condition that such Plan is in reorganization within the meaning of Section 4241
of ERISA.
"Reportable Event": any of the events set forth in Section
4043(b) of ERISA, other than those events as to which the thirty day notice
period is waived under subsections .13, .14, .16, .18, .19 or .20 of PBGC Reg.
Section 2615.
"Repair and Maintenance Account": the Repair and Maintenance
Account established and maintained pursuant to the Security Deposit Agreement.
"Reporting Party": the Borrower, the Greenhouse Operator, the
Coal Supplier, Arch, CSX and, prior to the Equity Funding Termination Date,
Southern.
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"Required Completion Date Reserve Deposits": the sum of (i)
with respect to the Debt Service Reserve Account, the Required Initial Debt
Service Reserve Deposit Amount (less, if a Debt Service Letter of Credit shall
be outstanding on the Completion Date, the aggregate amount available to be
drawn under such Debt Service Letter of Credit on such date), plus (ii) with
respect to the Repair and Maintenance Account, the Initial Repair and
Maintenance Reserve Amount, plus (iii) with respect to the Final Completion
Escrow Account, the amount required to be deposited into the Final Completion
Escrow Account on the Completion Date pursuant to clause (d) of the definition
of "Completion Date", plus (iv) with respect to the Project Control Account, the
amount if any, by which $3,500,000 exceeds the amount expended by the Borrower
prior to the Completion Date for initial working capital purposes plus (v) with
respect to the Distributions Account, $13,700,000, to be used to make the
Contingent Distribution.
"Required Debt Service Reserve Amount": as of any date of
determination, the projected Debt Service for the six months next succeeding
such date.
"Required Initial Debt Service Reserve Deposit Amount":
$8,250,000, or such lesser amount as shall have been agreed to in writing by the
Majority Lenders and the Borrower prior to the Completion Date.
"Required Project Control Reserve Amount": as defined in
Section 1.2 of the Security Deposit Agreement.
"Required Repair and Maintenance Reserve Amount": as defined
in Section 1.2 of the Security Deposit Agreement.
"Required Secured Parties": at any time, each of (i) Banks,
Institutions, Unsupported Bondholders (acting through the relevant Bond Trustee)
and Accelerated Interest Rate Hedging Counterparties (as defined below) the
Senior Creditor Percentages of which at such time aggregate at least 66 2/3%;
and (ii) Banks and Accelerated Interest Rate Hedging Counterparties the Bank
Commitment Percentages of which at such time aggregate at least 66 2/3% and
(iii) Institutions and Unsupported Bondholders (acting through the relevant Bond
Trustee) the Investor Percentages of which at such time aggregate at least 66
2/3%; provided, however, that if at any time on or after the first day of the
fourteenth year following the Commercial Operations Date, the Senior Creditor
Percentage of either the Banks and the Accelerated Interest Rate Hedging
Counterparties or the Institutions is less than 20% of the Total Senior Creditor
Exposure (as defined in the definition of "Senior Creditor Percentage"), then
"Required Secured Parties" shall be determined without reference to clause (ii)
or (iii) above; provided, further, that on and after the date on which the Bank
Loans and all amounts payable to the Banks, the Issuing Bank and the
Administrative Agent under the Loan Documents have been paid in full, no Letter
of Credit is outstanding and all of the Commitments of the Banks and the
Interest Rate Hedging Agreements have been terminated, "Required Secured
Parties" shall be determined without reference to clause (ii) above and clause
(i) above shall be calculated without reference to "Banks" or "Accelerated
Interest Rate Hedging Counterparties". For purposes of this definition,
"Accelerated Interest Rate Hedging Counterparties" shall include each
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45
Interest Rate Hedging Counterparty party to an Interest Rate Hedging Agreement
the Swap Termination Obligations in respect of which have become payable
following an unwind of all or a portion of such Interest Rate Hedging Agreement.
"Requirements of Law": as to any Person, the Certificate of
Incorporation and By-Laws or the partnership agreement or other organizational
or governing documents of such Person, and any law, treaty, rule or regulation
or determination of an arbitrator or a court or other Government 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.
"Requisite Partnership Interest": with respect to any Person,
both (i) 50% of all general partnership interests and (ii) Partnership Interests
entitling such Person to receive at least 35% of the profits and losses of the
Borrower.
"Requisition Proceeds": any and all payments (in any form
whatsoever) made or due and payable from time to time in connection with any
requisition, confiscation, condemnation, seizure or forfeiture of all or any
part of the Project by any Government Authority (or any person acting under
color of any Government Authority).
"Reserved Amounts": on any date of calculation, the sum of:
(a) the amount by which the Required Initial Debt Service
Reserve Deposit Amount exceeds the sum of (i) the amount, if any, on
deposit in the Debt Service Reserve Account and (ii) if a Debt Service
Letter of Credit shall then be outstanding, the aggregate amount
available to be drawn under such Debt Service Letter of Credit on such
date; and
(b) the amount by which the Initial Repair and Maintenance
Reserve Amount exceeds the amount, if any, on deposit in the Repair and
Maintenance Account; and
(c) prior to the later to occur of Substantial Completion and
completion of the Unit Reliability Test (as defined in the Facility
Construction Contract), $6,000,000; and thereafter, the amount by which
the Heat Rate Bonus payable to the Facility Contractor exceeds the
amount of such Heat Rate Bonus paid to the Facility Contractor on or
prior to such date.
"Responsible Officer": (i) with respect to any Person other
than the Borrower, the president, vice president, treasurer or assistant
treasurer of such Person, and (ii) with respect to the Borrower, its chief
executive officer, its chief financial officer or any Responsible Officer of a
General Partner.
"Scheduled Senior Debt Service Payment Date": each date
occurring after the Completion Date on which (a) regularly scheduled
installments of principal, interest and/or fees are due on any Senior Debt
(other than the Interest Rate Hedging Agreements) or (b) payment of Swap
Obligations specified in clause (a) of the definition thereof which do not
constitute Swap
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Terminations Obligations are due pursuant to any Interest Rate Hedging Agreement
to which a Secured Counterparty is a party. For purposes of clause (a) of the
preceding sentence, each Bank Loan Interest Payment Date shall be deemed to be a
regularly scheduled interest payment date with respect to Bank Loans.
"Secured Bond Trustees": the one or more Bond Trustees which
become parties to the Security Deposit Agreement by executing a Security Deposit
Agreement Supplement in accordance with Section 9.4 of the Security Deposit
Agreement.
"Secured Counterparties": the one or more Co-Agents or
Affiliates thereof, as parties to the Interest Rate Hedging Agreements, which
are or become parties to an Interest Rate Hedging Agreement.
"Secured Obligations": the principal of and interest on the
Loans and the Unsupported Bonds (including any interest accruing after the
filing of a petition initiating any proceeding in bankruptcy, insolvency or like
proceeding with respect to the Borrower whether or not the claim for such
interest is allowed in such proceeding), the L/C Reimbursement Obligations, all
amounts payable from time to time under any Interest Rate Hedging Transaction
entered into with an Interest Rate Hedging Counterparty described in clause (i)
of the definition thereof, and all other indebtedness, obligations and
liabilities of the Borrower to the Secured Parties, whether direct or indirect,
absolute or contingent, due or to become due, or now or hereafter existing,
which may arise under, out of, or in connection with any of the Loan Documents
or the Bond Documents relating to any Unsupported Bonds (as any of the Loan
Documents or such Bond Documents may from time to time be amended, modified,
substituted, extended or renewed) and any other document made, delivered or
given in connection therewith, whether on account of principal, interest,
premiums, reimbursement obligations, fees, indemnities, costs, expenses or
otherwise, and all deferrals, renewals, extensions and refinancings of any
indebtedness, obligations or liabilities referred to above.
"Secured Parties": collectively, the Security Agent, the
Administrative Agent, the Banks, the Issuing Bank, the Institutions, the
Interest Rate Hedging Counterparties described in clause (i) of the definition
thereof and each Secured Bond Trustee.
"Security Agent": Credit Suisse, in its capacity as security
agent for the Secured Parties under the Security Deposit Agreement, or any
successor security agent appointed pursuant to Section 2.6 of the Security
Deposit Agreement.
"Security Deposit Agreement": the Security Deposit and
Intercreditor Agreement to be entered into among the Borrower, the Secured
Parties and the Security Agent, substantially in the form of Exhibit D to the
Project Loan Agreement, as amended, supplemented or otherwise modified from time
to time in accordance with the terms thereof.
"Security Deposit Agreement Supplement": as defined in Section
9.4(a) of the Security Deposit Agreement.
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"Security Deposit Collateral": as defined in Section 1.2 of
the Security Deposit Agreement.
"Security Documents": collectively, the Security Deposit
Agreement, the Project Mortgage, the General Partner Interest Pledge Agreements,
the Limited Partner Interest Pledge Agreements, the Greenhouse Mortgage
Assignment, the Borrower Stock Assignment, the Consents to Assignment, the
Southern Equity Contribution Agreement, each Bond Pledge Agreement and any other
agreement or instrument entered into by the Borrower or any other Person which
secures payment of all or any portion of the Secured Obligations.
"SEI": Southern Electric International, Inc., a Delaware
corporation.
"SEI Birchwood": SEI Birchwood, Inc., a Delaware corporation.
"SEI Coal Procurement Letter": the letter dated May 18, 1994
from SEI to the Borrower, as amended, supplemented or otherwise modified from
time to time in accordance with Section 11.12(a) of the Project Loan Agreement.
"Senior Creditor Percentage": at any time, either:
(a) for purposes of the definition of "Majority Lenders":
(i) with respect to any Bank, a fraction (expressed as a
percentage), the numerator of which is the sum of (i) the aggregate
unpaid principal amount of Bank Loans then outstanding, (ii) the unused
portion of the Total Bank Loan Commitments then in effect and (iii) the
Letter of Credit Exposure at such time, and the denominator of which is
the Total Senior Creditor Exposure;
(ii) with respect to any Institution, a fraction (expressed as a
percentage), the numerator of which is the sum of (i) the aggregate
unpaid principal amount of Institutional Loans then outstanding and
(ii) the unused portion of the Total Institutional Commitments, and the
denominator of which is the Total Senior Creditor Exposure; and
(iii) with respect to the Unsupported Bondholders, a fraction
(expressed as a percentage), the numerator of which is the aggregate
unpaid principal amount of Unsupported Bonds then outstanding, and the
denominator of which is the Total Senior Creditor Exposure; or
(b) for purposes of the definition of "Required Secured
Parties":
(i) with respect to any Bank, a fraction (expressed as a
percentage), the numerator of which is the sum of (i) the aggregate
unpaid principal amount of Bank Loans then outstanding, (ii) the unused
portion of the Total Bank Loan Commitments then in effect and (iii) the
Letter of Credit Exposure at such time, and the denominator of which is
the Total Senior Creditor Exposure;
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48
(ii) with respect to any Institution, a fraction (expressed as a
percentage), the numerator of which is the sum of (i) the aggregate
unpaid principal amount of Institutional Loans then outstanding and
(ii) the unused portion of the Total Institutional Commitments, and the
denominator of which is the Total Senior Creditor Exposure;
(iii) with respect to the Unsupported Bondholders, a fraction
(expressed as a percentage), the numerator of which is the aggregate
unpaid principal amount of Unsupported Bonds then outstanding, and the
denominator of which is the Total Senior Creditor Exposure; and
(iv) with respect to any Interest Rate Hedging Counterparty, a
fraction (expressed as a percentage), the numerator of which is the
aggregate amount of Swap Termination Obligations calculated as of such
day, and the denominator of which is the Total Senior Creditor
Exposure.
As used in this definition, "Total Senior Creditor Exposure" means, at any time,
the sum of (i) the aggregate unpaid principal amount of Loans then outstanding,
(ii) the unused portion of the Total Loan Commitments then in effect, (iii) the
Letter of Credit Exposure at such time, (iv) the aggregate unpaid principal
amount of Unsupported Bonds then outstanding and, for purposes of the definition
of "Required Secured Parties" only, (v) the aggregate amount of Swap Termination
Obligations calculated as of such day.
"Senior Debt": collectively, Indebtedness of the Borrower
incurred under or pursuant to (a) the Bank Loan Facility, (b) the Institutional
Loan Facility, (c) the VP Letter of Credit Facility, (d) the Bond Letter of
Credit Facility, (e) the Bonds and (f) Interest Rate Hedging Agreements.
"Senior Debt Agreements": the Loan Documents, the Bond
Documents executed in connection with the Bonds issued from time to time in
accordance with Section 10.25 of the Project Loan Agreement, the Interest Rate
Hedging Agreements and each other agreement evidencing any Senior Debt or
pursuant to which any Senior Debt is incurred.
"Senior Debt to Capital Ratio": as of the Completion Date, the
ratio of (a) the sum of (i) the aggregate principal amount of outstanding Loans,
(ii) the Letter of Credit Exposure and (iii) the aggregate principal amount of
outstanding Unsupported Bonds, in each case on the Completion Date, to (b) the
sum of (x) the Total Equity Contribution Amount and (y) (A) the aggregate
principal amount of Equity Funding Loans outstanding on the Completion Date
which are paid by Southern pursuant to the Equity Funding Guarantee, or (B) the
aggregate principal amount of any Equity Funding Loans repaid by Southern
pursuant to the Equity Funding Guarantee prior to the Completion Date, provided
that concurrently therewith the Equity Funding Commitments shall have been
terminated.
"SEWG": Southern Electric Wholesale Generators, Inc., a
Delaware corporation.
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"Single Employer Plan": any Plan which is covered by Title IV
of ERISA, but which is not a Multiemployer Plan.
"Significant Project Participants": the Persons from time to
time party to the Principal Project Documents.
"Site": the land located in King George County, Virginia which
is described in Schedule 5 to the Project Loan Agreement, on which the Facility
and the Greenhouse are to be located.
"Sixth Amendment": the Sixth Amendment, dated as of September
18, 1995, to the Project Loan Agreement, among the Borrower, the Lenders and the
Administrative Agent.
"Sixth Amendment Effective Date": the date on which the Sixth
Amendment becomes effective in accordance with Article II(1) of the Sixth
Amendment.
"Southern": The Southern Company, a Delaware corporation.
"Southern Documents": collectively, the Equity Funding
Guarantee, the Southern Equity Contribution Agreement and the Construction
Contract Guarantees.
"Southern Equity Contribution Agreement": the Equity
Contribution Agreement to be entered into by Southern in favor of the Borrower
and the Security Agent, in substantially the form of Exhibit G of the Project
Loan Agreement, as amended, supplemented or otherwise modified from time to time
in accordance with Section 11.11(a) of the Project Loan Agreement.
"Southern Equity Contribution Collateral": the Equity
Contribution Amount payable pursuant to Section 2.1 of the Southern Equity
Contribution Agreement and all other claims, rights, powers, privileges,
interests and remedies referred to in clause (ii) of Section 3.1 thereof.
"Special Payment Account": the Special Payment Account
established and maintained pursuant to the Security Deposit Agreement.
"Special Senior Debt Prepayment Date": each date on which (a)
mandatory or optional prepayments of principal of the Bank Loans and/or
Institutional Loans are to be made pursuant to Section 7.3, 7.4 or 10.31 of the
Project Loan Agreement, (b) an early unwind of all or a portion of any Interest
Rate Hedging Agreement is to be effected or (c) mandatory or optional
prepayments of principal of the Bonds are to be made pursuant to the relevant
Bond Indenture.
"Specified Default": any Default under Section 12.1(a),
12.1(b) or 12.1(e) of the Project Loan Agreement.
"Standard & Poor's": Standard & Poor's Ratings Services.
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"Steam Sales Agreement": the Steam Sales Agreement dated as of
May 18, 1994 between the Borrower and the Greenhouse Owner, as amended,
supplemented or otherwise modified from time to time in accordance with Section
11.12(a) of the Project Loan Agreement.
"Stormwater and Surface Water Runoff Easement Agreement": the
Easement Agreement dated as of April 22, 1994 by and between the Greenhouse
Operator and the Borrower, as amended, supplemented or otherwise modified from
time to time in accordance with Section 11.12(a) to the Project Loan Agreement.
"Subsequent Funding Period": the period from and including the
Closing Date to and including the Institutional Commitment Termination Date.
"Subsidiary": as to any Person, a corporation, partnership or
other entity of which shares of stock or other ownership interests having
ordinary voting power (other than stock or such other ownership interests having
such power only by reason of the happening of a contingency) to elect a majority
of the board of directors or other managers of such corporation, partnership or
other entity are at the time owned, or the management of which is otherwise
controlled, directly or indirectly through one or more intermediaries, or both,
by such Person.
"Substantial Completion": (a) with respect to the Facility, as
defined in Section 1.1 of the Facility Construction Contract, and (b) with
respect to the Greenhouse, as defined in Section 1.1 of the Greenhouse
Construction Contract.
"Substitute VP Letter of Credit": an irrevocable direct pay
letter of credit substantially in the form of Exhibit C-2 to the Project Loan
Agreement or in a form acceptable to Virginia Power (as evidenced by a written
confirmation from Virginia Power to such effect) to be issued in favor of
Virginia Power by a bank which at all times meets the credit rating requirements
set forth in clause (i) of the definition of "Interest Rate Hedging
Counterparty"; provided that no such letter of credit shall be deemed a
"Substitute VP Letter of Credit" unless (i) if any such letter of credit is
being issued prior to the Bank Loan Final Maturity Date, the Issuing Bank and
the Banks shall have been unwilling to extend the expiration date of the then
outstanding VP Letter of Credit, if any, pursuant to Section 6.7 of the Project
Loan Agreement, and (ii) the reimbursement obligations, if any, of the Borrower
to the issuer of such letter of credit or to any other Person in respect of
draws under such letter of credit shall be unsecured.
"Substitute VP Security": any security arrangement entered
into by the Borrower which meets the requirements of Section 13.3 or 13.5, as
the case may be, of the Power Purchase Agreement and is otherwise acceptable to
Virginia Power (as evidenced by a written confirmation from Virginia Power to
such effect); provided that no such security shall be deemed "Substitute VP
Security" unless (i) if any such security arrangement is entered into prior to
the Bank Loan Final Maturity Date, the Issuing Bank and the Banks shall have
been unwilling to extend the expiration date of the then outstanding VP Letter
of Credit, if any, pursuant to Section 6.7 of the Project Loan Agreement and
(ii) the reimbursement or payment obligations, if any, of the Borrower to the
provider of such security or to any other Person in respect of such security are
unsecured.
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"Swap Obligations": collectively, the payment of (a) all
scheduled amounts payable to the Secured Counterparties by the Borrower, as the
fixed-rate payor, under the Interest Rate Hedging Agreements with Secured
Counterparties (including, without limitation, interest accruing after the date
of any filing by the Borrower of any petition in bankruptcy or the commencement
of any bankruptcy, insolvency or similar proceeding with respect to the
Borrower), net of all scheduled amounts payable to the Borrower by such Secured
Counterparties as floating-rate payors, and (b) all other indebtedness, fees,
indemnities and other amounts payable by the Borrower to the Secured
Counterparties under the Interest Rate Hedging Agreements.
"Swap Termination Obligations": the aggregate amount of Swap
Obligations payable to any Secured Counterparty by the Borrower, as the fixed
rate payor, upon the early unwind of all or a portion of an Interest Rate
Hedging Agreement with such Secured Counterparty, net of all amounts payable to
the Borrower by such Secured Counterparty, as floating-rate payor.
"Taxes": as defined in Section 7.6(a) of the Project Loan
Agreement.
"Term VP Expiration Date": the seventh anniversary of the
Closing Date, or such later date to which the Term VP Expiration Date has been
extended in accordance with Section 6.7 of the Project Loan Agreement.
"Term VP Letter of Credit": the irrevocable direct pay letter
of credit to be issued by the Issuing Bank in favor of Virginia Power on the
Commercial Operations Date pursuant to Section 6.3(a) of the Project Loan
Agreement, substantially in form of Exhibit C-2 to the Project Loan Agreement,
as amended, supplemented or otherwise modified from time to time in accordance
with its terms, and any replacement therefor issued pursuant to Section 6.3(b)
of the Project Loan Agreement.
"Term VP Letter of Credit Disbursement": any payment or
disbursement made by or on behalf of the Issuing Bank under the Term VP Letter
of Credit.
"Term VP Reimbursement Payment": as defined in Section 6.6(a)
of the Project Loan Agreement.
"Title Company": Lawyers Title Insurance Corporation, or such
other title insurance company approved by the Co-Agents and the Institutions to
insure the priority of the Lien of the Project Mortgage.
"Total Available Project Credit": as of any date, the sum of
(a) the unutilized portion of the Total Bank Project Loan Commitments then in
effect, (b) the unutilized portion of the Total Institutional Commitments then
in effect, (c) the unutilized portion of the Equity Funding Commitments then in
effect and (d) the Increased IDC Contribution Amount, if any, contributed by
Southern to the Borrower pursuant to the Southern Equity Contribution Agreement
prior to such date.
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"Total Bank Exposure": on any day, the sum of (a) the
aggregate principal amount of Bank Loans then outstanding and (b) the Letter of
Credit Exposure on such date.
"Total Bank Loan Commitments": at any time, the sum of (i) the
Total Bank Project Loan Commitments then in effect and (ii) the Total Bank L/C
Loan Commitments then in effect; provided that in no event shall the Total Bank
Loan Commitments at any time exceed $215,976,000.
"Total Bank L/C Loan Commitments": at any time, the obligation
of the Banks to make Bank L/C Loans and Bank Liquidity Loans during the Bank
Loan Commitment Period in an aggregate principal amount equal to the excess of
(i) the aggregate stated amount of the Letters of Credit then outstanding over
(ii) the aggregate amount of Letter of Credit Disbursements, the L/C
Reimbursement Payment in respect of which has previously been paid by the
Borrower other than through a Bank L/C Loan or a Bank Liquidity Loan.
"Total Bank Project Loan Commitments": the obligation of the
Banks to make Bank Project Loans to the Borrower under the Project Loan
Agreement during the Bank Loan Commitment Period in an aggregate principal
amount equal to $208,191,000, as such amount may be reduced from time to time
pursuant to Section 2.3 and/or 2.4 of the Project Loan Agreement.
"Total Bond Letter of Credit Committments": $51,000,000.
"Total Equity Contribution Amount": as defined in Section 1.2
of the Southern Equity Contribution Agreement.
"Total Institutional Commitments": the obligation of the
Institutions to make Institutional Loans to the Borrower under the Project Loan
Agreement during the Institutional Commitment Period in an aggregate amount
equal to $135,000,000, as such amount may be reduced from time to time pursuant
to Section 2.3 of the Project Loan Agreement.
"Total Lender Exposure": as defined in Section 14.10(b) of the
Project Loan Agreement.
"Total Loan Commitments": the sum of (i) the Total Bank Loan
Commitments and (ii) the Total Institutional Commitments.
"Total VP Letter of Credit Commitments": $7,272,000.
"True-Up Amount": as defined in Section 14.10(b) of the
Project Loan Agreement.
"True-Up Obligation": the irrevocable and unconditional
obligation of the Banks to purchase undivided participating interests in the
Institutional Loans upon an acceleration of
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such Loans following an Event of Default under the Project Loan Agreement, as
set forth in Section 14.10(b) of the Project Loan Agreement.
"Trust Indenture-Series 1994A": the Trust Indenture by and
between the Industrial Development Authority of King George County, Virginia,
and Bankers Trust Company, as trustee, dated as of October 1, 1994.
"Trust Indenture-Series 1994B": the Trust Indenture by and
between the Industrial Development Authority of King George County, Virginia,
and Bankers Trust Company, as trustee, dated as of December 1, 1994.
"Trust Indenture-Series 1995": the Trust Indenture by and
between the Industrial Development Authority of King George County, Virginia and
Bankers Trust Company, as trustee, dated as of November 1, 1995.
"Trust Indenture-Series 1996A": the Trust Indenture by and
between the Industrial Development Authority of King George County, Virginia,
and Bankers Trust Company, as trustee (the "Trustee"), dated as of April 1,
1996.
"Trust Indenture-Series 1996B": the Trust Indenture by and
between the Industrial Development Authority of King George County, Virginia,
and the party therein named as trustee, pursuant to which the Series 1996B
Bonds, if any, are issued.
"Type": as to any Bank Loan, its nature as a Base Rate Loan, a
Eurodollar Loan or a C/D Rate Loan.
"Uniform Customs": the Uniform Customs and Practice for
Documentary Credits (1994 Revision), International Chamber of Commerce Brochure
No. 500, as the same may be amended from time to time.
"Unsupported Bondholders": holders from time to time of
Unsupported Bonds.
"Unsupported Bonds": Bonds issued pursuant to Section 10.25 of
the Project Loan Agreement which are not or are not proposed to be supported by
a Bond Letter of Credit.
"Virginia Power": Virginia Electric and Power Company, a
Virginia public service corporation.
"Virginia Power First Refusal Agreement": the Right of First
Refusal Agreement dated as of 23 between the Borrower and Virginia Power.
"Virginia Power Purchase Proceeds": any and all payments made
by Virginia Power in connection with its exercise of its purchase option
pursuant to Section 5.6 of the Power Purchase Agreement.
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"VP Cash Collateral Proceeds": as defined in Section 1.2 of
the Security Deposit Agreement.
"VP Letter of Credit Facility": the letter of credit facility
provided by the Issuing Bank and the Banks to the Borrower pursuant to Section 6
of the Project Loan Agreement, under which the Issuing Bank agrees to issue the
VP Letters of Credit in accordance with the terms thereof.
"VP Letters of Credit": collectively, the Construction VP
Letter of Credit and the Term VP Letter of Credit.
"VP Reimbursement Obligations": as defined in Section 6.6(b)
of the Project Loan Agreement.
"VP Reimbursement Payments": at any time, the sum of (i) the
Construction VP Reimbursement Payments and (ii) the Term VP Reimbursement
Payments.
"Water Line and Pumping Station Easement Agreement": the Water
Line and Pumping Station Easement Agreement dated September 22, 1992 between SEI
Birchwood and Frank B. Taylor and Laura Stuart Taylor, as amended by that
certain Easement Amendment dated November 30, 1993 among Frank B. Taylor and
Laura Stuart Taylor, and SEI Birchwood and Curtis Adrian Gilbert and Ethel S.
Gilbert, and as further amended by that certain Second Amendment to Easement,
dated March 18, 1994 among Frank B. Taylor and Laura Stuart Taylor and the
Borrower, as the same may be further amended, supplemented or otherwise modified
in accordance with Section 11.12(a) to the Project Loan Agreement.
<PAGE> 1
EXHIBIT 10.2
=============================================================
COMPOSITE
(through 4/96)
of
SECURITY DEPOSIT AND INTERCREDITOR AGREEMENT
among
BIRCHWOOD POWER PARTNERS, L.P.
and
THE SECURED PARTIES NAMED HEREIN
and
CREDIT SUISSE,
as Security Agent
Dated as of May 18, 1994
=============================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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<S> <C> <C>
ARTICLE I
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.1 Certain Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.2 Other Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.3 Other Definitional Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE II
The Security Agent . . . . . . . . . . . . . . . . . . . . . . . 9
Section 2.1 Appointment of the Security Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 2.2 Exculpatory Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 2.3 Delegation of Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 2.4 Reliance by Security Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 2.5 Limitations on Duties of Security Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 2.6 Resignation and Removal of the Security Agent . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 2.7 Treatment of Registered Holder, Payee or Indorsee by Security Agent . . . . . . . . . . . . . . 13
Section 2.8 Appointment of Separate or Co-Security Agent . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 2.9 Successor Security Agent by Merger, Consolidation, Etc. . . . . . . . . . . . . . . . . . . . 14
Section 2.10 Eligibility of Security Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE III
Establishment of Accounts;
Grant of Security Interests . . . . . . . . . . . . . . . . . . . . . 15
Section 3.1 Establishment of Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 3.2 Security Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE IV
Deposits into Accounts; Investment . . . . . . . . . . . . . . . . . . . 17
Section 4.1 Construction Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 4.2 Institutional Loan Proceeds Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 4.3 Required Deposits on the Completion Date . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 4.4 Project Control Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 4.5 Special Payment Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 4.6 Greenhouse Reserve Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 4.7 Bond Transfer Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 4.8 Deposit Irrevocable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 4.9 Statements of Amounts Held in Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 4.10 Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
</TABLE>
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<TABLE>
<CAPTION>
ARTICLE V
Page
<S> <C> <C>
Transfers From Accounts . . . . . . . . . . . . . . . . . . . . . . 21
Section 5.1 Institutional Loan Proceeds Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 5.2 Construction Account; Bond Transfer Accounts . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 5.3 Project Control Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 5.4 Repair and Maintenance Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 5.5 Additional Collateral Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 5.6 Debt Service Reserve Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 5.7 Special Payment Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 5.8 Distributions Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 5.9 Final Completion Escrow Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 5.10 Accrued Interest Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 5.11 Insurance and Property Tax Reserve Account . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 5.12 Greenhouse Reserve Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 5.13 Delivery of Request Letters, Disbursement Requests . . . . . . . . . . . . . . . . . . . . . . 34
Section 5.14 Shortfall Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 5.15 Transfers from Certain Accounts During a Default Period . . . . . . . . . . . . . . . . . . . 35
Section 5.16 The Security Agent's Calculations; Determinations . . . . . . . . . . . . . . . . . . . . . . 39
Section 5.17 Insufficient Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 5.18 Concerning Section 10.31 of the Project Loan Agreement . . . . . . . . . . . . . . . . . . . . 40
ARTICLE VI
Agreements with the Security Agent . . . . . . . . . . . . . . . . . . . 40
Section 6.1 Delivery of Senior Debt Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 6.2 Payment by Security Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 6.3 Information Provided to the Security Agent . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 6.4 Notice of Amounts Payable Under Financing Documents . . . . . . . . . . . . . . . . . . . . . . 42
Section 6.5 Information Accompanying Amounts Delivered for Deposit into Accounts . . . . . . . . . . . . . 43
Section 6.6 Certificate of Secured Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 6.7 Compensation and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 6.8 Stamp and Other Similar Taxes; Filing Fees, Excise Taxes, Etc. . . . . . . . . . . . . . . . . 44
Section 6.9 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 6.10 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 6.11 Application by Secured Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE VII
Default Period . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 7.1 Default and Acceleration Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 7.2 General Authority of the Security Agent over the Collateral . . . . . . . . . . . . . . . . . . 46
Section 7.3 Right to Initiate Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
</TABLE>
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<TABLE>
Page
<S> <C> <C>
Section 7.4 Exercise of Powers; Instructions of Required Secured Parties . . . . . . . . . . . . . . . . . 46
Section 7.5 Remedies Not Exclusive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 7.6 Waiver and Estoppel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 7.7 Limitation on Security Agent's Duty in Respect of Collateral . . . . . . . . . . . . . . . . . 48
Section 7.8 Limitation by Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 7.9 Future Right, Title and Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
ARTICLE VIII
Certain Agreements of the Secured Parties . . . . . . . . . . . . . . . . . 49
Section 8.1 Secured Obligations Pari Passu . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 8.2 Pro Rata Sharing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 8.3 Turnover of Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 8.4 No Bankruptcy Filings or Foreclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 8.5 No Loans; No Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 8.6 Security Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 8.7 Intercreditor Agreement Regarding Amendment and Waiver of Senior Debt Agreements . . . . . . . 50
Section 8.8 Voting Rights Following True-Up . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 8.9 Bond Trustee and Bondholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 8.10 Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
ARTICLE IX
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 9.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 9.2 No Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 9.3 Amendments, Supplements and Waivers of this Agreement . . . . . . . . . . . . . . . . . . . . . 53
Section 9.4 Additional Secured Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 9.5 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 9.6 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 9.7 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 9.8 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 9.9 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 9.10 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 9.11 Submission To Jurisdiction; Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 9.12 WAIVERS OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
</TABLE>
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<PAGE> 5
ANNEXES:
A Definitions
SCHEDULE:
1 Required Repair and Maintenance Reserve Amount
EXHIBITS:
A Form of Security Deposit Agreement Supplement
B Form of Request Letter
C Form of Request for Distributions
D Form of Disbursement Request
E Form of Construction Fund Requisition - Series 1994A
-iv-
<PAGE> 6
SECURITY DEPOSIT AND INTERCREDITOR AGREEMENT, dated as of May 18,
1994, among (i) BIRCHWOOD POWER PARTNERS, L.P., a Delaware limited partnership
(the "Borrower"), (ii) BANQUE PARIBAS, NEW YORK BRANCH, BARCLAYS BANK PLC,
CREDIT SUISSE and UNION BANK OF CALIFORNIA and each other bank or financial
institution which becomes a party to this Agreement as a "Bank" by executing a
Bank Transfer Supplement (as hereinafter defined) in accordance with Section
9.4 (the "Banks"), (iii) JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY, ALLSTATE
INSURANCE COMPANY and NEW YORK LIFE INSURANCE COMPANY, the other financial
institutions or institutional investors parties to this Agreement and
identified on the signature pages hereof as an "Institution" and each other
institution which becomes a party to this Agreement as an "Institution" by
executing an Institutional Transfer Supplement (as hereinafter defined) in
accordance with Section 9.4 (the "Institutions"), (iv) CREDIT SUISSE, and, when
the context requires, CREDIT SUISSE, NEW YORK BRANCH, as issuing bank under the
Project Loan Agreement referred to herein (in such capacity, the "Issuing
Bank"), (v) CREDIT SUISSE, as administrative agent for the Banks (in such
capacity, together with its successors and assigns in such capacity, the
"Administrative Agent") under the Loan Documents referred to herein, (vi) the
Banks parties to Interest Rate Hedging Agreements (as hereinafter defined) and
this Agreement and identified on the signature pages hereof as a "Secured
Counterparty" and each other Bank that becomes a party to this Agreement as a
"Secured Counterparty" by executing a Security Deposit Agreement Supplement (as
hereinafter defined) in accordance with Section 9.4 (in such capacity, the
"Secured Counterparties"), (vii) any Bond Trustee (as hereinafter defined) that
becomes a party to this Agreement by executing a Security Deposit Agreement
Supplement in accordance with Section 9.4 (a "Secured Bond Trustee") and (viii)
CREDIT SUISSE, as security agent for the Secured Parties referred to herein (in
such capacity, the "Security Agent").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Borrower desires to acquire, construct, own and
operate the Project, consisting of a nominal 220 MW pulverized coal-fired
cogeneration facility to be located in King George County, Virginia;
WHEREAS, in order to obtain construction and permanent
financing for the Project, the Borrower has, among other things, entered into
the Project Loan Agreement, pursuant to which the Banks and the Institutions
have agreed to make loans to, and the Issuing Bank has agreed to issue letters
of credit for the account of, the Borrower;
WHEREAS, the Borrower has also entered into separate Interest
Rate Hedging Agreements with the Secured Counterparties in order to mitigate
the risk of interest rate fluctuations in respect of a portion of the loans to
be made under the Project Loan Agreement;
WHEREAS, it is a condition precedent for the Banks, the
Issuing Bank and the Institutions to make loans and other extensions of credit
to the Borrower under the Project Loan Agreement, and for the Secured
Counterparties to permit the maturity of the Interest Rate Hedging Agreements
to be approximately equal to the loans under the Project Loan Agreement, that
the parties hereto enter into this Agreement; and
<PAGE> 7
2
WHEREAS, the Banks, the Institutions, the Issuing Bank, the
Secured Counterparties, any Secured Bond Trustee, the Administrative Agent and
the Security Agent are herein collectively referred to as the "Secured
Parties".
NOW, THEREFORE, in consideration of the premises, and of the
mutual covenants and agreements herein contained and other good and valuable
consideration, receipt of which is hereby acknowledged, the parties hereto
hereby agree as follows:
ARTICLE I
Definitions
-----------
Section 1.1 Certain Defined Terms. Capitalized terms used
herein and not otherwise defined herein shall have the meanings assigned to
them in Annex A.
Section 1.2 Other Defined Terms. As used herein, the
following terms shall have the following meanings:
"Acceleration Notice": a written notice delivered to the
Borrower and the Security Agent during a Default Period (a) by the
Administrative Agent or the Majority Banks pursuant to paragraph (2)
of Section 12.2 of the Project Loan Agreement, declaring the Bank
Notes to be immediately due and payable prior to the stated maturity
thereof, (b) by the Majority Institutions pursuant to paragraph (3) of
Section 12.2 of the Project Loan Agreement, declaring the
Institutional Notes to be immediately due and payable prior to the
stated maturity thereof, or (c) by the Required Secured Parties
pursuant to paragraph (4) of Section 12.2 of the Project Loan
Agreement, declaring all of the Notes to be immediately due and
payable. An Acceleration Notice shall be deemed to have been
delivered if an Event of Default specified in clause (i) or (ii) of
Section 12.1(e) of the Project Loan Agreement occurs with respect to
the Borrower.
"Accrued Interest Subaccount": each of (a) the Bank Accrued
Interest Subaccount and (b) the Institutional Accrued Interest
Subaccount.
"Annual O&M Bonus": the annual Operating Heat Rate Bonus
payable to the Facility Operator as provided in Schedule G to the
Operating and Maintenance Agreement.
"Available Debt Service Reserve Deposit Amount": on any
Quarterly Distribution Date, the product of (i) 0.60 and (ii) the
amount of funds remaining on deposit in the Project Control Account on
such Quarterly Distribution Date after all of the transfers on such
date required by clauses first through eighth of Section 5.3(a) have
been made and prior to the making of any transfers on such date
pursuant to clause ninth thereof.
"Bank Accrued Interest Amount": as of any date of
calculation, an amount sufficient to cause the balance of the Bank
Accrued Interest Subaccount to equal the amount of all accrued and
unpaid interest on the Bank Loans on such date (after giving
<PAGE> 8
3
effect to any payments of interest on the Bank Loans on such date and
any transfers of funds from the Bank Accrued Interest Subaccount on
such date).
"Bank Accrued Interest Subaccount": as defined in Section
3.1(a).
"Basic Monthly O&M Fee": the Monthly Base Operations Fee
payable to the Facility Operator on a quarterly basis as provided in
Schedule G to the Operating and Maintenance Agreement.
"Bond Construction Fund Requisitions": a Bond Construction
Fund Requisition-Series 1994A, a Bond Construction Fund
Requisition-Series 1994B, a Bond Construction Fund Requisition-Series
1995, a Bond Construction Fund Requisition-Series 1996A and/or a Bond
Construction Fund Requisition-Series 1996B, as the case may be.
"Bond Construction Fund Requisition - Series 1994A": a
requisition, in substantially the form of Exhibit E hereto, of funds
on deposit in the "Construction Fund" established and identified as
such in the Trust Indenture - Series 1994A.
"Bond Construction Fund Requisition - Series 1994B": a
requisition, in substantially the form of Exhibit B to the Trust
Indenture - Series 1994B, of funds on deposit in the "Construction
Fund" established and identified as such in the Trust Indenture -
Series 1994B.
"Bond Construction Fund Requisition-Series 1995": a
requisition, in substantially the form of Exhibit B to the Trust
Indenture-Series 1995, of funds on deposit in the "Construction Fund"
established and identified as such in the Trust Indenture-Series 1995.
"Bond Construction Fund Requisition-Series 1996A": a
requisition, in substantially the form of the applicable Exhibit to
the Trust Indenture-Series 1996A, of funds on deposit in that certain
Construction Fund established and identified as such in the Trust
Indenture-Series 1996A.
"Bond Construction Fund Requisition-Series 1996B": a
requisition, in substantially the form of the applicable Exhibit to
the Trust Indenture-Series 1996B, of funds on deposit in that certain
Construction Fund established and identified as such in the Trust
Indenture-Series 1996B.
"Bond Transfer Accounts": the Bond Transfer Account-Series
1994A, the Bond Transfer Account-Series 1994B, the Bond Transfer
Account-Series 1995, the Bond Transfer Account-Series 1996A and the
Bond Transfer Account-Series 1996B, established and identified as such
in this Security Deposit Agreement.
"Bond Trustee - Series 1994A": Bankers Trust Company or its
successor as `Trustee' under the Trust Indenture - Series 1994A.
"Bond Trustee - Series 1994B": Bankers Trust Company or its
successor as `Trustee' under the Trust Indenture - Series 1994B.
<PAGE> 9
4
"Bond Trustee-Series 1995": Bankers Trust Company or its
successor as `Trustee' under the Trust Indenture-Series 1995.
"Bond Trustee-Series 1996A": Bankers Trust Company or its
successor as "Trustee" under the Trust Indenture-Series 1996A.
"Bond Trustee-Series 1996B": that certain party identified as
"Trustee," or its successor as "Trustee," under the Trust
Indenture-Series 1996B.
"Construction Account Deposits": as defined in Section 4.1.
"Cure Notice": a written notification delivered to the
Borrower and the Security Agent by the Secured Party or Secured
Parties which previously delivered a Default Notice, stating that an
Event of Default which was the subject of such Default Notice is no
longer continuing.
"Damage Event": any loss or destruction of, or damage to, or
condemnation, confiscation or seizure of, or requisition of title to
or use of, any part of the Project which does not constitute an Event
of Loss.
"Default Notice": a written notification delivered to the
Security Agent by the Borrower or any Secured Party stating that an
Event of Default has occurred and is continuing and describing the
event or condition causing such Event of Default.
"Default Period": the period commencing on the date the
Security Agent receives a Default Notice and ending on the date the
Security Agent receives a Cure Notice or a notice of cancellation
pursuant to Section 7.1(b).
"Delay Damages Subaccount": as defined in Section 3.1(a).
"Delay Damages Proceeds": any and all amounts paid to the
Borrower pursuant to Section 7.2 of the Facility Construction Contract
or Section 9.1 of the Greenhouse Construction Contract.
"Depletion Balance": on any Quarterly Distribution Date
during a Depletion Period, the amount, if any, by which (i) the
aggregate amounts transferred from the Debt Service Reserve Account
pursuant to Section 5.6(a), 5.6(b) or 5.15(c) during such Depletion
Period exceeds (ii) the aggregate amount of any funds transferred into
the Debt Service Reserve Account pursuant to clause ninth of Section
5.3(a) during such Depletion Period plus (or minus) the aggregate
amount of the increase (or decrease) since the previous Quarterly
Distribution Date in the amount then available to be drawn under Debt
Service Letters of Credit established, if any.
"Depletion Period": a period commencing on and including any
date on which there occurs any transfer of funds on deposit in the
Debt Service Reserve Account pursuant to Section 5.6(a), 5.6(b) or
5.15(c), and ending on the first Quarterly Distribution Date
thereafter on which the aggregate amount transferred into the Debt
Service Reserve
<PAGE> 10
5
Account during such period pursuant to clause ninth of Section
5.3(a) equals or exceeds the aggregate amount of funds transferred
from the Debt Service Reserve Account during such period pursuant to
Section 5.6(a), 5.6(b) or 5.15(c); provided that no Depletion Period
may commence while a Depletion Period is in existence.
"Disbursement Date": each (a) Scheduled Senior Debt Service
Payment Date, (b) Monthly Operating Disbursement Date, (c) Quarterly
Distribution Date, (d) L/C Reimbursement Date and (e) Special Senior
Debt Prepayment Date.
"Disbursement Request": each certificate from time to time
delivered by a Responsible Officer of the Borrower to the Security
Agent requesting the release of funds from the Institutional Loan
Proceeds Account or Construction Account to pay Project Costs, Bank
Project Loans and/or Equity Funding Loans, each such certificate to be
substantially in the form of Exhibit D.
"Excess Construction Account Deposits": as defined in Section
5.2(a).
"Greenhouse Letter of Credit": the "Sublessee's Letter of
Credit" under the Greenhouse Loan Agreement.
"Greenhouse Reserve Account Cash Deposits": as defined in
Section 4.6.
"Greenhouse Reserve Withdrawal Event": any transfer of funds
on deposit in the Greenhouse Reserve Account pursuant to Section 5.12.
"holder": (a) with respect to each Registered Institutional
Note, the Institution in whose name such Registered Institutional Note
is registered in the Institutional Note Register, as notified to the
Security Agent by the relevant Institution pursuant to Section 6.3 or
6.4 or, if not inconsistent therewith, the Borrower pursuant to
Section 4.7(d) of the Project Loan Agreement; or (b) with respect to
each other Institutional Note, the holder thereof from time to time,
as notified by the relevant Institution to the Security Agent pursuant
to Section 6.3 or 6.4.
"Increased IDC Contribution Proceeds": any and all proceeds
received by the Borrower of the Contingent Increased IDC Contribution
payable pursuant to the Southern Equity Contribution Agreement.
"Institutional Accrued Interest Amount": as of any date of
calculation, an amount sufficient to cause the balance of the
Institutional Accrued Interest Subaccount to equal the amount of all
accrued and unpaid interest on the Institutional Notes on such date
(after giving effect to any payments of interest on the Institutional
Notes on such date and any transfers of funds from the Institutional
Accrued Interest Subaccount on such date).
"Institutional Interest Subaccount": as defined in Section
3.1(a).
"Institutional Loan Proceeds Account Deposits": as defined in
Section 4.2.
<PAGE> 11
6
"L/C Cash Collateral Proceeds": any and all payments made or
due and payable by the Borrower, as cash collateral, pursuant to
clause (ii)(y) of Section 7.3(a) or 7.3(d) of the Project Loan
Agreement following the occurrence of an Event of Loss or a
termination of the Power Purchase Agreement by Virginia Power.
"L/C Cash Collateral Subaccount": as defined in Section
3.1(a).
"Major Maintenance Expenses": all costs, other than
administrative costs and costs incurred on an annual basis in
connection with the normal maintenance of the Facility, incurred by
the Borrower for any overhaul of, or major maintenance procedure for,
the Facility or any part thereof which requires significant
disassembly or shutdown of the Facility and which are incurred
pursuant to manufacturers' guidelines or recommendations, engineering
or operating considerations or the requirements of any applicable
Governmental Approval (excluding any such costs that are payable by
other Persons under warranty or similar agreements or insurance
policies).
"Maximum Debt Service Reserve Deposit Amount": on any
Quarterly Distribution Date, the sum of (i) the Remaining Initial Debt
Service Reserve Shortfall, if any, and (ii) the Available Debt Service
Reserve Deposit Amount; provided that if a Depletion Period shall be
in existence, the Maximum Debt Service Reserve Deposit Amount on such
Quarterly Distribution Date shall be increased by the amount of the
Depletion Balance on such Quarterly Distribution Date.
"Monthly Operating Disbursement Date": the last Business Day
of any month occurring after the Commercial Operations Date.
"Non-Restoration Event": any condemnation, confiscation or
acquisition of, or acquisition of title to or use of, any portion of
the Site by any Governmental Authority which is not necessary in
connection with the construction, use, ownership or operation (present
or future) of the Project or the Greenhouse in accordance with the
applicable provisions of the Project Documents and in compliance with
all Requirements of Law, as determined by the Borrower in good faith
and confirmed by the Administrative Agent and Majority Institutions
(after consultation with the Independent Engineer).
"Non-Restoration Subaccount": as defined in Section 3.1(a).
"Notice of Action": as defined in Section 7.4(b).
"Prepayment Subaccount": as defined in Section 3.1(a).
"Post-Quarterly Calculation Date Deposits": on any Quarterly
Distribution Date, the collective reference to all funds deposited
into, or transferred to, the Project Control Account (including
without limitation pursuant to Section 4.4) during the period from and
excluding the immediately preceding Quarterly Calculation Date to and
including such Quarterly Distribution Date.
"Project Control Account Deposits": as defined in Section
4.4.
<PAGE> 12
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"Remaining Initial Debt Service Reserve Shortfall": on any
Quarterly Distribution Date, the amount by which the sum of (i) the
Required Initial Debt Service Reserve Deposit Amount and (ii)
$3,000,000 exceeds the aggregate amount deposited into the Debt
Service Reserve Account on the Completion Date pursuant to Section 4.1
or transferred into the Debt Service Reserve Account on any prior
Quarterly Distribution Date (if any) following the Completion Date
pursuant to Section 5.3(a).
"Request Letter": each letter from time to time delivered by
a Responsible Officer of the Borrower to the Security Agent requesting
the transfer and/or release of funds from one or more Accounts to or
on behalf of the Borrower in accordance with Article V, each such
letter to be substantially in the form of Exhibit B or in such other
form acceptable to the Borrower and the Security Agent.
"Required Project Control Reserve Amount": $2,000,000,
provided that such amount shall be increased (or decreased) on January
1 of each year by the percentage change in the GNP Index Multiplier
for the previous calendar year (but in no event shall such amount be
less than $2,000,000).
"Required Repair and Maintenance Reserve Amount": for each
Quarterly Distribution Date, the amount listed on Schedule 1 opposite
the year following the Commercial Operations Date in which such date
occurs, as such Schedule 1 may be adjusted from time to time by the
Borrower (provided that the Independent Engineer shall have confirmed
the appropriateness of such adjustment) or by the Administrative Agent
and the Majority Institutions (after consultation with the Independent
Engineer and the Borrower), to increase and/or decrease all or any of
the amounts set forth therein, based on a material change in facts or
circumstances from those on which such Schedule 1 was prepared, to
more accurately reflect the amounts and expected dates of incurrence
of the Major Maintenance Expenses expected to be incurred in
connection with the periodic overhaul of, or major maintenance
procedures for, the Facility.
"Restoration Subaccount": as defined in Section 3.1(a).
"Restorations": with respect to any Damage Event, the
restoration, repair, rebuilding or replacement of the affected portion
of the Project to substantially the same condition as prior to the
occurrence of such Damage Event.
"Security Deposit Agreement Supplement": as defined in
Section 9.4(a).
"Security Deposit Collateral": the Accounts, each Debt Service
Letter of Credit issued and outstanding from time to time and all
cash, other instruments, investments and securities on deposit in the
Accounts, excluding , however, the Bond Transfer Accounts, the
Greenhouse Reserve Account, any Greenhouse Letter of Credit issued and
outstanding from time to time and all cash, other instruments,
investments and securities on deposit in the Greenhouse Reserve
Account.
"Series 1994A Bond Transfer Account": the Series 1994A Bond
Transfer Account established and maintained pursuant to this Security
Deposit Agreement.
<PAGE> 13
8
"Series 1994B Bond Transfer Account": the Series 1994B Bond
Transfer Account established and maintained pursuant to this Security
Deposit Agreement.
"Series 1995 Bond Transfer Account': the Series 1995 Bond
Transfer Account established and maintained pursuant to the Security
Deposit Account.
"Series 1996A Bond Transfer Account": the Series 1996A Bond
Transfer Account established and maintained pursuant to this Security
Deposit Agreement.
"Series 1996B Bond Transfer Account": the Series 1996B Bond
Transfer Account established and maintained pursuant to this Security
Deposit Agreement.
"Special Payment Account Deposits": as defined in Section
4.5.
"Subaccounts": collectively, (a) the Restoration Subaccount,
(b) the Non-Restoration Subaccount, (c) the L/C Cash Collateral
Subaccount, (d) the Prepayment Subaccount, (e) the Delay Damages
Subaccount, (f) the Bank Accrued Interest Subaccount and (g) the
Institutional Accrued Interest Subaccount.
"Trust Indenture - Series 1994A": the Trust Indenture by and
between the Industrial Development Authority of King George County,
Virginia, and Bankers Trust Company, as trustee (the `Trustee'), dated
as of October 1, 1994.
"Trust Indenture - Series 1994B": the Trust Indenture by and
between the Industrial Development Authority of King George County,
Virginia, and Bankers Trust Company, as trustee (the `Trustee'), dated
as of December 1, 1994.
"Trust Indenture-Series 1995": the Trust Indenture by and
between the Industrial Development Authority of King George County,
Virginia and Bankers Trust Company, as trustee, dated as of November
1, 1995.
"Trust Indenture-Series 1996A": the Trust Indenture by and
between the Industrial Development Authority of King George County,
Virginia, and Bankers Trust Company, as trustee (the "Trustee"), dated
as of April 1, 1996.
"Trust Indenture-Series 1996B": the Trust Indenture by and
between the Industrial Development Authority of King George County,
Virginia, and the party therein named as trustee, pursuant to which
the Series 1996B Bonds, if any, are issued.
Section 1.3 Other Definitional Provisions. (a) 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 Article, Section, paragraph, Annex,
Schedule and Exhibit references are to this Agreement unless otherwise
specified.
<PAGE> 14
9
(b) Each reference in this Agreement to any Project
Document or any Financing Document shall be deemed to refer to such Project
Document or Financing Document as the same may be amended, supplemented or
otherwise modified from time to time.
(c) Any term defined by reference to an agreement,
instrument or other document shall have the meaning so assigned to it whether
or not such agreement, instrument or other document is in effect.
(d) Each reference in this Agreement to a Person shall be
deemed to include such Person's successors and assigns.
(e) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
ARTICLE II
The Security Agent
------------------
Section 2.1 Appointment of the Security Agent. Each of the
Secured Parties hereby designates and appoints Credit Suisse as the security
agent for such Secured Party under this Agreement and the other Security
Documents, and authorizes Credit Suisse, in such capacity, to take such action
on its behalf under the provisions of this Agreement and the other Security
Documents and to exercise such powers and perform such duties as are expressly
delegated to it by the terms of this Agreement and the other Security
Documents, together with such other powers as are reasonably incidental
thereto. Notwithstanding any provision to the contrary elsewhere in this
Agreement or in any other Security Document, the Security Agent shall not have
any duties or responsibilities, except those expressly set forth herein or in
any other Security Document, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Security Document or shall otherwise exist against the
Security Agent.
Section 2.2 Exculpatory Provisions. (a) The Security Agent
shall not be responsible in any manner whatsoever for the correctness of any
recitals, statements, representations or warranties herein or in any other
Financing Document or Project Document. The Security Agent makes no
representations as to the value or condition of the Collateral or any part
thereof, or as to the title of the Borrower or any other Person thereto or as
to the security afforded by this Agreement or any other Security Document, or
as to the validity, execution, enforceability, legality or sufficiency of this
Agreement, the other Financing Documents, the Project Documents or the Secured
Obligations, and the Security Agent shall incur no liability or responsibility
in respect of any such matters. The Security Agent shall not be responsible or
liable in any manner whatever for soliciting any funds or for the sufficiency,
correctness, genuineness or validity of any funds or securities deposited with
or held by it under this Agreement or under the other Security Documents, or
responsible for insuring the Collateral or for the payment of taxes, charges or
assessments or discharging of Liens upon the Collateral or otherwise as to the
maintenance of the Collateral.
<PAGE> 15
10
(b) The Security Agent shall not be liable for any error of
judgment or for any acts done or omitted by it hereunder or under any other
Security Document except in the case of its gross negligence or willful
misconduct.
(c) The Security Agent shall not be required to ascertain or
inquire as to the performance by the Borrower of any of the covenants or
agreements contained herein or in any other Financing Document or Project
Document.
(d) The Security Agent may accept deposits from, lend money
to, issue letters of credit in favor of and generally engage in any kind of
business with the Borrower or any of its Affiliates as if it were not the
Security Agent. With respect to the Secured Obligations owing to it in any of
its respective capacities as a Bank, the Issuing Bank, the Administrative Agent
or a Secured Counterparty, the Security Agent shall have the same rights and
powers hereunder and under the other Security Documents as any Bank, the
Issuing Bank, the Administrative Agent or any Secured Counterparty, as the case
may be, and may exercise the same as though it were not acting as the Security
Agent, and any reference to a Secured Party (in whatever terms) shall, unless
the context otherwise requires, include a reference to Credit Suisse in its
respective capacities as a Bank, the Issuing Bank, the Administrative Agent and
a Secured Counterparty.
Section 2.3 Delegation of Duties. The Security Agent may
execute any of its powers herein or in the other Security Documents and perform
any duty hereunder or under the other Security Documents either directly or by
or through agents or attorneys-in-fact. The Security Agent shall not be
responsible for the negligence or misconduct of any agents or attorneys-in-fact
selected by it provided that such selection occurs with reasonable care.
Section 2.4 Reliance by Security Agent. (a) Whenever in the
administration of this Agreement or the other Security Documents the Security
Agent shall deem it necessary or desirable that a factual matter be proved or
established in connection with the Security Agent taking, suffering or omitting
any action hereunder or thereunder, such matter (unless other evidence in
respect thereof is herein or therein specifically prescribed) may be deemed to
be conclusively proved or established by a certificate of a Responsible Officer
of the Borrower delivered to the Security Agent, and such certificate shall be
full authorization to the Security Agent for any action taken, suffered or
omitted in reliance thereon, subject, however, to the provisions of Section
2.5.
(b) The Security Agent may consult with counsel, and any
advice or statements of legal counsel (including, without limitation, counsel
to the Borrower) shall be full and complete authorization and protection in
respect of any action taken or suffered by it hereunder or under any other
Security Document in good faith reliance thereon.
(c) The Security Agent may rely, and shall be fully protected
in acting, upon any resolution, statement, certificate, instrument, opinion,
report, notice, request, consent, order, bond or other paper or document
reasonably believed by it to be genuine and to have been signed or presented by
the proper party or parties or, in the case of cables, telecopies and telexes,
to have been sent by the proper party or parties. In the absence of its
negligence or willful misconduct, the Security Agent may conclusively rely, as
to the truth of the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the Security
<PAGE> 16
11
Agent and conforming to the requirements of this Agreement or any other
Financing Document, as the case may be. Without limiting the generality of the
foregoing, the Security Agent may conclusively rely on the information
contained in any Request Letter delivered pursuant to Article V in the
performance of its duties thereunder.
(d) The Security Agent shall not be under any obligation to
exercise any of the rights or powers vested in it by this Agreement or the
other Security Documents, at the request or direction of the Required Secured
Parties or any other combination of Secured Parties pursuant to this Agreement
or otherwise, unless the Security Agent shall have been provided adequate
security and indemnity against the costs, expenses (including its customary
fees) and liabilities which may be incurred by it in compliance with such
request or direction, including such reasonable advances as may be requested by
the Security Agent.
Section 2.5 Limitations on Duties of Security Agent. (a)
Unless and until an Event of Default shall have occurred and be continuing and
the Security Agent shall have received notice thereof in accordance with
paragraph (b) of this Section 2.5, the Security Agent shall not be obligated to
take any action, or refrain from taking any action, under or in respect of this
Agreement or any other Security Document except for the performance of such
duties as are specifically required hereby or thereby and except as may be
requested from time to time in writing by the Required Secured Parties or such
other combination of Secured Parties as may be specified in any applicable
provision of this Agreement or such other Security Document. If an Event of
Default exists and if the Security Agent shall have received notice thereof in
accordance with paragraph (b) of this Section 2.5, the Security Agent will
exercise such rights, powers and remedies (whether vested by this Agreement or
any other Security Document or by statute or by law or otherwise) for the
protection and enforcement of the Security Agent's rights under and in respect
of this Agreement and the other Security Documents as may be directed in
writing pursuant to a Notice of Action.
(b) The Security Agent shall not be deemed to have knowledge
or notice of the occurrence of any Default or Event of Default unless the
Security Agent has received notice from any Secured Party, the Borrower or,
prior to the Equity Funding Termination Date, Southern, describing such Default
or Event of Default and stating that such notice is a "notice of default". In
the event that the Security Agent receives such a notice, the Security Agent
shall give notice thereof to the Secured Parties.
(c) In the event that the Security Agent shall have received
incomplete or insufficient information to perform its duties hereunder or
requires clarification of any matter, the Security Agent shall be entitled to
request direction from, and to act, or refrain from acting, on the written
direction of, the Required Secured Parties or such other combination of Secured
Parties as may be specified in the applicable provision of this Agreement or
the other Security Documents, and the Security Agent shall be fully protected
in relying on such direction or in failing to act until the receipt of such
information or clarification or direction.
(d) No provision of this Agreement or of any other Security
Document shall be deemed to impose any duty or obligation on the Security Agent
to perform any act or acts or exercise any right, power, duty or obligation
conferred or imposed on it, in any jurisdiction in which it shall be illegal,
or in which the Security Agent shall be unqualified or incompetent, to
<PAGE> 17
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perform any such act or acts or to exercise any such right, power, duty or
obligation or if such performance or exercise would constitute doing business
by the Security Agent in such jurisdiction or impose a tax on the Security
Agent by reason thereof.
Section 2.6 Resignation and Removal of the Security Agent.
(a) The Security Agent may at any time, by giving not less than 30 days prior
written notice to the Borrower and the Secured Parties, resign and be
discharged of the responsibilities hereby created, such resignation and
discharge to be effective upon the appointment of a successor Security Agent.
As promptly as practicable after the giving of any such notice, the Majority
Lenders shall appoint a successor Security Agent. The Majority Institutions or
(prior to the repayment of the Bank Loans and L/C Reimbursement Obligations and
termination of the Commitments of the Banks) the Majority Banks may, at any
time upon giving at least 30 days' prior written notice thereof to the Borrower
and the Security Agent, remove the Security Agent for cause (or without cause
if the Security Agent shall no longer be the Administrative Agent or if all of
the Bank Loans and L/C Reimbursement Obligations shall have been paid in full
and the Commitments of the Banks terminated) and appoint a successor Security
Agent, such removal to be effective upon the acceptance of such appointment by
the successor Security Agent. The Security Agent who has resigned or been
removed or replaced pursuant to this Section 2.6(a) shall be entitled to the
fees, costs and expenses provided under Section 6.7 to the extent incurred or
arising, or relating to events occurring, before its resignation or removal.
(b) If at any time the Security Agent shall resign or be
removed or otherwise become incapable of acting, the Majority Lenders shall
appoint from among the Banks (or, if all of the Bank Loans and L/C
Reimbursement Obligations shall have been paid in full and the Commitments of
the Banks terminated, from any bank or trust company with an office in New
York, New York having a combined capital, surplus and undivided profits of at
least $100,000,000) a successor Security Agent for the Secured Parties, which
successor Security Agent shall be reasonably acceptable to the Borrower (unless
an Event of Default has occurred and is continuing). If no successor Security
Agent shall have been appointed by the Majority Lenders and shall have accepted
such appointment within 30 days after the giving of such notice of resignation
or removal, as the case may be, then the Security Agent may, on behalf of the
Secured Parties (if such Security Agent is resigning), or a court of competent
jurisdiction upon the petition of one or more Secured Parties shall, appoint a
successor Security Agent, which shall be a Bank or any other bank or trust
company with an office in New York, New York having a combined capital, surplus
and undivided profits of at least $100,000,000 and which shall be reasonably
acceptable to the Borrower (unless an Event of Default has occurred and is
continuing). The powers, duties, authority and title of the predecessor
Security Agent shall be terminated and canceled without procuring the
resignation of such predecessor and without any other formality (except as may
be required by applicable law) than appointment and designation of a successor
Security Agent in writing duly executed by the Majority Lenders and delivered
to the predecessor Security Agent, the Secured Parties and the Borrower. Such
appointment and designation shall be full evidence of the right and authority
to make the same and of all the facts therein recited, and this Agreement and
the other Security Documents shall vest in such successor Security Agent,
without any further act, deed or conveyance, all the estates, properties,
rights, powers, duties, authority and title of its predecessor Security Agent;
but such predecessor shall, nevertheless, on the written request of the
Majority Lenders or the successor Security Agent, execute and deliver an
instrument transferring to such successor Security Agent all the estates,
<PAGE> 18
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properties, rights, powers, duties, authority and title of such predecessor
Security Agent hereunder and under the other Security Documents and shall
deliver all Collateral held by it or its agents to such successor Security
Agent. Should any deed, conveyance, amendment of a Financing Document or other
instrument in writing from the Borrower be reasonably required or requested by
any successor Security Agent or the Majority Lenders for more fully and
certainly vesting in such successor Security Agent the estates, properties,
rights, powers, duties, authority and title vested or intended to be vested in
the predecessor Security Agent, then any and all such deeds, conveyances,
amendments and other instruments shall, on request of such successor Security
Agent or the Majority Lenders, be executed, acknowledged and delivered by the
Borrower. If the Borrower shall not have executed and delivered any such deed,
conveyance, amendments or other instrument within 10 days after it receives a
written request from the successor Security Agent or Majority Lenders, as the
case may be, to do so, or if an Event of Default is in existence, the
predecessor Security Agent may execute the same on behalf of the Borrower. The
Borrower hereby appoints any successor Security Agent as its agent and
attorney-in- fact to act for it as provided in the preceding sentence.
Section 2.7 Treatment of Registered Holder, Payee or Indorsee
by Security Agent. The Security Agent may treat the registered holder of any
Registered Institutional Note or the payee or indorsee of any other promissory
note or other instrument evidencing a Secured Obligation as the absolute owner
thereof for all purposes and shall not be affected by any notice to the
contrary, whether such Registered Institutional Note, other promissory note or
other instrument shall be past due or not.
Section 2.8 Appointment of Separate or Co-Security Agent.
(a) The Security Agent may, and, upon the request of the Majority Lenders, the
Security Agent shall, by an instrument in writing delivered to the Borrower and
to each of the Secured Parties, appoint a bank or trust company or an
individual to act as separate security agent or co- security agent for any
purpose deemed by the Security Agent or the Majority Lenders to be advantageous
to their respective interests, such separate security agent or co-security
agent to exercise only such rights and to have only such duties as shall be
specified in the instrument of appointment. The Borrower agrees to pay the
reasonable fees, costs and expenses of any such separate security agent or
co-security agent as provided in Section 6.7 and, if requested by the Security
Agent, such separate security agent or co-security agent or the Majority
Lenders, the Borrower will enter into an amendment to this Agreement,
reasonably satisfactory in form and substance to the Security Agent, such
separate security agent or co-security agent and the Majority Lenders,
confirming the rights and duties of such separate security agent or co-security
agent. No separate security agent or co-security agent hereunder shall be
required to meet the terms of eligibility of a Security Agent under Section
2.10. The Security Agent may at any time accept the resignation of or remove
any separate security agent or co-security agent.
(b) Any separate security agent or co-security agent
hereunder shall, to the extent permitted by law, be appointed and act, and the
Security Agent shall act, subject to the following provisions and conditions:
(i) all powers, duties, obligations and rights conferred
upon the Security Agent in respect of the receipt, custody, investment
and payment of monies and in respect of the receipt and custody of the
other Collateral shall be exercised solely by the Security Agent;
<PAGE> 19
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(ii) all other rights, powers, duties and obligations
conferred or imposed upon the Security Agent shall be conferred or
imposed upon and exercised or performed by the Security Agent and such
separate security agent or co-security agent jointly, except to the
extent that under any law of any jurisdiction in which any particular
act or acts are to be performed, the Security Agent shall be
incompetent or unqualified to perform such act or acts, in which event
such rights, powers, duties and obligations shall be exercised and
performed by such separate security agent or co-security agent;
(iii) no power hereby given to any such separate security
agent or co-security agent shall be exercised hereunder by such
separate security agent or co-security agent except jointly with, or
with the consent of, the Security Agent; and
(iv) no security agent (including, subject to Section 2.3,
the Security Agent) shall be liable for any act or failure to act on
the part of any other security agent hereunder.
(c) The Majority Institutions or Majority Banks may, at any
time upon giving at least 30 days' prior written notice thereof to the
Borrower, the Security Agent and the separate security agent or co-security
agent, remove such separate security agent or co-security agent for cause;
provided that such separate security agent or co-security agent shall be
entitled to the fees, costs and expenses provided under Section 6.7 to the
extent incurred or arising, or relating to events occurring, before its
removal.
Section 2.9 Successor Security Agent by Merger,
Consolidation, Etc. Any corporation into which the Security Agent may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which the Security Agent is a party, if eligible
as provided in Section 2.10, shall automatically succeed to all of the rights
and obligations of the Security Agent hereunder and with respect to the
Collateral, the Bond Transfer Accounts and the Greenhouse Reserve Account
without further action on the part of any of the parties hereto.
Section 2.10 Eligibility of Security Agent. The Security
Agent shall always be a bank or trust company in good standing, organized under
the laws of the United States of America or one of the States thereof or acting
through a branch or agency located in the United States and having capital,
surplus and undivided profits (as shown by its latest financial statement
published to its shareholders) aggregating at least $100,000,000, if there be
such a bank or trust company willing and able to accept such trust upon
reasonable and customary terms. In case at any time the Security Agent shall
cease to be eligible in accordance with the provisions of this Section 2.10,
the Security Agent shall resign immediately in the manner and with the effect
specified in Section 2.6.
<PAGE> 20
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ARTICLE III
Establishment of Accounts;
Grant of Security Interests
---------------------------
Section 3.1 Establishment of Accounts. (a) The Security
Agent shall establish the following accounts in the name of the Borrower, which
unless otherwise indicated herein, will be special, segregated and irrevocable
cash collateral accounts and designated:
(i) the Institutional Loan Proceeds Account;
(ii) the Construction Account;
(iii) the Project Control Account;
(iv) the Accrued Interest Account;
(v) the Insurance and Property Tax Account;
(vi) the Repair and Maintenance Account;
(vii) the Debt Service Reserve Account;
(viii) the Additional Collateral Account;
(ix) the Special Payment Account;
(x) the Final Completion Escrow Account;
(xi) the Greenhouse Reserve Account (such account shall not be a
cash collateral account);
(xii) the Distributions Account;
(xiii) the Series 1994A Bond Transfer Account (such account shall
not be a cash collateral account);
(xiv) the Series 1994B Bond Transfer Account (such account shall
not be a cash collateral account);
(xv) the Series 1995 Bond Transfer Account (such account shall
not be a cash collateral account);
(xvi) the Series 1996A Bond Transfer Account (such account shall
not be a cash collateral account); and
<PAGE> 21
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(xvii) the Series 1996B Bond Transfer Account (such account shall
not be a cash collateral account).
Within the Accrued Interest Account, the Security Agent shall establish a
segregated and irrevocable cash collateral bank accrued interest subaccount
(the "Bank Accrued Interest Subaccount") and a segregated and irrevocable cash
collateral institutional accrued interest subaccount (the "Institutional
Accrued Interest Subaccount"). Within the Special Payment Account, the
Security Agent shall establish a segregated and irrevocable cash collateral
restoration subaccount (the "Restoration Subaccount"), a segregated and
irrevocable cash collateral non-restoration subaccount (the "Non-Restoration
Subaccount"), a segregated and irrevocable cash collateral prepayment
subaccount (the "Prepayment Subaccount"), a segregated and irrevocable cash
collateral letter of credit subaccount (the "L/C Cash Collateral Subaccount"),
and a segregated and irrevocable cash collateral delay damages subaccount (the
"Delay Damages Subaccount").
(b) The Accounts shall be maintained by the Security
Agent at one of its offices located in New York, New York until the termination
of this Agreement. The Accounts (other than the Bond Transfer Accounts and the
Greenhouse Reserve Account) and all cash, cash equivalents, instruments,
investments and other securities on deposit therein shall, as provided in
Section 3.2, constitute collateral security for the payment by the Borrower of
the Secured Obligations and the performance by the Borrower of all of its
covenants, agreements and obligations to the Secured Parties under the Senior
Debt Agreements, and shall, subject to the provisions of this Agreement, be
subject to the exclusive dominion and control of the Security Agent. The
Security Agent shall have the sole and exclusive right to withdraw or order a
transfer of funds from the Accounts (which shall be in accordance with this
Agreement), and the Borrower hereby appoints the Security Agent as its true and
lawful attorney, with full power of substitution, for the purpose of making any
such withdrawal or ordering any such transfer of funds from any Account, which
appointment is coupled with an interest and is irrevocable. The Borrower shall
not have any rights or powers with respect to any amounts on deposit in the
Accounts or any part thereof except (i) as provided in Section 4.9, (ii) the
right to have such amounts applied in accordance with the provisions of this
Agreement and (iii) the right to receive amounts from the Distributions Account
in accordance with Section 5.8.
(c) The Security Agent agrees to accept all cash, cash
equivalents, instruments, investments and other securities to be delivered to
or held by the Security Agent pursuant to the terms of this Agreement and, from
such cash, cash equivalents, instruments, investments and other securities, to
make the releases and transfers contemplated by this Agreement as and when
required in accordance with the terms hereof. The Security Agent shall hold
and safeguard the Accounts (and the cash, cash equivalents, instruments,
investments and other securities on deposit therein) during the term of this
Agreement and shall treat the cash, cash equivalents, instruments, investments
and other securities in the Accounts (other than the Bond Transfer Accounts and
the Greenhouse Reserve Account) as pledged by the Borrower to the Security
Agent as agent of, and for the ratable benefit of, the Secured Parties in
accordance with the provisions hereof.
Section 3.2 Security Interests. (a) In order to secure the
payment of the Secured Obligations and the performance and observance by the
Borrower of all of its covenants, agreements and obligations to the Secured
Parties under the Senior Debt Agreements, the
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Borrower hereby pledges and assigns to the Security Agent, and creates in favor
of the Security Agent:
(i) for the ratable benefit of the Secured Parties as
provided herein, a first lien on and security interest in and to all
of the Borrower's right, title and interest, whether now owned or
hereafter acquired and whether now existing or hereafter coming into
existence, in, to and under this Agreement and in and to the Security
Deposit Collateral (except as otherwise provided in clauses (ii) and
(iii) of this Section 3.2), and all proceeds thereof and substitutions
or replacements therefor;
(ii) for the ratable benefit of the Banks, a first lien
on and security interest in and to all of the Borrower's right, title
and interest, whether now existing or hereafter coming into existence,
in and to the Bank Accrued Interest Subaccount and all cash, cash
equivalents, instruments, investments and other securities on deposit
therein; and
(iii) for the ratable benefit of the Institutions, a
first lien on and security interest in and to all of the Borrower's
right, title and interest, whether now existing or hereafter coming
into existence, in and to the Institutional Accrued Interest
Subaccount and all cash, cash equivalents, instruments, investments
and other securities on deposit therein.
(b) The Borrower hereby confirms the pledges and
assignments to the Security Agent effected by, and the security interests in
favor of the Security Agent created by, this Agreement in and to the Security
Deposit Collateral and all proceeds thereof and substitutions or replacements
therefor.
ARTICLE IV
Deposits into Accounts; Investment
----------------------------------
Section 4.1 Construction Account. There shall be deposited
into the Construction Account:
(a) on the date of any Bank Project Loan all or a portion
of the proceeds of which are to be used to pay Project Costs (other
than funding the Repair and Maintenance Account, the Debt Service
Reserve Account, the Project Control Account or the Final Completion
Escrow Account on the Completion Date), all or such portion, as the
case may be, of the proceeds of such Bank Project Loan;
(b) on the date of any Equity Funding Loan all or a
portion of the proceeds of which are to be used to pay Project Costs,
all or such portion, as the case may be, of the proceeds of such
Equity Funding Loan; and
(c) on the applicable Equity Contribution Date under the
Southern Equity Contribution Agreement, the portion of the Increased
IDC Contribution Proceeds not constituting the Increased IDC
Prepayment Amount.
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If, notwithstanding the foregoing, the Borrower shall receive any amounts
specified in clauses (a) through (c) above (collectively, the "Construction
Account Deposits"), it shall immediately deliver such amounts in the exact form
received (duly indorsed, if appropriate, in a manner satisfactory to the
Security Agent) to the Security Agent, and the Security Agent shall deposit
such amounts into the Construction Account. The Security Agent shall have the
right to receive all Construction Account Deposits directly from the Persons
owing the same. All such Construction Account Deposits received by or on
behalf of the Security Agent shall be deposited into the Construction Account.
Section 4.2 Institutional Loan Proceeds Account. There shall
be deposited into the Institutional Loan Proceeds Account, on the date of any
Institutional Loan, all of the proceeds of such Institutional Loan. If,
notwithstanding the foregoing, the Borrower shall receive any amounts specified
in the preceding sentence ("Institutional Loan Proceeds Account Deposits"), it
shall immediately deliver such amounts in the exact form received (duly
indorsed, if appropriate, in a manner satisfactory to the Security Agent) to
the Security Agent, and the Security Agent shall deposit such amounts into the
Institutional Loan Proceeds Account. The Security Agent shall have the right
to receive all Institutional Loan Proceeds Account Deposits directly from the
Persons owing the same. All such Institutional Loan Proceeds Account Deposits
received by or on behalf of the Security Agent shall be deposited into the
Institutional Loan Proceeds Account.
Section 4.3 Required Deposits on the Completion Date. On the
Completion Date, there shall be deposited into the Debt Service Reserve
Account, the Repair and Maintenance Account, the Project Control Account, the
Final Completion Escrow Account and the Distributions Account the portion of
the proceeds of the Bank Project Loans made on such date which is specified in
the Extension of Credit Request given with respect thereto as being applied for
such purpose. The Borrower hereby agrees that it shall request Bank Project
Loans to be made on the Completion Date (to the extent of the then unutilized
portion of the Total Bank Project Loan Commitments) in an aggregate principal
amount such that, after giving effect to all Bank Project Loans made on the
Completion Date, the amount on deposit in each of the Debt Service Reserve
Account, the Repair and Maintenance Account, the Project Control Account, the
Final Completion Escrow Account and the Distributions Account will be at least
equal to the Required Completion Date Reserve Deposits applicable to such
Account; and if the then unutilized portion of the Total Bank Project Loan
Commitments is insufficient to permit the Required Completion Date Reserved
Deposits to be made into each such Account in full, the proceeds of such Bank
Project Loans shall be applied first, for deposit into the Final Completion
Escrow Account, second, for deposit into the Project Control Account, third,
for deposit into the Repair and Maintenance Account, fourth, for deposit into
the Debt Service Reserve Account and fifth, for deposit into the Distributions
Account.
Section 4.4 Project Control Account. There shall be
deposited into the Project Control Account:
(a) all Project Revenues received by or on behalf of the
Borrower, other than Greenhouse Prepayment Proceeds and proceeds of
any Greenhouse Reserve Replenishment Rent;
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(b) all Business Interruption Insurance Proceeds; and
(c) the proceeds of all payments received by the Borrower
pursuant to any Interest Rate Hedging Agreement (net of any payment in
respect of Swap Obligations payable by the Borrower under such
Interest Rate Hedging Agreement on such date).
If, notwithstanding the foregoing, the Borrower shall receive any amounts
specified in clauses (a) through (c) above (collectively, the "Project Control
Account Deposits"), it shall immediately deliver such amounts in the exact form
received (duly indorsed, if appropriate, in a manner satisfactory to the
Security Agent) to the Security Agent, and the Security Agent shall deposit
such proceeds into the Project Control Account. The Security Agent shall have
the right to receive all Project Control Account Deposits directly from the
Persons owing the same. All such Project Control Account Deposits received by
or on behalf of the Security Agent shall be deposited into the Project Control
Account.
Section 4.5 Special Payment Account. There shall be
deposited into the Special Payment Account:
(a) all Casualty Insurance Proceeds;
(b) all Requisition Proceeds;
(c) all Buy-Down Amount Proceeds;
(d) all Delay Damages Proceeds;
(e) the portion of the Increased IDC Contribution
Proceeds constituting the Increased IDC Prepayment
Amount;
(f) all Greenhouse Prepayment Proceeds;
(g) all L/C Cash Collateral Proceeds;
(h) all Equity Contribution Proceeds (other than the
Increased IDC Contribution Proceeds); and
(i) all Virginia Power Purchase Proceeds.
Of the amounts specified in clauses (a) through (i) above (collectively, the
"Special Payment Account Deposits"), (i) all Casualty Insurance Proceeds
received in connection with a Damage Event, and all Requisition Proceeds
received following a Damage Event which is not a Non-Restoration Event, shall
be deposited in the Restoration Subaccount, (ii) all Requisition Proceeds
received in connection with a Damage Event which is a Non-Restoration Event
shall be deposited in the Non-Restoration Subaccount, (iii) all L/C Cash
Collateral Proceeds shall be deposited in the L/C Cash Collateral Subaccount,
(iv) all Delay Damages Proceeds shall be deposited into the Delay Damages
Subaccount, and (v) all other Special Payment Account Deposits shall be
deposited in the Prepayment Subaccount. If, notwithstanding the foregoing, the
Borrower shall
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receive any amounts in respect of Special Payment Account Deposits, it shall
immediately deliver such amounts in the exact form received (duly indorsed, if
appropriate, in a manner satisfactory to the Security Agent) to the Security
Agent, and the Security Agent shall deposit such amounts into the Restoration
Subaccount, the Non-Restoration Subaccount, the L/C Cash Collateral Subaccount,
the Prepayment Subaccount or the Delay Damages Subaccount, as the case may be,
of the Special Payment Account. The Security Agent shall have the right to
receive all Special Payment Account Deposits directly from the Persons owing
the same. All such Special Payment Account Deposits received by or on behalf
of the Security Agent shall be deposited into the Restoration Subaccount, the
Non-Restoration Subaccount, the L/C Cash Collateral Subaccount, the Delay
Damages Subaccount or the Prepayment Subaccount, as the case may be, of the
Special Payment Account.
Section 4.6 Greenhouse Reserve Account. There shall be
deposited into the Greenhouse Reserve Account all proceeds of any Greenhouse
Reserve Replenishment Rent and credited to the Greenhouse Reserve Account the
face amount of any Greenhouse Letter of Credit. If, notwithstanding the
foregoing, the Borrower shall receive any proceeds of any Greenhouse Reserve
Replenishment Rent (the "Greenhouse Reserve Account Cash Deposits"), it shall
immediately deliver such amounts in the exact form received (duly indorsed, if
appropriate, in a manner satisfactory to the Security Agent) to the Security
Agent, and the Security Agent shall deposit such proceeds into the Greenhouse
Reserve Account. The Security Agent shall have the right to receive all
Greenhouse Reserve Account Cash Deposits directly from the Persons owing the
same. All such Greenhouse Reserve Account Cash Deposits received by or on
behalf of the Security Agent shall be deposited into the Greenhouse Reserve
Account.
Section 4.7 Bond Transfer Accounts. With respect to each
Series of Bonds, there shall be deposited into the relevant Bond Transfer
Account all amounts received by the Security Agent from the relevant Bond
Trustee pursuant to a Bond Construction Fund Requisition relating to such
series. With respect to each Monthly Construction Disbursement Date on which
transfers are to be made, pursuant to Section 5.2 hereof from any Construction
Fund corresponding to any series of Bonds, the Borrower agrees to provide, at
least 10 Business Days prior thereto, to the Administrative Agent and the
Security Agent a copy of each Bond Construction Fund Requisition relating to
such series. No such amount shall be so accepted for deposit except on a
Monthly Construction Disbursement Date on which the Security Agent will make
transfers from the Construction Account pursuant to Section 5.2 hereof.
Section 4.8 Deposit Irrevocable. Any deposit made into the
Accounts hereunder (except through clerical or other manifest error) shall be
irrevocable and all cash, cash equivalents, instruments, investments and other
securities on deposit in the Accounts (other than the Bond Transfer Accounts
and the Greenhouse Reserve Account) shall be held in pledge by the Security
Agent and applied solely as provided herein.
Section 4.9 Statements of Amounts Held in Accounts. No later
than 15 days after each Quarterly Calculation Date, the Security Agent will
provide to the Borrower and, at the request of any Secured Party, to such
Secured Party, a statement of the amounts held in each of the Accounts.
<PAGE> 26
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Section 4.10 Investment. (a) Cash on deposit in the
Accounts (other than the Bond Transfer Accounts and the Construction Account)
shall be invested and reinvested in Permitted Investments by the Security
Agent, who shall make such Permitted Investments (i) except during a Default
Period, at the written direction of the Borrower, and (ii) during a Default
Period, in Permitted Investments selected by the Security Agent or, if specific
investment instructions are given to the Security Agent by the Required Secured
Parties, in accordance with such instructions. The Security Agent shall not
have any liability to the Borrower or any Secured Party resulting from any
losses on investments made by it in Permitted Investments in accordance with
this Section 4.10(a) or if the earnings realized on any investment in Permitted
Investments are less than otherwise could have been achieved had other
Permitted Investments been selected. The Security Agent shall sell or
liquidate all or any part of the Permitted Investments held in any Account at
any time it determines, in its sole judgment, that the proceeds thereof are
required to make a release from any Account or any transfer between Accounts
pursuant to Article V, and the Security Agent shall not be liable to any Person
for any loss suffered because of such sale or liquidation.
(b) All investments in Permitted Investments made by the
Security Agent, and the net proceeds of the sale, liquidation or payment
thereof, and all interest on, or other earnings realized with respect to, any
investment in any Account, shall be held in the same Account and for the same
purposes as the cash used to purchase such Permitted Investments.
ARTICLE V
Transfers From Accounts
-----------------------
Section 5.1 Institutional Loan Proceeds Account. (a) Except
during a Default Period, on any Monthly Construction Disbursement Date on which
Institutional Loans are borrowed under the Project Loan Agreement and deposited
into the Institutional Loan Proceeds Account, if the Extension of Credit
Request received by the Security Agent with respect to such borrowing specifies
that all or a portion of the proceeds of such Institutional Loans are to be
applied to pay Project Costs, or prepay Bank Loans and/or Equity Funding Loans,
the Security Agent shall, on such Monthly Construction Disbursement Date,
subject to the satisfaction of the conditions set forth in Section 9.2 of the
Project Loan Agreement, transfer from the Institutional Loan Proceeds Account
to the Construction Account, the amount specified in such Extension of Credit
Request to be applied to the payment of Project Costs or the prepayment of Bank
Loans and/or Equity Funding Loans, as the case may be. Any portion of
Institutional Loans deposited into the Institutional Loan Proceeds Account on a
Monthly Construction Disbursement Date which is not transferred from the
Institutional Loan Proceeds Account on such date in accordance with this
paragraph (a) shall be retained in the Institutional Loan Proceeds Account
pending further application in accordance with paragraph (b) or (c) below or,
during a Default Period, Section 5.15.
(b) Except during a Default Period, on any Monthly
Construction Disbursement Date, if the Security Agent receives from the
Borrower a Disbursement Request at least 10 Business Days prior thereto
specifying that all or a portion of the funds on deposit in the Institutional
Loan Proceeds Account are to be applied to pay Project Costs, or to prepay Bank
<PAGE> 27
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Loans and/or Equity Funding Loans, the Security Agent shall, on such Monthly
Construction Disbursement Date, subject to the satisfaction of the conditions
set forth in Section 9.2 (other than paragraphs (e) and (i) through (k)) of the
Project Loan Agreement (regardless of whether a Loan was made on such date),
transfer from the funds then on deposit in the Institutional Loan Proceeds
Account to the Construction Account, the amount specified in such Disbursement
Request.
(c) Except during a Default Period, on the Completion Date,
after the transfer from the Institutional Loan Proceeds Account of the amounts
specified in paragraphs (a) and (b) above on such date, if any, the Security
Agent shall transfer the remainder of the funds on deposit in the Institutional
Loan Proceeds Account to the Debt Service Reserve Account.
Section 5.2 Construction Account; Bond Transfer Accounts.
(a) Except during a Default Period, (i) on each Borrowing Date under the
Project Loan Agreement, upon the deposit into the Construction Account of the
proceeds of the Bank Project Loans requested to be made on such date, (ii) on
each Monthly Construction Disbursement Date, upon the deposit into the
Construction Account of amounts on deposit in the Institutional Loan Proceeds
Account pursuant to Section 5.1 and (iii) on each Equity Funding Loan Borrowing
Date under the Equity Funding Loan Agreement, upon the deposit into the
Construction Account of the proceeds of the Equity Funding Loans requested to
be made on such date, the Security Agent shall make the following transfers
from the Construction Account:
(A) the portion of the proceeds of the Bank Project Loans
or Institutional Loans, Institutional Loan Proceeds Account Deposits
and Equity Funding Loans which is specified in the Extension of Credit
Request, Disbursement Request or Equity Funding Loan Borrowing
Certificate, as the case may be, given with respect thereto as being
for the purpose of paying Project Costs (including without limitation
interest and fees on the Loans, Bonds or Equity Funding Loans or Swap
Obligations then due and payable, but excluding the Contingent
Distribution), shall be transferred to the Persons specified in such
Extension of Credit Request, Disbursement Request or Equity Funding
Loan Borrowing Certificate, as the case may be, in the respective
amounts specified therein to be the amount of Project Costs then due
and payable to each such Person;
(B) the portion of the proceeds of the Equity Funding
Loans made prior to the Completion Date, or the Institutional Loan
Proceeds Account Deposits, which is specified in the Equity Funding
Loan Borrowing Certificate, Extension of Credit Request or
Disbursement Request, as the case may be, given with respect thereto
as being for the purpose of prepaying Bank Loans, shall be transferred
to the Administrative Agent for application in accordance with Section
7.4 of the Project Loan Agreement; and
(C) the portion of the proceeds of the Bank Project Loans
made on the Completion Date, or the Institutional Loan Proceeds
Account Deposit, which is specified in the Extension of Credit Request
or Disbursement Request, as the case may be, given with respect
thereto as being for the purpose of prepaying or repaying Equity
Funding Loans shall be transferred to the Equity Funding Loan Agent
for application in accordance with the Equity Funding Loan Agreement.
<PAGE> 28
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Any portion of the proceeds of Bank Project Loans or Equity Funding Loans
deposited in the Construction Account on a Borrowing Date or an Equity Funding
Loan Borrowing Date, as the case may be, which is not transferred from the
Construction Account on such date (the "Excess Construction Account Deposits")
in accordance with clause (A), (B) or (C) above, shall be retained in the
Construction Account pending further application in accordance with paragraph
(b) or (c) below or, during a Default Period, Section 5.15.
(b) Except during a Default Period, on any Monthly
Construction Disbursement Date, if the Security Agent receives from the
Borrower a Disbursement Request at least 10 Business Days prior thereto
specifying that all or a portion of the Excess Construction Account Deposits
are required to pay Project Costs, the Security Agent shall, on such Monthly
Construction Disbursement Date, subject to the satisfaction of the conditions
set forth in Section 9.2 (other than paragraphs (e) and (i) through (k)) of the
Project Loan Agreement (regardless of whether a Loan was made on such date),
transfer from the Excess Construction Account Deposits then on deposit in the
Construction Account to the Persons specified in such Disbursement Request, the
amount specified in such Disbursement Request to be the amount of Project Costs
then due and payable to such Persons.
(c) Except during a Default Period, on the Equity
Contribution Date on which the Contingent Increased IDC Contribution, if any,
shall be made by Southern under the Southern Equity Contribution Agreement or
on any Monthly Construction Disbursement Date occurring thereafter, if the
Security Agent receives from the Borrower a Disbursement Request at least 10
Business Days prior thereto specifying that all or a portion of the Increased
IDC Contribution Proceeds not constituting the Increased IDC Prepayment Amount
which are deposited into the Construction Account are required to pay Project
Costs, the Security Agent shall, on such Equity Contribution Date or such
Monthly Construction Disbursement Date, as the case may be, subject to the
satisfaction of the conditions set forth in Section 9.2 (other than paragraphs
(e) and (i) through (k)) of the Project Loan Agreement (regardless of whether a
Loan was made on such date), transfer such Increased IDC Contribution Proceeds
then on deposit in the Construction Account to the Persons specified in such
Disbursement Request, the amount specified in such Disbursement Request to be
the amount of Project Costs then due and payable to such Persons.
(d) Except during a Default Period, on the Completion
Date, after the transfer from the Construction Account of the amounts specified
in paragraphs (a), (b) and (c) above on such date, the Security Agent shall
transfer the remainder of the funds on deposit in the Construction Account to
the Debt Service Reserve Account.
(e) (i) Except during a Default Period, on any Monthly
Construction Disbursement Date, if the Security Agent received from the
Borrower any Bond Construction Fund Requisition at least 10 Business Days prior
thereto, the Security Agent shall, on such Monthly Construction Disbursement
Date, transfer out of funds on deposit in the relevant Bond Transfer Account to
the Persons specified in such Bond Construction Fund Requisition, the amounts
specified therein to pay the Project Costs specified therein.
(ii) No Bond Transfer Account shall contain any overnight
balance, and any surplus funds remaining in any Bond Transfer Account
at the end of any Business Day
<PAGE> 29
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shall be transferred by the Security Agent to the relevant Bond
Trustee for deposit into the relevant Construction Fund.
Section 5.3 Project Control Account. (a) Except during a
Default Period, on each Disbursement Date after the Commercial Operations Date,
the Security Agent shall transfer from the Project Control Account the
following amounts in the following order of priority:
first, if such Disbursement Date is a Monthly Operating
Disbursement Date, to the Security Agent and the Administrative Agent
for any unpaid fees, costs and expenses then due and payable to it as
Security Agent;
second, if such Disbursement Date is a Monthly Operating
Disbursement Date, to the Borrower for the payment of the Cash
Operating Costs due and payable during the succeeding calendar month
(excluding the Basic Monthly O&M Fee, the Annual O&M Bonus, Major
Maintenance Expenses, amounts to be deposited in the Repair and
Maintenance Account and insurance premiums and property taxes to the
extent paid with the proceeds of any amounts on deposit in the
Insurance and Property Tax Reserve Account), the amount specified in
the Request Letter delivered with respect to such Monthly Operating
Disbursement Date in accordance with Section 5.13; provided that if
the amount of Cash Operating Costs for such succeeding calendar month
exceeds the amount of budgeted Cash Operating Costs for such calendar
month specified in the relevant Operating Budget by more than 10%, in
each case exclusive of Major Maintenance Expenses, amounts to be
deposited in the Repair and Maintenance Account, the cost (including
transportation cost) of Coal, limestone and ammonia and ash disposal
costs, such excess Cash Operating Costs shall be disbursed to the
Borrower pursuant to this clause only with the prior consent of the
Administrative Agent, which consent shall not be unreasonably
withheld;
third, if such Disbursement Date is a Monthly Operating
Disbursement Date, into the Insurance and Property Tax Reserve
Account, an amount equal to 1/12th of any insurance premiums and
property taxes payable on or within twelve months following such
Monthly Operating Disbursement Date, together with the amount of all
deficiencies, if any, with respect to deposits required during all
prior months with respect to insurance premiums and property taxes;
fourth, if such Disbursement Date is a Scheduled Senior Debt
Service Payment Date, ratably, (i) if interest is due and payable on
any Bank Loan on such date under the Project Loan Agreement, to the
Administrative Agent, an amount equal to the sum of (x) the excess of
(A) the accrued interest on such Bank Loan then due and payable over
(B) any amounts transferred from the Bank Accrued Interest Subaccount
to the Administrative Agent pursuant to Section 5.10(a) on such
Scheduled Senior Debt Service Payment Date in respect of such Bank
Loan and (y) any letter of credit fee then due and payable pursuant to
Section 7.1(d) of the Project Loan Agreement, (ii) if interest is due
and payable on any Institutional Note on such date under the Project
Loan Agreement, to the holder of such Institutional Note, an amount
equal to the excess of (x) the accrued interest on such Institutional
Note then due and payable over (y) any amounts transferred from the
Institutional Accrued Interest Subaccount to such holder pursuant to
Section
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5.10(b) on such Scheduled Senior Debt Service Payment Date in respect
of such Institutional Note, (iii) if interest is due and payable on
any Bonds on such date under the relevant Bond Indenture, (x) to the
Issuing Bank, an amount equal to the accrued interest on the Bonds
which was paid on such date through a drawing on a Bond Letter of
Credit, and (y) to the Bond Trustee party to such Bond Indenture, an
amount equal to the accrued interest on the Bonds then due and payable
which was not paid on such date through a drawing on a Bond Letter of
Credit, and (iv) into the Bank Accrued Interest Subaccount, the Bank
Accrued Interest Amount calculated as of such date and into the
Institutional Accrued Interest Subaccount, the Institutional Accrued
Interest Amount calculated as of such date;
fifth, if such Disbursement Date is a Scheduled Senior Debt
Service Payment Date, ratably, (i) to the Administrative Agent, an
amount equal to the installment of principal, if any, of the Bank
Loans payable on such date pursuant to Section 3.4 of the Project Loan
Agreement, (ii) to each holder of an Institutional Note, an amount
equal to the installment of principal, if any, of such Institutional
Note payable on such date pursuant to Section 4.4 of the Project Loan
Agreement, (iii) to the Bond Trustee, an amount equal to the
installment of principal, if any, of any Bonds payable on such date
pursuant to the relevant Bond Indenture which was not paid on such
date through a drawing on a Bond Letter of Credit, (iv) to the Issuing
Bank, an amount equal to the installment of principal, if any, of any
Bonds payable on such date pursuant to the relevant Bond Indenture
which was paid on such date through a drawing on a Bond Letter of
Credit, the Bond Reimbursement Obligation with respect to which was
not financed with Bank L/C Loans or Bank Equity Loans, and (v) to each
Secured Counterparty, the amount of the Swap Obligations specified in
clause (a) of the definition thereof payable on such date under each
Interest Rate Hedging Agreement to which such Secured Counterparty is
a party;
sixth, if such Disbursement Date is a Scheduled Senior Debt
Service Payment Date, ratably, (i) to the Administrative Agent, an
amount equal to the fees, funding indemnities and other amounts, if
any, then due and payable to the Banks and the Issuing Bank under the
Project Loan Agreement (other than those payable pursuant to clause
fourth above), (ii) to each Institution, an amount equal to the fees
and other amounts, if any, then due and payable to such Institution
under the Project Loan Agreement, (iii) with respect to each issuance
of Bonds, to the Bond Trustee in respect thereof, an amount equal to
the fees and other amounts, if any, then due and payable to such Bond
Trustee and the holders of such Bonds under the relevant Bond
Indenture, and (iv) to each Secured Counterparty, the amount of the
Swap Obligations specified in clause (b) of the definition thereof
payable on such date under each Interest Rate Hedging Agreement to
which such Secured Counterparty is a party;
seventh, if such Disbursement Date is a Quarterly Distribution
Date, into the Repair and Maintenance Account, the sum of (x) an
amount sufficient to cause the amounts on deposit in the Repair and
Maintenance Account to be equal to the Required Repair and Maintenance
Reserve Amount for such date plus (y) if requested by the Borrower in
a Request Letter delivered with respect to such Quarterly Distribution
Date, an amount, not to exceed 10% (when aggregated with other amounts
deposited into the Repair and Maintenance Reserve in such calendar
year pursuant to this clause (y)) of the
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Required Repair and Maintenance Reserve Amount in such calendar year,
necessary for the payment of Major Maintenance Expenses during such
calendar year in accordance with Section 5.4;
eighth, if such Disbursement Date is a Quarterly Distribution
Date, to the Facility Operator, an amount sufficient to pay the Basic
Monthly O&M Fee and/or the Annual O&M Bonus then due and payable under
the Operating and Maintenance Agreement, together with any unpaid
amounts of the Basic Monthly O&M Fee and the Annual O&M Bonus
(excluding interest thereon) which was payable to the Facility
Operator on a prior Quarterly Distribution Date;
ninth, if such Disbursement Date is a Quarterly Distribution
Date, into the Debt Service Reserve Account, an amount equal to the
lesser of (i) the amount which will cause the sum of (x) the amount of
cash and Permitted Investments on deposit in the Debt Service Reserve
Account and (y) the aggregate amount then available to be drawn under
Debt Service Letters of Credit, if any, to be equal to the Required
Debt Service Reserve Amount as of such date and (ii) the Maximum Debt
Service Reserve Deposit Amount; provided that the Borrower may, on any
Quarterly Distribution Date, establish one or more Debt Service
Letters of Credit or increase the amount then available to be drawn
under existing Debt Service Letters of Credit, and the amount of funds
required to be deposited into the Debt Service Reserve Account
pursuant to this clause ninth on such Quarterly Distribution Date
shall be reduced by the aggregate stated amount of such newly
established Debt Service Letters of Credit or the aggregate amount of
such increase in the amount then available to be drawn under any
existing Debt Service Letters of Credit, as the case may be;
tenth, if such Disbursement Date is both a Quarterly
Distribution Date and a Cash Trap Date, into the Additional Collateral
Account, an amount equal to the amount by which the remainder of funds
on deposit in the Project Control Account on such date (excluding an
amount equal to the Post-Quarterly Calculation Date Deposits) exceeds
the Required Project Control Reserve Amount;
eleventh, if such Disbursement Date is a Quarterly
Distribution Date, to the Facility Operator, an amount equal to any
interest payable to the Facility Operator pursuant to Section 6.7 of
the Operating and Maintenance Agreement following the non-payment or
partial payment of the Basic Monthly O&M Fee and/or the Annual O&M
Bonus on a prior Quarterly Distribution Date; and
twelfth, if such Disbursement Date is a Quarterly Distribution
Date occurring on or after the Initial Repayment Date and is not a
Cash Trap Date, into the Distributions Account, an amount equal to the
amount by which the remainder of funds on deposit in the Project
Control Account on such date (excluding an amount equal to the
Post-Quarterly Calculation Date Deposits) exceeds the Required Project
Control Reserve Amount;
provided that (i) if such Disbursement Date is a Special Senior Debt Prepayment
Date, all transfers required to be made pursuant to Section 5.3(c) shall be
made immediately after the
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transfers required by clause third and prior to the making of the transfers
required by clause fourth of this Section 5.3(a) on such date, and (ii) if such
Disbursement Date is an L/C Reimbursement Date, all transfers required to be
made pursuant to Section 5.3(d) shall be made ratably with the transfers
required by clause fifth of this Section 5.3(a) on such date. Any amount not
transferred to another Account on any Disbursement Date shall be retained in
the Project Control Account pending further application pursuant to this
Agreement.
(b) Except during a Default Period, on any Special Senior
Debt Prepayment Date on which there shall be insufficient funds in the
Prepayment Subaccount of the Special Payment Account and in the Additional
Collateral Account and Debt Service Reserve Account to make all of the
transfers required by Section 5.7(c) in connection with a mandatory prepayment
of Bank Loans and/or Institutional Loans pursuant to Section 7.3 of the Project
Loan Agreement, the Security Agent shall, on such Special Senior Debt
Prepayment Date, transfer from the Project Control Account to the Persons
specified in Section 5.7(c), after making the transfers required to be made
pursuant to clause third of Section 5.3(a), an amount equal to the amounts then
due and payable to such Persons pursuant to said Section 5.7(c) (after giving
effect to the transfers by the Security Agent from the Prepayment Subaccount,
the Additional Collateral Account and the Debt Service Reserve Account of all
funds on deposit therein in accordance with Sections 5.7(c), 5.5(c) and 5.6(b),
respectively).
(c) Except during a Default Period, on any L/C Reimbursement
Date on which there shall be insufficient funds in the L/C Cash Collateral
Subaccount of the Special Payment Account and in the Additional Collateral
Account and Debt Service Reserve Account to make all of the transfers required
by Section 5.7(d), the Security Agent shall, on such L/C Reimbursement Date,
transfer from the Project Control Account to the Persons specified in Section
5.7(d), ratably with the transfers required by clause fifth of Section 5.3(a),
an amount equal to the amounts then due and payable to such Persons pursuant to
said Section 5.7(d) (after giving effect to the transfers by the Security Agent
from the L/C Cash Collateral Subaccount, the Additional Collateral Account and
the Debt Service Reserve Account of all funds on deposit therein in accordance
with Sections 5.7(d), 5.5(c) and 5.6(b), respectively).
Section 5.4 Repair and Maintenance Account. Except during a
Default Period, on any Monthly Operating Disbursement Date on which a transfer
from the Repair and Maintenance Account is requested by the Borrower, upon
receipt of a Request Letter specifying the amount requested to be transferred
from the Repair and Maintenance Account and the items for which such amount is
to be paid, and certifying that the payments to be made with such amount
constitute payments of Major Maintenance Expenses, the Security Agent shall
transfer from the Repair and Maintenance Account to the Persons specified in
such Request Letter the amount of Major Maintenance Expenses specified in such
Request Letter to be then due and payable; provided that the Security Agent
shall have received written confirmation from the Independent Engineer that, in
its reasonable judgment, such payments to be made constitute payments of Major
Maintenance Expenses.
Section 5.5 Additional Collateral Account.
(a) Scheduled Senior Debt Service Payment Date. Except
during a Default Period, on any Scheduled Senior Debt Service Payment Date on
which there shall be insufficient
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funds in the Project Control Account and the Delay Damages Subaccount of the
Special Payment Account to make all of the transfers required pursuant to
clauses fourth through sixth of Section 5.3(a), the Security Agent shall, on
such Scheduled Senior Debt Service Payment Date, transfer from the Additional
Collateral Account to the Persons or into the Accounts, as the case may be,
specified in such clauses fourth through sixth of Section 5.3(a), in the order
of priority set forth therein, the amounts then due and payable to such Persons
or into such Accounts pursuant to such clauses (after giving effect to
transfers by the Security Agent from the Project Control Account and the Delay
Damages Subaccount of the Special Payment Account on such Scheduled Senior Debt
Service Payment Date of all funds on deposit therein in accordance with
Sections 5.3(a) and 5.7(e)).
(b) Optional Loan Prepayments. Except during a Default
Period, on any Special Senior Debt Prepayment Date on which, after the
Completion Date, the Borrower shall elect to make an optional prepayment of the
Bank Loans and/or Institutional Loans in accordance with Section 7.4 of the
Project Loan Agreement, the Security Agent shall, upon receipt of a Request
Letter from the Borrower, transfer from the Additional Collateral Account,
ratably, (i) to the Administrative Agent, the aggregate amount of principal of
and interest on the Bank Loans payable to the Banks pursuant to Section 7.4 of
the Project Loan Agreement on such date, together with all fees, funding
indemnities and other amounts payable to the Administrative Agent and the Banks
under Section 7.4 of the Project Loan Agreement in connection with such
prepayment, and (ii) to each holder of an Institutional Note, the aggregate
amount of principal of and interest on such Institutional Note payable pursuant
to Section 7.4 of the Project Loan Agreement on such date to such holder,
together with all fees, any Make-Whole Premium, Modified Make-Whole Premium and
other amounts payable to such holder under Section 7.4 of the Project Loan
Agreement in connection with such prepayment.
(c) Mandatory Loan Prepayments; L/C Reimbursements.
Except during a Default Period, on each Special Senior Debt Prepayment Date
with respect to a mandatory prepayment of Bank Loans and/or Institutional Loans
pursuant to Section 7.3 of the Project Loan Agreement, and on each L/C
Reimbursement Date, on which there shall be insufficient funds in the
Prepayment Subaccount or the L/C Cash Collateral Subaccount, as the case may
be, of the Special Payment Account to make all of the transfers required
pursuant to Section 5.7(c) or 5.7(d), as the case may be, the Security Agent
shall, on such date, transfer from the Additional Collateral Account to the
Persons specified in Section 5.7(c) or 5.7(d), as the case may be, the amounts
then due and payable to such Persons pursuant thereto (after giving effect to
transfers by the Security Agent from the Prepayment Subaccount or the L/C Cash
Collateral Subaccount, as the case may be, on such date of all funds on deposit
therein in accordance with Sections 5.7(c) or 5.7(d), as the case may be).
(d) Cash Release Date. Except during a Default Period,
on any Quarterly Distribution Date which is a Cash Release Date, the Security
Agent shall, on such date, transfer from the Additional Collateral Account to
the Distributions Account all funds, if any, on deposit in the Additional
Collateral Account (after giving effect to any transfers by the Security Agent
from the Additional Collateral Account pursuant to paragraphs (a), (b) and (c)
of this Section 5.5 on such date).
Section 5.6 Debt Service Reserve Account.
-----------------------------
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(a) Scheduled Senior Debt Service Payment Date. Except
during a Default Period, on any Scheduled Senior Debt Service Payment Date on
which there shall be insufficient funds in the Project Control Account, the
Delay Damages Subaccount and the Additional Collateral Account to make all of
the transfers required pursuant to clauses fourth through sixth of Section
5.3(a), the Security Agent shall, on such Scheduled Senior Debt Service Payment
Date, transfer from the Debt Service Reserve Account to the Persons or into the
Accounts, as the case may be, specified in such clauses fourth through sixth of
Section 5.3(a), in the order of priority set forth therein, the amounts then
due and payable to such Persons and into such Accounts pursuant to such clauses
(after giving effect to transfers by the Security Agent from the Project
Control Account, the Delay Damages Subaccount and the Additional Collateral
Account on such Scheduled Senior Debt Service Payment Date of all funds on
deposit therein in accordance with Sections 5.3(a), 5.7(e) and 5.5(a),
respectively).
(b) Mandatory Loan Prepayments; L/C Reimbursements.
Except during a Default Period, on each Special Senior Debt Prepayment Date
with respect to a mandatory prepayment of Bank Loans and/or Institutional Loans
pursuant to Section 7.3 of the Project Loan Agreement, and on each L/C
Reimbursement Date, on which there shall be insufficient funds in the
Prepayment Subaccount or the L/C Cash Collateral Subaccount, as the case may
be, of the Special Payment Account and in the Additional Collateral Account to
make all of the transfers required pursuant to Section 5.7(c) or 5.7(d), as the
case may be, the Security Agent shall, on such date, transfer from the Debt
Service Reserve Account to the Persons specified in Section 5.7(c) or 5.7(d),
as the case may be, the amounts then due and payable to such Persons pursuant
thereto (after giving effect to transfers by the Security Agent from the
Prepayment Subaccount or the L/C Cash Collateral Subaccount, as the case may
be, and from the Additional Collateral Account on such date of all funds on
deposit therein in accordance with Sections 5.7(c) or 5.7(d), as the case may
be, and Section 5.5(c)).
(c) Excess Reserve Deposits. Except during a Default
Period, on any Quarterly Distribution Date on which the funds on deposit in the
Debt Service Reserve Account (after giving effect to transfers by the Security
Agent from the Debt Service Reserve Account, if any, on such date pursuant to
this Section 5.6) exceed the Required Debt Service Reserve Amount as of such
date, the Security Agent shall, on such date, transfer from the Debt Service
Reserve Account to the Project Control Account an amount equal to such excess.
Section 5.7 Special Payment Account.
------------------------
(a) Restoration Subaccount. Except during a Default Period,
if the Security Agent shall receive a Request Letter requesting payment for
Restorations with respect to a Damage Event which is not a Non-Restoration
Event (provided that no more than one Request Letter may be delivered pursuant
to this Section 5.7(a) in any calendar month), the Security Agent shall
transfer from the Restoration Subaccount of the Special Payment Account to or
as directed by the Borrower, the amount certified in such Request Letter to be
then due and payable in respect of such Restorations. Each Request Letter
delivered pursuant to this Section 5.7(a) regarding Restorations with respect
to a Damage Event shall be accompanied by (i) a certificate of a Responsible
Officer of the Borrower (A) describing in reasonable detail the work done and
materials purchased with respect to such Restorations, (B) stating the amount
requested to be transferred to or upon the order of the Borrower for such
Restorations, that such amount is
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requested to reimburse the Borrower for, or to pay, the cost of such
Restorations and that such amount, together with amounts remaining in the
Restoration Subaccount for such purpose, are sufficient to pay in full the cost
of such Restorations, (C) stating that no mechanic's or materialmen's liens
have been filed and remain undischarged, except those to be discharged with the
amount then requested to be transferred from the Restoration Subaccount and
those which have been insured over by the Title Company without indemnification
by the Borrower, and (D) stating that no Event of Default has occurred and is
continuing, and (ii) if the aggregate amount to be paid for Restorations with
respect to such Damage Event exceeds $1,000,000, a certificate of the
Independent Engineer stating that (A) the amount requested by the Borrower in
such Request Letter is being used to reimburse the Borrower for, or to pay, the
cost of Restorations and (B) the amount requested in the Request Letter,
together with amounts on deposit in the Restorations Subaccount which are
available for such purpose, are sufficient to pay in full the costs of such
Restorations. With respect to each Damage Event which is not a Non-Restoration
Event, promptly following the completion of Restorations with respect to such
Damage Event (and the receipt by the Security Agent of a certificate from a
Responsible Officer of the Borrower and the Independent Engineer to such
effect), except during a Default Period, the Security Agent shall promptly
transfer all remaining funds on deposit in the Restoration Subaccount with
respect to such Damage Event to the Project Control Account.
(b) Non-Restoration Subaccount. Except during a Default
Period, on any Business Day on which the Security Agent shall deposit
Requisition Proceeds into the Non-Restoration Subaccount of the Special Payment
Account, (i) if the amount of such Requisition Proceeds, together with the
aggregate amount of Requisition Proceeds previously deposited into the
Non-Restoration Subaccount (whether or not such amounts remain on deposit
therein), is less than $2,000,000, the Security Agent shall transfer such
Requisition Proceeds from the Non-Restoration Subaccount to the Project Control
Account, or (ii) if the amount of such Requisition Proceeds, together with the
aggregate amount of such previously deposited Requisition Proceeds, is
$2,000,000 or more, the Security Agent shall transfer such Requisition Proceeds
from the Non-Restoration Subaccount to the Prepayment Subaccount, for
application to the prepayment of Bank Loans and/or Institutional Loans pursuant
to Section 7.3(g) of the Project Loan Agreement.
(c) Mandatory Loan Prepayments. Except during a Default
Period, on any Special Senior Debt Prepayment Date on which all or a portion of
the Loans are required to be prepaid pursuant to Section 7.3 of the Project
Loan Agreement or all or a portion of the Bonds are required to be prepaid
pursuant to the Bond Indenture pursuant to which such Bonds were issued, the
Security Agent shall transfer from the Prepayment Subaccount of the Special
Payment Account the following amounts in the following order of priority:
first, ratably, (i) to the Administrative Agent, the aggregate
amount of principal of and interest on the Bank Loans payable to the
Banks pursuant to the relevant paragraph of Section 7.3 of the Project
Loan Agreement, (ii) to each holder of an Institutional Note, the
aggregate amount of principal of and interest on such Institutional
Note payable pursuant to the relevant paragraph of Section 7.3 of the
Project Loan Agreement, (iii) to each Bond Trustee, the aggregate
amount of principal of and interest, if any, on the Bonds issued
pursuant to the Bond Indenture to which such Bond Trustee is a party
which is payable pursuant to such Bond Indenture on such Special
Senior Debt Prepayment Date and which was not paid through a drawing
on a Bond Letter of Credit, (iv) to the Issuing
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Bank, the aggregate amount of principal of and interest, if any, on
any Bonds prepaid on such Special Senior Debt Prepayment Date through
a drawing on a Bond Letter of Credit (but only to the extent not paid
to the Issuing Bank on such date pursuant to Section 5.7(d) in
satisfaction of the related Bond Reimbursement Obligations) and (v) to
each Secured Counterparty, an amount equal to the Swap Termination
Obligations (other than those in respect of the Swap Obligations
specified in clause (b) of the definition thereof), if any, payable to
such Secured Counterparty under each Interest Rate Hedging Agreement
to which such Secured Counterparty is a party; and
second, ratably, (i) to the Administrative Agent, all fees,
funding indemnities and other amounts payable to the Administrative
Agent and the Banks pursuant to the relevant paragraph of Section 7.3
of the Project Loan Agreement in connection with such prepayment, (ii)
to each Institution, all fees, Make-Whole Premiums, Modified
Make-Whole Premiums and other amounts payable to such Institution
pursuant to the relevant paragraph of Section 7.3 of the Project Loan
Agreement in connection with such prepayment, (iii) to each Bond
Trustee, any fees or other amounts payable to such Bond Trustee
pursuant to the relevant Bond Indenture in connection with such
prepayment, and (iv) to each Secured Counterparty, an amount equal to
the Swap Termination Obligations (other than those payable pursuant to
clause first above) payable to such Secured Counterparty under each
Interest Rate Hedging Agreement to which Secured Counterparty is a
party.
(d) L/C Cash Collateral Subaccount. Except during a Default
Period, on each L/C Reimbursement Date, the Security Agent shall transfer from
the L/C Cash Collateral Subaccount of the Special Payment Account to the
Issuing Bank an amount equal to the amount of the L/C Reimbursement Obligations
then due and payable, together with all interest, fees and other amounts
payable to the Administrative Agent, the Issuing Bank and the Banks pursuant to
Section 5.5 or 6.6, as the case may be, of the Project Loan Agreement in
connection therewith. Except during a Default Period, promptly following the
termination of the outstanding Letters of Credit and the Total VP Letter of
Credit Commitments and Total Bond Letter of Credit Commitments, the Security
Agent shall transfer the remainder of the funds on deposit in the L/C Cash
Collateral Subaccount (after payment of amounts owing pursuant to the preceding
sentence), if any, into the Construction Account (if prior to the Completion
Date) or into the Project Control Account (if on or after the Completion Date).
(e) Delay Damages Subaccount. Except during a Default
Period, on any Scheduled Senior Debt Service Payment Date on or prior to the
Completion Date on which there shall be insufficient funds in the Project
Control Account to make all of the transfers required pursuant to clause fourth
of Section 5.3(a), the Security Agent shall, on such Scheduled Senior Debt
Service Payment Date, transfer from the Delay Damages Subaccount to the Persons
or into the Accounts, as the case may be, specified in such clauses fourth
through sixth of Section 5.3(a), in the order of priority set forth therein,
the amounts then due and payable to such Persons and into such Account pursuant
to such clauses fourth through sixth (after giving effect to transfers by the
Security Agent from the Project Control Account on such Scheduled Senior Debt
Service Payment Date of all funds on deposit therein in accordance with Section
5.3(a)). Except during a Default Period, on the Completion Date, the Security
Agent shall transfer the remainder of the
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funds on deposit in the Delay Damages Subaccount (after payment of amounts
owing pursuant to the preceding sentence on such date), if any, into the
Project Control Account.
(f) Amounts Retained in Subaccount. Any amount not
transferred from the Prepayment Subaccount, the L/C Cash Collateral Subaccount
or the Delay Damages Subaccount pursuant to Section 5.7(c), 5.7(d) or 5.7(e),
respectively, on any Special Debt Prepayment Date, L/C Reimbursement Date or
any Scheduled Senior Debt Service Payment Date, as the case may be, shall be
retained in such Subaccount pending further application pursuant to this
Agreement.
Section 5.8 Distributions Account.
---------------------
(a) Contingent Distribution. Except during a Default Period,
on the Completion Date, if the Security Agent shall have deposited any proceeds
of Bank Project Loans into the Distributions Account pursuant to Section 4.3
the Security Agent shall transfer from the Distributions Account to the
Borrower the amount of such proceeds of Bank Project Loans. Except during a
Default Period, on the date of Final Completion of the Facility, if the
Security Agent shall have transferred any funds into the Distributions Account
from the Final Completion Escrow Account pursuant to Section 5.9(b), the
Security Agent shall transfer from the Distributions Account to the Borrower
the amount of funds so transferred.
(b) Quarterly Distributions. Except during a Default Period,
on each Quarterly Distribution Date (or within three Business Days thereafter)
on or after the Initial Repayment Date, if the Security Agent shall have
received from the Borrower a written request for Distributions substantially in
the form of Exhibit C at least five Business Days prior to such Quarterly
Distribution Date and such Distributions shall be permitted to be made by
Section 11.4 of the Project Loan Agreement, the Security Agent shall transfer
from the Distributions Account to the Borrower the amount specified in such
written request.
(c) No Liens on Distributions. All amounts of Distributions
transferred from the Distributions Account to the Borrower pursuant to this
Section 5.8 (and by the Borrower to the Partners) shall be free and clear of
any and all claims or security interests of the Security Agent and the Secured
Parties.
(d) Amounts Retained in Account. Any amount not transferred
from the Distributions Account on any Quarterly Distribution Date shall be
retained in the Distributions Account pending further application pursuant to
this Agreement.
Section 5.9 Final Completion Escrow Account. (a) Except
during a Default Period, on each Monthly Operating Disbursement Date after the
Completion Date and until Final Completion of the Facility and of the
Greenhouse, upon receipt of:
(i) a Request Letter (x) specifying the amount of
Project Costs requested to be paid on such Monthly Operating
Disbursement Date (which may include any unpaid Heat Rate Bonus, if
any, payable to the Facility Contractor pursuant to the Facility
Construction Contract), including for each matter for which payment is
to be made a reasonably detailed description thereof, and (y)
certifying that no Event of Default has occurred and is continuing,
and
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(ii) a certificate of the Independent Engineer (i)
confirming that the Project Costs identified in the Request Letter
referred to in paragraph (a) above have been properly incurred and are
due and payable on such Monthly Operating Disbursement Date and (ii)
stating that, as of the date of such certificate, the estimated cost
of completing the Project and achieving Final Completion of the
Facility and Final Completion of the Greenhouse and settling any
pending Disputes (as defined in paragraph (d) of the definition of
Completion Date in Annex A hereto), does not exceed the amount on
deposit in the Final Completion Escrow Account,
the Security Agent shall transfer from the Final Completion Escrow Account to,
or as directed by, the Borrower the amount certified in such Request Letter to
be the amount of Project Costs then due and payable.
(b) Upon the occurrence of Final Completion of the Facility
and of the Greenhouse and the receipt by the Security Agent of a certificate
signed by the Borrower and the Contractors stating that all Disputes (as
defined in paragraph (d) of the definition of Completion Date), if any, have
been settled and that no further potential liability (contingent or otherwise)
to the Borrower exists with respect thereto, the amounts remaining on deposit
in the Final Completion Escrow Account shall be transferred first, if at such
time a Default Period is not in existence, to the Distributions Account, for
application to the payment of the Contingent Distribution, in an amount not to
exceed the unpaid Contingent Distribution Amount, and second, to the Prepayment
Subaccount of the Special Payment Account, for application to the prepayment of
Bank Loans pursuant to Section 7.3(e) of the Project Loan Agreement.
Section 5.10 Accrued Interest Account. (a) Except during a
Default Period, on each Scheduled Senior Debt Service Payment Date on which
interest is then due and payable on any Bank Loan under the Project Loan
Agreement, the Security Agent shall transfer from the Bank Accrued Interest
Subaccount of the Accrued Interest Account to the Administrative Agent, from
and to the extent of the funds on deposit therein, an amount equal to such
amount of interest due and payable on such Bank Loan on such date.
(b) Except during a Default Period, on each Scheduled Senior
Debt Service Payment Date on which interest is due and payable on any
Institutional Note under the Project Loan Agreement, the Security Agent shall
transfer from the Institutional Accrued Interest Subaccount of the Accrued
Interest Account to the holder of such Institutional Note, from and to the
extent of the funds on deposit therein, an amount equal to such amount of
interest due and payable on such Institutional Note on such date.
(c) Any amount not transferred from any Accrued Interest
Subaccount on any day shall be retained in such Accrued Interest Subaccount
pending further application pursuant to this Agreement.
Section 5.11 Insurance and Property Tax Reserve Account. (a)
Except during a Default Period, on each Monthly Operating Disbursement Date on
which the Borrower delivers a Request Letter in accordance with Section 5.15
specifying that insurance premiums and/or property taxes will be payable during
the succeeding calendar month, the Security Agent shall transfer the amount
specified in such Request Letter from the Insurance and Property Tax
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34
Reserve Account to the Borrower, for payment of such insurance premiums and/or
property taxes.
(b) Any amount not transferred from the Insurance and
Property Tax Reserve Account on any day shall be retained in the Insurance and
Property Tax Reserve Account pending further application in accordance with
this Agreement.
Section 5.12 Greenhouse Reserve Account.
--------------------------
(a) Greenhouse Letter of Credit Drawing. If a Greenhouse
Letter of Credit shall be outstanding and the Security Agent shall receive a
Request Letter from the Borrower stating that a Drawing Event (as defined in
the Greenhouse Sublease) has occurred, then the Security Agent shall, on the
date specified in such Request Letter, make a drawing on the Greenhouse Letter
of Credit in the amount specified in the Request Letter and shall deposit the
proceeds into the Greenhouse Reserve Account pending application pursuant to
paragraph (b) below.
(b) Application of Funds on Deposit in the Greenhouse Reserve
Account. If the Security Agent shall receive a Request Letter from the
Borrower stating that a Drawing Event has occurred and, in the case of a
Drawing Event specified in clause (B) or (C) of such definition, the Greenhouse
Operator has certified to the Borrower that it does not have funds available to
pay the amounts specified in the Request Letter, then the Security Agent (i)
may, in its own discretion, in the case of a Drawing Event specified in clause
(B) of the definition thereof, or (ii) shall, in the case of any other Drawing
Event, transfer from the Greenhouse Reserve Account to or as directed by the
Borrower amounts of Greenhouse Reserve Replenishment Rent or other amounts on
deposit therein.
(c) Any amounts not transferred from the Greenhouse Reserve
Account on any Disbursement Date shall be retained in the Greenhouse Reserve
Account pending further application pursuant to this Section 5.12.
Section 5.13 Delivery of Request Letters, Disbursement
Requests. Except as otherwise specifically provided in this Article V, each
Request Letter to be delivered by the Borrower pursuant to this Article V shall
be delivered to the Security Agent not later than three Business Days prior to
the date that the Security Agent is required to make any transfer specified
therein. At the time the Borrower delivers to the Security Agent any Request
Letter, Disbursement Request, Bond Construction Fund Requisition or any written
request for Distributions pursuant to Section 5.8 or other written
communication with respect to the Accounts, the Borrower shall deliver a copy
thereof to each of the Institutions and the Administrative Agent. Any Request
Letter delivered pursuant to clause first of Section 5.3(a) or clause first of
5.15(b) requesting amounts to be released from one or more Accounts to pay Cash
Operating Costs shall be accompanied by a certificate specifying the amount and
percentage by which the actual Cash Operating Costs differ from the budgeted
amounts for the relevant period, in each case calculated in accordance with
Section 5.3(a) or 5.15(b), as the case may be.
Section 5.14 Shortfall Notices. The Security Agent shall
notify the Secured Parties and the Borrower as soon as practicable if any
amounts required to be transferred from an Account pursuant to this Article V
on any date exceeds the cash available in such Account.
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Section 5.15 Transfers from Certain Accounts During a Default
Period. (a) During a Default Period, the Borrower shall not have the right to
issue a Request Letter or written request for Distributions pursuant to Section
5.8 or otherwise direct the transfer of funds from any Account except as
specifically provided in this Section 5.15.
(b) During a Default Period until the Security Agent receives
a Notice of Action directing that action be taken pursuant to Section 5.15(d),
on each Disbursement Date after the Commercial Operations Date the Security
Agent shall transfer, from the Accounts as specified in Section 5.15(c), the
following amounts in the following order of priority:
first, if such Disbursement Date is a Monthly Operating
Disbursement Date, to the Security Agent and the Administrative Agent
for any unpaid fees, costs and expenses then due and payable to it as
Security Agent or the Administrative Agent;
second, if such Disbursement Date is a Monthly Operating
Disbursement Date, to the Borrower for the payment of Cash Operating
Costs due and payable during the succeeding calendar month (other than
the Basic Monthly O&M Fee, the Annual O&M Bonus, Major Maintenance
Expenses, and insurance premiums and property taxes to the extent paid
with the proceeds of any amounts on deposit in the Insurance and
Property Tax Reserve Account), the amount of such Cash Operating Costs
as specified in a Request Letter delivered by the Borrower in
accordance with Section 5.15;
provided that if such amount of Cash
Operating Costs for such succeeding calendar month exceeds the amount
of budgeted Cash Operating Costs for such calendar month specified in
the relevant Operating Budget, in each case exclusive of the Basic
Monthly O&M Fee, the Annual O&M Bonus and the cost (including
transportation cost) of Coal, limestone and ammonia and ash disposal
costs, such excess Cash Operating Costs shall be disbursed to the
Borrower pursuant to this clause only with the prior consent of the
Administrative Agent (if such amount of Cash Operating Costs is more
than 5% but less than 10% above such budgeted Cash Operating Costs) or
the Administrative Agent and the Majority Institutions (if such amount
of Cash Operating Costs is 10% or more above such budgeted Cash
Operating Costs), in each case, which consent shall not be
unreasonably withheld;
third, if such Disbursement Date is a Monthly Operating
Disbursement Date, ratably, into the Insurance and Property Tax
Reserve Account, an amount equal to 1/12th of any insurance premiums
and property taxes payable on or within twelve months following such
Monthly Operating Disbursement Date, together with the amount of all
deficiencies, if any, with respect to deposits required during all
prior months with respect to insurance premiums and property taxes;
fourth, if such Disbursement Date is a Special Senior Debt
Prepayment Date on which all or a portion of the Loans are required to
be prepaid pursuant to Section 7.3 of the Project Loan Agreement or
all or a portion of the Bonds are required to be prepaid pursuant to
the Bond Indenture pursuant to which such Bonds were issued, to the
Persons or into the Accounts specified in clauses first and second of
Section 5.7(c), the amounts specified in such clauses in the order of
priority set forth therein;
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fifth, if such Disbursement Date is a Scheduled Senior Debt
Service Payment Date, to the Persons or into the Accounts, as the case
may be, specified in clauses fourth through sixth of Section 5.3(a),
the amounts specified in such clauses in the order of priority set
forth in Section 5.3(a);
sixth, if such Disbursement Date is a Monthly Operating
Disbursement Date, with the consent of the Required Secured Parties,
to the Borrower for the payment of Major Maintenance Expenses, the
amount specified in the Request Letter delivered with respect to such
Monthly Operating Disbursement Date; provided, that the Major
Maintenance Expenses payable in any calendar year shall not exceed the
amounts set forth in Schedule 2 hereto (as adjusted from time to
time); provided, further that the Borrower shall certify, and the
Independent Engineer shall confirm, in writing to the Security Agent
that, in its reasonable judgment, such payments to be made constitute
payments of Major Maintenance Expenses;
seventh, if such Disbursement Date is a Quarterly Distribution
Date, to the Facility Operator, an amount sufficient to pay the Basic
Monthly O&M Fee and/or the Annual O&M Bonus then due and payable under
the Operating and Maintenance Agreement, together with any unpaid
amounts of the Basic Monthly O&M Fee and the Annual O&M Bonus
(excluding interest thereon) which was payable to the Facility
Operator on a prior Quarterly Distribution Date;
eighth, if such Disbursement Date is a Special Senior Debt
Prepayment Date on which the Borrower shall elect to prepay Bank Loans
and/or Institutional Loans in accordance with Section 7.4 of the
Project Loan Agreement, with the consent of the Required Secured
Parties, to the Persons specified in Section 5.5(b), the amounts
specified in such clauses in the order of priority set forth therein;
and
ninth, if such Disbursement Date is a Quarterly Distribution
Date, to the Facility Operator, an amount equal to any interest
payable to the Facility Operator pursuant to Section 6.7 of the
Operating and Maintenance Agreement following the non-payment or
partial payment of the Basic Monthly O&M Fee and/or the Annual O&M
Bonus on a prior Quarterly Distribution Date;
provided that if such Disbursement Date is a L/C Reimbursement Date, the
Security Agent shall transfer from the Accounts as specified in Section
5.15(c), ratably with the transfers required by clause fifth of this Section
5.15(b) on such date, to the Persons specified on Section 5.7(d), the amounts
specified therein.
(c) Unless otherwise directed by the Required Secured
Parties, the Security Agent shall obtain the cash necessary to make the
transfers and/or releases required by Sections 5.15(b) and 5.15(d) from the
Accounts by making withdrawals from the Accounts in the following order of
priority: first, the Project Control Account; second, the Institutional Loan
Proceeds Account; third, the Construction Account; fourth, the Additional
Collateral Account; fifth, the Debt Service Reserve Account; sixth, the
Distributions Account; and seventh, funds in any other Account (other than the
Greenhouse Reserve Account and the Bond Transfer Accounts) in such order of
priority as the Required Secured Parties may determine; provided that the
amounts payable
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pursuant to clauses seventh and ninth of Section 5.15(b) may only be paid from
funds on deposit in the Project Control Account; provided, further, that:
(i) on any Scheduled Senior Debt Service Payment Date
on which interest is due and payable on any Bank Loan or Institutional
Note under the Project Loan Agreement, the Security Agent shall, prior
to making any of the withdrawals specified in the provisions of this
Section 5.15(c) preceding this proviso, transfer from the Bank Accrued
Interest Subaccount or the Institutional Accrued Interest Subaccount,
as the case may be, to the Administrative Agent or each holder of an
Institutional Note, respectively, any amounts then on deposit in such
Subaccount for application to the payment of the interest due and
payable on such Loan or Note on such date;
(ii) on any Scheduled Senior Debt Service Payment Date
on which interest and/or fees are due and payable on any Senior Debt,
the Security Agent shall, immediately after the transfers specified in
clause (i) of this proviso and prior to making any of the withdrawals
specified above in the provisions of this Section 5.15(c)
preceding this proviso, transfer from the Delay Damages Subaccount of
the Special Payment Account to the holders of such Senior Debt, from
and to the extent of all funds on deposit therein, the amounts of
interest and/or fees then due and payable to such holders under the
relevant Senior Debt Agreements;
(iii) on any Special Senior Debt Prepayment Date on
which all or a portion of the Loans are required to be prepaid
pursuant to Section 7.3 of the Project Loan Agreement or all or a
portion of the Bonds are required to be prepaid pursuant to the
relevant Bond Indenture, the Security Agent shall, prior to making any
of the withdrawals specified in the provisions of this Section 5.15(c)
preceding this proviso, transfer from the Prepayment Subaccount of the
Special Payment Account to the Administrative Agent, each Institution
and the relevant Bond Trustee, as the case may be, from and to the
extent of all funds on deposit in the Prepayment Subaccount, the
amounts then due and payable (x) to the Banks (including the Issuing
Bank in reimbursement of amounts drawn under a Bond Letter of Credit),
the Administrative Agent and the Institutions pursuant to the Project
Loan Agreement and (ii) to the relevant Bond Trustee, the amounts then
due and payable on the Bonds that are not paid through a drawing on a
Bond Letter of Credit;
(iv) on any L/C Reimbursement Date, the Security Agent
shall, prior to making any of the withdrawals specified in the
provisions of this Section 5.15(c) preceding this proviso, transfer
from the L/C Cash Collateral Subaccount of the Special
Payment Account to the Issuing Bank, from and to the extent of all
funds on deposit therein, the amounts then due and payable to the
Issuing Bank and the Banks in respect of L/C Reimbursement
Obligations; and
(v) on any date during the Construction Period on
which a True-Up Amount is owing to the Institutions pursuant to
Section 14.10(b) of the Project Loan Agreement and the Security Agent
shall have received a written request from the Administrative Agent or
any Institution specifying the True-Up Amount owing to each
Institution (as calculated in accordance with paragraph (ii) of
Section 14.10(b)), the Security Agent shall, prior to making any of
the withdrawals specified in the provisions
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38
of this Section 5.15(c) preceding this proviso but after making the
transfers specified in clauses (i) through (iv) of this proviso,
withdraw from the Institutional Loan Proceeds Account the funds then
on deposit therein, up to the aggregate True-Up Amounts due to all of
the Institutions, and pay such funds to the Institutions for
application to the prepayment of the Institutional Loans.
Subject to the delivery of a Notice of Action directing that action be taken
pursuant to Section 5.15(d), amounts remaining on deposit in the Accounts
during a Default Period after application as provided in Section 5.15(b) shall
be retained in such Accounts pending future application in accordance with
Section 5.15(b) or, if such Default Period shall no longer be continuing, the
other provisions of this Agreement.
(d) If at any time the Security Agent receives a Notice of
Action directing it to distribute the amounts in the Accounts in accordance
with this Section 5.15(d), the Security Agent shall transfer all amounts (other
than the Greenhouse Reserve Account and the Bond Transfer Accounts) available
in the Accounts in the order of priority among the Accounts as is specified in
Section 5.15(c) (excluding the proviso thereto and clauses (ii), (iii) and (iv)
thereof) in the following order of priority:
first, ratably, (i) all fees, costs and expenses payable to
the Security Agent and (ii) all charges, expenses and advances
incurred or made by the Security Agent in order to protect the Liens
of the Security Documents or the security afforded thereby, together
with interest at the True-Up Default Rate;
second, ratably, all fees, costs and expenses payable to the
Administrative Agent and all costs and expenses of each Secured Party,
all as certified to the Security Agent by the applicable Secured
Party;
third, to the Administrative Agent and the holders of the
Institutional Notes, the amounts on deposit in the Bank Accrued
Interest Subaccount and the Institutional Accrued Interest Subaccount,
respectively, as partial payment of the outstanding interest on the
Bank Loans and the Institutional Notes, respectively;
fourth, if upon a bankruptcy or reorganization of the Borrower
any amount on deposit in the Bank Accrued Interest Subaccount or the
Institutional Accrued Interest Subaccount is released to the Borrower,
to the Administrative Agent and the holders of the Institutional
Notes, respectively, amounts that will cause accrued interest (other
than interest accruing by reason of the existence of an Event of
Default) on all of the Bank Loans and Institutional Notes to have been
paid to the identical date;
fifth, ratably, (i) to the Administrative Agent, an amount
equal to the remaining outstanding principal of and interest on the
Bank Loans, the unpaid amount of the L/C Reimbursement Obligations and
funding indemnities payable pursuant to Section 7.7(a) of the Project
Loan Agreement, (ii) to each holder of an Institutional Note, an
amount equal to the remaining outstanding principal of and interest on
such Institutional Note, and (iii) to each Bond Trustee, an amount
equal to the remaining outstanding principal of and
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39
interest on the Bonds issued pursuant to the Bond Indenture to which
such Bond Trustee is a party which shall not have been paid through a
drawing on a Bond Letter of Credit;
sixth, ratably, (i) to each Secured Counterparty, all Swap
Termination Obligations if any, payable to such Secured Counterparty
under each Interest Rate Hedging Agreement to which such Secured
Counterparty is a party, and (ii) all fees, Make-Whole Premiums,
Modified Make-Whole Premiums and other amounts owed to the Secured
Parties;
seventh, to the Secured Parties, all other Secured Obligations
owed to the Secured Parties (to be paid to the Secured Parties pro
rata in accordance with the aggregate outstanding amount of such other
Secured Obligations owed to each Secured Party); and
eighth, any surplus then remaining shall be paid to the
Borrower or its successors or assigns or to whomever may be lawfully
entitled to receive the same or as a court of competent jurisdiction
may direct.
(e) The proceeds of any sale, disposition or other
realization by the Security Agent or any Secured Party of or upon the Mortgaged
Property or the Partner Collateral shall be distributed in the order of
priority set forth in Section 5.15(d); provided, however, that if (i) the
Loans shall have been declared due and payable at any time during the
three-year period ending on the Bank Loan Final Maturity Date because of a
Default that occurred during such three-year period which becomes an Event of
Default that is continuing at the time the Loans are declared due and payable
and (ii) the proceeds of the sale, disposition or other realization of or upon
the Mortgaged Party and the Partner Collateral are insufficient to pay in full
all outstanding principal of the Loans and the principal amount of all L/C
Reimbursement Obligations, then any amount withdrawn during such three-year
period from the Debt Service Reserve Account to pay any Lender principal of its
Loans or L/C Reimbursement Obligations which is withdrawn (x) after the date of
occurrence of such Default or (y) up to one year prior to the occurrence of
such Default (but not prior to the beginning of such three-year period) to the
extent such withdrawn amount is not restored to the Debt Service Reserve
Account prior to the acceleration of the Loans, shall be credited against the
amount of principal payable to such Lender pursuant to clause fifth of Section
5.15(d).
Section 5.16 The Security Agent's Calculations;
Determinations. (a) In making the determinations and allocations required by
this Article V, the Security Agent may rely upon information provided pursuant
to Section 6.3 or 6.4 hereof and Section 4.7(d) or 10.4(c) of the Project Loan
Agreement, and the Security Agent shall have no liability to any of the Secured
Parties for actions taken in reliance on such information. All transfers and
releases made by the Security Agent pursuant to this Article V (except through
clerical or other manifest error) shall be final, subject to any decree of any
court of competent jurisdiction.
(b) In making the determinations and allocations required
by this Article V, Permitted Investments on deposit from time to time in the
Accounts shall be valued by the Security Agent at the lesser of the face amount
thereof and the purchase price thereof.
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(c) In the event of any dispute as to any amount to be
distributed or paid by the Security Agent from the Accounts, the Security Agent
is authorized and directed to retain in its possession without liability to
anyone all or any part of the amounts then on deposit in the Accounts, until
such dispute shall have been settled by mutual agreement of the Borrower and
the Secured Parties or by a final order, decree or judgment of a Federal or
State court of competent jurisdiction as to which time for an appeal has
expired and no appeal has been perfected, but the Security Agent shall be under
no duty whatsoever to institute or defend any such proceedings.
Section 5.17 Insufficient Amounts. To the extent the amounts
on deposit in any Account are insufficient to fully satisfy any transfer or
release requirement from such Account under this Article V, such transfer or
release shall be made to the extent of the amount on deposit in such Account
(after the sale of all instruments, investments and securities held in the
Account). In addition, if any transfer and/or release requirements from any
Account in this Article V share the same level of priority and there are
insufficient funds in such Account to satisfy in full all such transfer and/or
release requirements which share such level of priority, such transfers and/or
releases shall be made on a pro rata basis to the extent of the amount on
deposit in such Account; provided that if payments on account of principal,
interest and/or other amounts due on the Senior Debt share the same level of
priority, the funds released on account of such payment of Senior Debt shall be
applied as follows: first, to the payment of accrued interest on such Senior
Debt to the date of such payment; second, to the payment of the principal
amount of such Senior Debt and L/C Reimbursement Obligations then due; and
third, to the payment of any such other amounts that share the same level of
priority.
Section 5.18 Concerning Section 10.31 of the Project Loan
Agreement. It is understood, and shall be assumed for purposes of calculating
the required funding of the Debt Service Reserve Account, that the amount of
any retirement, purchase and cancellation and redemption of Bonds and of any
prepayment of Bank Loans specified in Section 10.31 of the Project Loan
Agreement for any Bank Loan Installment Payment Date will result in a Bond
Reimbursement Obligation becoming due on such date in such amount. For all
purposes of this Security Deposit Agreement, such Bond Reimbursement Obligation
(and interest thereon and all other amounts owing with respect thereto) shall
be treated in the same manner as Bank Loans and shall be given the same
priority pro rata as Bank Loans, and in all other respects shall be treated in
the same manner as Bank Loans due on a Scheduled Senior Debt Service Payment
Date.
ARTICLE VI
Agreements with the Security Agent
----------------------------------
Section 6.1 Delivery of Senior Debt Agreements. The Security
Agent acknowledges receipt from the Borrower of copies of the Senior Debt
Agreements as in effect on the date hereof, certified by the Borrower to be
true and correct and to constitute all of the Senior Debt Agreements in effect
on the date hereof. The Borrower shall deliver to the Security Agent, promptly
upon the execution thereof, a true and complete copy of each amendment,
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supplement or other modification to any Senior Debt Agreement, and of each new
Senior Debt Agreement, entered into after the date of this Agreement.
Section 6.2 Payment by Security Agent. All payments by the
Security Agent under any Security Document to any Secured Party shall be made
(a) if to any Bank, the Issuing Bank or the Administrative Agent, by wire
transfer to the Administrative Agent at its address specified in Schedule 1 to
the Project Loan Agreement if originally a party hereto or if such Bank
becomes a party hereto after the date hereof, at its address specified in the
Bank Transfer Supplement executed by such Bank, (b) if to any Institution, by
wire transfer to it at its address specified (i) in the Institutional Note
Register, if the Institutional Notes held by such Institution are Registered
Institutional Notes, or (ii) otherwise, on Schedule 1 to the Project Loan
Agreement if originally a party hereto or, if such Institution becomes a party
hereto after the date hereof, at its address specified in the Institutional
Transfer Supplement executed by such Institution, (c) if to any Bond Trustee,
by wire transfer to such Bond Trustee at its address notified by such Bond
Trustee to the Security Agent from time to time, and (d) if to any Secured
Counterparty, by wire transfer to it at its address specified in Schedule 1 to
the Project Loan Agreement if originally a party hereto or if such Secured
Counterparty becomes a party hereto after the date hereof, at its address
specified in the Security Deposit Agreement Supplement executed by such Secured
Counterparty.
Section 6.3 Information Provided to the Security Agent. (a)
The Administrative Agent may from time to time deliver to the Security Agent,
and upon the request of the Security Agent from time to time shall deliver to
the Security Agent, a statement setting forth as of such time (A) the amount of
the Total Bank Loan Commitments, the stated amount of the VP Letter of Credit
then outstanding and the stated amount of each Bond Letter of Credit, if any,
then outstanding and the aggregate outstanding principal amount of Bank Loans
and (B) the amount of each Type of outstanding Bank Loan and the interest rates
then in effect with respect thereto. The Administrative Agent shall also
notify the Security Agent of the amount of any L/C Reimbursement Obligations
not repaid by the Borrower or refinanced with a Bank L/C Loan or Bank Liquidity
Loan. In addition, the Administrative Agent shall notify the Security Agent of
the occurrence of any Event of Loss (and the Event of Loss Prepayment Date) or
Damage Event (and whether such Damage Event is a Non-Restoration Event) of
which it has actual knowledge or has received notice from any Bank or from the
Borrower pursuant to Section 10.17 of the Project Loan Agreement and shall also
deliver to the Security Agent from time to time, at the option of the
Administrative Agent or at the request of the Security Agent, any other
information necessary to permit the Security Agent to make the deposits,
transfers and releases with respect to the Accounts in accordance with the
provisions of this Agreement.
(b) Each Institution shall deliver to the Security Agent, at
the time of each issuance to it of an Institutional Note and of each transfer
by it of all or a portion of the Institutional Notes held by it to one or more
other Institutions, all relevant information with respect to such Notes or such
transfer, including the principal amount of such Notes and the names and
addresses of the holders thereof, the interest rate payable thereon, the dates
on which principal and interest on such Notes are due and payable and the
respective amounts of principal and interest payable on each such Note on each
such date. Each Institution shall notify the Security Agent of the occurrence
of an Event of Loss (and the Event of Loss Prepayment Date) or Damage Event
(and whether such Damage Event is a Non-Restoration Event) of which it has
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actual knowledge or has received notice from the Borrower pursuant to Section
10.17 of the Project Loan Agreement and shall also deliver to the Security
Agent from time to time, at the option of such Institution or at the request of
the Security Agent, any other information necessary to permit the Security
Agent to make the deposits, transfers and releases with respect to the Accounts
in accordance with the provisions of this Agreement.
(c) The Borrower shall cause each Bond Trustee to deliver to
the Security Agent, on or before the date of issuance of the Bonds to be issued
under the Bond Indenture to which such Bond Trustee is a party, a statement
setting forth the aggregate principal amount of such Bonds, the interest
rate(s) payable thereon, the dates on which principal and interest on such
Bonds are due and payable and the respective amounts of principal due and
payable on each such date. The Borrower shall also cause each Bond Trustee to
deliver to the Security Agent from time to time, at the request of the Security
Agent, any other information necessary to permit the Security Agent to make the
deposits, transfers and releases with respect to the Accounts in accordance
with the provisions of this Agreement.
(d) Each Secured Counterparty shall deliver to the Security
Agent, upon such Secured Counterparty becoming a party to this Agreement, a
statement setting forth the Swap Obligations payable to such Secured
Counterparty under each Interest Rate Hedging Agreement to which it is a party
and the dates on which such amounts are due and the method by which the Swap
Termination Obligations thereunder are calculated. Each Secured Counterparty
shall also deliver to the Security Agent from time to time, at the option of
such Secured Party or at the request of the Security Agent, any other
information necessary to permit the Security Agent to make the deposits,
transfers and releases with respect to the Accounts in accordance with the
provisions of this Agreement.
(e) The Borrower shall notify the Security Agent, as soon as
practicable prior to the expected occurrence thereof, and on the date of
occurrence thereof, of the Commercial Operations Date, the Completion Date and
the date of Final Completion of the Facility and shall deliver to the Security
Agent, concurrently with the delivery thereof under the relevant Financing
Document, a copy of each Extension of Credit Request, Equity Funding Loan
Borrowing Certificate, Greenhouse Prepayment Notice, Buydown Prepayment Notice
and Optional Prepayment Notice delivered by the Borrower pursuant to such
Financing Document and, at the request of the Security Agent from time to time,
any other information necessary to permit the Security Agent to make the
deposits, transfers and releases with respect to the Accounts in accordance
with the provisions of this Agreement. The Borrower will also notify the
Security Agent, promptly following its receipt of notice from the Greenhouse
Owner, of the expected occurrence of, and the date of occurrence of, Final
Completion of the Greenhouse. In addition, if any Project Document is assigned
by any party thereto, the Borrower shall, on or prior to the date of such
assignment, furnish to the Security Agent the name and address of the assignee
of such party where notices are to be sent.
Section 6.4 Notice of Amounts Payable Under Financing
Documents. (a) The Borrower shall deliver to the Security Agent and each
Secured Party, not later than five Business Days prior to any Scheduled Senior
Debt Service Payment Date, Special Senior Debt Prepayment Date or L/C
Reimbursement Date, a certificate setting forth, as of such Scheduled Senior
Debt Service Payment Date, Special Senior Debt Prepayment Date or L/C
Reimbursement Date, as the
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case may be, the aggregate amount of Senior Debt due and payable on such date
(broken down as to principal on Bank Loans, Institutional Notes and Bonds,
interest on Bank Loans, Institutional Notes and Bonds, Swap Obligations (and
any portion thereof constituting Swap Termination Obligations), L/C
Reimbursement Obligations, fees, funding indemnities, any Make-Whole Premium or
Modified Make-Whole Premium and other amounts due under the Financing Documents
on such date). The Security Agent may conclusively rely on any certificate
delivered pursuant to this Section 6.4(a) in transferring or releasing amounts
from the Accounts pursuant to Article V unless it shall have received notice to
the contrary from any Secured Party as to any payment due to it in accordance
with Section 6.4(b) below.
(b) The Administrative Agent shall have the right to direct
the Security Agent in writing as to any amount to be paid to the Administrative
Agent (for retention by it or for distribution to the Banks) pursuant to
Article V of this Agreement, each Institution shall have the right to direct
the Security Agent in writing as to any amount to be paid to it pursuant to
Article V of this Agreement, each Secured Counterparty shall have the right to
direct the Security Agent in writing as to any amount to be paid to such
Secured Counterparty pursuant to Article V of this Agreement, each Bond Trustee
shall have the right to direct the Security Agent in writing as to any amount
to be paid pursuant to Article V of this Agreement to it (for retention by it
or for distribution to the holders of the Bonds issued pursuant to the Bond
Indenture to which it is a party), and the Issuing Bank shall have the right to
direct the Security Agent in writing as to any amount to be paid to it (for
retention by it or for distribution to the Banks) in respect of L/C
Reimbursement Obligations pursuant to Article V of this Agreement. The
Security Agent may conclusively rely on any directions delivered to it pursuant
to this Section 6.4(b) in transferring or releasing amounts from the Accounts
pursuant to Article V, notwithstanding any contrary directions delivered to it
pursuant to Section 6.4(a) or any other provision of the Agreement, unless it
shall have actual knowledge that such directions are incorrect.
Section 6.5 Information Accompanying Amounts Delivered for
Deposit into Accounts. All amounts delivered to the Security Agent for deposit
into any Account by any party after the Closing Date pursuant to Article IV
(other than any Project Revenues received pursuant to the Power Purchase
Agreement, the Steam Sales Agreement or the Greenhouse Loan Agreement) shall be
accompanied by a certificate of a Responsible Officer of the Borrower setting
forth in reasonable detail the source of the amounts and the Account or
Subaccount into which such amounts are to be deposited and such other
information as may be necessary to enable the Security Agent to so deposit such
funds in accordance with this Agreement. The Security Agent may conclusively
rely on such certificates.
Section 6.6 Certificate of Secured Parties. Any action or
direction taken by the Secured Parties under any provision of this Agreement
shall be pursuant to a certificate or certificates executed by Secured Parties
constituting the required combination of Secured Parties, and each such
certificate shall state the amount of Secured Obligations held by such Secured
Parties and that such Secured Parties constitute the required combination of
Secured Parties for purposes of the action or direction taken by such Secured
Parties.
Section 6.7 Compensation and Expenses. The Borrower shall
pay to the Security Agent, from time to time upon demand, all of the documented
out-of-pocket costs and expenses of the Security Agent (including, without
limitation, the reasonable fees and disbursements of its
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counsel and such special counsel as the Security Agent reasonably elects to
retain) (i) arising in connection with the administration of this Agreement
(including without limitation pursuant to Section 2.4(d) hereof) and the other
Security Documents, any amendment, modification or termination of this
Agreement or any other Security Document or the enforcement of any of the
provisions hereof or thereof, (ii) incurred or required to be advanced in
connection with the administration of the Collateral, the sale or other
disposition of Collateral pursuant to this Agreement or any other Security
Document and the preservation, protection or defense of the Security Agent's
rights under this Agreement and the other Security Documents and in and to the
Collateral, (iii) incurred by the Security Agent in connection with the
resignation or removal of the Security Agent pursuant to Section 2.6 or (iv)
incurred by a separate security agent or co-security agent appointed in
accordance with Section 2.8. In addition to the payment of the above amounts
to the Security Agent, in the case of any successor Security Agent which is not
also the Administrative Agent entitled to receive the fee referred to in
Section 7.1(e) of the Project Loan Agreement, or of any separate security agent
or co- security agent appointed in accordance with Section 2.8, the Borrower
shall pay to such successor Security Agent, separate security agent or
co-security agent, as the case may be, its reasonable fees which are approved
by the Borrower, which approval will not be unreasonably withheld and, in any
event, will be granted if such fees are customary. The obligations of the
Borrower under this Section 6.7 shall survive the termination of the other
provisions of this Agreement.
Section 6.8 Stamp and Other Similar Taxes; Filing Fees,
Excise Taxes, Etc. The Borrower shall indemnify and hold harmless the Security
Agent and each Secured Party from any present or future liability for any stamp
or any other similar tax and any penalties or interest with respect thereto,
which may be assessed, levied or collected by any jurisdiction in connection
with this Agreement, any other Security Document or any Collateral. The
Borrower shall also pay or reimburse the Security Agent for any and all
payments made by the Security Agent in respect of all search, filing, recording
and registration fees, and all taxes, excise taxes and other similar imposts
which may be payable or determined to be payable in respect of the execution
and delivery of this Agreement and each other Security Document. The
obligations of the Borrower under this Section 6.8 shall survive the
termination of the other provisions of this Agreement.
Section 6.9 Indemnification. The Borrower shall pay,
indemnify, and hold the Security Agent and each Secured Party harmless from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses (including, without limitation, the
reasonable fees and disbursements of counsel) and disbursements of any kind or
nature with respect to the execution, delivery, enforcement, performance and
administration of this Agreement and the other Security Documents
(collectively, the "Indemnified Liabilities"), unless arising solely from the
gross negligence or willful misconduct of such indemnified party. In any suit,
proceeding or action brought, in accordance with the provisions of this
Agreement or any other Security Document, by the Security Agent under or with
respect to any contract, agreement, interest or obligation constituting part of
the Collateral for any sum owing thereunder, or to enforce any provisions
hereof or thereof, the Borrower will save, indemnify and keep the Security
Agent and the Secured Parties harmless from and against all expense, loss or
damage suffered by reason of any defense, setoff, counterclaim, recoupment or
reduction of liability whatsoever of the obligor thereunder, arising out of a
breach by the Borrower of any obligation thereunder or arising out of any other
agreement, indebtedness or liability at any time owing to or in favor of such
obligor or its successors from the Borrower, and
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all such obligations of the Borrower shall be and remain enforceable against
and only against the Borrower and shall not be enforceable against the Security
Agent or any Secured Party. The agreements in this Section 6.9 shall survive
the termination of the other provisions of this Agreement.
Section 6.10 Further Assurances. At any time and from time
to time, upon the written request of the Security Agent, and at the expense of
the Borrower, the Borrower will promptly execute and deliver any and all such
further instruments and documents and take such further action (including,
without limitation, the delivery to the Security Agent or its agent of chattel
paper (as defined in the New York Uniform Commercial Code) which constitutes
Collateral) as is necessary or reasonably requested further to perfect, or to
protect the perfection of, the liens and security interests granted under the
Security Documents, including, without limitation, the filing of any financing
or continuation statements under the Uniform Commercial Code in effect in any
relevant jurisdiction. The Borrower also hereby authorizes the Security Agent
to sign and to file any such financing or continuation statements without the
signature of the Borrower to the extent permitted by applicable law, and to
file a carbon, photostatic, photographic or other reproduction of any Security
Document or a Uniform Commercial Code financing statement.
Section 6.11 Application by Secured Parties. The Security
Agent shall have no duty to inquire as to the application by the Administrative
Agent, any Institution, the Issuing Bank, any Bond Trustee, any Secured
Counterparty or any other holders of Senior Debt of any amounts distributed to
them under this Agreement or any other Security Document.
ARTICLE VII
Default Period
--------------
Section 7.1 Default and Acceleration Notices. (a) A Default
Notice or Acceleration Notice shall be effective upon receipt thereof by the
Security Agent. The Security Agent shall be deemed to have received a Default
Notice upon the filing by the Borrower of a voluntary petition of bankruptcy
under the Bankruptcy Code (or the taking of similar action by the Borrower
under the laws of any other jurisdiction). The Security Agent shall be deemed
to have received an Acceleration Notice if an Event Default specified in clause
(i) or (ii) of Section 12.1(e) of the Project Loan Agreement occurs with
respect to the Borrower. A Default Notice or Acceleration Notice, once
effective, shall remain in effect unless and until it is canceled as provided
in Section 7.1(b).
(b) The Secured Party or Secured Parties which have given a
Default Notice or Acceleration Notice shall be entitled to cancel it by
delivering a Cure Notice or other written notice of cancellation to the
Security Agent (i) prior to the commencement of the exercise of remedies by the
Security Agent pursuant to the Security Documents or (ii) thereafter, if the
Security Agent reasonably believes that any such exercise of remedies may be
reversed without undue difficulty. In addition, (i) the Required Secured
Parties shall be entitled to cancel any Default Notice at any time by
delivering a written notice of cancellation to the Security Agent, and (ii) any
Acceleration Notice may be cancelled by written notice to the Security Agent in
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accordance with the provisions of the last paragraph of Section 12.2 of the
Project Loan Agreement.
(c) Promptly upon receipt by the Security Agent of a Default
Notice or Acceleration Notice or any Cure Notice or other written notice of
cancellation thereof delivered pursuant to Section 7.1(b), the Security Agent
shall deliver a copy thereof to the Borrower and each Secured Party.
Section 7.2 General Authority of the Security Agent over the
Collateral. The Borrower hereby irrevocably constitutes and appoints the
Security Agent and any officer or agent thereof, with full power of
substitution as among such officers and agents, as its true and lawful
attorney-in-fact with full power and authority in the name of the Borrower or
in its own name, from time to time in the Security Agent's reasonable
discretion during a Default Period to take any and all appropriate action and
to execute any and all documents and instruments which may be necessary or
desirable to carry out the terms of this Agreement and the other Security
Documents (but subject to the terms hereof and thereof) and to accomplish the
purposes hereof and thereof; and, without limiting the generality of the
foregoing, the Borrower hereby gives the Security Agent, during any Default
Period, the power and right on behalf of the Borrower, without notice to or
further assent by the Borrower, to: (i) ask for, demand, sue for, collect,
receive and give acquittance for any and all moneys due or to become due upon,
or in connection with, the Collateral; (ii) receive, take, endorse, assign and
deliver any and all checks, notes, drafts, acceptances, documents and other
negotiable and non-negotiable instruments taken or received by the Security
Agent as, or in connection with, the Collateral; (iii) commence, prosecute,
defend, settle, compromise or adjust any claim, suit, action or proceeding with
respect to, or in connection with, the Collateral; (iv) sell, transfer, assign
or otherwise deal in or with the Collateral or any part thereof as fully and
effectively as if the Security Agent were the absolute owner thereof; (v)
exercise all remedies provided for by the Security Documents; and (vi) do, at
its option and at the expense and for the account of the Borrower, at any time
or from time to time, all acts and things which the Security Agent reasonably
deems necessary to perfect the liens and security interests of the Security
Agent in the Collateral, to protect or preserve the Collateral and to realize
upon the Collateral. The Borrower hereby ratifies all that said
attorneys-in-fact shall lawfully do or cause to be done by virtue hereof. This
power of attorney is a power coupled with an interest and shall be irrevocable.
Section 7.3 Right to Initiate Proceedings. During any
Default Period, the Security Agent, subject to the provisions of Sections
7.4(b) and 8.4, (i) shall have the right and power to institute and maintain
such suits and proceedings as it may reasonably deem appropriate to protect and
enforce the rights vested in it by this Agreement and each other Security
Document and (ii) may either after entry, or without entry, proceed by suit or
suits at law or in equity to enforce such rights and to foreclose upon the
Collateral and to sell all or, from time to time, any of the Collateral, in
each case in accordance with the provisions of the relevant Security Document,
under the judgment or decree of a court of competent jurisdiction or pursuant
to the power of sale granted to it in the Security Documents.
Section 7.4 Exercise of Powers; Instructions of Required
Secured Parties. (a) All of the powers, remedies and rights of the Security
Agent set forth in or contemplated by this Agreement may be exercised by the
Security Agent in respect of each other Security Document
<PAGE> 52
47
as though set forth in full therein, and all of the powers, remedies and rights
of the Security Agent and the Secured Parties as set forth in each Security
Document may be exercised from time to time as herein and therein provided. In
the event of any inconsistency between this Agreement and any other Security
Document, the provisions of this Agreement shall be controlling.
(b) During any Default Period, the Required Secured Parties
may deliver one or more notices (any such notice, a "Notice of Action") from
time to time to the Security Agent directing the Security Agent to exercise, to
partially exercise or not to exercise one or more of the rights and remedies
available to the Security Agent under this Agreement and the other Security
Documents. The Security Agent shall deliver to each Secured Party a copy of
each Notice of Action promptly after receipt thereof. The Security Agent shall
exercise the rights and remedies and take the other actions described in a
Notice of Action at the time or times specified in such Notice of Action.
Notwithstanding anything in this Agreement or the other Security Documents to
the contrary, during a Default Period, if the Security Agent has not received a
Notice of Action, the Security Agent agrees with the Secured Parties that it
shall not foreclose on, or assert or exercise any right or remedy otherwise
available to it under this Agreement or any other Security Document with
respect to, all or any portion of the Collateral.
(c) All Proceeds of Collateral received by the Security Agent
from the exercise of its rights and remedies under this Agreement and the other
Security Documents shall be applied as set forth in Section 5.15(d).
Section 7.5 Remedies Not Exclusive. (a) No right or remedy
conferred upon or reserved to the Security Agent herein or in the other
Security Documents is intended to be exclusive of any other right or remedy,
but every such right and remedy shall be cumulative and shall be in addition to
every other right and remedy conferred herein or in any other Security Document
or now or hereafter existing at law or in equity or by statute.
(b) No delay or omission by the Security Agent to exercise
any right, remedy or power hereunder or under any other Security Document shall
impair any such right, remedy or power or shall be construed to be a waiver
thereof, and every right, power and remedy given by this Agreement or any other
Security Document to the Security Agent may be exercised from time to time and
as often as may be deemed expedient by the Security Agent.
(c) If the Security Agent shall have proceeded to enforce any
right, remedy or power under this Agreement or any other Security Document and
the proceeding for the enforcement thereof shall have been discontinued or
abandoned for any reason or shall have been determined adversely to the
Security Agent, then the Borrower, the Security Agent and the Secured Parties
shall, subject to any effect of or determination in such proceeding, severally
and respectively be restored to their former positions and rights hereunder or
thereunder and in all other respects, and thereafter all rights, remedies and
powers of the Security Agent shall continue as though no such proceeding had
been taken.
(d) All rights of action and of asserting claims upon or
under this Agreement and the other Security Documents may be enforced by the
Security Agent without the possession of any document or instrument evidencing
or relating to any Secured Obligation or the production
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48
thereof at any trial or other proceeding relative thereto; any suit or
proceeding instituted by the Security Agent shall be, subject to the provisions
of Section 2.5(d), brought in its name as Security Agent; and any recovery of
judgment shall be held as part of the Collateral.
Section 7.6 Waiver and Estoppel. (a) To the extent it may
lawfully do so, the Borrower agrees that, during any Default Period, it will
not at any time in any manner whatsoever claim or take the benefit or advantage
of any appraisement, valuation, stay, extension, moratorium, turnover or
redemption law, or any law permitting it to direct the order in which the
Collateral shall be sold, now or at any time hereafter in force, which may
delay, prevent or otherwise affect the performance or enforcement of this
Agreement or any other Security Document, and the Borrower hereby waives all
benefit or advantage of all such laws, to the extent that it may lawfully do
so, and covenants that it will not hinder, delay or impede the execution of any
power granted to the Security Agent in this Agreement or any other Security
Document but will suffer and permit the execution of every such power as though
no such law were in force.
(b) To the extent it may lawfully do so, the Borrower, on
behalf of itself and all who claim through or under it (including, without
limitation, any and all subsequent creditors, vendees, assignees and lienors),
hereby waives and releases all rights to demand or to have any marshalling of
the Collateral upon any sale during any Default Period whether made under any
power of sale granted herein or in any other Security Document or pursuant to
judicial proceedings or upon any foreclosure or any enforcement of this
Agreement or any other Security Document and consents and agrees that all the
Collateral may at any such sale be offered and sold publicly or privately as an
entirety or in lots as the Security Agent and the other Secured Parties may
determine.
(c) To the extent it may lawfully do so, the Borrower hereby
waives presentment, demand, protest and any notice of any kind (including,
without limitation, notice of intent to accelerate maturity or notice of
acceleration of maturity, except notices explicitly required hereunder or under
the Senior Debt Agreements or the other Security Documents) in connection with
this Agreement and the other Security Documents and any action taken by the
Security Agent with respect to the Collateral during any Default Period.
Section 7.7 Limitation on Security Agent's Duty in Respect of
Collateral. The Security Agent shall not have any duty to the Borrower or to
the Secured Parties as to any Collateral in its possession or control or in the
possession or control of any of its agents or nominees, or as to any income
thereon or as to the preservation of rights against prior parties or any other
rights pertaining thereto, except as specifically provided in this Agreement or
any other Security Document and except that the Security Agent shall hold the
Collateral in its custody with the same degree of care as similar property
owned by it at such time.
Section 7.8 Limitation by Law. All rights, remedies and
powers provided herein may be exercised only to the extent that the exercise
thereof does not violate any applicable provision of law, and all the
provisions hereof are intended to be subject to all applicable mandatory
provisions of law which may be controlling and to be limited to the extent
necessary so that they will not render this Agreement invalid, unenforceable in
whole or in part or not entitled to be recorded, registered or filed under the
provisions of any applicable law.
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Section 7.9 Future Right, Title and Interest. The Borrower
hereby agrees that it will defend the Security Agent's and the Secured Parties'
right, title and interest in and to the Collateral and the Proceeds thereof
against the claims and demands of all Persons whomsoever; and further agrees
that it will have like title to and right to grant a lien on and security
interest in all other property at any time hereafter granted to the Security
Agent as Collateral under the Security Documents and will likewise defend the
Security Agent's and the Secured Parties' right thereto and security interest
therein.
ARTICLE VIII
Certain Agreements of the Secured Parties
-----------------------------------------
Section 8.1 Secured Obligations Pari Passu. All Secured
Obligations shall (a) be entitled to the benefits of this Agreement and the
other Security Documents, (b) rank pari passu without any preference among
Secured Obligations by reason of date of incurrence or otherwise and (c) be
equally and ratably secured by the Collateral, except as otherwise provided in
Section 3.2.
Section 8.2 Pro Rata Sharing. (a) If, through the operation
of any bankruptcy, reorganization, insolvency or other laws or otherwise, the
Security Agent's security interest hereunder and under the other Security
Documents is enforced with respect to some, but not all, of the Secured
Obligations then outstanding, the Security Agent shall nonetheless apply all
Proceeds for the benefit of the holders of all Secured Obligations in the
proportions and subject to the priorities specified herein or in the other
Security Documents. To the extent that the Security Agent applies Proceeds as
set forth in the preceding sentence collected with respect to Secured
Obligations held by one Secured Party to or on behalf of Secured Obligations
held by a second Secured Party, the first Secured Party shall be deemed to have
purchased a participation in the Secured Obligations held by the second Secured
Party, or shall be subrogated to the rights of the second Secured Party 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.
(b) Subject to Section 8.2(a) above, if any Secured Party (a
"benefitted Secured Party") shall, in its capacity as a holder of Senior Debt,
at any time receive any payment of all or part of its Senior Debt or interest
thereon (whether voluntary or involuntary, through the exercise of any right of
setoff under the Senior Debt Agreements or by operation of law, or otherwise),
in a greater proportion than any such payment to any other Secured Party in
respect of such other Secured Party's Senior Debt or interest thereon, then,
unless any Senior Debt Agreement specifically provides for such payment to be
made to the holders of Senior Debt (or a portion of such holders) on a
non-proportionate basis, such benefitted Secured Party shall, promptly upon
becoming aware thereof or upon receipt of notice by the Security Agent to such
effect, pay to the Security Agent for the account of the other Secured Parties
entitled thereto the portion of such payment of the Senior Debt, or interest
thereon, which was made on a non- proportionate basis, for distribution by the
Security Agent in accordance with the provisions of this Agreement and the
other Senior Debt Agreements. Until such time as the provisions of the
immediately preceding sentence have been complied with, the benefitted Secured
Party shall be
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deemed to hold such amount required to be returned to the Security Agent in
trust for the other Secured Parties entitled thereto.
Section 8.3 Turnover of Collateral. If any Secured Party
(other than the Security Agent) acquires custody, control or possession of any
Collateral or Proceeds (other than pursuant to a disposition or distribution
thereof to such Secured Party in accordance with the provisions of this
Agreement or the other Security Documents), such Secured Party shall promptly
cause such Collateral or Proceeds to be delivered to or put in the custody,
possession or control of the Security Agent for disposition or distribution in
accordance with the provisions of this Agreement and the other Security
Documents. Until such time as the provisions of the immediately preceding
sentence have been complied with, such Secured Party shall be deemed to hold
such Collateral and Proceeds in trust for the parties entitled thereto
hereunder.
Section 8.4 No Bankruptcy Filings or Foreclosure. Each of
the Secured Parties hereby agrees that, except with the prior written consent
of the Required Secured Parties, it shall not: (i) commence any bankruptcy or
insolvency proceeding with respect to the Borrower or any Partner; or (ii)
attempt to foreclose on, or assert or exercise any right or remedy available to
it under this Agreement or any other Security Document with respect to, all or
any portion of the Collateral.
Section 8.5 No Loans; No Liens. Except as contemplated by
the Senior Debt Agreements, none of the Secured Parties shall (a) extend credit
or make any loans or advances or issue any letters of credit to the Borrower
which shall be in addition to those provided for in the Senior Debt Agreements
as in effect on the date hereof and which shall be secured by any security
interest, lien, pledge or mortgage covering any assets of the Borrower
whatsoever, or (b) accept any further grant from the Borrower of any mortgage
lien on, security interest in, or pledge of, any collateral which is not
granted equally and ratably to all of the Secured Parties.
Section 8.6 Security Interests. The Security Agent, each
Bank, each Institution and each Secured Counterparty hereby agrees that the
liens and security interests granted to the Security Agent under the Security
Documents shall be treated, as among the Secured Parties, as having equal
priority and shall at all times be shared by the Secured Parties as provided
herein.
Section 8.7 Intercreditor Agreement Regarding Amendment and
Waiver of Senior Debt Agreements. In addition to any consent requirement
contained in any Senior Debt Agreement, the consent of the Majority Lenders
shall be required in connection with any amendment, supplement, modification or
waiver of any term, provision, covenant or condition of any Senior Debt
Agreement (including without limitation this Agreement) except as otherwise
provided below:
(a) in addition to the consent of the Majority Lenders, the
consent of each affected Lender shall be required in connection with any
amendment, supplement, modification or waiver of any Note or the Project Loan
Agreement which would reduce the amount or change the scheduled date of
maturity of any Note held by such Lender or the amount or scheduled date of any
installment of principal thereof, or reduce the stated rate of any interest,
premium or fee or other amount payable thereunder or extend the scheduled date
of any payment thereof or change the amount or change the expiration date of
such Lender's Commitments;
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(b) in addition to the consent of the Majority Lenders, the
consent of the Issuing Bank shall be required in connection with any amendment,
supplement, modification or waiver of Section 5, 6, 7.1, 7.9 or 7.10 of the
Project Loan Agreement or any other provision of the Project Loan Agreement
which would reduce the rate of any fee or other amount payable thereunder to
the Issuing Bank or extend the scheduled date of any payment thereof or
increase the amount or extend the expiration date of the Total VP Letter of
Credit Commitments or the Total Bond Letter of Credit Commitments; provided
that the Issuing Bank shall not agree to any extension of a Construction VP
Expiration Date, a Term VP Expiration Date or a Bond L/C Expiration Date
without the prior written consent of all of the Banks;
(c) the consent of all of the Lenders shall be required in
connection with any amendment, supplement, modification or waiver of (i)
Section 14.1 of the Project Loan Agreement, (ii) paragraphs (1) through (7) of
Section 12.2 of the Project Loan Agreement or (iii) Section 9.3 of this
Agreement;
(d) the consent of the Majority Banks shall be required to
waive any one or more of the conditions precedent set forth in Section 9.3,
9.4, 9.5 or 9.6 of the Project Loan Agreement;
(e) in addition to the consent of the Majority Lenders, the
consent of the Administrative Agent shall be required in connection with any
amendment, supplement, modification or waiver of Section 13 of the Project Loan
Agreement;
(f) the consent of each Secured Party shall be required (i)
to release all or any part of the Collateral except in accordance with the
Security Documents or Section 11.7 of the Project Loan Agreement as in effect
on the date hereof, (ii) to amend, supplement, modify or waive any provision of
this Article VIII and (iii) in connection with any amendment, supplement or
other modification of the definition of "Majority Banks", "Majority
Institutions", "Majority Lenders", "Required Secured Parties", "Secured
Obligations" or "Senior Debt" (as such terms are defined herein and used in the
Financing Documents);
(g) in addition to the consent of the Majority Lenders, the
consent of the Security Agent shall be required in connection with any
amendment, supplement, modification or waiver of Article II or Section 7.7 of
this Agreement;
(h) the consent of the Required Secured Parties shall be
required in connection with any amendment, supplement, modification or waiver
of Section 7.4(b) or 8.4 of this Agreement; and
(i) without the consent of any Secured Party, the Security
Agent, at any time and from time to time, (i) may enter into one or more
Security Deposit Agreement Supplements, Bank Transfer Supplements or
Institutional Transfer Supplements to add additional Secured Parties hereto in
accordance with Section 9.4 and (ii) may enter into one or more other
agreements supplemental hereto or supplemental to the Project Mortgage, in form
satisfactory to the Security Agent, to mortgage or pledge to the Security
Agent, or grant a security interest in favor of the Security Agent in, any
property or assets as security or additional security for the
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Secured Obligations, including without limitation, as contemplated by Section
10.16 of the Project Loan Agreement.
Section 8.8 Voting Rights Following True-Up. For purposes of
(a) determining whether the consent of the "Majority Lenders", "Majority
Institutions", "Majority Banks" or "Required Secured Parties" shall have been
obtained in any circumstance under the Senior Debt Agreements or (b) the voting
of any claim, or the voting in respect of or determining whether consent has
been obtained in connection with any plan or other matter, in any bankruptcy,
reorganization or insolvency of the Borrower, in each case at and after the
purchase by any Bank of Participation Interests pursuant to its True-Up
Obligation under Section 14.10(b) of the Project Loan Agreement, (i) the
portion of the Institutional Notes represented by such Participation Interests
shall be deemed to be not outstanding and (ii) there shall be included as part
of the principal amount of Bank Project Loans held by such Bank the amount of
the Participation Interests purchased by such Bank, unless and until such
purchase of Participation Interests shall be rescinded as provided in clause
(vii) of said Section 14.10(b).
Section 8.9 Bond Trustee and Bondholders. Without limiting
the generality of Section 8.10 and notwithstanding anything in this Agreement
or any other Security Document to the contrary, neither any Bond Trustee (other
than any Secured Bond Trustee) or any holder of Bonds shall be a Secured Party
for any purpose under this Agreement or any other Security Document or be
entitled to the benefits hereof or thereof or in, to and under the Collateral.
Section 8.10 Beneficiaries. The agreements contained in this
Article VIII are intended only for the benefit of the Secured Parties, and no
Person (including, without limitation, the Borrower, the Partners and Southern
and its Affiliates) other than the Secured Parties shall have any rights under
this Article VIII. The Borrower hereby consents to the agreements contained in
this Article VIII and consents to any exercise of rights by the Security Agent
and the Secured Parties pursuant to this Article VIII.
ARTICLE IX
Miscellaneous
-------------
Section 9.1 Notices. All notices, requests and demands to or
upon the respective parties hereto to be effective shall be in writing
(including by telex, telecopy or telegraph), and, unless otherwise expressly
provided herein, shall be deemed to have been duly given or made when delivered
by hand or, in the case of notice given by mail, private courier, overnight
delivery service or telecopy, when received, or, in the case of telegraphic
notice, when delivered to the telegraph company, or, in the case of telex
notice, when sent, answerback received, addressed as follows in the case of the
Borrower and the Security Agent, and in accordance with Section 6.2 in the case
of the Secured Parties:
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The Borrower: Birchwood Power Partners, L.P.
c/o SEI Birchwood, Inc.
900 Ashwood Parkway, Suite 500
Atlanta, Georgia 30338
Attention: President
Telecopy: (404) 393-9871
The Security Agent: Credit Suisse
Tower 49
12 East 49th Street
New York, New York 10017
Attention: Project Finance
Telecopy: (212) 238-5390
Any party hereto may change its address for notices, requests and demands by
notice to the other parties in the manner provided in this Section 9.1.
Section 9.2 No Waivers. No failure on the part of the
Security Agent or any other Secured Party to exercise, no course of dealing
with respect to, and no delay in exercising, any right, power or privilege
under this Agreement or any other Security Document 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.
Section 9.3 Amendments, Supplements and Waivers of this
Agreement. This Agreement may not be amended or modified except in accordance
with the provisions of this Section 9.3. Except as otherwise specifically
provided in Section 8.7, with the written consent of the Majority Lenders, the
Security Agent and the Borrower may from time to time enter into an amendment,
supplement, waiver or other modification of this Agreement; provided that any
amendment, supplement, waiver or other modification of Article VIII shall not
require the consent of, and need not be executed by, the Borrower. Any such
amendment, supplement, waiver or other modification shall be binding upon the
Borrower, the Secured Parties and the Security Agent and their respective
successors.
Section 9.4 Additional Secured Parties. (a) Each Purchasing
Bank and Purchasing Institution meeting the requirements of Section 14.7 and
14.8, respectively, of the Project Loan Agreement shall become a party hereto
by executing and delivering to the Security Agent an original Bank Transfer
Supplement or Institutional Transfer Supplement, as the case may be. Each
Interest Rate Hedging Counterparty specified in clause (i) of the definition
thereof which shall enter into an Interest Rate Hedging Agreement after the
execution and delivery of this Agreement shall become a party hereto by
executing and delivering, concurrently with its execution and delivery of an
Interest Rate Hedging Agreement in accordance with Section 10.21 of the Project
Loan Agreement, a Security Deposit Agreement Supplement substantially in the
form of Exhibit A (a "Security Deposit Agreement Supplement") and delivering an
original thereof to the Security Agent. Each successor Administrative Agent
and successor Security Agent appointed pursuant to Section 13.1(i) of the
Project Loan Agreement or Section 2.6 hereof, as the case may be, shall, upon
accepting its appointment as such, automatically and without
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further act become a party hereto, as Administrative Agent or Security Agent,
as the case may be. In the event Unsupported Bonds are issued in accordance
with Section 10.25 of the Project Loan Agreement, the Bond Trustee party to the
Bond Indenture pursuant to which such Unsupported Bonds are issued shall become
a party hereto, as a Secured Bond Trustee, by executing a Security Deposit
Agreement Supplement and delivering an original thereof to the Security Agent.
Upon receipt of any Bank Transfer Supplement, Institutional Transfer Supplement
or Security Deposit Agreement Supplement in accordance with this Section
9.4(a), the Security Agent shall promptly deliver a copy thereof to the
Borrower and each Secured Party.
(b) Subject to compliance with the provisions of Section
9.4(a), each Security Deposit Agreement Supplement shall become effective upon
the execution thereof and delivery to the Security Agent. Upon receipt by the
Security Agent of an executed Security Deposit Agreement Supplement, Bank
Transfer Supplement or Institutional Transfer Supplement in accordance with
Section 9.4(a), and upon the appointment of a successor Administrative Agent or
successor Security Agent, the Purchasing Bank, Purchasing Institution, Interest
Rate Hedging Counterparty or Bond Trustee party thereto, or such successor
Administrative Agent or successor Security Agent, as the case may be, shall
become a "Secured Party" for all purposes under this Agreement and the other
Security Documents, entitled to the benefits hereof and thereof and subject to
the limitations on its rights as a Secured Party, in each case, as if
originally a party hereto; provided that, notwithstanding anything in this
Agreement or any other Security Document to the contrary, holders of
Unsupported Bonds shall not be Secured Parties for any purpose under this
Agreement or any other Security Document, and shall not be entitled to the
benefits hereof or thereof or in, to and under the Collateral except through
the Secured Bond Trustee party to the Bond Indenture pursuant to which such
Unsupported Bonds were issued.
Section 9.5 Headings. The table of contents and the headings
of Articles and Sections have been included herein for convenience only and
should not be considered in interpreting this Agreement.
Section 9.6 Severability. Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction shall not invalidate
the remaining provisions hereof, and any such prohibition or unenforceability
in any jurisdiction shall not invalidate or render unenforceable such provision
in any other jurisdiction.
Section 9.7 Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of each of the parties hereto and shall
inure to the benefit of each of the Secured Parties and their respective
successors and assigns, and nothing herein is intended or shall be construed to
give any other Person any right, remedy or claim under, to or in respect of
this Agreement or any Collateral. Without the prior written consent of each of
the Secured Parties, the Borrower may not assign or transfer any of its rights
or obligations under this Agreement or any other Security Document.
Section 9.8 Counterparts. This Agreement may be signed by
one or more of the parties hereto on any number of separate counterparts, and
all such counterparts taken together shall be deemed to constitute one and the
same instrument.
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Section 9.9 Termination. (a) Upon the earlier of (i)
receipt by the Security Agent from each Secured Party of a written direction to
cause the Liens created by the Security Documents to be released and discharged
or (ii) payment in full of all Secured Obligations and the termination of all
Commitments under the Project Loan Agreement, the Liens created by the Security
Documents shall terminate forthwith and all right, title and interest of the
Security Agent in and to the Collateral shall revert to the Borrower and its
successors and assigns.
(b) Upon the termination of the Security Agent's Liens and
the release of the Collateral in accordance with Section 9.9(a), the Security
Agent will promptly, at the written request and expense of the Borrower, (i)
execute and deliver to the Borrower such documents as the Borrower shall
reasonably request to evidence the termination of such Liens or the release of
the Collateral and (ii) deliver or cause to be delivered to the Borrower all
property of the Borrower then held by the Security Agent or any agent or
nominee thereof.
(c) This Agreement shall terminate when the Liens granted
under the Security Documents have terminated and the Collateral has been
released in accordance with Section 9.9(a); provided that the provisions of
Sections 6.7, 6.8 and 6.9 shall not be affected by any such termination.
SECTION 9.10 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS
AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
Section 9.11 Submission To Jurisdiction; Waivers. The
Borrower hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal action
or proceeding relating to this Agreement and the other Security
Documents, or for recognition and enforcement of any judgment in
respect thereof, to the non-exclusive general jurisdiction of the
courts of the State of New York, the courts of the United States of
America for the Southern District of New York, and appellate courts
from any thereof;
(b) consents that any such action or proceeding may be
brought in such courts and waives any objection that it may now or
hereafter have to the venue of any such action or proceeding in any
such court or that such action or proceeding was brought in an
inconvenient court and agrees not to plead or claim the same;
(c) agrees that nothing herein shall affect the right to
effect service of process in any manner permitted by law or shall
limit the right to sue in any other jurisdiction; and
(d) waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal action or
proceeding referred to in this Section any special, exemplary,
punitive or consequential damages, other than, in the case of punitive
damages, with respect to any Secured Party or the Security Agent which
engages in willful misconduct.
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SECTION 9.12 WAIVERS OF JURY TRIAL. THE BORROWER, THE
SECURITY AGENT AND THE SECURED PARTIES HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS
AGREEMENT OR ANY OTHER SECURITY DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
<PAGE> 62
57
IN WITNESS WHEREOF, the parties hereto have caused this
Security Deposit and Intercreditor Agreement to be duly executed and delivered
in New York, New York by their proper and duly authorized officers as of the
day and year first above written.
BIRCHWOOD POWER PARTNERS, L.P.
By SEI Birchwood, Inc., a General Partner
By: ___________________________
Name:
Title:
By Birchwood Development Corp.,
a General Partner
By: ___________________________
Name:
Title:
CREDIT SUISSE,
as Security Agent
By: ________________________________
Name:
Title:
By: ________________________________
Name:
Title:
<PAGE> 63
58
CREDIT SUISSE,
as Administrative Agent, Issuing
Bank, a Bank, a Secured
Counterparty and as a Secured
Party
By: ________________________________
Name:
Title:
By: ________________________________
Name:
Title:
BANQUE PARIBAS, NEW YORK BRANCH
as a Bank and as a Secured Party
By: ________________________________
Name:
Title:
By: ________________________________
Name:
Title:
BANQUE PARIBAS, PARIS, as a Secured Party
and as a Secured Counterparty
By: ________________________________
Name:
Title:
By: ________________________________
Name:
Title:
<PAGE> 64
59
BARCLAYS BANK PLC,
as a Bank, a Secured Counterparty
and as a Secured Party
By: ________________________________
Name:
Title:
UNION BANK OF CALIFORNIA,
as a Bank, a Secured Counterparty, and as a
Secured Party
By: ________________________________
Name:
Title:
JOHN HANCOCK MUTUAL LIFE INSURANCE
COMPANY, as an Institution and as
a Secured Party
By: ________________________________
Name:
Title:
JOHN HANCOCK VARIABLE LIFE
INSURANCE COMPANY, as an
Institution and as a Secured Party
By: ________________________________
Name:
Title:
<PAGE> 65
60
MELLON BANK, N.A., AS TRUSTEE FOR
AT&T MASTER PENSION TRUST, as an
Institution and as a Secured Party
By: ________________________________
Name:
Title:
MELLON BANK, N.A., AS TRUSTEE FOR
NYNEX MASTER PENSION TRUST, as an
Institution and as a Secured Party
By: ________________________________
Name:
Title:
COMMONWEALTH OF PENNSYLVANIA
STATE EMPLOYES' [sic] RETIREMENT
SYSTEM, as an Institution and as a Secured Party
By John Hancock Mutual Life Insurance Company,
as Investment Adviser
By: ________________________________
Name:
Title:
<PAGE> 66
61
ALLSTATE INSURANCE COMPANY,
as an Institution and as a
Secured Party
By: ________________________________
Name:
Title:
By: ________________________________
Name:
Title:
ALLSTATE LIFE INSURANCE COMPANY,
as an Institution and as a
Secured Party
By: ________________________________
Name:
Title:
By: ________________________________
Name:
Title:
ALLSTATE LIFE INSURANCE COMPANY
OF NEW YORK, as an Institution and as a
Secured Party
By:
________________________________
Name:
Title:
By:
________________________________
Name:
Title:
<PAGE> 67
NEW YORK LIFE INSURANCE COMPANY,
as an Institution and as a
Secured Party
By: ________________________________
Name:
Title:
<PAGE> 68
COMPOSITE
(through 4/96)
of
Annex A
-------
DEFINITIONS
-----------
The terms defined herein relate to the Project Loan Agreement
(as defined below) and certain other Loan Documents executed, or to be
executed, in connection with the transactions contemplated by the Project Loan
Agreement. If, and to the extent that, the Project Loan Agreement shall be
amended, modified or supplemented from time to time pursuant to the terms
thereof, this Annex and the Annex to each Loan Document that incorporates this
Annex shall be, or be deemed to have been, amended, modified or supplemented
concurrently with the execution and delivery of each such amendment,
modification or supplement of the Project Loan Agreement, in order to conform
the definitions herein to the new or amended definitions set forth in or
required by each such amendment, modification or supplement of the Project Loan
Agreement. The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
"Access and Utility Easement Agreement": the Access and
Utility Easement, dated as of April 21, 1994, among Frank B. Taylor and Laura
Stuart Taylor, the Greenhouse Operator and the Borrower, amended, supplemented
or otherwise modified from time to time in accordance with Section 11.12(a) of
the Project Loan Agreement.
"Accounts": the Institutional Loan Proceeds Account, the
Construction Account, the Accrued Interest Account, the Repair and Maintenance
Account, the Debt Service Reserve Account, the Project Control Account, the
Additional Collateral Account, the Special Payment Account, the Final
Completion Escrow Account, the Insurance and Property Tax Reserve Account, the
Greenhouse Reserve Account, Bond Transfer Accounts and the Distributions
Account.
"Accrued Interest Account": the Accrued Interest Account
established and maintained pursuant to the Security Deposit Agreement.
"Additional Collateral Account": the Additional Collateral
Account established and maintained pursuant to the Security Deposit Agreement.
"Additional Contract": any contract entered into by the
Borrower after the execution and delivery of the Project Loan Agreement,
providing for (i) the transmission or sale by the Borrower of any of the
Facility's electrical or steam output; (ii) the supply or
<PAGE> 69
2
transportation of Coal to the Facility; (iii) the removal of ash or other
by-products from the Facility; or (iv) the financing or leasing of equipment or
the supply of goods or services essential to the operation of the Facility
(other than employment contracts and contracts involving less than $500,000
annually or having a maximum term (including renewal options) of less than six
months).
"Administrative Agent": Credit Suisse, in its capacity as
administrative agent for the Banks, or any successor in such capacity appointed
pursuant to Section 13.1(i) of the Project Loan Agreement.
"Affiliate": as applied to any Person, any other Person
directly or indirectly controlling, controlled by, or under common control
with, that Person. For the purposes of this definition, "control" (including,
with correlative meanings, the terms "controlling," "controlled by" and "under
common control with"), as applied to any Person, means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of that Person, whether through the ownership of voting securities
or partnership or other ownership interests or by contract or otherwise;
provided that any Person owning, directly or indirectly, 10% or more of the
securities having ordinary voting power for the election of directors or other
members of the governing body of a corporation, or 10% or more of the
partnership or other ownership interests of any other Person, is deemed to
control such corporation or other Person.
"Agents": the Administrative Agent and the Security Agent.
"Aggregate Prepayment Amount": as defined in Section 7.4(b)
of the Project Loan Agreement.
"Agreement": as used in any Loan Document, such Loan
Document, as amended, supplemented or otherwise modified and in effect from
time to time.
"Annual O&M Bonus": as defined in Section 1.2 of the Security
Deposit Agreement.
"Anticipated Commercial Operations Date": as defined in the
Power Purchase Agreement.
"Applicable Bank Loan Margin": for each Type of Bank Loan
during the applicable period set forth in Schedule 2 to the Project Loan
Agreement, the rate per annum set forth under the relevant column heading in
said Schedule 2.
"Applicable Institutional Loan Margin": with respect to each
Institutional Loan, the "Applicable Institutional Loan Margin" determined in
accordance with the Institutional Note evidencing such Institutional Loan.
"Arch": Arch Mineral Corporation.
<PAGE> 70
3
"Arch Back-Up Coal Supply Agreement": the Agreement dated as
of May 18, 1994 among Arch, Cumberland River Coal Company, ACS Sales Company,
the Coal Transporter and the Borrower, as amended, supplemented or otherwise
modified from time to time in accordance with Section 11.12(a) of the Project
Loan Agreement.
"Ash Disposal Agreement": the Ash Disposal Agreement dated as
of May 6, 1994 between JTM Industries, Inc. and the Borrower, relating to ash
hauling and disposal services in respect of the Facility, as amended,
supplemented or otherwise modified from time to time in accordance with the
provisions of Section 11.12(a) of the Project Loan Agreement.
"Available Loan Commitments": at any time, the excess of (a)
the Total Loan Commitments (other than the Total Bank L/C Loan Commitments)
over (b) the aggregate principal amount of Loans (other than Bank L/C Loans and
Bank Liquidity Loans) then outstanding.
"Bank Commitment Percentage": at any time:
(a) with respect to any Bank, a fraction (expressed as a
percentage), the numerator of which is the sum of (i) the aggregate
unpaid principal amount of Bank Loans then outstanding, (ii) the
unused portion of the Total Bank Loan Commitments then in effect and
(iii) the Letter of Credit Exposure at such time, and the denominator
of which is the Total Exposure; and
(b) with respect to any Interest Rate Hedging
Counterparty, a fraction (expressed as a percentage), the numerator of
which is the aggregate amount of Swap Termination Obligations
calculated as of such day, and the denominator of which is the Total
Exposure.
As used in this definition, "Total Exposure" means, at any time, the sum of (i)
the aggregate unpaid principal amount of Loans then outstanding, (ii) the
unused portion of the Total Bank Loan Commitments then in effect, (iii) the
Letter of Credit Exposure at such time and (iv) the aggregate amount of Swap
Termination Obligations calculated as of such day.
"Bank Default Rate": (a) with respect to any Base Rate Loan,
for each date during the applicable period, the rate applicable pursuant to
paragraph (b) of Section 3.7 of the Project Loan Agreement plus 2.0%, (b) with
respect to any C/D Rate Loan or Eurodollar Loan, during the Bank Loan Interest
Period with respect thereto, the rate applicable during such Bank Loan Interest
Period pursuant to paragraph (a) or (c), as the case may be, of Section 3.7 of
the Project Loan Agreement plus 2.0% and (c) with respect to any other amount
payable by the Borrower, the Base Rate plus the Applicable Bank Loan Margin for
Base Rate Loans plus 2.0%.
"Bank Fee Letter": the letter agreement dated the date of the
Project Loan Agreement among the Co- Agents, the Administrative Agent and the
Borrower setting forth certain fees payable by the Borrower to the
Administrative Agent and the Banks.
<PAGE> 71
4
"Bank L/C Loans": Bank Loans the proceeds of which are to be
used solely as provided in Section 10.1(b)(ii) of the Project Loan Agreement.
"Bank L/C Note": as defined in Section 3.3(b) of the Project
Loan Agreement.
"Bank Liquidity Loan": Bank Loans the proceeds of which are
to be used solely to finance Bond Reimbursement Obligations arising in respect
of Liquidity Drawings as provided in Section 10.1(b)(iii) of the Project Loan
Agreement.
"Bank Liquidity Note": as defined in Section 3.3(c) of the
Project Loan Agreement.
"Bank Loan Commitment Period": (a) with respect to Bank
Project Loans, the period commencing on and including the first day of the
Construction Period to and including the last day thereof, (b) with respect to
Bank L/C Loans made to finance Construction VP Reimbursement Payments, the
period commencing on and including the first day of the Construction Period to
and including the termination of the Construction VP Letter of Credit in
accordance with Section 6.5 of the Project Loan Agreement, (c) with respect to
Bank L/C Loans made to finance Term VP Reimbursement Payments, the period
commencing on and including the date on which the Term VP Letter of Credit is
issued to and including the termination thereof in accordance with Section 6.5
of the Project Loan Agreement and (d) with respect to Bank L/C Loans and Bank
Liquidity Loans made to finance Bond Reimbursement Payments under a Bond Letter
of Credit, the period commencing on and including the date on which such Bond
Letter of Credit is issued to and including the termination thereof in
accordance with Section 5.4 of the Project Loan Agreement; provided that Bank
L/C Loans made to refinance Bank Liquidity Loans may be made only on the
applicable Bond L/C Expiration Date.
"Bank Loan Facility": the construction and term credit
facility provided by the Banks to the Borrower pursuant to Section 3 of the
Project Loan Agreement, under which the Banks will make Bank Loans from time to
time in accordance with the terms thereof.
"Bank Loan Final Maturity Date": the fifteenth anniversary of
the Commercial Operations Date.
"Bank Loan Installment Payment Date": as defined in Section
3.4(a) of the Project Loan Agreement.
"Bank Loan Interest Payment Date": (a) as to any Base Rate
Loan, the last day of March, June, September and December of each year,
commencing with the first such day to occur after the Closing Date, and the
date on which such Loan is paid or converted into a Bank Loan of another Type,
(b) as to any Eurodollar Loan having a Bank Loan Interest Period of three
months or less and any C/D Rate Loan having a Bank Loan Interest Period of 90
days or less, the last day of such Bank Loan Interest Period, and (c) as to any
Eurodollar Loan or C/D Rate Loan having a Bank Loan Interest Period longer than
three months or 90 days, respectively, each
<PAGE> 72
5
day which is three months or 90 days, respectively, or a whole multiple
thereof, after the first day of such Bank Loan Interest Period, and the last
day of such Bank Loan Interest Period.
"Bank Loan Interest Period": (a) with respect to any
Eurodollar Loan:
(i) initially, the period commencing on the borrowing or
conversion date, as the case may be, with respect to such Eurodollar
Loan and ending one, two, three or six months (or, if available to all
of the Banks, nine months, twelve months or longer) thereafter, as
selected by the Borrower in its notice of borrowing or notice of
conversion, as the case may be, given with respect thereto; and
(ii) thereafter, each period commencing on the last day of
the next preceding Bank Loan Interest Period applicable to such
Eurodollar Loan and ending one, two, three or six months (or, if
available to all of the Banks, nine months, twelve months or longer)
thereafter, as selected by the Borrower by irrevocable notice to the
Administrative Agent not less than three Business Days prior to the
last day of the then current Bank Loan Interest Period with respect
thereto; and
(b) with respect to any C/D Rate Loan:
(i) initially, the period commencing on the borrowing or
conversion date, as the case may be, with respect to such C/D Rate
Loan and ending 30, 60, 90 or 180 days (or, if available to all of the
Banks, 270 days) thereafter, as selected by the Borrower in its notice
of borrowing or notice of conversion, as the case may be, given with
respect thereto; and
(ii) thereafter, each period commencing on the last day of
the next preceding Bank Loan Interest Period applicable to such C/D
Rate Loan and ending 30, 60, 90 or 180 days (or, if available to all
of the Banks, 270 days) thereafter, as selected by the Borrower by
irrevocable notice to the Administrative Agent not less than two
Business Days prior to the last day of the then current Bank Loan
Interest Period with respect thereto;
provided that all of the foregoing provisions relating to Bank Loan Interest
Periods are subject to the following:
(1) if any Bank Loan Interest Period pertaining to a
Eurodollar Loan would otherwise end on a day that is not a Business
Day, such Bank Loan Interest Period shall be extended to the next
succeeding Business Day unless the result of such extension would be
to carry such Bank Loan Interest Period into another calendar month,
in which event such Bank Loan Interest Period shall end on the
immediately preceding Business Day;
<PAGE> 73
6
(2) if any Bank Loan Interest Period pertaining to a C/D Rate
Loan would otherwise end on a day that is not a Business Day, such
Bank Loan Interest Period shall be extended to the next succeeding
Business Day;
(3) any Bank Loan Interest Period pertaining to a Eurodollar
Loan that begins on the last Business Day of a calendar month (or on a
day for which there is no numerically corresponding day in the
calendar month at the end of such Bank Loan Interest Period) shall end
on the last Business Day of a calendar month;
(4) the Borrower shall select Bank Loan Interest Periods so
as not to require a payment or prepayment of any Eurodollar Loan or
C/D Rate Loan during a Bank Loan Interest Period for such Loan; and
(5) the Borrower shall not select a Bank Loan Interest Period
that ends after the Bank Loan Final Maturity Date.
"Bank Loans": as defined in Section 3.1 of the Project Loan
Agreement.
"Bank Notes": collectively, the Bank Project Notes, the Bank
L/C Notes and the Bank Liquidity Notes.
"Bank Project Loans": Bank Loans the proceeds of which are to
be used solely to pay Project Costs and otherwise as provided in Section
10.1(b)(i) of the Project Loan Agreement.
"Bank Project Note": as defined in Section 3.3(a) of the
Project Loan Agreement.
"Bank Transfer Supplement": as defined in Section 14.7(b) of
the Project Loan Agreement.
"Bankruptcy Code": Title 11, Unites States Code, as amended
from time to time.
"Banks": the banks and other financial institutions which are
identified as "Banks" in, and are from time to time party to, the Project Loan
Agreement.
"Base Case Projections" as defined in Section 9.1(w) of the
Project Loan Agreement.
"Base Fuel Compensation Price": as defined in Section 10.2 of
the Power Purchase Agreement.
"Base Rate": for any day, a rate per annum (rounded upwards,
if necessary, to the next 1/16 of 1%) equal to the greater of (a) the Federal
Funds Effective Rate as in effect at such time plus 0.5% and (b) the per annum
rate of interest from time to time publicly announced by the Administrative
Agent at its principal office in the United States as its base lending rate for
<PAGE> 74
7
domestic (United States) commercial loans (which rate may not be the lowest
rate of interest charged by the Administrative Agent in connection with
extensions of credit to its other customers). For purposes hereof, "Federal
Funds Effective Rate" means, with respect to each day, the rate per annum
(rounded upward, 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 Business Day
next succeeding such day; provided that (i) if such day is not a Business Day,
the Federal Funds Effective Rate for such day shall be such rate on such
transactions on the next preceding Business Day as so published on the next
succeeding Business Day, and (ii) if no such rate is so published on such next
succeeding Business Day, the Federal Funds Effective Rate for such day shall be
the average rate quoted to the Administrative Agent on such day on such
transactions as the Administrative Agent may reasonably determine. If for any
reason the Administrative Agent shall have determined (which determination
shall be conclusive absent manifest error) that it is unable to ascertain the
Federal Funds Effective Rate for any reason, the Base Rate shall be determined
without regard to clause (a) of the first sentence of this definition until the
circumstances giving rise to such inability no longer exist. Any change in the
Base Rate due to a change in the rate referred to in clause (b) of the first
sentence of this definition or in the Federal Funds Effective Rate shall be
effective as of the opening of business on the date of such change in the rate
referred to in such clause (b) or the Federal Funds Effective Rate,
respectively.
"Base Rate Loans": Bank Loans the rate of interest applicable
to which is based on the Base Rate.
"Basic Monthly O&M Fee": as defined in Section 1.2 of the
Security Deposit Agreement.
"Birchwood Development": Birchwood Development Corp., a
Delaware corporation.
"Bond Contribution Amount": as defined in the Southern Equity
Contribution Agreement.
"Bond Documents": collectively, the Bonds and each other
instrument or agreement entered into by the Borrower, the Bond Issuer or any
Bond Trustee in connection with the issuance, sale and marketing from time to
time of the Bonds, including without limitation any Bond Indenture, sale
agreement between the Bond Issuer and the Borrower, Bond purchase agreement,
official statement and remarketing agreement, as amended, supplemented or
otherwise modified from time to time in accordance with Section 11.11(a) of the
Project Loan Agreement.
"Bond Indenture": with respect to each issuance of Bonds, the
indenture executed by the Bond Issuer and the relevant Bond Trustee pursuant to
which such Bonds are issued.
"Bond Issuer": the Industrial Development Authority of King
George County, Virginia.
<PAGE> 75
8
"Bond L/C Expiration Date": with respect to each Bond Letter
of Credit, the seventh anniversary of the Closing Date, or such later date to
which the Bond L/C Expiration Date with respect to such Bond Letter of Credit
has been extended in accordance with Section 5.6 of the Project Loan Agreement.
"Bond Letter of Credit": each irrevocable direct pay letter
of credit to be issued by the Issuing Bank in favor of the Bond Trustee on any
Business Day during the Construction Period pursuant to Section 5.1(a) of the
Project Loan Agreement, substantially in the form of Exhibit C-3 to the Project
Loan Agreement (with such changes therein as shall be acceptable to the Issuing
Bank and the Majority Banks), as amended, supplemented or otherwise modified
from time to time in accordance with its terms, and any replacement therefor
issued pursuant to Section 5.2(b) of the Project Loan Agreement.
"Bond Letter of Credit Disbursement": any payment or
disbursement made by or on behalf of the Issuing Bank under any Bond Letter of
Credit.
"Bond Letter of Credit Facility": the letter of credit
facility provided by the Issuing Bank and the Banks to the Borrower pursuant to
Section 5 of the Project Loan Agreement, under which the Issuing Bank agrees to
issue the Bond Letters of Credit in accordance with the terms thereof.
"Bond Pledge Agreement": a pledge agreement to be entered
into among the Borrower, the Security Agent and a bond pledge agent with
respect to an issue of Bonds, which shall provide for the pledge of Bonds that
are purchased with the proceeds of a drawing under the related Bond Letter of
Credit and not immediately remarketed and shall be satisfactory in form and
substance to the Administrative Agent and the Majority Institutions.
"Bond Reimbursement Obligations": as defined in Section
5.5(b) of the Project Loan Agreement.
"Bond Reimbursement Payment": as defined in Section 5.5(a) of
the Project Loan Agreement.
"Bonds": the Series 1994A, Series 1994B, Series 1995, Series
1996A and, if issued, Series 1996B tax- exempt private activity bonds issued or
to be issued by the Bond Issuer at the request of the Borrower pursuant to one
or more Bond Indentures in accordance with Section 10.25 of the Project Loan
Agreement, in an original aggregate principal amount not to exceed $50,000,000.
"Bond Transfer Accounts": the Bond Transfer Account-Series
1994A, the Bond Transfer Account-Series 1994B, the Bond Transfer Account-Series
1995, the Bond Transfer Account-Series 1996A and the Bond Transfer Account-
Series 1996B, established and identified as such pursuant to Section 3.1(a) of
the Security Deposit Agreement.
<PAGE> 76
9
"Bond Trustee": with respect to each issuance of Bonds, the
trustee under the Bond Indenture pursuant to which such Bonds are issued, and
its successors in such capacity appointed in the manner provided for in such
Bond Indenture.
"Borrower": Birchwood Power Partners, L.P., a Delaware
limited partnership.
"Borrower Account": as defined in Section 7.11(b) of the
Project Loan Agreement.
"Borrower Representative": any officer or member of the
management committee of the Borrower or, for so long as it shall be a General
Partner, of SEI Birchwood.
"Borrower Stock Assignment": the Borrower Stock Assignment
made by the Borrower in favor of the Security Agent, substantially in the form
of Exhibit H to the Project Loan Agreement, as amended, supplemented or
otherwise modified from time to time.
"Borrower's Greenhouse Expenses": all payments of any kind
(whether in the form of a capital contribution, investment, loan, advance,
expense payment or otherwise) made by the Borrower to or for the benefit of the
Greenhouse Owner or Greenhouse Operator which are either (a) in excess of
$250,000 in any calendar year or (b) are in any amount to the extent that such
payments have been made for more than six consecutive months; provided that the
Borrower's Greenhouse Expenses shall exclude (i) loans made to the Greenhouse
Owner pursuant to the Greenhouse Loan Agreement, (ii) payments pursuant to the
Steam Sales Agreement and (iii) the proceeds of any withdrawals from the
Greenhouse Reserve Account.
"Borrowing Date": (a) with respect to Bank Loans, any of the
Closing Date, any Monthly Construction Disbursement Date or any Scheduled
Senior Debt Service Payment Date on which the Borrower requests Bank Project
Loans, or any Business Day on which the Borrower requests Bank L/C Loans or
Bank Liquidity Loans, in each case pursuant to Section 3.2 of the Project Loan
Agreement; and (b) with respect to Institutional Loans, any of the Closing Date
or any Monthly Construction Disbursement Date on which the Borrower requests
Institutional Loans pursuant to Section 4.2 of the Project Loan Agreement.
"Business Day": a day other than a Saturday, Sunday or other
day on which commercial banks in New York City are authorized or required by
law to close and (with respect to Eurodollar Loans only) on which deposits in
foreign currencies and exchange between banks may be carried on in London,
England.
"Business Interruption Insurance Proceeds": any and all
proceeds of any insurance, indemnity, warranty or guaranty payable from time to
time with respect to the partial or complete interruption of the operation of
the Project.
"Buy-Down Amount Proceeds": any and all amounts paid by the
Facility Contractor to the Borrower pursuant to Section 8.1 or 8.6 of the
Facility Construction Contract
<PAGE> 77
10
or by the Parent Guarantor to the Borrower pursuant to the Facility
Construction Contract Guarantee in respect thereof.
"Buy-Down Prepayment Notice": as defined in Section 7.3(c) of
the Project Loan Agreement.
"Capital Lease": any lease of property, real or personal, the
obligations of the lessee in respect of which are required in accordance with
GAAP to be capitalized on a balance sheet of the lessee.
"Cash Operating Costs": for any period, the sum of the
following for the Borrower (determined without duplication): (i) all salaries,
bonuses, employee benefits and other compensation paid plus (ii) the cost of
Coal, limestone and other materials and utilities paid, including the
transportation costs paid for transporting Coal, limestone and such other
materials and utilities to the Facility, plus (iii) ash disposal costs paid
plus (iv) insurance premiums paid plus (v) costs of operating and maintaining
the Project (including, without limitation, Major Maintenance Expenses and
other payments made under the Operating and Maintenance Agreement) paid plus
(vi) rent paid under leases permitted by Section 11.15 of the Project Loan
Agreement plus (vii) amounts paid by the Borrower to the Greenhouse Owner
pursuant to the Steam Sales Agreement plus (viii) amounts deposited in the
Repair and Maintenance Account plus (ix) real and personal property, use, sales
and similar taxes paid plus (x) fees paid for accounting, legal and other
professional services plus (xi) general and administrative expenses paid plus
(xii) capital expenditures paid plus (xiii) ongoing fees and expenses of any
Bond Trustee, the Security Agent and the Administrative Agent paid (including,
without limitation, amounts paid pursuant to Section 6.7 of the Security
Deposit Agreement or Section 14.5 of the Project Loan Agreement) plus (xiv) the
Basic Monthly O&M Fee and Annual O&M Bonus paid to the Facility Operator
pursuant to the Operations and Maintenance Agreement plus (xv) all other cash
expenditures relating to operating costs of the Project paid plus (xvi)
federal, state and local income taxes paid, if any; provided that there shall
be excluded from the foregoing items costs that are paid with amounts withdrawn
from the Repair and Maintenance Account.
"Cash Release Date": each Quarterly Distribution Date that
immediately follows a Quarterly Calculation Date on which neither the
Historical Debt Coverage Ratio nor the Projected Debt Coverage Ratio was less
than 1.25 to 1.0.
"Cash Trap Date": each Quarterly Distribution Date
immediately following a Quarterly Calculation Date on which either the
Historical Debt Coverage Ratio or the Projected Debt Coverage Ratio was less
than 1.20 to 1.0.
"Casualty Insurance Proceeds": any and all proceeds of any
insurance, indemnity, warranty or guaranty payable from time to time with
respect to any damage to, or destruction in whole or in part of, the Project.
"C/D Assessment Rate": for any day as applied to any C/D Rate
Loan, the net annual assessment rate (rounded upward, if necessary, to the
nearest 1/100th of 1%) determined
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11
by the Administrative Agent to be payable on such day to the Federal Deposit
Insurance Corporation or any successor ("FDIC") for FDIC's insuring time
deposits made in Dollars at offices of the Administrative Agent in the United
States.
"C/D Base Rate": with respect to each day during each Bank
Loan Interest Period pertaining to a C/D Rate Loan, the rate of interest per
annum determined by the Administrative Agent to be the arithmetic average
(rounded upward, if necessary, to the nearest 1/16th of 1%) of the respective
rates determined by the Administrative Agent as the average rate bid at 10:00
A.M., New York City time, or as soon thereafter as practicable, on the first
day of such Bank Loan Interest Period, by a total of three certificate of
deposit dealers of recognized standing selected by the Administrative Agent for
the purchase at face value from the Administrative Agent of its certificates of
deposit in an amount comparable to the C/D Rate Loan of the Administrative
Agent to which such Bank Loan Interest Period applies and having a maturity
comparable to such Bank Loan Interest Period.
"C/D Rate": with respect to each day during each Bank Loan
Interest Period pertaining to a C/D Rate Loan, a rate per annum determined for
such day in accordance with the following formula (rounded upward, if
necessary, to the nearest 1/100th of 1%):
C/D Base Rate + C/D Assessment Rate
-----------------------------
1.00 - C/D Reserve Percentage
"C/D Rate Loans": Bank Loans the rate of interest applicable
to which is based upon the C/D Rate.
"C/D Rate Tranche": as defined in Section 3.6 of the Project
Loan Agreement.
"C/D Reserve Percentage": for any day as applied to any C/D
Rate Loan, 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) (the "Board"), for determining the maximum reserve requirement
for a Depositary Institution (as defined in Regulation D of the Board) in
respect of new non-personal time deposits in Dollars.
"Change Order": (a) with respect to the Facility, a "Change"
(as defined in Section 1.1 of the Facility Construction Contract), or (b) with
respect to the Greenhouse, a "Change" defined in Section 1.1 of the Greenhouse
Construction Contract.
"Closing Date": May 25, 1994.
"Co-Agents": Banque Paribas, New York Branch, Barclays Bank
PLC, Credit Suisse and Union Bank.
"Coal": the coal purchased by the Borrower pursuant to the
Coal Supply Agreement, the SEI Coal Procurement Letter or the Arch Back-Up Coal
Supply Agreement for the operation of the Facility.
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12
"Coal Adjustment Agreement": the Special Adjustment Agreement
dated as of July 22, 1993 among the Coal Supplier, the Coal Transporter and the
Borrower, as amended, supplemented or otherwise modified from time to time in
accordance with Section 11.12(a) of the Project Loan Agreement.
"Coal Consultant": John T. Boyd Company, or such other coal
consultant reasonably acceptable to the Borrower as the Majority Lenders may
designate to examine and advise the Lenders with respect to the matters
referred to in Section 9.1(l) of the Project Loan Agreement and to prepare the
annual Coal Report update required to be delivered pursuant to Section 10.2(d)
of the Project Loan Agreement.
"Coal Report": the report of the Coal Consultant delivered
pursuant to Section 9.1(l) of the Project Loan Agreement.
"Coal Supplier": (i) collectively, Neweagle Industries, Inc.,
a Virginia corporation, Neweagle Coal Sales Corp., a Virginia corporation,
Laurel Creek Co., Inc., a Delaware corporation, and Rockspring Development,
Inc., a Delaware corporation, or (ii) subject to compliance with the provisions
of Section 11.14 of the Project Loan Agreement, their respective successors and
assigns.
"Coal Supply Agreement": the Coal Supply Agreement dated as
of July 22, 1993, as amended by First Amendment dated as of May 18, 1994,
between the Borrower and the Coal Supplier, as may be further amended,
supplemented or otherwise modified from time to time in accordance with Section
11.12(a) of the Project Loan Agreement.
"Coal Transportation Agreement": the Coal Transportation
Agreement dated as of July 22, 1993, as amended by First Amendment dated as of
April 28, 1994, between the Borrower and the Coal Transporter, as may be
further amended, supplemented or otherwise modified from time to time in
accordance with Section 11.12(a) of the Project Loan Agreement.
"Coal Transporter": ER&L Birchwood, Inc., a Delaware
corporation and a wholly-owned direct subsidiary of CSXT and a wholly-owned
indirect subsidiary of CSX.
"Code": the Internal Revenue Code of 1986, as amended from
time to time.
"Collateral": collectively, the Mortgaged Property, the
Security Deposit Collateral, the Southern Equity Contribution Collateral, the
Partner Collateral, and any Bonds (and the proceeds thereof) pledged pursuant
to a Bond Pledge Agreement.
"Commercial Operations Date": as defined in Section 1.5 of
the Power Purchase Agreement.
"Commitment": (a) as to any Bank, its Commitment Percentage
of the Total Bank Project Loan Commitments, the Total Bank L/C Loan
Commitments, the Total VP Letter of
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Credit Commitments and the Total Bond Letter of Credit Commitments; and (b) as
to any Institution, its Commitment Percentage of the Total Institutional
Commitments.
"Commitment Percentage": (a) with respect to any Bank, the
percentage set forth next to such Bank's name under the caption "Commitment
Percentage" on Part A of Schedule 1 to the Project Loan Agreement, as the same
may from time to time be modified or amended in accordance with Section 14.7 of
the Project Loan Agreement or otherwise in accordance with the terms thereof
and (b) with respect to any Institution, the percentage set forth next to such
Institution's name under the caption "Commitment Percentage" on Part B of
Schedule 1 to the Project Loan Agreement, as the same may from time to time be
modified or amended in accordance with Section 14.8 of the Project Loan
Agreement or otherwise in accordance with the terms thereof.
"Commonly Controlled Entity": an entity, whether or not
incorporated, which is under common control with the Borrower within the
meaning of Section 4001 of ERISA or is part of a group which includes the
Borrower and which is treated as a single employer under Section 414 of the
Code.
"Completion Date": the date on which the following conditions
shall have been satisfied:
(a) the Commercial Operations Date shall have occurred
and all of the conditions set forth in Section 2.3 of the Power
Purchase Agreement shall have been satisfied;
(b) the Facility shall have been completed and accepted
(except for punchlist items) by the Borrower in accordance with
Section 6.4.1 of the Facility Construction Contract, and the
Greenhouse shall have been completed and accepted (except for
punchlist items) by the Greenhouse Owner in accordance with Section
3.3 of the Greenhouse Construction Contract;
(c) the Administrative Agent and the Institutions shall
have received, with a counterpart for each Bank, the Facility
Completion Certificate duly executed and delivered by the Borrower and
the Independent Engineer and the Greenhouse Completion Certificate
duly executed and delivered by the Borrower, the Greenhouse Owner, the
Greenhouse Operator and the Independent Engineer;
(d) the Administrative Agent and the Institutions shall
have received evidence in form and substance reasonably satisfactory
to the Administrative Agent and the Majority Institutions that either
(i) all Project Costs necessary to achieve Final Completion of the
Facility and the Greenhouse shall have been paid in full and there
shall be no disputes concerning payment for work performed, services
rendered or material or equipment furnished with respect to the
Project or the Greenhouse involving any potential liability to the
Borrower (collectively, "Disputes"); or (ii) there shall have been
deposited into the Final Completion Escrow Account pursuant to Section
4.3 of the Security Deposit
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14
Agreement an amount equal to the sum of (x) 150% of the amount,
determined in good faith by the Borrower, the Administrative Agent and
Majority Institutions (after consultation with the Independent
Engineer), sufficient to pay all punchlist items and other Project
Costs necessary to achieve Final Completion of the Facility and the
Greenhouse, (y) 100% of the amount, determined in good faith by the
Borrower, the Administrative Agent and the Majority Institutions,
which would fully cover any potential liability of the Borrower with
respect to any pending Disputes and (z) the unpaid amount of the
maximum Heat Rate Bonus which is, or could be, owing to the Facility
Contractor following the Completion Date;
(e) (i) the Initial Repair and Maintenance Reserve
Amount shall have been deposited on or prior to such day in the Repair
and Maintenance Account; and (ii) the Borrower shall have applied at
least $3,500,000 of the proceeds of the Bank Project Loans and Equity
Funding Loans for initial working capital purposes or deposited such
amount into the Project Control Account on the Completion Date for
such purposes;
(f) all Governmental Approvals and other consents and
approvals referred to in Section 8.7 of the Project Loan Agreement,
including without limitation those listed in Part B of Schedule 6
thereof (other than filings required to be made on a later date by the
terms of such Governmental Approvals), shall have been duly obtained
or made and shall be in full force and effect, none of such
Governmental Approvals or other consents or approvals shall be the
subject of any pending or threatened judicial or administrative
proceedings, and if the applicable statute, rule or regulation
provides for a fixed period for judicial or administrative appeal or
review thereof, such period shall have expired. In addition, a copy
of each such Governmental Approval, consent or approval shall have
been delivered to the Administrative Agent (with a copy for each Bank)
and the Institutions; and
(g) the Equity Funding Termination Date shall have
occurred; provided that, for purposes hereof, the provisions of clause
(iii) of the definition of "Equity Funding Termination Date" shall be
deemed to have been satisfied if there are no unpaid amounts owing by
Southern under the Construction Contract Guarantees at such time.
"Consents to Assignment": collectively, (i) each Consent to
Assignment, each substantially in the form of one of Exhibits I-1 to I-10, to
be executed and delivered by each of the parties (other than the Borrower) to
each Project Document in effect on the Closing Date, and (ii) with respect to
each Additional Contract, the Consent to Assignment to be executed by the
parties thereto (other than the Borrower) as provided in Section 10.16 of the
Project Loan Agreement, which shall be in form and substance reasonably
satisfactory to the Administrative Agent and the Majority Institutions.
"Construction Account": the Construction Account established
and maintained pursuant to the Security Deposit Agreement.
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15
"Construction Contracts": collectively, the Facility
Construction Contract and the Greenhouse Construction Contract.
"Construction Contract Guarantees": collectively, the
Facility Construction Contract Guarantee and the Greenhouse Construction
Contract Guarantee.
"Construction Period": the period from and including the
Closing Date to and including the Construction Period Termination Date.
"Construction Period Termination Date": the earlier of (a)
the Completion Date and (b) Date Certain.
"Construction Progress Report": the report of the Borrower
required to be delivered pursuant to Section 10.2(a) of the Project Loan
Agreement.
"Construction VP Expiration Date": the Date Certain, or such
later date to which the Construction VP Expiration Date has been extended in
accordance with Section 6.7 of the Project Loan Agreement.
"Construction VP Letter of Credit": the irrevocable direct
pay letter of credit to be issued by the Issuing Bank in favor of Virginia
Power on the Closing Date pursuant to Section 6.2(a) of the Project Loan
Agreement, substantially in form of Exhibit C-1 to the Project Loan Agreement,
as amended, supplemented or otherwise modified from time to time in accordance
with its terms, and any replacement therefor issued pursuant to Section 6.2(b)
of the Project Loan Agreement.
"Construction VP Letter of Credit Disbursement": any payment
or disbursement made by or on behalf of the Issuing Bank under the Construction
VP Letter of Credit.
"Construction VP Reimbursement Payment": as defined in
Section 6.6(a) of the Project Loan Agreement.
"Contingent Bond Contribution": as defined in the Southern
Equity Contribution Agreement.
"Contingent Distribution": any payment of cash distributions
to Partners affiliated with Southern in accordance with clause (ii)(A) of
Section 11.4 of the Project Loan Agreement, in an aggregate amount not to
exceed the Contingent Distribution Amount.
"Contingent Distribution Amount": an aggregate amount equal
to the lesser of (i) $13,700,000 and (ii) the amount, if any, by which (x) the
Initial Budgeted Amount plus the Increased IDC Contribution Amount, if any,
contributed to the Borrower pursuant to the Southern Equity Contribution
Agreement exceeds (y) the aggregate amount of all Project Costs which have been
or are required to be incurred in order to achieve the occurrence of the
Completion Date
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16
and Final Completion of the Facility and the Greenhouse (including, in any
event, the Required Completion Date Reserve Deposits).
"Contingent Equity Contribution": as defined in the Southern
Equity Contribution Agreement.
"Contingent Increased IDC Contribution": as defined in the
Southern Equity Contribution Agreement.
"Contractors": collectively, the Facility Contractor and the Greenhouse
Contractor.
"Contractual Obligations": as to any Person, any provision of
any security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Credit Extension Date": (a) as to any Loan, the Borrowing
Date therefor, (b) as to any issuance of a VP Letter of Credit, the Closing
Date (in the case of the Construction VP Letter of Credit) or the Commercial
Operations Date (in the case of the Term VP Letter of Credit), and (c) as to
any issuance of a Bond Letter of Credit, the Business Day during the
Construction Period on which such Bond Letter of Credit is issued.
"Credit Facilities": as defined in 2.1 of the Project Loan
Agreement.
"CSX": CSX Corporation.
"CSXT": CSX Transportation, Inc., a Virginia corporation.
"CSXT Agreement": the Amended and Restated Agreement dated as
of May 18, 1994 between the Borrower and CSXT pursuant to which CSXT agrees to
cause the Coal Transporter to perform its obligations under the Coal
Transportation Agreement and the Coal Adjustment Agreement, as amended,
supplemented or otherwise modified from time to time in accordance with Section
11.12(a) of the Project Loan Agreement.
"CT Corporation Agreement": the letter agreement dated as of
May 13, 1994 from the Borrower to The Corporation Trust Company and Corporate
Trinity Company, as amended, supplemented or otherwise modified in accordance
with Section 11.12(a) of the Project Loan Agreement.
"Damage Event": as defined in Section 1.2 of the Security
Deposit Agreement.
"Date Certain": June 1, 1997.
"Debt Service": for any period, the sum (determined without
duplication) of: (a) all amounts payable by the Borrower during such period
pursuant to the Project Loan Agreement and the Notes in respect of principal
of, and interest on, the Loans, (b) all amounts, if any,
<PAGE> 84
17
payable by the Borrower to the Issuing Bank in respect of reimbursements for
Letter of Credit Disbursements, (c) all amounts, if any, payable by the
Borrower (minus the amounts, if any, receivable by the Borrower, to the extent
such amounts have actually been received by the Borrower, or may be set off or
applied by the Borrower against amounts payable by the Borrower) during such
period under any Interest Rate Hedging Transaction, (d) principal and interest
on the Bonds, if any, due and payable during such period, (e) Bond Letter of
Credit fees (including fronting fees) and fees in respect of the True-Up
Obligation, (f) VP Letter of Credit fees (including fronting fees), commitment
fees and administrative agent fees payable pursuant to the Project Loan
Agreement, (g) all other amounts in respect of principal, interest and other
fees and expenses payable by the Borrower during such period to any of the
Lenders pursuant to the Loan Documents and (h) all principal, interest and fees
payable with respect to any Refinancing Indebtedness or any purchase money
obligations permitted by Section 11.2(a) of the Project Loan Agreement;
provided that, for purposes of calculating "Historical Debt Coverage Ratio",
"Projected Debt Coverage Ratio" and "Debt Service Coverage Ratio", "Debt
Service" shall not include any General Indemnity Proceeds received by the
Borrower. For the purpose hereof, if the interest payable on any Loans or
other Senior Debt for any period is not determinable in advance because the
interest rate is not a fixed rate, it shall be assumed that such Loans or other
Senior Debt will bear interest during such period at the average interest rate
in effect with respect thereto during the six months immediately preceding such
period.
"Debt Service Coverage Ratio": for any period, the ratio of
(i) Project Cash Flow for such period to (ii) the Debt Service for such period.
"Debt Service Letter of Credit": a letter of credit, in an
acceptable form to the Security Agent, established in favor of the Security
Agent by a bank which at all times is rated at least A+ by Standard & Poor's
and at least A1 by Moody's, which letter of credit is a substitute for a like
amount of cash required to be on deposit in the Debt Service Reserve Account;
provided that no such letter of credit shall be deemed a "Debt Service Letter
of Credit" unless the Borrower has no direct or indirect reimbursement
obligations or liabilities to the issuer of such letter of credit or to any
other Person in respect of draws under such letter of credit.
"Debt Service Loans": Bank Project Loans the proceeds of
which are to be used to pay principal, interest and/or fees, or the Swap
Obligations, as the case may be, due on the outstanding Senior Debt.
"Debt Service Reserve Account": the Debt Service Reserve
Account established and maintained pursuant to the Security Deposit Agreement.
"Default": any of the events specified in Section 12.1 of the
Project Loan Agreement, whether or not any requirement for the giving of
notice, the lapse of time, or both, or any other condition set forth in said
Section 12.1, has been satisfied.
"Delay Damages Proceeds": as defined in Section 1.2 of the
Security Deposit Agreement.
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18
"Distribution": any distribution on or in respect of the
Partnership Interests, any payment on account of, or in connection with the
purchase, redemption, retirement or other acquisition of, Partnership
Interests, or any payment of principal or interest on, or in connection with
any redemption, purchase or other acquisition of, Junior Subordinated Debt.
"Distributions Account": the Distributions Account
established and maintained pursuant to the Security Deposit Agreement.
"Dollars" and "$": dollars in lawful currency of the United
States of America.
"Domestic Dollar Loans": collectively, C/D Rate Loans and
Base Rate Loans.
"Easements": any easement, license, right-of-way or similar
real property interest or right that is the subject of an Easement Agreement.
"Easement Agreements": (i) the Waterline and Pumping Station
Easement Agreement, (ii) the Access and Utility Easement Agreement, (iii) the
Stormwater and Surface Water Runoff Easement Agreement, and (iv) each other
agreement entered into prior to the execution and delivery of the Project Loan
Agreement granting or assigning to the Borrower ownership of or other rights in
respect of any easement, license, right-of-way or similar real property
interest or right relating to the Facility or the Site or to the transportation
and delivery of Coal, lime, water, ash, electricity or steam to or from the
Facility or the Site or to ingress or egress to or from the Facility or the
Site, each such agreement to be satisfactory in form and substance to the
Administrative Agent and the Majority Institutions.
"Environmental Consultant": Rust Environment &
Infrastructure, or such other environmental consultant reasonably acceptable to
the Borrower as the Majority Lenders may designate to examine and advise the
Lenders with respect to environmental matters concerning the Site and the
Project.
"Environmental Law": any and all Federal, state, local or
municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees or requirements of any Government Authority relating to the protection
of the environment or natural resources, or to emissions, discharge, Releases
or threatened Releases of Hazardous Materials into the environment including,
without limitation, ambient air, surface water, groundwater or land, or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous Materials, as
now or hereafter may be in effect.
"Environmental Report": the reports entitled "Phase I
Environmental Assessment, SEI Birchwood Power Facility, Parcel A, King George
County, Virginia" and "Phase I Environmental Assessment, SEI Birchwood Power
Facility, Parcel B, King George County, Virginia" prepared by the Environmental
Consultant, each dated April 1994.
"Equity Contribution Amount": as defined in Section 1.2 of
the Southern Equity Contribution Agreement.
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19
"Equity Contribution Dates": as defined in Section 1.1 of the
Equity Contribution Agreement.
"Equity Contribution Proceeds": any and all payments made or
due and payable by Southern on account of the Mandatory Equity Contribution or
any Contingent Equity Contribution.
"Equity Funding Banks": the banks which are identified as the
"Banks" in, and are from time to time party to, the Equity Funding Loan
Agreement.
"Equity Funding Commitments": the "Total Commitments" from
time to time in effect under the Equity Funding Loan Agreement.
"Equity Funding Documents": collectively, the Equity Funding
Loan Agreement, the Equity Funding Guarantee and the Southern Equity
Contribution Agreement.
"Equity Funding Guarantee": the Guarantee made by Southern in
favor of the Equity Funding Banks and the administrative agent and co-agents
under the Equity Funding Loan Agreement, substantially in the form of Exhibit D
to the Equity Funding Loan Agreement, as amended, supplemented or otherwise
modified from time to time in accordance with Section 11.11(a) of the Project
Loan Agreement.
"Equity Funding Loan Agent": Credit Suisse, in its capacity
as administrative agent for the Equity Funding Banks, or any successor in such
capacity appointed pursuant to subsection 8.9 of the Equity Funding Loan
Agreement.
"Equity Funding Loan Agreement": the Credit Agreement dated
as of May 18, 1994 among the Borrower, the co-agents named therein, the Equity
Funding Banks and Credit Suisse, as administrative agent for the Equity Funding
Banks thereunder, as amended, supplemented or otherwise modified from time to
time in accordance with Section 11.11(a) of the Project Loan Agreement.
"Equity Funding Loan Borrowing Certificate": a "Borrowing
Certificate" as defined in the Equity Funding Loan Agreement.
"Equity Funding Loan Borrowing Date": a "Borrowing Date" as
defined in the Equity Funding Loan Agreement.
"Equity Funding Loans": the revolving credit and bid loans
made by the Equity Funding Banks to the Borrower during the Construction Period
pursuant to the Equity Funding Loan Agreement.
"Equity Funding Termination Date": the date on which (i) the
Equity Funding Loans and all other amounts owing under the Equity Funding Loan
Agreement have been paid in full and the lending commitments thereunder
terminated, (ii) the Mandatory Equity
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20
Contribution and any Contingent Equity Contribution has been made to the
Borrower in accordance with Section 2.1 of the Southern Equity Contribution
Agreement and (iii) Southern shall have paid all amounts owing by it under the
Construction Contract Guarantees.
"ERISA": the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"Eurocurrency Reserve Requirements": for any day as applied
to a Eurodollar Loan, the aggregate (without duplication) of the rates
(expressed as a decimal fraction) of reserve requirements in effect on such day
(including, without limitation, basic, supplemental, marginal and emergency
reserves under any regulations of the Board of Governors of the Federal Reserve
System or other Government Authority having jurisdiction with respect thereto)
dealing with reserve requirements prescribed for eurocurrency funding
(currently referred to as "Eurocurrency Liabilities" in Regulation D of such
Board) maintained by a member bank of such System.
"Eurodollar Base Rate": with respect to each day during each
Bank Loan Interest Period pertaining to a Eurodollar Loan, the rate per annum
equal to the average (rounded upward, if necessary, to the nearest 1/16th of
1%) of the respective rates notified to the Administrative Agent by each of the
Reference Banks as the rate at which such Reference Bank is offered Dollar
deposits at or about 11:00 A.M., London time, two Business Days prior to the
beginning of such Bank Loan Interest Period in the London interbank eurodollar
market for delivery on the first day of such Bank Loan Interest Period, for the
number of days comprised therein and in an amount comparable to the amount of
its Eurodollar Loan to be outstanding during such Bank Loan Interest Period.
"Eurodollar Loans": Bank Loans the rate of interest
applicable to which is based upon the Eurodollar Rate.
"Eurodollar Rate": with respect to each day during each Bank
Loan Interest Period pertaining to a Eurodollar Loan, a rate per annum
determined for such day in accordance with the following formula (rounded
upward, if necessary, to the nearest 1/100th of 1%):
Eurodollar Base Rate
1.00 - Eurocurrency Reserve Requirements
"Eurodollar Tranche": as defined in Section 3.6 of the
Project Loan Agreement.
"Event of Default": any of the events specified in Section
12.1 of the Project Loan Agreement, provided that any requirement for the
giving of notice, the lapse of time, or both, or any other condition, has been
satisfied.
"Event of Loss": (a) the actual or constructive total loss of
all or substantially all of the Facility, or the condemnation, confiscation or
seizure of, or requisition of title to, or requisition by any Government
Authority of the use (for an indefinite period of time or for a period of time
in excess of twelve months) of, all or substantially all of the Facility; or
(b)(i) the
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21
loss, destruction or damage of, or (ii) the condemnation, confiscation or
seizure of, or requisition of title to, or requisition by any Government
Authority of the use of (in each case in this clause (ii) for an indefinite
period or for a period in excess of twelve months) such portion of the Project
as shall render the Facility unable to operate on a commercially feasible
basis, unless (in the case of this clause (b)): (w) no Event of Default shall
have occurred and be continuing at the time of occurrence of or immediately
after giving effect to any of the events specified in this clause (b), (x) it
is feasible to restore, rebuild or replace the affected portion of the Project,
(y) in the opinion of the Majority Lenders after consultation with the
Independent Engineer, sufficient funds are or will be available to the Borrower
(A) to restore, rebuild or replace the affected portion of the Project so that
the Facility will be able to operate on a commercially feasible basis and (B)
to pay all Debt Service until such restoration, rebuilding or replacement is
completed and (z) no party (other than the Borrower) to any Principal Project
Document has the right to terminate such Principal Project Document at any time
during the period of restoration, rebuilding or replacement as a result of any
of the events specified in this clause (b) unless such right has been waived in
writing in a manner reasonably satisfactory to the Security Agent. For the
purpose of clause (b) of this definition, the Event of Loss shall be deemed to
have occurred on the date on which the Security Agent shall notify the Borrower
in writing that one or more of the conditions (specifying the same) set forth
in clauses (w), (x), (y) and (z) has not been satisfied.
"Event of Loss Prepayment Date": in the case of an Event of
Loss described in clause (a) of the definition thereof, the earlier of (i) the
date which is 90 days after the date of such Event of Loss and (ii) the date on
which the insurance proceeds are received with respect to such Event of Loss;
and in the case of an Event of Loss described in clause (b) of the definition
thereof, the later of (x) the date on which such Event of Loss is deemed to
have occurred and (y) the earlier of the date on which the insurance proceeds
are received with respect to such Event of Loss or the date 90 days after such
Event of Loss is deemed to have occurred.
"Excess Cash Flow": as of any date of determination, the
amount available to be transferred from the Project Control Account to the
Distributions Account pursuant to clause twelfth of Section 5.3(a) of the
Security Deposit Agreement on such date.
"Extension of Credit": any of (a) the making of a Bank
Project Loan, (b) the making of a Bank L/C Loan, (c) the making of a Bank
Liquidity Loan, (d) the making of an Institutional Loan, (e) the issuance of a
VP Letter of Credit or (f) the issuance of a Bond Letter of Credit.
"Extension of Credit Request": a written request by the
Borrower for an Extension of Credit, substantially in the form of Exhibit B-1,
B-2 or B-3 of the Project Loan Agreement.
"Facility": the pulverized coal-fired cogeneration facility
having a nameplate rating of 220 megawatts to be constructed on the Site
pursuant to the Facility Construction Contract, consisting of the turbines,
boilers, fuel handling equipment and all other equipment installed on the
Borrower's side of the Interconnection Point that is not Interconnection
Facilities (as such terms are defined in the Power Purchase Agreement).
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22
"Facility Completion Certificate": a certificate
substantially in the form of Exhibit J-1 of the Project Loan Agreement, signed
by the Borrower and the Independent Engineer.
"Facility Construction Contract": the Amended and Restated
Agreement for Engineering, Procurement and Construction Services dated as of
April 19, 1994 between the Facility Contractor and the Borrower, as amended,
supplemented or otherwise modified from time to time in accordance with Section
11.12(a) of the Project Loan Agreement.
"Facility Construction Contract Guarantee": the Guaranty
dated as of May 18, 1994 made by the Parent Guarantor in favor of the Borrower,
as amended, supplemented or otherwise modified from time to time in accordance
with Section 11.12(a) of the Project Loan Agreement.
"Facility Construction Schedule": the schedule for the
Construction of the Facility prepared by the Borrower and the Facility
Contractor and approved by the Co-Agents, the Institutions and the Independent
Engineer, as set forth on Schedule 8 to the Project Loan Agreement.
"Facility Contractor": SEI.
"Facility Operator": SEI.
"Federal Funds Effective Rate": as defined in the definition
of "Base Rate".
"FERC": the Federal Energy Regulatory Commission or any
successor or analogous federal Government Authority.
"Final Completion": (a) with respect to the Facility, as
defined in Section 1.1 of the Facility Construction Contract, and (b) with
respect to the Greenhouse, as defined in Section 1.1 of the Greenhouse
Construction Contract.
"Final Completion Escrow Account": the Final Completion
Escrow Account established and maintained pursuant to the Security Deposit
Agreement.
"Final Completion Prepayment Amount": the amount transferred
from the Final Completion Escrow Account to the Prepayment Subaccount on the
date of Final Completion of the Facility pursuant to clause second of Section
5.9(b) of the Security Deposit Agreement.
"Financing Documents": collectively, the Loan Documents, the
Interest Rate Hedging Agreements with an Interest Rate Hedging Counterparty
specified in clause (ii) of the definition thereof, the Bond Documents and the
Equity Funding Documents.
"Force Majeure": with respect to any Project Document, as
defined in such Project Document.
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23
"GAAP": generally accepted accounting principles in the
United States of America in effect from time to time.
"General Indemnity Payment Proceeds": any and all proceeds of
any insurance maintained by the Borrower or any indemnity, warranty, liquidated
damages or guaranty in favor of the Borrower under any Project Document or
Financing Document which are payable to the Borrower and are not required to be
paid by the Borrower to another Person upon the Borrower's receipt thereof, and
which does not constitute Casualty Insurance Proceeds, Business Interruption
Insurance Proceeds, Requisition Proceeds or Liquidated Damages Proceeds.
"General Partner Interest Pledge Agreements": the collective
reference to the separate General Partner Interest Pledge Agreements made by
each General Partner of the Borrower from time to time in favor of the Security
Agent for the benefit of the Secured Parties, substantially in the form of
Exhibit F-1 to the Project Loan Agreement, as amended, supplemented or
otherwise modified from time to time in accordance with the terms thereof.
"General Partners": (a) on the date of execution and delivery
of the Project Loan Agreement, the collective reference to SEI Birchwood and
Birchwood Development, in their capacity as owners of general partnership
interests in the Borrower; and (b) thereafter, subject to compliance with the
provisions of the Partnership Agreement and of Section 11.13(a) of the Project
Loan Agreement, each owner from time to time of a general partnership interest
in the Borrower.
"GNP Index": the Gross National Product Implicit Price
Deflator as presently issued by the Department of Commerce Bureau of Economic
Analysis in the publication entitled "Economic Indicators" published by the
Government Printing Office, or, if said historical index is no longer available
or is converted to a different standard reference base or is otherwise revised,
such historical index as the Borrower and the Administrative Agent may select
that measures all goods and services in the economy adjusted for real price
change.
"GNP Index Multiplier": for any calendar year, the sum of (a)
the Inflation Factor for the calendar year immediately preceding such calendar
year and (b) 1.0.
"Government Authority": any nation or government, any state
or other political subdivision thereof, and any entity exercising legislative,
judicial, regulatory or administrative functions of or pertaining to
government.
"Governmental Approvals": authorizations, consents,
approvals, waivers, exemptions, variances, franchises, to the permissions,
permits and licenses of, and filings and declarations with, any Government
Authority.
"Greenhouse": the approximately 36 acre greenhouse complex to
be constructed on the Leased Land pursuant to the Greenhouse Construction
Contract, as more particularly described in Section 1.1 of the Greenhouse
Construction Contract.
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24
"Greenhouse Bill of Sale": the Bill of Sale dated May 18,
1994 from the Greenhouse Operator, as seller, to the Greenhouse Owner, as
buyer.
"Greenhouse Collateral": the Greenhouse and all other
property mortgaged, pledged or assigned to the Borrower or the Greenhouse Owner
pursuant to the Greenhouse Documents as security for the payment of the
obligations under the Greenhouse Loan Agreement or the Greenhouse Sublease,
respectively.
"Greenhouse Completion Certificate": a certificate
substantially in the form of Exhibit J-2 of the Project Loan Agreement, signed
by the Borrower, the Greenhouse Owner, the Greenhouse Operator and the
Independent Engineer.
"Greenhouse Construction Contract": the Construction Contract
dated as of April 19, 1994 between the Greenhouse Contractor and the Greenhouse
Operator, as assigned by the Greenhouse Operator to, and assumed by, the
Greenhouse Owner pursuant to the Assignment and Assumption Agreement dated as
of May 18, 1994, as amended, supplemented or otherwise modified from time to
time in accordance with Section 11.12(a) of the Project Loan Agreement.
"Greenhouse Construction Contract Guarantee": the Guaranty
dated as of May 18, 1994 made by the Parent Guarantor in favor of the
Greenhouse Owner, as amended, supplemented or otherwise modified from time to
time in accordance with Section 11.12(a) of the Project Loan Agreement.
"Greenhouse Construction Schedule": the schedule for the
construction of the Greenhouse prepared by the Greenhouse Operator and the
Greenhouse Contractor and approved by the Co-Agents, the Institutions and the
Independent Engineer, as set forth in Schedule 9 to the Project Loan Agreement.
"Greenhouse Contractor": SEI.
"Greenhouse Deed": the Deed of Bargain and Sale dated as of
May 18, 1994 from the Greenhouse Operator, as Grantor, to the Greenhouse Owner,
as Grantee.
"Greenhouse Documents": collectively, the Greenhouse Loan
Agreement, the Greenhouse Note, the Greenhouse Bill of Sale, the Greenhouse
Mortgage, the Greenhouse Nondisturbance Agreement, the Greenhouse Master Lease,
the Greenhouse Pledge Agreements, the Greenhouse Stock Assignment, the
Greenhouse Construction Contract, the Greenhouse Sublease and the Greenhouse
Deed.
"Greenhouse Loan Agreement": the Loan and Contribution
Agreement dated as of May 18, 1994 between the Greenhouse Owner and the
Borrower, as amended, supplemented or otherwise modified from time to time in
accordance with Section 11.12(a) of the Project Loan Agreement.
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25
"Greenhouse Master Lease": the Deed of Master Lease dated as
of May 18, 1994 between the Borrower, as Master Landlord, and the Greenhouse
Owner, as Master Tenant, as amended, supplemented or otherwise modified from
time to time in accordance with Section 11.12(a) of the Project Loan Agreement.
"Greenhouse Mortgage": the Deed of Trust, Security Agreement
and Assignment of Leases and Rents dated as of May 18, 1994 by and between the
Greenhouse Owner, as grantor, Lawyers Title Insurance Corporation, as Trustee,
for the benefit of the Borrower, as amended, supplemented or otherwise modified
from time to time in accordance with Section 11.12(a) of the Project Loan
Agreement.
"Greenhouse Mortgage Assignment": the Collateral Assignment
of Greenhouse Note, Loan Agreement and Mortgage dated as of May 18, 1994 from
the Borrower, as assignor, to the Security Agent, as assignee, as amended,
supplemented or otherwise modified from time to time in accordance with Section
11.11(a) of the Project Loan Agreement.
"Greenhouse Nondisturbance Agreement": the Nondisturbance,
Attornment and Subordination Agreement dated as of May 18, 1994 by and between
the Security Agent and the Greenhouse Operator, as amended, supplemented or
otherwise modified from time to time in accordance with Section 11.12(a) of the
Project Loan Agreement.
"Greenhouse Note": the promissory note executed by the
Greenhouse Owner in the form of Exhibit A to the Greenhouse Loan Agreement,
payable to the order of the Borrower, and any and all renewals, reinstatements,
rearrangements, enlargements or extensions thereof or of any promissory note or
notes given therefor, as amended, supplemented or otherwise modified from time
to time in accordance with Section 11.12(a) of the Project Loan Agreement.
"Greenhouse Operator": Dominion Growers of Fredericksburg,
Inc., a Virginia corporation.
"Greenhouse Operator Pledge Agreements": the collective
reference to (i) the Stock Pledge Agreement made by Johannes VanWingerden, the
sole stockholder of the Greenhouse Operator in favor of the Greenhouse Owner,
and (ii) following the Closing Date, the other Stock Pledge Agreements made by
each transferee of Johannes VanWingerden in favor of the Greenhouse Owner, in
each case, substantially in the form of Exhibit __ to the Greenhouse Sublease,
as amended, supplemented or otherwise modified from time to time in accordance
with Section 11.12(a) of the Project Loan Agreement.
"Greenhouse Owner": Greenhost, Inc., a Delaware corporation.
"Greenhouse Owner Pledge Agreement": the Stock Pledge
Agreement dated as of May 18, 1994 made by Corporate Trinity Company, the sole
stockholder of the Greenhouse Owner, in favor of the Borrower, substantially in
the form of Exhibit C to the Greenhouse Loan Agreement, as amended,
supplemented or otherwise modified from time to time in accordance with Section
11.12(a) of the Project Loan Agreement.
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26
"Greenhouse Pledge Agreements": collectively, the Greenhouse
Owner Pledge Agreement and the Greenhouse Operator Pledge Agreements.
"Greenhouse Prepayment Amount": as defined in Section 7.3(f)
of the Project Loan Agreement.
"Greenhouse Prepayment Notice": as defined in Section 7.3(f)
of the Project Loan Agreement.
"Greenhouse Prepayment Proceeds": with respect to any
optional or mandatory prepayment of loans pursuant to the Greenhouse Loan
Agreement, other than a mandatory prepayment of loans made with the proceeds of
any payments of Greenhouse Reserve Replenishment Rent under the Greenhouse
Sublease, 85% of the proceeds thereof.
"Greenhouse Reserve Account": the Greenhouse Reserve Account
established and maintained pursuant to the Security Deposit Agreement.
"Greenhouse Reserve Replenishment Rent": any payments of
Supplemental Rent made pursuant to Section 15.06 of the Greenhouse Sublease
following a Greenhouse Reserve Withdrawal Event and until such time as the
amount of funds on deposit in the Greenhouse Reserve Account equals $2,000,000.
"Greenhouse Reserve Withdrawal Event": as defined in Section
1.2 of the Security Deposit Agreement.
"Greenhouse Stock Assignment": the Greenhouse Stock
Assignment dated as of May 18, 1994 between the Greenhouse Owner and the
Borrower, as amended, supplemented or otherwise modified from time to time in
accordance with Section 11.12(a) of the Project Loan Agreement.
"Greenhouse Sublease": the Deed of Sublease dated as of May
18, 1994 between the Greenhouse Owner, as sublessor, and the Greenhouse
Operator, as sublessee, as amended, supplemented or otherwise modified from
time to time in accordance with Section 11.12(a) of the Project Loan Agreement.
"Guarantee Obligation": as to any Person (the "guaranteeing
person"), any obligation of (a) the guaranteeing person or (b) another Person
(including, without limitation, any bank under any letter of credit) to induce
the creation of which the guaranteeing person has issued a reimbursement,
counter indemnity or similar obligation, in either case guaranteeing or in
effect guaranteeing any Indebtedness, lease, dividends or other obligations
(the "primary obligations") of any other third Person (the "primary obligor")
in any manner, whether directly or indirectly, including, without limitation,
any obligation of the guaranteeing person, whether or not contingent, (i) to
purchase any such primary obligation or any property constituting direct or
indirect security therefor, (ii) to advance or supply funds (1) for the
purchase or payment of any such primary obligation or (2) to maintain working
capital or equity capital of the primary
<PAGE> 94
27
obligor or otherwise to maintain the net worth or solvency of the primary
obligor, (iii) to purchase property, securities or services primarily for the
purpose of assuring the owner of any such primary obligation of the ability of
the primary obligor to make payment of such primary obligation or (iv)
otherwise to assure or hold harmless the owner of any such primary obligation
against loss in respect thereof; provided, however, that the term Guarantee
Obligation shall not include (x) endorsements of instruments for deposit or
collection in the ordinary course of business, (y) obligations of the Borrower
contained in any Project Document on the Closing Date and (z) indemnity and
"hold harmless" provisions in the CT Corporation Agreement or in contracts
(including Additional Contracts) entered into by the Borrower in the ordinary
course of business after the Closing Date.
"Hazardous Materials": (a) any petroleum or petroleum
products, flammable explosives, radioactive materials, asbestos in any form
that is or could become friable, urea formaldehyde foam insulation and
polychlorinated biphenyls (PCB) to the extent regulated under any Environmental
Law; and (b) any chemicals, materials or substances defined as or included in
the definition of "hazardous substances", "hazardous wastes", "hazardous
materials", "extremely hazardous wastes", "restricted hazardous wastes", "toxic
substances", "toxic pollutants", "contaminants" or "pollutants", or words of
similar import, under any applicable Environmental Law.
"Heat Rate Bonus": as defined in Section 8.5 of the Facility
Construction Contract.
"Historical Debt Coverage Ratio": as of any Quarterly
Calculation Date, the ratio of (i) Project Cash Flow of the Borrower for the
six-month period ending on such Quarterly Calculation Date to (ii) Debt Service
for such six-month period.
"Increased IDC Contribution Amount": as defined in the
Southern Equity Contribution Agreement.
"Increased IDC Prepayment Amount":
(a) if the Applicable Institutional Loan Margin
(determined in accordance with the relevant Institutional Notes) of the initial
Institutional Loans made by the Institutions is 2.62%, but the Applicable
Institutional Loan Margin (determined in accordance with the relevant
Institutional Notes) of the subsequent Institutional Loans made by the
Institutions is 2.40%, $1,120,000; or
(b) if the Applicable Institutional Loan Margin
(determined in accordance with the relevant Institutional Notes) of both of the
Institutional Loans made by the Institutions is 2.62%, $2,239,000.
"Indebtedness": of any Person at any date, (a) all
indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services, (b) any other indebtedness of such Person which
is evidenced by a note, bond, debenture or similar instrument,
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28
(c) all obligations of such Person under Capital Leases, (d) all obligations of
such Person pursuant to Interest Rate Hedging Transactions, (e) all obligations
of such Person in respect of acceptances issued or created for the account of
such Person and (f) all liabilities secured by any Lien on any property owned
by such Person even though such Person has not assumed or otherwise become
liable for the payment thereof.
"Independent Engineer": Black & Veatch, Engineers-Architects,
a Missouri partnership, or such other engineering firm reasonably acceptable to
the Borrower as the Majority Lenders may designate.
"Independent Engineer's Certificate": as defined in Section
9.2(d) of the Project Loan Agreement.
"Independent Engineer's Report": the report of the
Independent Engineer delivered pursuant to Section 9.1(m) of the Project Loan
Agreement.
"Inflation Factor": for any calendar year (the "test year"),
the quotient obtained by dividing (a) the GNP Index for the test year minus the
GNP Index for the calendar year immediately preceding the test year, by (b) the
GNP Index for the calendar year immediately preceding the test year.
"Information Memorandum": the Birchwood Power Partners, L.P.
Non-Recourse Financing Amended and Restated Private Information Memorandum for
the Project dated May 18, 1994, prepared by the Borrower and delivered to the
Co-Agents and Institutions.
"Initial Budgeted Amount": $438,365,000.
"Initial Funding Period": the period from and including the
Closing Date to and including August 22, 1994.
"Initial Repair and Maintenance Reserve Amount": $1,000,000.
"Initial Repayment Date": the first Loan Installment Payment
Date to occur on or after the later of (i) the date which is three months after
the Completion Date and (ii) the date which is six months after the Commercial
Operations Date.
"Initial Synchronization Date": as defined in Section 1.23 of
the Power Purchase Agreement.
"Insolvency": with respect to any Multiemployer Plan, the
condition that such Plan is insolvent within the meaning of Section 4245 of
ERISA.
"Institution Default Rate": for any day with respect to any
Institutional Loan, the rate per annum equal to the rate of interest borne by
the Institutional Note evidencing such Loan plus 2.00%.
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29
"Institutional Commitment Period": the period from and
including the Closing Date to and including the Institutional Commitment
Termination Date.
"Institutional Commitment Termination Date": February 15,
1995.
"Institutional Fee Letter": the letter agreement dated the
date of the Project Loan Agreement between the Institutions and the Borrower,
setting forth certain fees payable by the Borrower to the Institutions.
"Institutional Loan Facility": the construction and term loan
facility provided by the Institutions to the Borrower pursuant to Section 4 of
the Project Loan Agreement, under which the Institutions will make
Institutional Loans from time to time in accordance with the terms thereof.
"Institutional Loan Final Maturity Date": the twentieth
anniversary of the Commercial Operations Date.
"Institutional Loan Installment Payment Date": as defined in
Section 4.4(a) of the Project Loan Agreement.
"Institutional Loan Proceeds Account": the Institutional Loan
Proceeds Account established and maintained pursuant to the Security Deposit
Agreement.
"Institutional Loans": as defined in Section 4.1 of the
Project Loan Agreement.
"Institutional Note": as defined in Section 4.3 of the
Project Loan Agreement.
"Institutional Note Register": as defined in Section 4.7(a)
of the Project Loan Agreement.
"Institutional Transfer Supplement": as defined in Section
14.8(a) of the Project Loan Agreement.
"Institutions": the financial institutions, insurance
companies and other institutional investors which are identified as
"Institutions" in, and are from time to time party to, the Project Loan
Agreement.
"Insurance and Property Tax Reserve Account": the Insurance
and Property Tax Reserve Account established and maintained pursuant to the
Security Deposit Agreement.
"Insurance Consultant": Gale, Smith & Co. Inc., or such other
insurance consultant reasonably acceptable to the Borrower as the Majority
Lenders may designate.
"Interest Drawing": as defined in the relevant Bond Letter of
Credit.
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30
"Interest Rate Election Notice": a written notice by the
Borrower delivered in connection with a borrowing of Bank Loans, substantially
in the form of Exhibit M to the Project Loan Agreement.
"Interest Rate Hedging Agreement": the agreement or
agreements entered into, or to be entered into, by the Borrower and one or more
Interest Rate Hedging Counterparties in connection with each Interest Rate
Hedging Transaction, as amended, supplemented or otherwise modified from time
to time in accordance with Section 11.11(a) of the Project Loan Agreement.
"Interest Rate Hedging Counterparty": (i) any Co-Agent or any
Affiliate thereof whose long-term unsecured debt securities are rated A- or
better by Standard & Poor's or A3 or better by Moody's or (ii) any other
financial institution whose long-term unsecured debt securities are rated AA-
or better by Standard & Poor's or Aa3 or better by Moody's, in each case at the
time of such Co-Agent's, such Affiliate's or such other financial institution's
entry into an Interest Rate Hedging Transaction with the Borrower.
"Interest Rate Hedging Transaction": any interest rate
protection agreement, interest rate swap transaction, interest rate "cap" or
"collar" transaction, interest rate future, interest rate option or other
interest rate hedging transaction.
"Investor Percentage": at any time:
(a) with respect to any Institution, a fraction
(expressed as a percentage), the numerator of which is the sum of (i)
the aggregate unpaid principal amount of Institutional Loans then
outstanding held by such Institution and (ii) the unused Institutional
Loan Commitment of such Institution then in effect, and the
denominator of which is the Total Investor Exposure at such time; and
(b) with respect to the Unsupported Bondholders, a
fraction (expressed as a percentage), the numerator of which is the
aggregate unpaid principal amount of Unsupported Bonds then
outstanding, and the denominator of which is the Total Investor
Exposure at such time.
For purposes of this definition, "Total Investor Exposure" means, at any time,
the sum of (i) the aggregate unpaid principal amount of Institutional Loans
then outstanding, (ii) the aggregate unpaid principal amount of Unsupported
Bonds then outstanding and (iii) the unused portion of the Total Institutional
Commitments then in effect.
"IPP": an independent power production facility which is not
a Qualifying Facility.
"IPP Conversion Date": the date, if any, on which the
Facility shall cease to be a Qualifying Facility and shall become an IPP in
compliance with all relevant provisions of the Project Loan Agreement.
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31
"Issuing Bank": Credit Suisse, or when the context requires,
Credit Suisse, New York Branch, or any successor or assign, and shall be
interpreted accordingly throughout the Loan Documents.
"Junior Subordinated Indebtedness": unsecured indebtedness of
the Borrower for borrowed money that is evidenced by an instrument or
instruments containing the subordination provisions set forth in Exhibit N to
the Project Loan Agreement.
"L/C Cash Collateral Subaccount": as defined in Section
3.1(a) of the Security Deposit Agreement.
"L/C Disbursement Date": the date on which any Letter of
Credit Disbursement is made.
"L/C Reimbursement Date": each date upon which any L/C
Reimbursement Obligation arises and the payment thereof is not financed with
the proceeds of a Bank L/C Loan or Bank Liquidity Loan under the Project Loan
Agreement.
"L/C Reimbursement Obligations": collectively, Bond
Reimbursement Obligations and VP Reimbursement Obligations.
"L/C Reimbursement Payments": collectively, Bond
Reimbursement Payments and VP Reimbursement Payments.
"Leased Land": that portion of the Site that is subject to
the Greenhouse Master Lease.
"Lenders": the Banks, the Issuing Bank and the Institutions.
"Lenders' Default Notice": as defined in Section 1.2 of the
Southern Equity Contribution Agreement.
"Letter of Credit Disbursement": any Construction VP Letter
of Credit Disbursement, any Term VP Letter of Credit Disbursement or any Bond
Letter of Credit Disbursement.
"Letter of Credit Exposure": on any date with respect to all
Letters of Credit then outstanding, the sum of (i) the aggregate undrawn
portion of the respective stated amounts of such Letters of Credit on such date
and (ii) the aggregate amount of L/C Reimbursement Obligations on such date
which have not been reimbursed by the Borrower from its own funds or financed
with the proceeds of a Bank L/C Loan or a Bank Liquidity Loan.
"Letters of Credit": collectively, the Bond Letters of Credit
and the VP Letters of Credit.
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32
"Lien": any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), charge or other
security interest or any preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including, without
limitation, any conditional sale or other title retention agreement and any
lease having substantially the same economic effect as any of the foregoing).
"Limited Partner Interest Pledge Agreement": the collective
reference to the separate Limited Partner Interest Pledge Agreements made by
each Limited Partner of the Borrower from time to time in favor of the Security
Agent for the benefit of the Secured Parties, substantially in the form of
Exhibit F-2 to the Project Loan Agreement, as amended, supplemented or
otherwise modified from time to time in accordance with the terms thereof.
"Limited Partners": (a) on the date of the execution and
delivery of the Project Loan Agreement, SEI Birchwood, in its capacity as the
owner of all of the limited partnership interests of the Borrower; and (b)
thereafter, subject to compliance with the provisions of the Partnership
Agreement and of Section 11.13(b) of the Project Loan Agreement, each owner
from time to time of a limited partnership interest in the Borrower.
"Liquidity Drawing": a Tender Drawing -- Principal or a
Tender Drawing -- Interest (as each such term is defined in the relevant Bond
Letter of Credit), the proceeds of which are to be used to fund tenders of the
relevant Bonds in connection with a remarketing of the Bonds.
"Liquidity Loan Termination Date": with respect to Bank
Liquidity Loans the proceeds of which are used to finance Bond Reimbursement
Obligations in respect of a Liquidity Drawing under a Bond Letter of Credit,
the applicable Bond L/C Expiration Date of such Bond Letter of Credit.
"Loan Documents": the Project Loan Agreement, the Notes, each
Interest Rate Hedging Agreement with an Interest Rate Hedging Counterparty
specified in clause (i) of the definition thereof and the Security Documents.
"Loan Installment Payment Date": each of (i) the last day of
each March, June, September and December occurring on the first such day to
occur after the Commercial Operations Date, to and including the Bank Loan
Final Maturity Date (in the case of Bank Loans) or the Institutional Loan Final
Maturity Date (in the case of Institutional Loans) and (ii) the Bank Loan Final
Maturity Date (in the case of Bank Loans) or the Institutional Loan Final
Maturity Date (in the case of Institutional Loans).
"Loan Participants": as defined in Section 14.7(a) of the
Project Loan Agreement.
"Loans": collectively, the Bank Project Loans, the Bank L/C
Loans, the Bank Liquidity Loans and the Institutional Loans.
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33
"Majority Banks": at any time, Banks the Commitment
Percentages of which at such time aggregate at least 66 2/3%.
"Majority Institutions": at any time, Institutions and
Unsupported Bondholders (acting through the relevant Bond Trustee) the Investor
Percentages of which at such time aggregate at least 66 2/3%.
"Majority Lenders": at any time, each of (i) Banks,
Institutions and Unsupported Bondholders (acting through the relevant Bond
Trustee) the Senior Creditor Percentages of which at such time aggregate at
least 66 2/3%; and (ii) Banks the Commitment Percentages of which at such time
aggregate at least 66 2/3% and (iii) Institutions and Unsupported Bondholders
(acting through the relevant Bond Trustee) the Investor Percentages of which at
such time aggregate at least 66 2/3%; provided, however, that if at any time on
or after the first day of the fourteenth year following the Commercial
Operations Date, the Senior Creditor Percentage of either the Banks or the
Institutions is less than 20% of the Total Senior Creditor Exposure (as defined
in the definition of "Senior Creditor Percentage"), then "Majority Lenders"
shall be determined without reference to clause (ii) or (iii) above; provided,
further, that on and after the date on which the Bank Loans and all amounts
payable to the Banks, the Issuing Bank and the Administrative Agent under the
Loan Documents have been paid in full, no Letter of Credit is outstanding and
all of the Commitments of the Banks have been terminated, "Majority Lenders"
shall be determined without reference to clause (ii) above and clause (i) above
shall be calculated without reference to "Banks".
"Make-Whole Premium": a premium, determined as of the date of
any optional prepayment pursuant to Section 7.4 of the Project Loan Agreement,
any mandatory prepayment pursuant to Section 7.3 of the Project Loan Agreement
in respect of which the Make-Whole Premium is payable, or any acceleration
pursuant to Section 12.2 thereof, in respect of each Institutional Loan (or the
portion thereof) to be prepaid or each Institutional Loan being accelerated,
equal to the amount (but not less than zero) obtained by subtracting (i) the
sum of the unpaid principal amount of such Institutional Loan (or the portion
thereof) being prepaid or accelerated and the amount of interest thereon
accrued to the prepayment date or date of acceleration, as the case may be,
from (ii) the sum of the Current Values of each scheduled interest payment and
principal payment (each such amount of principal or interest being referred to
herein as an "Amount Payable") being prepaid or accelerated that would
otherwise have become due after the date of such determination if such
Institutional Loan were not being prepaid or accelerated. The "Current Value"
of any Amount Payable means such Amount Payable discounted on a quarterly basis
to its present value on the date of determination in accordance with the
following formula:
Current Value = Amount Payable
--------------
(1 + d/p)n
where "d" is the sum of (a) 50 basis points and (b) the Treasury Yield per
annum expressed as a decimal, and "n" is an exponent (which need not be an
integer) equal to the number of
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34
quarterly periods and portions thereof (any such portion of a period to be
determined by dividing the number of days in such portion of such period by the
total number of days in such period, both computed on the basis of twelve
30-day months in a 360-day year) from the date of such determination to the
scheduled payment date of the Amount Payable, and "p" is 4. The "Treasury
Yield" applicable to each Amount Payable shall be the yield to maturity implied
by the yields reported, as of 10:00 a.m. (New York City time) on the Business
Day next preceding the date fixed for prepayment or the date of acceleration,
as the case may be, with respect to the principal amount being prepaid or
accelerated, on the display designated as "Page 678" on the Telerate Service
(or such other display as may replace such Page 678) for actively traded U.S.
Treasury securities having a maturity equal to the then remaining weighted
average life of the Institutional Loan being prepaid or accelerated (the
"Remaining Life") of such principal amount as of such date, computed by
dividing (x) the amount referred to in clause (i) above into (y) the total of
the products obtained by multiplying (A) the amount of each remaining required
repayment of principal by (B) the number of years (calculated to the nearest
one-twelfth) which will elapse between the date as of which such computation is
made and the due date of such payment. If the Remaining Life is not equal to
the constant maturity of a U.S. Treasury security for which a weekly average
yield is given, the Treasury Yield shall be obtained by linear interpolation
(calculated to the nearest one-twelfth of a year) from the weekly average
yields of (a) the actively traded U.S. Treasury security with a maturity
closest to and greater than the Remaining Life and (b) the actively traded U.S.
Treasury security with a maturity closest to and less than the Remaining Life,
except that if the Remaining Life is less than one year, the weekly average
yield on actively traded U.S. Treasury securities adjusted to a constant
maturity of one year shall be used. The Treasury Yield shall be computed to
the fifth decimal place (one thousandth of a percentage point) and then rounded
to the fourth decimal place (one hundredth of a percentage point).
"Mandatory Equity Contribution": as defined in the Southern
Equity Contribution Agreement.
"Material Adverse Effect": a material adverse effect on (a)
the business, operations or financial condition of the Borrower, (b) the
ability of the Borrower to perform its obligations under the Loan Documents and
the Project Documents, or (c) the validity or enforceability of the Loan
Documents or the Project Documents or the rights, interests and remedies of the
Lenders under the Loan Documents.
"Maximum Partnership Interest": with respect to any Person,
(i) 50% of all general partnership interests in the Borrower and (ii)
Partnership Interests entitling such Person to receive 50% of the profits and
losses of the Borrower.
"Modified Make-Whole Premium": (a) with respect to any
optional prepayment of Institutional Loans pursuant to Section 7.4 of the
Project Loan Agreement with funds transferred from the Additional Collateral
Account pursuant to Section 5.6(b) of the Security Deposit Agreement, such
Institution's Pro Rata Share (as defined below) of the product of (x) the
aggregate amounts payable to the Banks pursuant to Section 7.7(a) or 7.7(d) of
the Project Loan Agreement in connection with such prepayment and (y) a
fraction, the numerator of which
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35
is the aggregate principal amount of Institutional Loans to be prepaid in
connection with such prepayment and the denominator of which is the aggregate
principal amount of Bank Loans to be prepaid in connection with such
prepayment; and (b) with respect to any other optional prepayment pursuant to
Section 7.4 of the Project Loan Agreement of Institutional Loans held by an
Institution exercising the Pro Rata Prepayment Option which has agreed to
receive the Modified Make-Whole Premium, a premium, determined as of the date
of such optional prepayment, calculated in accordance with the definition of
"Make- Whole Premium", except that, for purposes of the formula used to
determine "Current Value" in such definition, "d" shall be the sum of (i) 100
basis points and (ii) the Treasury Yield per annum expressed as a decimal. For
purposes of this definition, "Pro Rata Share", with respect to any Institution
exercising the Pro Rata Prepayment Option in connection with an optional
prepayment of Institutional Loans, is equal to a fraction, the numerator of
which is equal to the aggregate principal amount of Institutional Loans held by
such Institution on the date of such prepayment and the denominator of which is
equal to the aggregate principal amount of Institutional Loans held by all
Institutions exercising the Pro Rata Prepayment Option on the date of such
prepayment.
"Monthly Construction Disbursement Date": in any calendar
month during the Construction Period, the single Business Day in such calendar
month designated by the Borrower as the date on which the Borrower proposes to
borrow Bank Project Loans and/or Institutional Loans under the Project Loan
Agreement to pay Project Costs.
"Moody's": Moody's Investor Services, Inc.
"Mortgaged Property": the "Trust Property" as defined in the
Project Mortgage.
"Multiemployer Plan": a Plan which is a multiemployer plan
as defined in Section 4001(a)(3) of ERISA.
"Non-Restoration Prepayment Amount": as defined in Section
7.3(g) of the Project Loan Agreement.
"Non-Restoration Prepayment Notice": as defined in Section
7.3(g) of the Project Loan Agreement.
"Note Exchange Date": the first date on which interest is
payable (and has been paid) on the Institutional Loans following the second
borrowing of Institutional Loans pursuant to Section 4.1 of the Project Loan
Agreement.
"Notes": collectively, the Bank Notes and Institutional
Notes.
"Notice to Proceed": (a) with respect to the Facility, as
defined in Section 1.1 of the Facility Construction Contract, or (b) with
respect to the Greenhouse, as defined in Section 1.1 of the Greenhouse
Construction Contract.
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36
"Operating and Maintenance Agreement": the Amended and
Restated Facility Operations and Maintenance Agreement dated as of May 18, 1994
between the Borrower and the Facility Operator, as amended, supplemented or
otherwise modified from time to time in accordance with Section 11.12(a) of the
Project Loan Agreement.
"Operating Budget": as defined in Section 10.23 of the Project
Loan Agreement.
"Operating Year": the consecutive twelve-month period
commencing on the Commercial Operations Date, and each consecutive twelve-month
period thereafter commencing on each anniversary of the Commercial Operations
Date.
"Optional Prepayment Notice": as defined in Section 7.4(a) of
the Project Loan Agreement.
"Ornamental Flower Market Consultant": Context Consulting, or
such other consultant reasonably acceptable to the Borrower as the Majority
Lenders may designate to examine and advise the Lenders with respect to the
Greenhouse, the Greenhouse Operator and the ornamental flower market.
"Parent Guarantor": Southern, as guarantor under the
Construction Contract Guarantees.
"Partner Collateral": the "Collateral" as defined in each
General Partner Pledge Agreement and each Limited Partner Pledge Agreement.
"Partners": collectively, the General Partners and the
Limited Partners.
"Partnership Agreement": the Limited Partnership Agreement of
the Borrower dated as of July 21, 1993, as amended by a First Amendment dated
as of April 27, 1994 and by a Second Amendment dated as of May 18, 1994,
between Birchwood Development, in its capacity as a general partner, and SEI
Birchwood, in its respective capacities as a general partner and as the sole
limited partner.
"Partnership Interests": collectively, the general
partnership interests and limited partnership interests in the Borrower.
"PBGC": the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA.
"Permitted Investments": collectively, (a) direct obligations
of the United States or of any agency or political subdivision thereof, or
obligations guaranteed as to principal and interest by the United States or by
any agency or political subdivision thereof, in any case maturing not more than
90 days from the date of acquisition thereof; (b) certificates of deposit
issued by any bank having capital, surplus and undivided profits of at least
U.S.$500,000,000 and a long-term unsecured senior debt rating of at least "A"
by Standard & Poor's and "A2" by
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37
Moody's, in any case maturing not more than 90 days from the date of
acquisition thereof; and (c) commercial paper rated "P-1" or better by Moody's
or "A-1" or better by Standard & Poor's, in any case maturing not more than 90
days from the date of acquisition thereof.
"Permitted Liens": (i) Liens for taxes, assessments or
governmental charges which are not yet due or which are being Contested (as
defined below); (ii) Liens in connection with worker's compensation,
unemployment insurance, old-age pensions or other social security benefits or
obligations; (iii) mechanics', materialmen's, warehousemen's, carriers' or
other like Liens arising in the ordinary course of business securing
obligations incurred in connection with the Project which are not yet due or
which are fully bonded or are being Contested; (iv) Liens incurred or created
in the ordinary course of business in connection with or to secure the
performance of bids, tenders, contracts (other than for the payment of money),
leases, statutory obligations, surety bonds or appeal bonds; (v) Liens of
judgments or awards fully covered by insurance or with respect to which an
appeal or proceeding for review is being prosecuted by a Contest; (vi) the
exceptions to title set forth in Schedule B of the title insurance policy
delivered to the Security Agent pursuant to Section 9.1(j) of the Project Loan
Agreement; and (vii) any easements, rights-of-way, licenses and similar
encumbrances incurred or created in the ordinary course of business which do
not singularly or in the aggregate interfere with the use or impair the value
of the Borrower's property or assets or impair the rights or interests of the
Lenders with respect to the Collateral. For purposes of this definition,
"Contest" means, with respect to any taxes, assessments, governmental charges
or levies or any Lien or other claim (each, a "Claim"), a contest pursued in
good faith challenging the validity or amount of any such Claim by proper
proceedings timely instituted if (a) the Borrower diligently pursues such
contest, (b) the Borrower sets aside on its books adequate reserves in
accordance with GAAP with respect to the contested Claim, (c) during the period
of such contest the enforcement of any contested Claim is effectively stayed
and any Lien asserted thereby is effectively removed of record and (d) such
contest (i) will not interfere with the construction or operation of the
Project and (ii) does not involve any substantial danger of a sale, forfeiture
or loss of any part of the Project, title thereto or any interest therein.
"Person": an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint venture,
Government Authority or other entity of whatever nature.
"Plan": at a particular time, any employee benefit plan which
is covered by ERISA and in respect of which the Borrower or a Commonly
Controlled Entity is (or, if such plan were terminated at such time, would
under Section 4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA.
"Power Purchase Agreement": the Power Purchase and Operating
Agreement effective July 13, 1990 between SEI Birchwood and Virginia Power, as
assigned by SEI Birchwood to, and assumed by, the Borrower pursuant to an
Assignment and Assumption Agreement dated as of May 18, 1994 among SEI
Birchwood, the Borrower and Virginia Power, and as amended, supplemented or
otherwise modified from time to time in accordance with Section 11.12(a) of the
Project Loan Agreement.
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38
"Prepayment Subaccount": as defined in the Security Deposit
Agreement.
"Principal Project Documents": collectively, the Construction
Contracts, the Construction Contract Guarantees, the Power Purchase Agreement,
the Steam Sales Agreement, the Operating and Maintenance Agreement, the Coal
Supply Agreement, the Arch Back-Up Coal Supply Agreement, the SEI Coal
Procurement Letter, the Coal Transportation Agreement, the CSXT Agreement, the
Coal Adjustment Agreement, the Ash Disposal Agreement, the Real Estate
Documents, the Greenhouse Documents (to the extent not specified above) and the
Partnership Agreement, together with any replacement or substitute agreement
for any of the foregoing.
"Proceeds": all cash and other property, real, personal or
mixed, tangible or intangible, received upon the sale, exchange, collection or
other disposition of the Collateral or proceeds thereof, and, in any event,
including, but not limited to, Casualty Insurance Proceeds, Business
Interruption Insurance Proceeds, Requisition Proceeds, Buy-Down Amount
Proceeds, Delay Damages Proceeds, General Indemnity Payments Proceeds,
Greenhouse Prepayment Proceeds, Mandatory Equity Contribution Proceeds and all
proceeds of the Contingent Bond Contribution, if any, and the Contingent
Increased IDC Contribution, if any.
"Project": the Facility, the Site and all licenses, permits
and easements and other real property interests and rights relating to the
Facility or the Site which are owned or leased by the Borrower or in which the
Borrower has any rights, including, without limitation, the Easements.
"Project Cash Flow": for any period, the amount, if any, by
which Project Revenues for such period exceed the sum of (i) Cash Operating
Costs (excluding the Basic O&M Monthly Fee and the Annual O&M Bonus) for such
period plus (ii) the Borrower's Greenhouse Expenses, if any, for such period
plus (or minus) (iii) decreases (or increases) in cash working capital of the
Borrower from the prior period.
"Project Control Account": the Project Control Account
established and maintained pursuant to the Security Deposit Agreement.
"Project Cost Savings": the amount, if any, by which (a) the
sum of (i) the Initial Budgeted Amount and (ii) the Increased IDC Contribution
Amount, if any, contributed to the Borrower pursuant to the Southern Equity
Contribution Agreement on or prior to such date, exceeds (b) the aggregate
amount of all Project Costs which have been or are required to be incurred in
order to achieve the occurrence of the Completion Date and Final Completion of
the Facility and of the Greenhouse, including, in any event, (x) the Required
Completion Date Reserve Deposits specified in clauses (ii) through (v) of the
definition thereof and (y) the Required Debt Service Reserve Amount as of the
Completion Date.
"Project Costs": all costs and expenses incurred or to be
incurred by the Borrower to develop, design, finance, construct, test and
start-up the Project in the manner contemplated by the Principal Project
Documents and to achieve Final Completion of the Facility, including without
limitation (a) the amounts payable by the Borrower pursuant to the Facility
Construction
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39
Contract; (b) all costs and expenses payable by the Borrower in connection with
the performance by it of its covenants in the Facility Construction Contract;
(c) the costs of acquiring and preparing the Site and the Easements; (d) the
cost of owner-furnished equipment (including the fuel storage facility), spare
parts, power and water for construction and start-up, and utility
interconnection costs; (e) the cost of interconnecting the Facility with the
Greenhouse and of any equipment owned by the Borrower that is located on the
Leased Land; (f) the secured construction loans not exceeding $20,079,000
principal amount and capital contribution not exceeding $7,000,000 which the
Borrower has agreed to make to the Greenhouse Owner pursuant to the Greenhouse
Loan Agreement; (g) initial working capital (not exceeding $3,500,000) for the
Project, (h) the cost of insurance and bonds; (i) consulting fees of the
Independent Engineer, Insurance Consultant, Coal Consultant, Environmental
Consultant and Ornamental Flower Market Consultant; (j) legal, accounting,
engineering and financing fees and expenses, and interest during construction;
(k) other fees and expenses associated with arranging the financing
contemplated by the Project Loan Agreement, the Equity Funding Loan Agreement
and the Bond Documents, including placement agent and underwriting fees and
other issuance costs of the Bonds; (l) ad valorem taxes, real and personal
property taxes and sales, use and excise taxes; (m) general and administrative
expenses directly attributable to the Project; (n) the funding of the Debt
Service Reserve Account on the Completion Date in the amount of the Required
Debt Service Reserve Amount; (o) the funding of the Repair and Maintenance
Account on the Completion Date in the amount of the Initial Repair and
Maintenance Reserve Amount, (p) the Heat Rate Bonus (not exceeding $6,000,000),
if any, payable to the Facility Contractor in accordance with Section 8.5 of
the Facility Construction Contract; (q) project development and construction
management fees, including without limitation the development fee to be paid to
Affiliates of Southern on the Closing Date in an aggregate amount not to exceed
$1,700,000; and (r) the Contingent Distribution Amount, if any, payable on the
Completion Date to Partners affiliated with Southern; excluding, however, (i)
the repayment of the principal amount of Equity Funding Loans and any payment
of interest on overdue amounts of principal thereof and interest thereon and
(ii) any costs, expenses, fees and other amounts payable in connection with the
issuance and sale by the Borrower, or the assignment or transfer by any
Partner, of a general or limited partnership interest in the Borrower. In
addition, for purposes of calculating "Contingent Distribution Amount",
"Project Costs" shall not include any amounts in clause (r) above.
"Project Documents": collectively, the Principal Project
Documents, the CT Corporation Letter and, when entered to, each Additional
Contract.
"Project Loan Agreement": the Loan and Reimbursement
Agreement dated as of May 18, 1994 among the Borrower, the Banks, the
Institutions, the Co-Agents, the Issuing Bank and the Administrative Agent, as
amended, supplemented or otherwise modified from time to time in accordance
with the terms thereof.
"Project Mortgage": the Credit Line Deed of Trust, Assignment
and Security Agreement made by the Borrower, as Grantor, to Lawyers Title
Insurance Corporation, as trustee for the use and benefit of the Security
Agent, as Beneficiary, substantially in the form of Exhibit E of the Project
Loan Agreement, as amended, supplemented or otherwise modified from time to
time.
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40
"Project Participants": collectively, the Borrower, the
Facility Contractor, the Greenhouse Contractor, the Parent Guarantor, Virginia
Power, the Facility Operator, the Coal Supplier, Arch, the Coal Transporter,
CSXT, the Greenhouse Owner, the Greenhouse Operator, the Partners and each
other Person from time to time party to a Project Document (including without
limitation, SEI as a party to the SEI Coal Procurement Letter).
"Project Revenues": for any period, the sum of (i) all
revenues received by the Borrower from the sale of electrical energy pursuant
to the Power Purchase Agreement and from the sale of steam pursuant to the
Steam Sales Agreement, (ii) any other operating revenues received by the
Borrower for such period, (iii) all payments received by the Borrower of any
scheduled repayment of loans or any mandatory prepayment of loans pursuant to
the Greenhouse Loan Agreement with the proceeds of rent payable pursuant to
Section 3.01 of the Greenhouse Sublease, (iv) any General Indemnity Payment
Proceeds and (v) the earnings on Permitted Investments on deposit in the
Accounts to the extent distributed to the Project Control Account pursuant to
the Security Deposit Agreement.
"Projected Debt Coverage Ratio": as of any Quarterly
Calculation Date, the ratio of (i) Projected Project Cash Flow as of such date
to (ii) Projected Debt Service as of such date.
"Projected Debt Service": as of any Quarterly Calculation
Date, the projected Debt Service for the twelve-month period ending on the
fourth succeeding Quarterly Calculation Date.
"Projected Project Cash Flow": as of any Quarterly
Calculation Date, the projected Project Cash Flow for the twelve-month period
ending on the fourth succeeding Quarterly Calculation Date. Such Projected
Project Cash Flow shall be determined by using the same amount for Project Cash
Flow for the immediately preceding twelve-month period, and then adjusting such
amount for the effect thereon of any planned or anticipated changes during such
succeeding twelve-month period in the operation or maintenance of the Facility
(as determined in good faith by the Borrower, which determination shall be
reasonably acceptable to the Administrative Agent, upon consultation with the
Independent Engineer).
"Pro Rata Prepayment Option": as defined in Section 7.5(b) of
the Project Loan Agreement.
"Pro Rata Prepayment Share": with respect to any mandatory
prepayment of Loans pursuant to Section 7.3(c), 7.3(f) or 7.3(g) of the Project
Loan Agreement, or any optional prepayment of Loans pursuant to Section 7.4 of
the Project Loan Agreement (other than as provided in clause (i), (ii) or (iii)
of Section 7.5(a) thereof):
(a) if none of the Institutions exercises the Pro Rata
Prepayment Option in connection with such prepayment in accordance
with Section 7.5(b) of the Project Loan Agreement, (i) the Pro Rata
Prepayment Share of the Banks shall be equal to the Aggregate
Prepayment Amount, the Buy-Down Amount Proceeds, the Non-Restoration
Prepayment Amount or the Greenhouse Prepayment Amount, as the case may
be, and (ii) the Pro Rata Prepayment Share of the Institutions shall
be zero; and
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41
(b) if any of the Institutions exercises the Pro Rata
Prepayment Option with respect to such prepayment in accordance with
Section 7.5(b) of the Project Loan Agreement (the "Electing
Institutions"), then:
(A) the Pro Rata Prepayment Share of the Banks shall
be equal to the product of (1) the Aggregate Prepayment
Amount, the Buy-Down Amount Proceeds, the Non-Restoration
Prepayment Amount or the Greenhouse Prepayment Amount, as the
case may be, and (2) a fraction, the numerator of which shall
be the Total Bank Exposure on the date of the Optional
Prepayment Notice, the Buy-Down Prepayment Notice, the
Non-Restoration Prepayment Notice or the Greenhouse Prepayment
Notice, as the case may be, and the denominator of which shall
be the sum of (x) the Total Bank Exposure and (y) the
aggregate outstanding principal amount of Institutional Loans
held by all of the Electing Institutions, in each case on the
date of the Optional Prepayment Notice, the Buy-Down
Prepayment Notice, the Non-Restoration Prepayment Notice or
the Greenhouse Prepayment Notice, as the case may be;
(B) the Pro Rata Prepayment Share of each
Electing Institution shall be equal to the product of (1) the
Aggregate Prepayment Amount, the Buy-Down Amount Proceeds, the
Non-Restoration Prepayment Amount or the Greenhouse Prepayment
Amount, as the case may be, and (2) a fraction, the numerator
of which shall be the aggregate outstanding principal amount
of Institutional Loans held by such Electing Institution on
the date of the Optional Prepayment Notice, the Buy-Down
Prepayment Notice, the Non-Restoration Prepayment Notice or
the Greenhouse Prepayment Notice, as the case may be, and the
denominator of which shall be the sum of (x) the Total Bank
Exposure and (y) the aggregate outstanding principal amount of
Institutional Loans held by all of the Electing Institutions,
in each case on the date of the Optional Prepayment Notice,
the Buy-Down Prepayment Notice, the Non-Restoration Prepayment
Notice or the Greenhouse Prepayment Notice, as the case may
be; and
(C) the Pro Rata Prepayment Share of each
Institution which is not an Electing Institution shall be
zero.
"Purchasing Banks": as defined in Section 14.7(b) of the
Project Loan Agreement.
"Purchasing Institutions": as defined in Section 14.8(a) of
the Project Loan Agreement.
"PUHCA": the Public Utility Holding Company Act of 1935, as
amended.
"PURPA": the Pubic Utility Regulatory Policies Act of 1978,
as amended from time to time.
"QF Plan": as defined in Section 10.18 of the Project Loan
Agreement.
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42
"Qualified Financial Institution": (a) Any bank satisfactory
to the Issuing Bank that has capital, surplus and undivided profits of at least
$500,000,000 and that is either organized under the laws of the United States
or any state thereof or has a branch office or agency located in the United
States, and (b) any other bank or financial institution approved by the
Administrative Agent and the Borrower (which approval will not be unreasonably
withheld) and satisfactory to the Issuing Bank.
"Qualified Limited Partner Transferee": any Person which, at
the effective time of the relevant transfer or issuance, (a) is a partnership,
corporation, business trust or unincorporated association, (b) individually, or
if a member of a consolidated group, with such Person's consolidated group, has
a tangible net worth (as defined in accordance with GAAP) of $25,000,000 or
more, (c) has not been convicted or pleaded guilty or no contest to any felony
within the previous five years, and (d) has knowledge and experience in
financial and business matters such that it is capable of evaluating the merits
and risks of the investment in the Borrower; provided that, after giving effect
to such transfer or issuance, more than 50% of the limited partnership
interests will be held by Persons which have knowledge and experience in the
management of or investment in power generating facilities.
"Qualifying Facility": a cogeneration facility meeting all of
the requirements for a "qualifying cogeneration facility" set forth in PURPA
and in Part 292 of the rules and regulations of FERC under PURPA.
"Quarterly Calculation Date": the last day of each March,
June, September and December of each year, commencing on the first of such days
to occur after the Commercial Operations Date.
"Quarterly Distribution Date": the last day of each calendar
month immediately succeeding the month in which a Quarterly Calculation Date
occurs (or, if any such date is not a Business Day, the immediately preceding
Business Day), commencing on the first of such dates to occur after the initial
Quarterly Calculation Date.
"Real Estate Documents": collectively, the Project Mortgage,
the Easement Agreements, the Greenhouse Mortgage Assignment and the Virginia
Power First Refusal Agreement.
"Reference Banks": Barclays Bank PLC, Credit Suisse and Union
Bank.
"Refinancing Indebtedness": Indebtedness incurred by the
Borrower which is permitted by clause (f) of Section 11.1 of the Project Loan
Agreement.
"Refinancing Transaction": as defined in clause (f) of
Section 11.1 of the Project Loan Agreement.
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43
"Refunding Drawing": a drawing on a Bond Letter of Credit on
the applicable Bond L/C Expiration Date, the proceeds of which are to be used
to repay in full the Relevant Bonds or the purchase price of the Relevant
Bonds.
"Register": as defined in Section 14.7(c) of the Project Loan
Agreement.
"Registered Institutional Notes": as defined in Section
4.7(a) of the Project Loan Agreement.
"Reimbursable Expenses": as defined in Section 14.5 of the
Project Loan Agreement.
"Relative Bank Exposure": on any day, the number obtained by
dividing (i) the Total Bank Exposure on such date by (ii) the sum of (x) the
Total Bank Project Loan Commitments (calculated based on the assumption that
all of the Bonds have been issued prior to such day and that the Total Bank
Project Loan Commitments have been reduced by a corresponding amount in
accordance with Section 2.4 of the Project Loan Agreement), (y) the Total VP
Letter of Credit Commitments and (z) the Total Bond Letter of Credit
Commitments.
"Relative Institution Exposure": on any day, the number
obtained by dividing (x) the aggregate principal amount of Institutional Loans
then outstanding by (b) the Total Institutional Commitments then in effect.
"Release of Hazardous Materials": the release of any
Hazardous Material into or upon or under any land or water or air, or otherwise
into the environment, including, without limitation, by means of burial,
disposal, discharge, emission, injection, spillage, leakage, seepage, leaching,
dumping, pumping, pouring, escaping, emptying, placement and the like.
"Relevant Bonds": with respect to any Bond Letter of Credit,
the Bonds which are or are proposed to be supported by such Bond Letter of
Credit.
"Reorganization": with respect to any Multiemployer Plan, the
condition that such Plan is in reorganization within the meaning of Section
4241 of ERISA.
"Reportable Event": any of the events set forth in Section
4043(b) of ERISA, other than those events as to which the thirty day notice
period is waived under subsections .13, .14, .16, .18, .19 or .20 of PBGC Reg.
Section 2615.
"Repair and Maintenance Account": the Repair and Maintenance
Account established and maintained pursuant to the Security Deposit Agreement.
"Reporting Party": the Borrower, the Greenhouse Operator, the
Coal Supplier, Arch, CSX and, prior to the Equity Funding Termination Date,
Southern.
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"Required Completion Date Reserve Deposits": the sum of (i)
with respect to the Debt Service Reserve Account, the Required Initial Debt
Service Reserve Deposit Amount (less, if a Debt Service Letter of Credit shall
be outstanding on the Completion Date, the aggregate amount available to be
drawn under such Debt Service Letter of Credit on such date), plus (ii) with
respect to the Repair and Maintenance Account, the Initial Repair and
Maintenance Reserve Amount, plus (iii) with respect to the Final Completion
Escrow Account, the amount required to be deposited into the Final Completion
Escrow Account on the Completion Date pursuant to clause (d) of the definition
of "Completion Date", plus (iv) with respect to the Project Control Account,
the amount if any, by which $3,500,000 exceeds the amount expended by the
Borrower prior to the Completion Date for initial working capital purposes plus
(v) with respect to the Distributions Account, $13,700,000, to be used to make
the Contingent Distribution.
"Required Debt Service Reserve Amount": as of any date of
determination, the projected Debt Service for the six months next succeeding
such date.
"Required Initial Debt Service Reserve Deposit Amount":
$8,250,000, or such lesser amount as shall have been agreed to in writing by
the Majority Lenders and the Borrower prior to the Completion Date.
"Required Project Control Reserve Amount": as defined in
Section 1.2 of the Security Deposit Agreement.
"Required Repair and Maintenance Reserve Amount": as defined
in Section 1.2 of the Security Deposit Agreement.
"Required Secured Parties": at any time, each of (i) Banks,
Institutions, Unsupported Bondholders (acting through the relevant Bond
Trustee) and Accelerated Interest Rate Hedging Counterparties (as defined
below) the Senior Creditor Percentages of which at such time aggregate at least
66 2/3%; and (ii) Banks and Accelerated Interest Rate Hedging Counterparties
the Bank Commitment Percentages of which at such time aggregate at least 66
2/3% and (iii) Institutions and Unsupported Bondholders (acting through the
relevant Bond Trustee) the Investor Percentages of which at such time aggregate
at least 66 2/3%; provided, however, that if at any time on or after the first
day of the fourteenth year following the Commercial Operations Date, the Senior
Creditor Percentage of either the Banks and the Accelerated Interest Rate
Hedging Counterparties or the Institutions is less than 20% of the Total Senior
Creditor Exposure (as defined in the definition of "Senior Creditor
Percentage"), then "Required Secured Parties" shall be determined without
reference to clause (ii) or (iii) above; provided, further, that on and after
the date on which the Bank Loans and all amounts payable to the Banks, the
Issuing Bank and the Administrative Agent under the Loan Documents have been
paid in full, no Letter of Credit is outstanding and all of the Commitments of
the Banks and the Interest Rate Hedging Agreements have been terminated,
"Required Secured Parties" shall be determined without reference to clause (ii)
above and clause (i) above shall be calculated without reference to "Banks" or
"Accelerated Interest Rate Hedging Counterparties". For purposes of this
definition, "Accelerated Interest Rate Hedging Counterparties" shall include
each
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45
Interest Rate Hedging Counterparty party to an Interest Rate Hedging Agreement
the Swap Termination Obligations in respect of which have become payable
following an unwind of all or a portion of such Interest Rate Hedging
Agreement.
"Requirements of Law": as to any Person, the Certificate of
Incorporation and By-Laws or the partnership agreement or other organizational
or governing documents of such Person, and any law, treaty, rule or regulation
or determination of an arbitrator or a court or other Government 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.
"Requisite Partnership Interest": with respect to any Person,
both (i) 50% of all general partnership interests and (ii) Partnership
Interests entitling such Person to receive at least 35% of the profits and
losses of the Borrower.
"Requisition Proceeds": any and all payments (in any form
whatsoever) made or due and payable from time to time in connection with any
requisition, confiscation, condemnation, seizure or forfeiture of all or any
part of the Project by any Government Authority (or any person acting under
color of any Government Authority).
"Reserved Amounts": on any date of calculation, the sum of:
(a) the amount by which the Required Initial Debt Service
Reserve Deposit Amount exceeds the sum of (i) the amount, if any, on
deposit in the Debt Service Reserve Account and (ii) if a Debt Service
Letter of Credit shall then be outstanding, the aggregate amount
available to be drawn under such Debt Service Letter of Credit on such
date; and
(b) the amount by which the Initial Repair and
Maintenance Reserve Amount exceeds the amount, if any, on deposit in
the Repair and Maintenance Account; and
(c) prior to the later to occur of Substantial Completion
and completion of the Unit Reliability Test (as defined in the
Facility Construction Contract), $6,000,000; and thereafter, the
amount by which the Heat Rate Bonus payable to the Facility Contractor
exceeds the amount of such Heat Rate Bonus paid to the Facility
Contractor on or prior to such date.
"Responsible Officer": (i) with respect to any Person other
than the Borrower, the president, vice president, treasurer or assistant
treasurer of such Person, and (ii) with respect to the Borrower, its chief
executive officer, its chief financial officer or any Responsible Officer of a
General Partner.
"Scheduled Senior Debt Service Payment Date": each date
occurring after the Completion Date on which (a) regularly scheduled
installments of principal, interest and/or fees are due on any Senior Debt
(other than the Interest Rate Hedging Agreements) or (b) payment of Swap
Obligations specified in clause (a) of the definition thereof which do not
constitute Swap
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46
Terminations Obligations are due pursuant to any Interest Rate Hedging
Agreement to which a Secured Counterparty is a party. For purposes of clause
(a) of the preceding sentence, each Bank Loan Interest Payment Date shall be
deemed to be a regularly scheduled interest payment date with respect to Bank
Loans.
"Secured Bond Trustees": the one or more Bond Trustees which
become parties to the Security Deposit Agreement by executing a Security
Deposit Agreement Supplement in accordance with Section 9.4 of the Security
Deposit Agreement.
"Secured Counterparties": the one or more Co-Agents or
Affiliates thereof, as parties to the Interest Rate Hedging Agreements, which
are or become parties to an Interest Rate Hedging Agreement.
"Secured Obligations": the principal of and interest on the
Loans and the Unsupported Bonds (including any interest accruing after the
filing of a petition initiating any proceeding in bankruptcy, insolvency or
like proceeding with respect to the Borrower whether or not the claim for such
interest is allowed in such proceeding), the L/C Reimbursement Obligations, all
amounts payable from time to time under any Interest Rate Hedging Transaction
entered into with an Interest Rate Hedging Counterparty described in clause (i)
of the definition thereof, and all other indebtedness, obligations and
liabilities of the Borrower to the Secured Parties, whether direct or indirect,
absolute or contingent, due or to become due, or now or hereafter existing,
which may arise under, out of, or in connection with any of the Loan Documents
or the Bond Documents relating to any Unsupported Bonds (as any of the Loan
Documents or such Bond Documents may from time to time be amended, modified,
substituted, extended or renewed) and any other document made, delivered or
given in connection therewith, whether on account of principal, interest,
premiums, reimbursement obligations, fees, indemnities, costs, expenses or
otherwise, and all deferrals, renewals, extensions and refinancings of any
indebtedness, obligations or liabilities referred to above.
"Secured Parties": collectively, the Security Agent, the
Administrative Agent, the Banks, the Issuing Bank, the Institutions, the
Interest Rate Hedging Counterparties described in clause (i) of the definition
thereof and each Secured Bond Trustee.
"Security Agent": Credit Suisse, in its capacity as security
agent for the Secured Parties under the Security Deposit Agreement, or any
successor security agent appointed pursuant to Section 2.6 of the Security
Deposit Agreement.
"Security Deposit Agreement": the Security Deposit and
Intercreditor Agreement to be entered into among the Borrower, the Secured
Parties and the Security Agent, substantially in the form of Exhibit D to the
Project Loan Agreement, as amended, supplemented or otherwise modified from
time to time in accordance with the terms thereof.
"Security Deposit Agreement Supplement": as defined in
Section 9.4(a) of the Security Deposit Agreement.
<PAGE> 114
47
"Security Deposit Collateral": as defined in Section 1.2 of
the Security Deposit Agreement.
"Security Documents": collectively, the Security Deposit
Agreement, the Project Mortgage, the General Partner Interest Pledge
Agreements, the Limited Partner Interest Pledge Agreements, the Greenhouse
Mortgage Assignment, the Borrower Stock Assignment, the Consents to Assignment,
the Southern Equity Contribution Agreement, each Bond Pledge Agreement and any
other agreement or instrument entered into by the Borrower or any other Person
which secures payment of all or any portion of the Secured Obligations.
"SEI": Southern Electric International, Inc., a Delaware
corporation.
"SEI Birchwood": SEI Birchwood, Inc., a Delaware corporation.
"SEI Coal Procurement Letter": the letter dated May 18, 1994
from SEI to the Borrower, as amended, supplemented or otherwise modified from
time to time in accordance with Section 11.12(a) of the Project Loan Agreement.
"Senior Creditor Percentage": at any time, either:
(a) for purposes of the definition of "Majority Lenders":
(i) with respect to any Bank, a fraction (expressed as a
percentage), the numerator of which is the sum of (i) the aggregate
unpaid principal amount of Bank Loans then outstanding, (ii) the
unused portion of the Total Bank Loan Commitments then in effect and
(iii) the Letter of Credit Exposure at such time, and the denominator
of which is the Total Senior Creditor Exposure;
(ii) with respect to any Institution, a fraction
(expressed as a percentage), the numerator of which is the sum of (i)
the aggregate unpaid principal amount of Institutional Loans then
outstanding and (ii) the unused portion of the Total Institutional
Commitments, and the denominator of which is the Total Senior Creditor
Exposure; and
(iii) with respect to the Unsupported Bondholders, a
fraction (expressed as a percentage), the numerator of which is the
aggregate unpaid principal amount of Unsupported Bonds then
outstanding, and the denominator of which is the Total Senior Creditor
Exposure; or
(b) for purposes of the definition of "Required Secured
Parties":
(i) with respect to any Bank, a fraction (expressed as a
percentage), the numerator of which is the sum of (i) the aggregate
unpaid principal amount of Bank Loans then outstanding, (ii) the
unused portion of the Total Bank Loan Commitments then in effect and
(iii) the Letter of Credit Exposure at such time, and the denominator
of which is the Total Senior Creditor Exposure;
<PAGE> 115
48
(ii) with respect to any Institution, a fraction
(expressed as a percentage), the numerator of which is the sum of (i)
the aggregate unpaid principal amount of Institutional Loans then
outstanding and (ii) the unused portion of the Total Institutional
Commitments, and the denominator of which is the Total Senior Creditor
Exposure;
(iii) with respect to the Unsupported Bondholders, a
fraction (expressed as a percentage), the numerator of which is the
aggregate unpaid principal amount of Unsupported Bonds then
outstanding, and the denominator of which is the Total Senior Creditor
Exposure; and
(iv) with respect to any Interest Rate Hedging
Counterparty, a fraction (expressed as a percentage), the numerator of
which is the aggregate amount of Swap Termination Obligations
calculated as of such day, and the denominator of which is the Total
Senior Creditor Exposure.
As used in this definition, "Total Senior Creditor Exposure" means, at any
time, the sum of (i) the aggregate unpaid principal amount of Loans then
outstanding, (ii) the unused portion of the Total Loan Commitments then in
effect, (iii) the Letter of Credit Exposure at such time, (iv) the aggregate
unpaid principal amount of Unsupported Bonds then outstanding and, for purposes
of the definition of "Required Secured Parties" only, (v) the aggregate amount
of Swap Termination Obligations calculated as of such day.
"Senior Debt": collectively, Indebtedness of the Borrower
incurred under or pursuant to (a) the Bank Loan Facility, (b) the Institutional
Loan Facility, (c) the VP Letter of Credit Facility, (d) the Bond Letter of
Credit Facility, (e) the Bonds and (f) Interest Rate Hedging Agreements.
"Senior Debt Agreements": the Loan Documents, the Bond
Documents executed in connection with the Bonds issued from time to time in
accordance with Section 10.25 of the Project Loan Agreement, the Interest Rate
Hedging Agreements and each other agreement evidencing any Senior Debt or
pursuant to which any Senior Debt is incurred.
"Senior Debt to Capital Ratio": as of the Completion Date,
the ratio of (a) the sum of (i) the aggregate principal amount of outstanding
Loans, (ii) the Letter of Credit Exposure and (iii) the aggregate principal
amount of outstanding Unsupported Bonds, in each case on the Completion Date,
to (b) the sum of (x) the Total Equity Contribution Amount and (y) (A) the
aggregate principal amount of Equity Funding Loans outstanding on the
Completion Date which are paid by Southern pursuant to the Equity Funding
Guarantee, or (B) the aggregate principal amount of any Equity Funding Loans
repaid by Southern pursuant to the Equity Funding Guarantee prior to the
Completion Date, provided that concurrently therewith the Equity Funding
Commitments shall have been terminated.
"SEWG": Southern Electric Wholesale Generators, Inc., a
Delaware corporation.
<PAGE> 116
49
"Single Employer Plan": any Plan which is covered by Title IV
of ERISA, but which is not a Multiemployer Plan.
"Significant Project Participants": the Persons from time to
time party to the Principal Project Documents.
"Site": the land located in King George County, Virginia
which is described in Schedule 5 to the Project Loan Agreement, on which the
Facility and the Greenhouse are to be located.
"Sixth Amendment": the Sixth Amendment, dated as of
September 18, 1995, to the Project Loan Agreement, among the Borrower, the
Lenders and the Administrative Agent.
"Sixth Amendment Effective Date": the date on which the Sixth
Amendment becomes effective in accordance with Article II(1) of the Sixth
Amendment.
"Southern": The Southern Company, a Delaware corporation.
"Southern Documents": collectively, the Equity Funding
Guarantee, the Southern Equity Contribution Agreement and the Construction
Contract Guarantees.
"Southern Equity Contribution Agreement": the Equity
Contribution Agreement to be entered into by Southern in favor of the Borrower
and the Security Agent, in substantially the form of Exhibit G of the Project
Loan Agreement, as amended, supplemented or otherwise modified from time to
time in accordance with Section 11.11(a) of the Project Loan Agreement.
"Southern Equity Contribution Collateral": the Equity
Contribution Amount payable pursuant to Section 2.1 of the Southern Equity
Contribution Agreement and all other claims, rights, powers, privileges,
interests and remedies referred to in clause (ii) of Section 3.1 thereof.
"Special Payment Account": the Special Payment Account
established and maintained pursuant to the Security Deposit Agreement.
"Special Senior Debt Prepayment Date": each date on which (a)
mandatory or optional prepayments of principal of the Bank Loans and/or
Institutional Loans are to be made pursuant to Section 7.3, 7.4 or 10.31 of the
Project Loan Agreement, (b) an early unwind of all or a portion of any Interest
Rate Hedging Agreement is to be effected or (c) mandatory or optional
prepayments of principal of the Bonds are to be made pursuant to the relevant
Bond Indenture.
"Specified Default": any Default under Section 12.1(a),
12.1(b) or 12.1(e) of the Project Loan Agreement.
"Standard & Poor's": Standard & Poor's Ratings Services.
<PAGE> 117
50
"Steam Sales Agreement": the Steam Sales Agreement dated as
of May 18, 1994 between the Borrower and the Greenhouse Owner, as amended,
supplemented or otherwise modified from time to time in accordance with Section
11.12(a) of the Project Loan Agreement.
"Stormwater and Surface Water Runoff Easement Agreement": the
Easement Agreement dated as of April 22, 1994 by and between the Greenhouse
Operator and the Borrower, as amended, supplemented or otherwise modified from
time to time in accordance with Section 11.12(a) to the Project Loan Agreement.
"Subsequent Funding Period": the period from and including
the Closing Date to and including the Institutional Commitment Termination
Date.
"Subsidiary": as to any Person, a corporation, partnership or
other entity of which shares of stock or other ownership interests having
ordinary voting power (other than stock or such other ownership interests
having such power only by reason of the happening of a contingency) to elect a
majority of the board of directors or other managers of such corporation,
partnership or other entity are at the time owned, or the management of which
is otherwise controlled, directly or indirectly through one or more
intermediaries, or both, by such Person.
"Substantial Completion": (a) with respect to the Facility,
as defined in Section 1.1 of the Facility Construction Contract, and (b) with
respect to the Greenhouse, as defined in Section 1.1 of the Greenhouse
Construction Contract.
"Substitute VP Letter of Credit": an irrevocable direct pay
letter of credit substantially in the form of Exhibit C-2 to the Project Loan
Agreement or in a form acceptable to Virginia Power (as evidenced by a written
confirmation from Virginia Power to such effect) to be issued in favor of
Virginia Power by a bank which at all times meets the credit rating
requirements set forth in clause (i) of the definition of "Interest Rate
Hedging Counterparty"; provided that no such letter of credit shall be deemed a
"Substitute VP Letter of Credit" unless (i) if any such letter of credit is
being issued prior to the Bank Loan Final Maturity Date, the Issuing Bank and
the Banks shall have been unwilling to extend the expiration date of the then
outstanding VP Letter of Credit, if any, pursuant to Section 6.7 of the Project
Loan Agreement, and (ii) the reimbursement obligations, if any, of the Borrower
to the issuer of such letter of credit or to any other Person in respect of
draws under such letter of credit shall be unsecured.
"Substitute VP Security": any security arrangement entered
into by the Borrower which meets the requirements of Section 13.3 or 13.5, as
the case may be, of the Power Purchase Agreement and is otherwise acceptable to
Virginia Power (as evidenced by a written confirmation from Virginia Power to
such effect); provided that no such security shall be deemed "Substitute VP
Security" unless (i) if any such security arrangement is entered into prior to
the Bank Loan Final Maturity Date, the Issuing Bank and the Banks shall have
been unwilling to extend the expiration date of the then outstanding VP Letter
of Credit, if any, pursuant to Section 6.7 of the Project Loan Agreement and
(ii) the reimbursement or payment obligations, if any, of the Borrower to the
provider of such security or to any other Person in respect of such security
are unsecured.
<PAGE> 118
51
"Swap Obligations": collectively, the payment of (a) all
scheduled amounts payable to the Secured Counterparties by the Borrower, as the
fixed-rate payor, under the Interest Rate Hedging Agreements with Secured
Counterparties (including, without limitation, interest accruing after the date
of any filing by the Borrower of any petition in bankruptcy or the commencement
of any bankruptcy, insolvency or similar proceeding with respect to the
Borrower), net of all scheduled amounts payable to the Borrower by such Secured
Counterparties as floating-rate payors, and (b) all other indebtedness, fees,
indemnities and other amounts payable by the Borrower to the Secured
Counterparties under the Interest Rate Hedging Agreements.
"Swap Termination Obligations": the aggregate amount of Swap
Obligations payable to any Secured Counterparty by the Borrower, as the fixed
rate payor, upon the early unwind of all or a portion of an Interest Rate
Hedging Agreement with such Secured Counterparty, net of all amounts payable to
the Borrower by such Secured Counterparty, as floating-rate payor.
"Taxes": as defined in Section 7.6(a) of the Project Loan
Agreement.
"Term VP Expiration Date": the seventh anniversary of the
Closing Date, or such later date to which the Term VP Expiration Date has been
extended in accordance with Section 6.7 of the Project Loan Agreement.
"Term VP Letter of Credit": the irrevocable direct pay letter
of credit to be issued by the Issuing Bank in favor of Virginia Power on the
Commercial Operations Date pursuant to Section 6.3(a) of the Project Loan
Agreement, substantially in form of Exhibit C-2 to the Project Loan Agreement,
as amended, supplemented or otherwise modified from time to time in accordance
with its terms, and any replacement therefor issued pursuant to Section 6.3(b)
of the Project Loan Agreement.
"Term VP Letter of Credit Disbursement": any payment or
disbursement made by or on behalf of the Issuing Bank under the Term VP Letter
of Credit.
"Term VP Reimbursement Payment": as defined in Section 6.6(a)
of the Project Loan Agreement.
"Title Company": Lawyers Title Insurance Corporation, or such
other title insurance company approved by the Co-Agents and the Institutions to
insure the priority of the Lien of the Project Mortgage.
"Total Available Project Credit": as of any date, the sum of
(a) the unutilized portion of the Total Bank Project Loan Commitments then in
effect, (b) the unutilized portion of the Total Institutional Commitments then
in effect, (c) the unutilized portion of the Equity Funding Commitments then in
effect and (d) the Increased IDC Contribution Amount, if any, contributed by
Southern to the Borrower pursuant to the Southern Equity Contribution Agreement
prior to such date.
<PAGE> 119
52
"Total Bank Exposure": on any day, the sum of (a) the
aggregate principal amount of Bank Loans then outstanding and (b) the Letter of
Credit Exposure on such date.
"Total Bank Loan Commitments": at any time, the sum of (i)
the Total Bank Project Loan Commitments then in effect and (ii) the Total Bank
L/C Loan Commitments then in effect; provided that in no event shall the Total
Bank Loan Commitments at any time exceed $215,976,000.
"Total Bank L/C Loan Commitments": at any time, the
obligation of the Banks to make Bank L/C Loans and Bank Liquidity Loans during
the Bank Loan Commitment Period in an aggregate principal amount equal to the
excess of (i) the aggregate stated amount of the Letters of Credit then
outstanding over (ii) the aggregate amount of Letter of Credit Disbursements,
the L/C Reimbursement Payment in respect of which has previously been paid by
the Borrower other than through a Bank L/C Loan or a Bank Liquidity Loan.
"Total Bank Project Loan Commitments": the obligation of the
Banks to make Bank Project Loans to the Borrower under the Project Loan
Agreement during the Bank Loan Commitment Period in an aggregate principal
amount equal to $208,191,000, as such amount may be reduced from time to time
pursuant to Section 2.3 and/or 2.4 of the Project Loan Agreement.
"Total Bond Letter of Credit Committments": $51,000,000.
"Total Equity Contribution Amount": as defined in Section 1.2
of the Southern Equity Contribution Agreement.
"Total Institutional Commitments": the obligation of the
Institutions to make Institutional Loans to the Borrower under the Project Loan
Agreement during the Institutional Commitment Period in an aggregate amount
equal to $135,000,000, as such amount may be reduced from time to time pursuant
to Section 2.3 of the Project Loan Agreement.
"Total Lender Exposure": as defined in Section 14.10(b) of
the Project Loan Agreement.
"Total Loan Commitments": the sum of (i) the Total Bank Loan
Commitments and (ii) the Total Institutional Commitments.
"Total VP Letter of Credit Commitments": $7,272,000.
"True-Up Amount": as defined in Section 14.10(b) of the
Project Loan Agreement.
"True-Up Obligation": the irrevocable and unconditional
obligation of the Banks to purchase undivided participating interests in the
Institutional Loans upon an acceleration of
<PAGE> 120
53
such Loans following an Event of Default under the Project Loan Agreement, as
set forth in Section 14.10(b) of the Project Loan Agreement.
"Trust Indenture-Series 1994A": the Trust Indenture by and
between the Industrial Development Authority of King George County, Virginia,
and Bankers Trust Company, as trustee, dated as of October 1, 1994.
"Trust Indenture-Series 1994B": the Trust Indenture by and
between the Industrial Development Authority of King George County, Virginia,
and Bankers Trust Company, as trustee, dated as of December 1, 1994.
"Trust Indenture-Series 1995": the Trust Indenture by and
between the Industrial Development Authority of King George County, Virginia
and Bankers Trust Company, as trustee, dated as of November 1, 1995.
"Trust Indenture-Series 1996A": the Trust Indenture by and
between the Industrial Development Authority of King George County, Virginia,
and Bankers Trust Company, as trustee (the "Trustee"), dated as of April _____,
1996.
"Trust Indenture-Series 1996B": the Trust Indenture by and
between the Industrial Development Authority of King George County, Virginia,
and the party therein named as trustee, pursuant to which the Series 1996B
Bonds, if any, are issued.
"Type": as to any Bank Loan, its nature as a Base Rate Loan,
a Eurodollar Loan or a C/D Rate Loan.
"Uniform Customs": the Uniform Customs and Practice for
Documentary Credits (1994 Revision), International Chamber of Commerce Brochure
No. 500, as the same may be amended from time to time.
"Unsupported Bondholders": holders from time to time of
Unsupported Bonds.
"Unsupported Bonds": Bonds issued pursuant to Section 10.25
of the Project Loan Agreement which are not or are not proposed to be supported
by a Bond Letter of Credit.
"Virginia Power": Virginia Electric and Power Company, a
Virginia public service corporation.
"Virginia Power First Refusal Agreement": the Right of First
Refusal Agreement dated as of 23 between the Borrower and Virginia Power.
"Virginia Power Purchase Proceeds": any and all payments made
by Virginia Power in connection with its exercise of its purchase option
pursuant to Section 5.6 of the Power Purchase Agreement.
<PAGE> 121
54
"VP Cash Collateral Proceeds": as defined in Section 1.2 of
the Security Deposit Agreement.
"VP Letter of Credit Facility": the letter of credit facility
provided by the Issuing Bank and the Banks to the Borrower pursuant to Section
6 of the Project Loan Agreement, under which the Issuing Bank agrees to issue
the VP Letters of Credit in accordance with the terms thereof.
"VP Letters of Credit": collectively, the Construction VP
Letter of Credit and the Term VP Letter of Credit.
"VP Reimbursement Obligations": as defined in Section 6.6(b)
of the Project Loan Agreement.
"VP Reimbursement Payments": at any time, the sum of (i) the
Construction VP Reimbursement Payments and (ii) the Term VP Reimbursement
Payments.
"Water Line and Pumping Station Easement Agreement": the
Water Line and Pumping Station Easement Agreement dated September 22, 1992
between SEI Birchwood and Frank B. Taylor and Laura Stuart Taylor, as amended
by that certain Easement Amendment dated November 30, 1993 among Frank B.
Taylor and Laura Stuart Taylor, and SEI Birchwood and Curtis Adrian Gilbert and
Ethel S. Gilbert, and as further amended by that certain Second Amendment to
Easement, dated March 18, 1994 among Frank B. Taylor and Laura Stuart Taylor
and the Borrower, as the same may be further amended, supplemented or otherwise
modified in accordance with Section 11.12(a) to the Project Loan Agreement.
<PAGE> 1
EXHIBIT 10.3
FIRST AMENDMENT TO
COMPOSITE AMENDMENT
AND CONSENT TO
PROJECT LOAN AGREEMENT
AND SECURITY DEPOSIT AGREEMENT
FIRST AMENDMENT, dated as of December 18, 1996, to the
Composite Amendment and Consent to Project Loan Agreement and Security Deposit
Agreement, among the persons parties to (i) the LOAN AND REIMBURSEMENT AGREEMENT
(as amended, supplemented or otherwise modified from time to time, the "Project
Loan Agreement"), dated as of May 18, 1994 and (ii) the SECURITY DEPOSIT AND
INTERCREDITOR AGREEMENT (as amended, supplemented or otherwise modified from
time to time, the "Security Deposit Agreement"), dated as of May 18, 1994.
W I T N E S S E T H
-------------------
WHEREAS, (a) BIRCHWOOD POWER PARTNERS, L.P. (the "Borrower"),
(b) the several banks parties to the Project Loan Agreement (collectively, the
"Banks"), (c) JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY, ALLSTATE INSURANCE
COMPANY, NEW YORK LIFE INSURANCE COMPANY, and other institutions parties to the
Project Loan Agreement (collectively, the "Institutions"), (d) BANQUE PARIBAS,
NEW YORK BRANCH, BARCLAYS BANK PLC, CREDIT SUISSE and UNION BANK OF CALIFORNIA,
as co-agents for the Banks (in such capacity, the "Co-Agents"), (e) CREDIT
SUISSE and CREDIT SUISSE, NEW YORK BRANCH, as Issuing Bank (in such capacity,
the "Issuing Bank," and together with the Banks and the Institutions, the
"Lenders") and (f) CREDIT SUISSE as administrative agent for the Banks and the
Issuing Bank (in such capacity, the "Administrative Agent") are parties to the
Project Loan Agreement;
WHEREAS, the parties to the Project Loan Agreement further
amended, confirmed and restated the Project Loan Agreement by that certain
Composite Amendment to Project Loan Agreement and Security Deposit Agreement,
dated as of April 10, 1996 (the "Composite Amendment"); and
WHEREAS, the parties to the Project Loan Agreement have agreed
to amend further the Project Loan Agreement, as set forth below;
<PAGE> 2
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Defined Terms. Unless otherwise defined herein,
terms which are defined in the Project Loan Agreement and used herein are used
herein as defined in the Project Loan Agreement.
SECTION 2. Amendment to Section 7.4(c). Section 7.4(c) of the
Project Loan Agreement is hereby amended by adding "Except as otherwise provided
in Section 10.31," to the beginning of the second sentence, and by changing the
word "Partial" to "partial".
SECTION 3. Amendment to Section 10.31(a). Section 10.31(a) is
hereby amended by adding the following sentence at the end of the section:
"Notwithstanding anything to the contrary in the first
sentence of this Section 10.31(a), if one or more Bank Loan
Installment Payment Dates occur before the Initial Repayment
Date, the amounts that would, absent this sentence, be payable
in accordance with the first sentence of this Section 10.31(a)
on such Loan Installment Payment Dates shall not be required
to be paid by the Borrower on such dates, but shall instead be
paid on the Initial Repayment Date, together with the amount
payable in accordance with the first sentence of this Section
10.31(a), and such amounts, the repayment of which is deferred
to the Initial Repayment Date, shall bear interest to the
Initial Repayment Date at the rates applicable thereto."
SECTION 4: Other Matters
A. Effectiveness. This First Amendment shall
become effective as of the date that the Administrative Agent
shall have received counterparts of this First Amendment, duly
executed by the Borrower, the Administrative Agent, the
Issuing Bank and the Majority Lenders.
B. Continuing Effect; No Other Amendments.
Except as expressly amended or modified hereby, all the
provisions of the Project Loan Agreement are and shall remain
in full force and effect.
C. GOVERNING LAW. THIS FIRST AMENDMENT SHALL
BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK.
2
<PAGE> 3
D. Counterparts. This First Amendment may be
executed by the parties hereto in any number of separate
counterparts, each of which shall be an original and all of
which taken together shall be deemed to constitute one and the
same instrument.
E. Fees and Expenses. The Borrower agrees to
reimburse the Administrative Agent for all of its
out-of-pocket costs and expenses incurred in connection with
the negotiation, preparation, execution and delivery of this
First Amendment including, without limitation, the fees and
disbursements of Simpson Thacher & Bartlett, counsel to the
Administrative Agent.
BIRCHWOOD POWER PARTNERS, L.P.
By: SEI Birchwood, Inc., a General Partner
By: /s/ T. E. Dorsey
-----------------------------------
Name: Thomas E. Dorsey
-------------------------
Title: Vice President
-------------------------
By: Cogentrix/Birchwood Two, L.P., a
General Partner
By: Cogentrix of Birchwood I, Inc., its
Sole General Partner
By: /s/ Elizabeth L. Rippetoe
-----------------------------------
Name: Elizabeth L. Rippetoe
-------------------------
Title: Vice President and
Assistant General
Counsel
-------------------------
3
<PAGE> 4
CREDIT SUISSE, as Security Agent
By: /s/ Steven Dowe
-----------------------------------
Name: Steven Dowe
-------------------------
Title: Associate
-------------------------
By: /s/ Kevin V. Soucy
-----------------------------------
Name: Kevin V. Soucy
-------------------------
Title: Associate
-------------------------
CREDIT SUISSE and CREDIT SUISSE, NEW
YORK BRANCH, as Issuing Bank, as
Administrative Agent, as Co-Agent, as a
Bank, as a Secured Counterparty and as a
Secured Party
By: /s/ Steven Dowe
-----------------------------------
Name: Steven Dowe
-------------------------
Title: Associate
-------------------------
By: /s/ Kevin V. Soucy
-----------------------------------
Name: Kevin V. Soucy
-------------------------
Title: Associate
-------------------------
BANQUE PARIBAS, NEW YORK BRANCH as a
Co-Agent, as a Bank and as Secured Party
By: /s/ Frances Ballard, Sr.
-----------------------------------
Name: Frances Ballard, Sr.
-------------------------
Title: Vice President
-------------------------
By: /s/ David Lee
-----------------------------------
Name: David Lee
-------------------------
Title: Vice President
-------------------------
4
<PAGE> 5
BANQUE PARIBAS, PARIS as a Secured Party
and as a Secured Counterparty
By:
-----------------------------------
Name:
-------------------------
Title:
-------------------------
By:
-----------------------------------
Name:
-------------------------
Title:
-------------------------
BARCLAYS BANK PLC as Co-Agent, as a
Bank, as a Secured Counterparty and as a
Secured Party
By:
-----------------------------------
Name:
-------------------------
Title:
-------------------------
THE TORONTO-DOMINION BANK as a Bank and
as a Secured Party
By: /s/ Linda Lavin
-----------------------------------
Name: Linda Lavin
-------------------------
Title: Director
-------------------------
NATIONAL WESTMINSTER BANK as a Bank and
as a Secured Party
By:
-----------------------------------
Name:
-------------------------
Title:
-------------------------
BANQUE NATIONALE DE PARIS as a Bank and
as a Secured Party
By: /s/ Peter A. Ryan
-----------------------------------
Name: Peter A. Ryan
-------------------------
Title: Vice President
-------------------------
5
<PAGE> 6
THE FUJI BANK LTD. as a Bank and as a
Secured Party
By: /s/ Mr. T. Mitsui
-----------------------------------
Name: Mr. T. Mitsui
---------------------------
Title: Vice President and Manager
---------------------------
THE BANK OF NOVA SCOTIA as a Bank and as
a Secured Party
By: /s/ Gary Sabris
-----------------------------------
Name: Gary Sabris
-------------------------
Title:
-------------------------
THE SANWA BANK, LIMITED, NEW YORK BRANCH
as a Bank and as a Secured Party
By:
-----------------------------------
Name:
-------------------------
Title:
-------------------------
JOHN HANCOCK MUTUAL LIFE INSURANCE
COMPANY as an Institution and as a
Secured Party
By: /s/ Daniel R. Revers
-----------------------------------
Name: Daniel R. Revers
-------------------------
Title: Investment Officer
-------------------------
JOHN HANCOCK VARIABLE LIFE INSURANCE
COMPANY as an Institution and as a
Secured Party
By: /s/ M. M. Stapleton
-----------------------------------
Name: M. M. Stapleton
-------------------------
Title: Vice President
-------------------------
6
<PAGE> 7
MELLON BANK, N.A., solely in its
capacity as Trustee for AT&T MASTER
PENSION TRUST as an Institution and as a
Secured Party
AS DIRECTED BY JOHN HANCOCK MUTUAL LIFE
INSURANCE COMPANY, and not in its
individual capacity
By: /s/ Patricia J. Veilleux
-----------------------------------
Name: Patricia J. Veilleux
-------------------------
Title: Associate Counsel
-------------------------
MELLON BANK, N.A., solely in its capaicy
as Trustee FOR NYNEX MASTER PENSION
TRUST as an Institution and as a Secured
Party
AS DIRECTED BY JOHN HANCOCK MUTUAL LIFE
INSURANCE COMPANY, and not in its
individual capacity
By: /s/ Patricia J. Veilleux
-----------------------------------
Name: Patricia J. Veilleux
-------------------------
Title: Associate Counsel
-------------------------
COMMONWEALTH OF PENNSYLVANIA STATE
EMPLOYEES' RETIREMENT SYSTEM as an
Institution and as a Secured Party
By: John Hancock Mutual Life Insurance
Company, as Investment Adviser
By: /s/ M. M. Stapleton
-----------------------------------
Name: M. M. Stapleton
-------------------------
Title: Vice President
-------------------------
ALLSTATE INSURANCE COMPANY as an
Institution and as a Secured Party
By: /s/ S. M. Laude
-----------------------------------
Name: Steven M. Laude
-------------------------
Title: Authorized Signatory
-------------------------
7
<PAGE> 8
ALLSTATE LIFE INSURANCE COMPANY as an
Institution and as a Secured Party
By: /s/ S. M. Laude
-----------------------------------
Name: Steven M. Laude
-------------------------
Title: Authorized Signatory
-------------------------
ALLSTATE LIFE INSURANCE COMPANY OF NEW
YORK, as an Institution and as a Secured
Party
By: /s/ S. M. Laude
-----------------------------------
Name: Steven M. Laude
-------------------------
Title: Authorized Signatory
-------------------------
NEW YORK LIFE INSURANCE COMPANY, as an
Institution and as a Secured Party
By: /s/ Jamie N. Manson
-----------------------------------
Name: Jamie N. Manson
-------------------------
Title: Assistant Vice President
-------------------------
UNION BANK OF CALIFORNIA, N.A. as a
Co-Agent, as a Bank, as a Secured
Counterparty and as a Secured Party
By: /s/ Melisa M. Lewis
-----------------------------------
Name: Melisa M. Lewis
-------------------------
Title: Vice President
-------------------------
8
<PAGE> 1
EXHIBIT 10.4
AMENDED AND RESTATED
STOCK PLEDGE AGREEMENT
THIS AMENDED AND RESTATED STOCK PLEDGE AGREEMENT ("Agreement") is made
as of the 19th day of November, 1996, by and between COGENTRIX/BIRCHWOOD TWO,
L.P., a Delaware limited partnership ("Pledgor"), and BIRCHWOOD POWER PARTNERS,
L.P., a Delaware limited partnership ("Lender").
W I T N E S S E T H:
--------------------
WHEREAS, all one hundred (100) shares of the issued and outstanding
stock of the Corporation (as hereinafter defined) were previously owned by
Corporate Trinity Company, a Delaware corporation ("CTC"), and such shares were
previously pledged to Lender pursuant to that certain Stock Pledge Agreement
dated as of May 18, 1994 by and between CTC and Lender (the "Original Pledge
Agreement");
WHEREAS, Lender has previously assigned all of its rights to the shares
under the Original Pledge Agreement in favor of Credit Suisse, as security
agent, under the Security Deposit Agreement (as hereinafter defined) pursuant to
that certain Borrower Stock Assignment dated as of May 18, 1994 (the "Original
Stock Assignment");
WHEREAS, CTC granted Lender an option to purchase shares of the stock
of the Corporation pursuant to that certain Letter Agreement dated May 13, 1994
(the "Stock Option"), and Lender has assigned its rights under the Stock Option
to (i) Pledgor as to a fifty percent (50%) interest and (ii) SEI Birchwood, Inc.
("SEI Birchwood") as to a fifty percent (50%) interest pursuant to that certain
Assignment dated November 19, 1996 among Lender, Pledgor and SEI Birchwood;
WHEREAS, Pledgor intends to exercise the Stock Option and acquire fifty
(50) shares of the issued and outstanding stock of the Corporation from CTC
pursuant to the Stock Option;
WHEREAS, the parties hereto desire to enter into this Agreement to
amend and restate the Original Pledge Agreement in order to affirm and provide
that the shares transferred to Pledgor remain subject to a pledge in favor of
Lender in accordance with the terms and conditions of this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, and intending to be legally bound thereby, the
parties hereto hereby agree as follows:
1. Defined Terms. When used herein, the following terms shall have the
following meanings:
"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
<PAGE> 2
with such first Person. The term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of a Person, whether through ownership of voting securities, by
contract or otherwise.
"Collateral" shall mean the property and interests in property
described in Sections 2 and 4 hereof.
"Corporation" shall mean Greenhost, Inc., a Delaware corporation.
"Dividends" shall mean any cash dividends or distributions, any and all
stock or liquidating dividends, other distributions in property, return of
capital or other distributions made by the Corporation on or in respect of the
Pledged Securities, whether declared from the net profits or excess cash flow of
the Corporation or resulting from a subdivision, combination or reclassification
of the outstanding capital stock of the Corporation or received in exchange for
the Pledged Securities or of any part thereof as a result of any merger or
consolidation to which the Corporation may be a party or otherwise.
"Event of Default" shall mean any of the events specified in Section 5
hereof.
"Loan Agreement" means the Loan and Contribution Agreement, dated as of
May 18, 1994 between Greenhost, Inc., as Borrower, and Birchwood Power Partners,
L.P., as Lender, as the same may be amended, modified or supplemented from time
to time.
"Loan Documents" means the Notes, the Loan Agreement, the New Loan
Agreement and any collateral documents thereto.
"Margin Stock" shall have the meaning given such term in Regulation U
of the Board of Governors of the Federal Reserve System, 12 C.F.R. Section 221.
"New Loan Agreement" means the Term Loan and Working Capital Agreement,
dated as of November 19, 1996 between Greenhost, Inc., as Borrower, and
Birchwood Power Partners, L.P., as Lender, as the same may be amended, modified
or supplemented from time to time.
"Notes" means (i) the promissory note executed by Corporation in the
form of Exhibit A to the Loan Agreement, payable to the order of Lender, in the
amount of twenty million seventy nine thousand dollars ($20,079,000), (ii) the
Working Capital Note executed by Corporation in the form of Exhibit A to the New
Loan Agreement, payable to the order of Lender, in the amount of three million
dollars ($3,000,000) and (iii) the Term Note executed by Corporation in the form
of Exhibit B to the New Loan Agreement payable to the order of Lender, in the
amount of two million five hundred thousand dollars ($2,500,000).
"Obligations" means the unpaid principal of and interest on (including
interest accruing on or after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating to
the Corporation, whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding) the Notes and all other obligations
2
<PAGE> 3
and liabilities of the Corporation to the Lender, whether direct or indirect,
absolute or contingent, due or to become due, or now existing or hereafter
incurred, which may arise under, out of, or in connection with, the Notes, New
Loan Agreement, the Loan Agreement or this Agreement and any other document
made, delivered or given in connection therewith or herewith, whether on account
of principal, interest, reimbursement obligations, fees, indemnities, costs,
expenses (including, without limitation, all fees and disbursements of counsel
to the Lender) or otherwise.
"Person" means any individual, partnership, corporation, business
trust, firm, joint stock company, trust, unincorporated association, joint
venture, business association, syndicate, government, governmental organization,
or other entity of whatever nature.
"Pledged Securities" shall mean all of the issued and outstanding
shares of stock of the Corporation held beneficially or of record by the
Pledgor.
"Project Control Account" shall have the meaning given to such term in
the Security Deposit Agreement.
"Project Loan Agreement": that certain Loan and Reimbursement
Agreement, dated as of May 18, 1994, between (i) Birchwood Power Partners, L.P.,
as Borrower, (ii) Credit Suisse, Banque Paribas, Barclays Bank PLC and Union
Bank of California, as Co-Agents, (iii) Credit Suisse and Credit Suisse, New
York Branch, as Issuing Bank, (iv) Credit Suisse, as Administrative Agent, and
(v) certain banks and institutions as set forth therein, as the same may be
amended, modified or supplemented from time to time.
"Secured Obligations" shall have the meaning given to such term in the
Security Deposit Agreement.
"Securities Laws" shall mean, collectively, the Securities Act of 1933,
as amended; the Securities Exchange Act of 1934, as amended; any similar statute
or statutes hereafter enacted analogous in purpose or effect; any state Blue Sky
or similar statute analogous in purpose or effect; and any and all rules or
regulations promulgated under any of the foregoing.
"Security Agent": Credit Suisse, in its capacity as security agent for
the Secured Parties under the Security Deposit Agreement, or any successor
security agent appointed pursuant to Section 2.6 of the Security Deposit
Agreement.
"Security Deposit Agreement" shall mean that certain Security Deposit
and Intercreditor Agreement among the Lender, Credit Suisse, as security agent,
and certain banks and institutions as set forth therein, dated as of May 18,
1994, as the same may be amended, modified or supplemented from time to time.
"Stock Option" shall have the meaning set forth in the preamble hereof.
2. Pledge. To induce Lender to enter into the New Loan Agreement, and
in consideration thereof and of any loans, advances or financial accommodations
heretofore or
3
<PAGE> 4
hereafter granted by Lender to or for the account of the Corporation, whether
pursuant to the New Loan Agreement or otherwise, all of which will inure to the
direct and material benefit of Pledgor, Pledgor hereby pledges, conveys,
hypothecates, mortgages, assigns, sets over, delivers and grants to Lender as
security for the payment and performance when due (whether at the stated
maturity, by acceleration or otherwise) of all Obligations of the Corporation, a
first and prior perfected lien on and security interest in all of the issued and
outstanding stock of the Corporation held beneficially or of record by Pledgor,
whether now owned or existing or hereafter acquired or arising, including,
without limitation, when acquired, all of the Pledged Securities, together with
all proceeds thereof and all cash, additional securities and other property at
any time and from time to time receivable or otherwise distributed in respect of
or in exchange for any and all of the foregoing (the "Collateral").
TO HAVE AND TO HOLD the Collateral, together with all rights, title,
interests, powers, privileges and preferences pertaining or incidental thereto,
unto Lender, its successors and assigns forever, subject, however, to the terms,
covenants and conditions hereinafter set forth.
3. Representations, Warranties and Covenants. Pledgor hereby
represents, warrants and covenants to and with Lender as follows:
(a) Validity and Binding Effect. This Agreement constitutes a legal,
valid and binding obligation of the Pledgor, enforceable in accordance with its
terms, and upon delivery to the Lender of the stock certificates evidencing the
Pledged Securities, the security interest created pursuant to this Agreement
will constitute a valid, perfected first priority security interest in the
Collateral, enforceable in accordance with its terms against all creditors of
the Pledgor and any Persons purporting to purchase any Collateral from the
Pledgor, except in each case as enforceability may be affected by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.
(b) No Legal Bar; No Liens. The execution, delivery and performance of
this Agreement will not violate any provision of any requirement of law or
contractual obligation of the Pledgor and will not result in the creation or
imposition of any Lien on any of the properties or revenues of the Pledgor
pursuant to any requirement of law or contractual obligation of the Pledgor,
except the security interests created by this Agreement.
(c) No Consents Required. No consent or authorization of, filing with,
or other act by or in respect of, any arbitrator or governmental authority and
no consent of any other Person (including, without limitation, any creditor of
the Pledgor), is required in connection with the execution, delivery,
performance, validity or enforceability of this Agreement.
(d) No Material Litigation. No litigation, investigation or proceeding
of or before any arbitrator or Governmental Authority is pending or, to the
knowledge of the Pledgor, threatened by or against the Pledgor or against any of
its properties or revenues with respect to this Agreement or any of the
transactions contemplated hereby.
4
<PAGE> 5
(e) Title. Upon exercise of the Stock Option by Pledgor and acquisition
of the fifty percent (50%) of the shares of the Corporation pursuant thereto,
Pledgor will be the legal and equitable owner of, and will have the complete and
unconditional authority to pledge, the Pledged Securities and the other
Collateral and will hold the same free and clear of all liens, charges,
encumbrances and security interests, except those in favor of Lender, and will
defend its title thereto against the claims of all persons whomsoever;
(f) Percentage Ownership. The Pledged Securities included in the
Collateral constitute fifty percent (50%) of the issued and outstanding shares
of common stock of the Corporation, are validly issued, fully paid and
nonassessable; there are no existing options, warrants or commitments of any
kind or nature or any outstanding securities or other instruments convertible
into shares of any class of stock of the Corporation; and no stock of the
Corporation is held in the treasury of the Corporation;
(g) No Violation of Securities Laws. Pledgor's execution and delivery
of this Agreement and the pledge of the Collateral hereunder do not, directly or
indirectly, violate or result in a violation of any Securities Law;
(h) Delivery of Certificates. Concurrently with the execution of this
Agreement, Pledgor shall deliver to Lender, or as the Lender may direct, all
certificates evidencing the Pledged Securities, accompanied by undated stock
powers executed in blank, and by such other instruments or documents as Lender
or its counsel may reasonably request;
(i) No New Stock. Pledgor will not, subsequent to the date of this
Agreement, cause or, to the extent it is able to do so, permit the Corporation
to issue (by means of a dividend or otherwise) any stock or securities
convertible into stock, unless and except upon first having obtained the prior
written consent of Lender;
(j) After-Acquired Collateral. Promptly, and in any event within ten
(10) days, after Pledgor acquires any additional stock in the Corporation or
receives or is issued any stock or other securities or property in respect of
any of the Collateral, whether or not for value paid for it, Pledgor shall (i)
deliver such stock or other securities or property (including, but not limited
to, any and all certificates evidencing any such stock or securities) to Lender,
together with stock powers or other appropriate instruments of transfer,
executed in blank, all to be held subject to the terms of this Agreement; (ii)
execute and deliver such pledge agreements, security agreements, financing
statements or other instruments, documents or agreements as may be necessary or
appropriate to confirm, evidence or perfect the security interests granted
hereby;
(k) Taxes. Pledgor will pay all taxes, assessments and charges levied,
assessed or imposed upon the Collateral before the same become delinquent or
become liens upon any of the Collateral;
(l) Margin Stock. None of the stock included in the Collateral is, as
of the date of this Agreement, Margin Stock and Pledgor shall, promptly after
learning thereof, notify
5
<PAGE> 6
Lender of any Collateral which is or becomes Margin Stock and execute and
deliver in favor of Lender any and all instruments, documents and agreements
necessary to cause the pledge of such Margin Stock to comply with all applicable
laws, rules and regulations;
(m) Additional Assurances. (i) Pledgor agrees to perform, at any time
and from time to time, all acts and do all things which Lender may request, now
or hereafter, to evidence, preserve, perfect or protect the creation, attachment
or perfection of the security interests herein granted to Lender;
(ii) The Pledgor will not (A) sell, assign, transfer,
exchange, or otherwise dispose of, or grant any option with respect to, the
Collateral other than in a transaction pursuant to which the net proceeds after
payment of the Obligations are deposited into the Project Control Account and,
subject to Section 5.4 of the New Loan Agreement, which does not violate the
terms or conditions of any "Project Contract" (as defined in the New Loan
Agreement), the Project Loan Agreement or the Loan Agreement, (B) create, incur
or permit to exist any Lien or option in favor of, or any claim of any Person
with respect to, any of the Collateral, or any interest therein, except for the
security interest created by this Agreement, or (C) enter into any agreement or
undertaking restricting the right or ability of the Pledgor or the Lender to
sell, assign or transfer any of the Collateral;
(n) No Amendments. Without the prior written consent of Lender, Pledgor
will not approve or consent to any changes to the Articles or Certificate of
Incorporation or By-Laws of the Corporation which would in any way impair or
diminish the rights of Pledgor or Lender thereunder;
(o) Right to Perform. In the event that Pledgor fails or refuses to
perform any of its obligations set forth herein, Lender shall have the right,
without obligation, to do all things it deems necessary or advisable to
discharge the same, and any sums paid by Lender, or the cost thereof, including
without limitation, attorneys' fees, shall constitute secured Obligations and
bear interest until paid; and
(p) No Obligation. Pledgor acknowledges and agrees that nothing
contained herein shall obligate Lender or impose a duty upon Lender to assume
any duties or obligations of Pledgor with respect to any of the Collateral.
4. Collateral Assignment of Dividends.
(a) Irrespective of whether there exists an Event of Default hereunder,
Pledgor agrees that so long as any of the Notes are outstanding, any and all
Dividends paid by the Corporation with respect to the Pledged Securities are
hereby irrevocably assigned as collateral security by Pledgor to Credit Suisse,
as security agent under the Security Deposit Agreement and shall be delivered
to, Credit Suisse, as security agent under the Security Deposit Agreement for
deposit into the Project Control Account, to be applied and distributed in
accordance with the terms of the Security Deposit Agreement. Pledgor recognizes
and agrees that such assignment will provide collateral security for the payment
and performance of the obligations of Lender secured by the Security Deposit
Agreement (including, without
6
<PAGE> 7
limitation, all "Secured Obligations" referred to therein), and Pledgor confirms
that it is familiar with and has reviewed the terms and conditions of the
Security Deposit Agreement and related Project Loan Agreement. Until the Notes
are paid in full, Pledgor hereby irrevocably authorizes and directs the
Corporation to pay all Dividends with respect to the Pledged Securities into the
Project Control Account and confirms and agrees that Pledgee shall be entitled
to assign its rights under this Agreement, including this Section 4, to the
Security Agent under the terms of the Security Deposit Agreement.
(b) At such time as all of the Notes have been paid in full, any and
all Dividends thereafter declared shall no longer be subject to the provisions
of Section 4(a) above, and the assignment of Dividends and direction of payment
thereof to the Project Control Agreement provided for therein shall be of no
further force or effect.
5. Holding Collateral; Exchanges. Lender may hold any of the
Collateral, endorsed or assigned in blank, and may deliver any of the Collateral
to the issuer thereof for the purpose of making denominational exchanges or
registrations or transfers or for such other purpose in furtherance of this
Agreement as Lender may deem desirable.
6. Voting Rights. Pledgor shall retain all voting rights with respect
to the Pledged Securities and other Collateral until such time as an Event of
Default shall have occurred; provided, however, that no vote shall be cast or
corporate right exercised or other action taken which, in the Lender's
reasonable judgment, would impair the Collateral or which would be inconsistent
with or result in any violation of any provision of the Loan Agreement, the New
Loan Agreement, this Agreement or any other Loan Document. If an Event of
Default shall occur and be continuing and the Lender shall give notice of its
intent to exercise such rights to the Pledgor, all shares of the Pledged
Securities shall be registered in the name of the Lender or its nominee, and the
Lender or its nominee may thereafter exercise (i) all voting, corporate and
other rights pertaining to such shares of the Pledged Securities at any meeting
of shareholders of the Corporation or otherwise), and (ii) any and all rights of
conversion, exchange, subscription and any other rights, privileges or options
pertaining to such shares of the Pledged Securities as if it were the absolute
owner thereof (including, without limitation, the right to exchange at its
discretion any and all of the Pledged Securities upon the merger, consolidation,
reorganization, recapitalization or other fundamental change in the corporate
structure of the Corporation, or upon the exercise by the Pledgor or the Lender
of any right, privilege or option pertaining to such shares of the Pledged
Securities, and in connection therewith, the right to deposit and deliver any
and all of the Pledged Securities with any committee, depositary, transfer
agent, registrar or other designated agency upon such terms and conditions as
the Lender may determine), all without liability except to account for property
actually received by it, but the Lender shall have no duty to the Pledgor to
exercise any such right, privilege or option and shall not be responsible for
any failure to do so or delay in so doing.
7. SEC Approval. Pledgor shall not exercise the Option until the date
the Securities and Exchange Commission shall have issued an order in SEC Docket
70-8935 authorizing SEI Birchwood to acquire the stock of fifty percent (50%) of
the Corporation
7
<PAGE> 8
under the Public Utility Holding Company Act of 1935 and such order shall have
become final.
8. Default. Each of the following shall constitute an "Event of
Default" hereunder:
(a) Default Under the New Loan Agreement. If there shall occur any
"Event of Default," as defined in Article 7 of the New Loan Agreement.
(b) Liens or Encumbrances. If any of the Collateral shall be attached
or levied upon or seized in any legal proceedings, or held by virtue of any Lien
or distress;
(c) Misrepresentation. If Pledgor or any Affiliate of Pledgor makes any
misrepresentation to Lender in connection with this Agreement or any transaction
relating thereto; or
(d) Covenants. If Pledgor shall default in the observance or
performance of any covenant or agreement contained in this Agreement.
9. Remedies. Upon and after an Event of Default, Lender shall have the
following rights and remedies:
(a) Secured Creditor. All of the rights and remedies of a secured party
under the Uniform Commercial Code of the State where such rights and remedies
are asserted, or under other applicable law, all of which rights and remedies
shall be cumulative, and none of which shall be exclusive, to the extent
permitted by law, in addition to any other rights and remedies contained in this
Agreement.
(b) Right of Sale. Lender may, without demand and without
advertisement, notice or legal process of any kind (except as may be required by
law), all of which Pledgor waives, at any time or times (i) apply any Dividends
or other property received by Lender pursuant to Section 4 hereof to the
Obligations and the Secured Obligations and (ii) sell the remaining Collateral,
or any part thereof, at public or private sale or at any broker's board or
office of the Lender or on any securities exchange, for cash, upon credit or for
future delivery as Lender shall deem appropriate. Lender shall be authorized at
any such sale to restrict the prospective bidders or purchasers to Persons who
will represent and agree that they are purchasing the Collateral for their own
account for investment and not with a view to the distribution or resale
thereof, and upon consummation of any such sale Lender shall have the right to
assign, transfer and deliver to the purchaser or purchasers thereof the
Collateral so sold. Each such purchaser at any such sale shall hold the property
sold absolutely free from any claim or right on the part of Pledgor, and Pledgor
hereby waives (to the extent permitted by law) all rights of redemption, stay
and/or appraisal which Pledgor now has or may have at any time in the future
under any rule of law or statute now existing or hereafter enacted. The Lender
shall have the right upon any such public sale or sales, and, to the extent
permitted by law, upon any such private sale or sales, to purchase the whole or
any part of the Collateral so sold, free of any right or equity of redemption in
the Pledgor, which right or equity is hereby waived or released. The Lender
shall apply any proceeds from time to time held by it and the
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<PAGE> 9
net proceeds of any such collection, recovery, receipt, appropriation,
realization or sale, after deducting all reasonable costs and expenses of every
kind incurred in respect thereof or incidental to the care or safekeeping of any
of the Collateral or in any way relating to the Collateral or the rights of the
Lender hereunder, including, without limitation, reasonable attorneys fees and
disbursements of counsel to the Lender, first to the payment in whole or in part
of the Obligations and secondly to the Secured Obligations, and only after such
application and after the payment by the Lender of any other amount required by
any provision of law, including, without limitation, Section 9-504(l)(c) of the
Uniform Commercial Code, need the Lender account for the surplus, if any, to the
Pledgor. To the extent permitted by applicable law, the Pledgor waives all
claims, damages and demands it may acquire against the Lender or any Lender
arising out of the exercise by them of any rights hereunder. The Pledgor waives
and agrees not to assert any rights or privileges which it may acquire under
Section 9-112 of the Uniform Commercial Code.
(c) Notice. In addition thereto, Pledgor further agrees that in the
event that notice is necessary under applicable law, written notice mailed to
Pledgor in the manner specified in Section 12(o) ten (10) days prior to the date
of the disposition of the Collateral subject to the security interest created
herein at any such public sale or sale at any broker's board or on any such
securities exchange, or prior to the date after which private sale or any other
disposition of said Collateral will be made, shall constitute commercially
reasonable and fair notice.
(d) Securities Laws. In view of the position of Pledgor in relation to
the securities now or hereafter included in the Collateral, or because of other
present or future circumstances, a question may arise under the Securities Laws
with respect to any disposition of the Collateral permitted hereunder. Pledgor
understands that compliance with the Securities Laws may very strictly limit the
course of Lender's conduct if Lender attempts to dispose of all or any part of
the Collateral and may also limit the extent to which or the manner in which any
subsequent transferee of any Collateral may dispose of the same. Pledgor clearly
understands and agrees that Lender shall be entitled to place all or any part of
the Collateral for private placement by an investment banking firm, that any
such investment banking firm may purchase all or any part of the Collateral for
its own account, and that Lender shall be entitled to place all or any part of
the Collateral privately with a purchaser or purchasers, notwithstanding the
existence of a public or private market upon which the quotations or sales
prices may exceed substantially the price at which Lender sells.
It is the intention of the parties hereto that the security
interests and liens of Lender shall in all relevant respects be subject to and
governed by said statutes, rules and regulations to the extent required by law
and that nothing in this Agreement shall be construed to diminish the control
exercised by Pledgor except in accordance with the provisions of any such
applicable statutory requirements and rules and regulations. Pledgor will, and
will cause the Corporation to, cooperate in filing all applications and in
taking all other actions (and in providing Lender with all information
appropriate to facilitate all other actions) which are necessary or appropriate
to comply, and which are not inconsistent with said statutes, rules and
regulations so as to permit enforcement of the rights of Lender hereunder.
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<PAGE> 10
10. Power of Attorney; Proxy.
(a) Appointment of Lender as Pledgor's Lawful Attorney. Upon and
after an Event of Default, Pledgor irrevocably designates, makes, constitutes
and appoints Lender (and all persons designated by Lender) as its true and
lawful attorney (and agent-in-fact) and Lender, or Lender's agent, may, without
notice to Pledgor, and at such time or times thereafter as Lender or said agent,
in its discretion, may determine, in the name of Pledgor or Lender, (i)
transfer the Collateral on the books of the Corporation, with full power of
substitution in the premises; (ii) endorse the name of Pledgor upon any
checks, notes, acceptance, money orders, certificates, drafts or other forms of
payment of security that come into Lender's possession; and (iii) do all
acts and things necessary, in Lender's discretion, to fulfill the obligations of
Pledgor under this Agreement.
(b) Irrevocable Proxy. Upon occurrence of any Event of Default
hereunder, Lender, or its nominee, without notice or demand of any kind to
Pledgor, shall have the sole and exclusive right to exercise all voting powers
pertaining to any and all of the Collateral (and to give written consents in
lieu of voting thereon) and may exercise such power in such manner as Lender, in
its sole discretion, shall determine. THIS PROXY IS COUPLED WITH AN INTEREST AND
IS IRREVOCABLE. The exercise by Lender of any of its rights and remedies under
this Section shall not be deemed a disposition of Collateral under Article 9 of
the Uniform Commercial Code nor an acceptance by Lender of any of the Collateral
in satisfaction of any of the Obligations.
11. Termination. Pledgor acknowledges and agrees that this Agreement
shall continue in full force and effect unless and until all Obligations have
been fully paid and performed, after which Lender, at Pledgor's expense, shall
return all Collateral then in its possession and control to Pledgor.
12. Limitation on Liability. Neither the Pledgor, nor any shareholder,
officer, employee, director, agent or Affiliate (other than the Borrower) of the
Pledgor shall be personally liable for payment of the Obligations or Secured
Obligations by reason of this Pledge Agreement or for any other liabilities of
the Borrower under any Loan Document. Any judicial proceedings that the Security
Agent or any Secured Party may institute against the Pledgor shall be limited to
seeking (i) the preservation, enforcement, foreclosure or other sale or
disposition of the Collateral or of the pledge and security interest in the
Collateral granted by this Pledge Agreement and (ii) the performance by the
Pledgor of its covenants and obligations hereunder. The provisions of this
Section 9 shall not be deemed to waive any cause of action the Security Agent or
any Secured Party may have against any Person for fraud or willful misconduct by
such Person.
13. Miscellaneous.
(a) No Subrogation. Notwithstanding anything to the contrary in this
Agreement, the Pledgor hereby irrevocably waives all rights which may have
arisen in connection with this Agreement to be subrogated to any of the rights
(whether contractual, under the Bankruptcy Code, including Section 509 thereof,
under common law or otherwise) of the Lender against
10
<PAGE> 11
the Corporation or against any collateral security or guarantee or right of
offset held by the Lender for the payment of the Obligations or the Secured
Obligations. The Pledgor hereby further irrevocably waives all contractual,
common law, statutory or other rights of reimbursement, contribution,
exoneration or indemnity (or any similar right) from or against the Corporation
or any other Person which may have arisen in connection with this Agreement. So
long as the Obligations remain outstanding, if any amount shall be paid by or on
behalf of the Corporation to the Pledgor on account of any of the rights waived
in this paragraph, such amount shall be held by the Pledgor in trust, segregated
from other funds of such Pledgor, and shall, forthwith upon receipt by such
Pledgor, be turned over to the Lender in the exact form received by the Pledgor
(duly indorsed by the Pledgor to the Lender, if required), to be applied against
the Obligations whether matured or unmatured, in such order as the Lender may
determine. The provisions of this paragraph shall survive the term of this
Agreement and the payment in full of the Obligations and the Secured Obligations
and the termination of the Commitments referred to in Section 3.1 of the Loan
Agreement.
(b) Amendments, etc. with Respect to the Obligations. The Pledgor shall
remain obligated hereunder, and the Collateral shall remain subject to the
security interests granted hereby, notwithstanding that, without any reservation
of rights against the Pledgor, and without notice to or further assent by the
Pledgor, any demand for payment of any of the Obligations or the Secured
Obligations made by the Lender may be rescinded by the Lender, and any of the
Obligations or the Secured Obligations continued, and the Obligations or the
Secured Obligations, or the liability of the Corporation or any other Person
upon or for any part thereof, or any collateral security or guarantee therefor
or right of offset with respect thereto, may, from time to time, in whole or in
part, be renewed, extended, amended, modified, accelerated, compromised, waived,
surrendered, or released by the Lender, and the Notes, the Loan Agreement, the
New Loan Agreement, the other Loan Documents, the Secured Obligations, the
Project Loan Agreement and any other documents executed and delivered in
connection therewith may be amended, modified, supplemented or terminated, in
whole or part, as the Lender may deem advisable from time to time, and any
guarantee, right of offset or other collateral security at any time held by the
Lender for the payment of the Obligations or the Secured Obligations may be
sold, exchanged, waived, surrendered or released. The Lender shall not have any
obligation to protect, secure, perfect or insure any other Lien at any time held
by it as security for the Obligations or the Secured Obligations or any property
subject thereto. The Pledgor waives any and all notice of the creation, renewal,
extension or accrual of any of the Obligations or the Secured Obligations and
notice of or proof of reliance by the Lender upon this Agreement; the
Obligations, and any of them, shall be deemed conclusively to have been created,
contracted or incurred in reliance upon this Agreement; and all dealings between
the Corporation and the Pledgor, on the one hand, and the Lender, on the other,
likewise shall be conclusively presumed to have been had or consummated in
reliance upon this Agreement. The Pledgor waives diligence, presentment,
protest, demand for payment and notice of default or nonpayment to or upon the
Corporation or the Pledgor with respect to the Obligations and the Secured
Obligations. When pursuing its rights and remedies hereunder against the
Pledgor, the Lender may, but shall be under no obligation to, pursue such rights
and remedies as it may have against the Corporation or any other Person or
against any collateral security or guarantee for the Obligations or the Secured
Obligations or any right of offset with respect thereto, and any failure by the
Lender to pursue
11
<PAGE> 12
such other rights or remedies or to collect any payments from the Corporation or
any such other Person or to realize upon any such collateral security or
guarantee or to exercise any such right of offset, or any release of the
Corporation or any such other Person or of any such collateral security,
guarantee or right of offset, shall not relieve the Pledgor of any liability
hereunder, and shall not impair or affect the rights and remedies, whether
express, implied or available as a matter of law, of the Lender against the
Pledgor or the Collateral.
(c) Duty of Lender. The Lender's sole duty with respect to the custody,
safekeeping and physical preservation of the Collateral in its possession, under
Section 9-207 of the Uniform Commercial Code or otherwise, shall be to deal with
it in the same manner as the Lender deals with similar securities and property
for its own account, except that the Lender shall have no obligation to invest
cash proceeds in its possession and may hold the same as demand deposits.
Neither the Lender nor any of its directors, officers, employees or agents shall
be liable for failure to demand, collect or realize upon any of the Collateral
or for any delay in doing so or shall be under any obligation to sell or
otherwise dispose of any Collateral upon the request of the Pledgor or any other
Person or to take any other action whatsoever with regard to the Collateral or
any part thereof.
(d) Waiver. Each and every right granted to Lender under this
Agreement, or allowed it by law or in equity, shall be cumulative and may be
exercised singly or concurrently from time to time, and are not exclusive of any
other rights or remedies provided by law. No failure on the part of Lender to
exercise, and no delay in exercising, any right shall operate as a waiver
thereof, nor shall any single or partial exercise by Lender of any right
preclude any other or future exercise thereof or the exercise of any other
right. No waiver by Lender of any Event of Default shall constitute a waiver of
any subsequent Event of Default.
(e) No Assignment by Pledgor. No assignment hereof shall be made by
Pledgor without the prior written consent of Lender. Lender may assign, or sell
participations in, its right, title and interest in the Collateral at any time
hereafter without notice to or consent of Pledgor or the Corporation.
(f) Successors and Assigns; Survival. This Agreement shall be binding
upon and inure to the benefit of the successors and permitted assigns of the
parties hereto. All representations, warranties and covenants made herein shall
survive the execution and delivery of this Agreement.
(g) Severability. If any provision of this Agreement or the application
thereof to any party thereto or circumstances shall be invalid or unenforceable
to any extent, the remainder of this Agreement and the application of such
provisions to any other party thereto or circumstance shall not be affected
thereby and shall be enforced to the greatest extent permitted by law.
(h) Amendment. Neither this Agreement nor any provision hereof may be
amended, waived, discharged, modified or terminated except pursuant to a written
instrument signed by Pledgor and Lender.
12
<PAGE> 13
(i) Interpretation. No provision of this Agreement shall be construed
against or interpreted to the disadvantage of any party hereto by any court or
other governmental or judicial authority by reason of such party having or being
deemed to have structured or dictated such provision.
(j) Lender Not a Joint Venturer. This Agreement shall not in any
respect be interpreted, deemed or construed as making Lender a partner or joint
venturer with Pledgor or as creating any similar relationship or entity, and
Pledgor agrees that it will not make any assertion, contention, claim or
counterclaim to the contrary in any action, suit or other legal proceeding
involving Lender and Pledgor.
(k) Attorney-in-Fact. Pledgor hereby designates and empowers Lender
irrevocably as its attorney-in-fact, at Pledgor's cost and expense, to do in the
name of Pledgor, any and all actions which Lender may deem necessary or
advisable to perform any of the obligations of Pledgor hereunder upon the
failure, refusal or inability of Pledgor to do so and Pledgor hereby indemnifies
and agrees to hold Lender harmless from any costs, damages, expenses or
liabilities arising against or incurred by Lender in connection therewith.
(l) Loan Document. This Agreement shall be construed as a Loan Document
and shall be subject to all of the benefits, terms and conditions of the Loan
Agreement and the New Loan Agreement with respect thereto.
(m) Conflict of Terms. Except as otherwise provided in this Agreement
by specific reference to the applicable provision of the Loan Agreement or the
New Loan Agreement, if any provision contained in this Agreement is in conflict
with, or inconsistent with, any provision in the Loan Agreement or the New Loan
Agreement, the provision contained in the Loan Agreement or the New Loan
Agreement, as the case may be, shall govern and control.
(n) Waivers by Pledgor. Except as otherwise provided for in this
Agreement, Pledgor hereby waives (i) presentment, demand and protest and notice
of presentment, protest, default, non-payment, maturity, release, compromise,
settlement, extension or renewal of any or all commercial paper, accounts,
contract rights, documents, instruments, chattel paper and guaranties at any
time held by Lender on which Pledgor may in any way be liable and hereby
ratifies and confirms whatever Lender may do in this regard; (ii) any bond or
security which might be required by any court prior to allowing Lender to
exercise any of Lender's remedies; and (iii) the benefit of all valuation,
appraisement and exemption laws.
(o) All notices, demands, requests, consents, and approvals desired,
necessary, required or permitted to be given pursuant to the terms of this
Agreement shall be in writing and shall be deemed to have been properly given if
personally delivered or sent, postage prepaid, by first class registered or
certified United States mail, return receipt requested, addressed to each party
hereto at the following address:
13
<PAGE> 14
If to Lender: Birchwood Power Partners, L.P.
c/o SEI Birchwood, Inc.
10900 Birchwood Drive
King George, Virginia 22485
Attention: Thomas E. Dorsey
Telecopy No: (540) 775-2780
Confirmation No.: (540) 775-0400
and: Birchwood Power Partners, L.P.
c/o Cogentrix/Birchwood Two, L.P.
9405 Arrowpoint Boulevard
Charlotte, North Carolina 28273-81109
Attn: Elizabeth Rippetoe
Telecopy No.: (704) 529-5313
Confirmation No.: (704) 525-3800
If to Pledgor: Cogentrix/Birchwood Two, L.P.
9405 Arrowpoint Boulevard
Charlotte, North Carolina 28273
Attn: Elizabeth Rippetoe
Telecopy No.: (704) 529-5313
or at such other address in the United States as Lender or Pledgor may from time
to time designate by like notice. Any such notice, demand, request or other
communication shall be considered given or delivered, as the case may be, on the
date of personal delivery or on the date of deposit in the United States mail as
provided above. Rejection or other refusal to accept or inability to deliver
because of changed address of which no notice was given shall be deemed to be
receipt of the notice, demand, request or other communication.
(p) Section Titles. The section titles contained in this Agreement are
and shall be without substantive meaning or content of any kind whatsoever and
are not a part of the agreement between the parties hereto.
(q) Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed to be an original, but all of which
shall together constitute one and the same agreement. Any signature page to this
Agreement may be evidenced by a telecopy or other facsimile of any original
signature page, and any signature page of any counterpart hereof may be appended
to any other counterpart hereof to form a completely executed counterpart
hereof.
(r) GOVERNING LAW; WAIVER OF JURY TRIAL. THIS AGREEMENT AND THE RIGHTS
AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF VIRGINIA. EACH
PARTY HERETO HEREBY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY
14
<PAGE> 15
LITIGATION RELATING TO TRANSACTIONS UNDER THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
(s) Submission To Jurisdiction; Waivers. Pledgor hereby irrevocably and
unconditionally:
(i) submits for itself and its property in any legal action
or proceeding relating to this Agreement and the other Loan Documents, or for
recognition and enforcement of any judgment in respect thereof, to the
non-exclusive general jurisdiction of any federal or state court sitting in King
George County, Virginia;
(ii) consents that any such action or proceeding may be
brought in such courts and waives any objection that it may now or hereafter
have to the venue of any such action or proceeding in any such court or that
such action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same; and
(iii) agrees that nothing herein shall affect the right
to effect service of process in any manner permitted by law or shall limit the
right to sue in any other jurisdiction.
(t) Integration. This Agreement contains the entire agreement and
understanding between the parties hereto concerning the pledge of the Pledged
Securities and expressly supersedes all prior understandings or agreements,
including, without limitation, the Original Pledge Agreement with respect to the
Pledged It is the intention of the parties hereto that the Pledged Securities
will at all times that the Obligations remain outstanding remain subject to the
lien and security interest created by the Original Stock Assignment, as the same
may be amended, modified or supplemented from time to time.
15
<PAGE> 16
IN WITNESS WHEREOF, this Agreement has been duly executed under seal as
of the day and year specified above.
"PLEDGOR"
COGENTRIX/BIRCHWOOD TWO, L.P.
By: Cogentrix of Birchwood I, Inc.,
a general partner
By: /s/ Elizabeth L. Rippetoe
---------------------------------
Title: Vice President
---------------------------------
16
<PAGE> 17
"LENDER"
BIRCHWOOD POWER PARTNERS, L.P.
By: SEI Birchwood, Inc.,
a general partner
By: /s/ Sheri Marcelone Fuller
---------------------------
Title: Vice President
---------------------------
By: Cogentrix/Birchwood Two, L.P.
a general partner
By: Cogentrix of Birchwood I, Inc.,
a general partner
By: /s/ Elizabeth L. Rippetoe
---------------------------------
Title: Vice President
---------------------------------
17
<PAGE> 1
Confidential Treatment
EXHIBIT 10.5
AMENDED AND RESTATED
FACILITY OPERATIONS AND MAINTENANCE AGREEMENT
BETWEEN
SOUTHERN ELECTRIC INTERNATIONAL, INC.
AND
BIRCHWOOD POWER PARTNERS, L.P.
DATED AS OF MAY 18, 1994
CONTRACT NO. 6709-P-07
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . . . 1
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
TERM OF AGREEMENT . . . . . . . . . . . . . . 5
2.1 Initial Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.2 Extension of Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE III
REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . 5
3.1 Owner Representations and Warranties . . . . . . . . . . . . . . . . . . . 5
3.2 Operator Representations and Warranties . . . . . . . . . . . . . . . . . . 6
ARTICLE IV
COVENANTS OF OPERATOR . . . . . . . . . . . . . 7
4.1 Operator's Responsibilities Prior to Commercial
Operation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.2 Operator's Responsibilities After Commercial
Operation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.3 No Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.4 Curtailment of Facility Operations . . . . . . . . . . . . . . . . . . . . 11
ARTICLE V
RESPONSIBILITIES OF OWNER . . . . . . . . . . . . 11
5.1 Items to be Furnished by Owner . . . . . . . . . . . . . . . . . . . . . . 11
5.2 Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.3 Owner's Representative . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.4 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE VI
EXPENSES AND PAYMENTS . . . . . . . . . . . . . 12
6.1 Operator's Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.2 Annual Operating Plan and Budget . . . . . . . . . . . . . . . . . . . . . 12
6.3 Payment of Operator's Expense . . . . . . . . . . . . . . . . . . . . . . . 14
6.4 Operator's Annual Guarantees . . . . . . . . . . . . . . . . . . . . . . . 15
6.5 Payment and Interest on Payment Delays; Disputes
Concerning Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.6 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.7 Subordination of Base Operations Fee and Net
Bonus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE VII
LIMITATIONS ON OPERATOR'S LIABILITY . . . . . . . . . . 18
7.1 Correction of Non-Conforming Services . . . . . . . . . . . . . . . . . . . 18
7.2 Total Limitation of Operator's Liability . . . . . . . . . . . . . . . . . 18
7.3 Exclusion of Certain Damages . . . . . . . . . . . . . . . . . . . . . . . 18
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C> <C> <C>
7.4 Equipment............................................... 18
7.5 Disclaimer of Warranty.................................. 19
ARTICLE VIII
TERMINATION, DEFAULTS AND REMEDIES........... 19
8.1 Termination by Either Party............................. 19
8.2 Termination by Owner for Cause.......................... 19
8.3 Additional Right of Owner to Remove Operator............ 20
8.4 Termination by Operator for Cause....................... 20
8.5 Additional Right of Operator to Resign.................. 21
ARTICLE IX
INDEMNIFICATION..................... 22
9.1 Indemnification by Operator............................. 22
9.2 Indemnification by Owner................................ 22
9.3 Survival................................................ 22
9.4 Notice and Legal Defense................................ 22
9.5 Failure to Defend Action................................ 23
ARTICLE X
INSURANCE........................ 23
10.1 Obligation to Obtain.................................... 23
10.2 Coverage Which Must Be Purchased by the Operator........ 23
10.3 Coverage Which Must Be Purchased by the Owner........... 24
10.4 Form and Content........................................ 26
10.5 Certificates, Proof of Loss............................. 26
10.6 No Limitation on Liability.............................. 27
ARTICLE XI
THIRD PARTIES...................... 27
11.1 Engagement of Third Parties............................. 27
11.2 Assignment of Rights or Obligations..................... 27
ARTICLE XII
DISPUTES........................ 27
12.1 Good Faith Resolution................................... 27
12.2 Arbitration Notice...................................... 28
12.3 Selection of Arbitrators................................ 28
12.4 Procedure............................................... 28
12.5 Binding Nature.......................................... 28
12.6 Enforceability.......................................... 28
ARTICLE XIII
GENERAL PROVISIONS................... 29
13.1 Capital Improvements.................................... 29
13.2 Notices................................................. 29
13.3 Governing Law........................................... 29
13.4 Counterparts............................................ 29
13.5 Successors and Assigns.................................. 29
13.6 Waiver.................................................. 29
13.7 Not for the Benefit of Third Parties.................... 29
13.8 Attorneys' Fees......................................... 30
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C> <C>
13.9 Confidentiality........................................ 30
13.10 Force Majeure.......................................... 30
13.11 Publicity Releases..................................... 31
13.12 Severability........................................... 31
13.13 Owner's and Operator's Obligations Non-recourse........ 32
13.14 Interpretation......................................... 32
13.15 Relationship of the Parties............................ 32
</TABLE>
SCHEDULES
A - Project Agreements
B - Outline of Operating Plan and Budget
C - Operator's Services Prior to Commercial Operation
D - Operator's Services After Commercial Operation
E - Annual Guarantees
F - Reporting Requirements
G - Fee, Rebate & Bonus Schedule
iii
<PAGE> 5
AMENDED AND RESTATED
FACILITY OPERATIONS AND MAINTENANCE AGREEMENT
This AMENDED AND RESTATED FACILITY OPERATIONS AND MAINTENANCE AGREEMENT
("Agreement"), dated as of May 18, 1994, between Southern Electric
International, Inc., a Delaware corporation, with its principal business address
in Atlanta, Georgia ("Operator"), and Birchwood Power Partners, L.P., a Delaware
limited partnership with its principal business address in Atlanta, Georgia
("Owner").
WHEREAS, Owner and Operator have heretofore entered into a Facility
Operations and Maintenance Agreement, dated as of November 12, 1993, pursuant to
which Operator has agreed to operate and maintain the SEI Birchwood Power
Facility ("Facility"), located in King George County, Virginia, on behalf of the
Owner; and
WHEREAS, Owner and Operator now wish to amend and restate the terms of
the Facility Operations and Maintenance Agreement.
NOW, THEREFORE, in consideration of the premises and their mutual
covenants set forth in this Agreement, Owner and Operator agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. In addition to other terms defined elsewhere in this
Agreement, the following terms shall have the meanings set forth below:
"Affiliate" means any person or entity which, directly or indirectly
through one or more intermediaries, controls, is controlled by, or is under
common control with, a Party.
"Agreement" means this Agreement and the Schedules attached hereto, as
amended or supplemented in writing from time to time.
"Annual Guarantees" means the Operations performance guarantees set
forth in Section 6.4 and Schedule E.
"Anticipated Commercial Operations Date" means November 29, 1996, or
such earlier or later date as the Owner, upon giving reasonable advance notice,
shall designate as the date upon which Operator is to commence start-up and
mobilization services to the Facility.
"Applicable Permits" means all permits, licenses, consents and
permissions, including any renewals, extensions or amendments
1
<PAGE> 6
thereto, applicable to the ownership, operation or maintenance of the Facility.
"Base Operations Fee," "Bonus," and "Rebate" shall mean the payments
and rebates payable in accordance with Schedule G hereto.
"Capital Improvement" means the installation of new equipment or
upgrading of equipment or facilities not included in the Operating Plan and
Budget as part of Routine Maintenance and not performed as the result of Major
Maintenance or Force Majeure.
"Commercial Operations Date" shall have the meaning given in Section
1.5 of the Power Purchase Agreement.
"Contract Year" means the twelve (12) month calendar year beginning
January 1 and ending December 31, except that, for purposes of this Agreement,
the first Contract Year shall commence eighteen (18) months prior to the
Anticipated Commercial Operations Date, and end on the following December 31 and
the final Contract Year shall commence on January 1 and end on the twenty-fifth
(25th) anniversary of the Commercial Operations Date.
"Contractor" means the party with whom Owner has executed the Turnkey
Contract.
"Facility" means the facility designed and constructed by Contractor,
and accepted by Owner, in accordance with the Turnkey Contract.
"Financing Agreements" shall mean the loan agreement or agreements and
related documents pursuant to which Owner borrows funds for the construction and
permanent financing of the Facility, and any refinancing thereof.
"Force Majeure" means any circumstances beyond the reasonable control
of a Party experiencing delay in the performance of, or inability to perform,
its obligations hereunder by reason of the occurrence thereof, if such
circumstances are not the fault of such Party, including, but not limited to,
acts of God; unusually severe weather conditions; accident; fire; strikes or
other labor unrest; war; riots; requirements, actions or failures to act on the
part of Governmental Authorities preventing performance; inability despite due
diligence to obtain or renew Applicable Permits; change of law; or failure or
faulty design of major equipment which could not reasonably be detected through
standard quality assurance/quality control procedures; provided that, as to
Operator, Force Majeure shall not include any strike or other
2
<PAGE> 7
labor unrest involving Operator's or any Subcontractor's employees at the
Facility site.
"Governmental Authority" shall mean any local, state, regional or
federal administrative, legal, judicial, or executive agency, court, commission,
department or other entity, but excluding any agency, commission, department or
other such entity acting in its capacity as lender, guarantor or mortgages.
"Imprest Account" means the deposit account established by owner in
accordance with Section 6.3 hereof.
"Lender" means any entity or entities providing construction or
permanent debt financing for the Facility, or providing credit support or credit
enhancement for such construction or permanent debt financing.
"Major Maintenance" means the performance of periodic scheduled or
unscheduled maintenance of capital equipment included in the Facility required
by either of the following:
(a) Warranty service or maintenance procedures dictated by Prudent
Utility Practices or recommended by the Vendor or manufacturer
in maintenance manuals, as needed to restore or maintain the
"Demonstrated Dependable Capacity," as defined in Schedule E;
or
(b) An outage of systems or equipment has occurred or repair or
replacement of an item of capital equipment is required as a
result of Force Majeure or otherwise.
"Mobilization Date" shall mean the date, which is anticipated to occur
eighteen (18) months prior to the Anticipated Commercial Operations Date, on
which Operator shall commence implementation of the Start-Up and Mobilization
Plan in accordance with Section 4.1(f) hereof.
"Operating Plan and Budget" means the annual plan prepared by Operator
in accordance with Section 6.2(a), which shall indicate periods when the
Facility is expected to be generating electricity and periods when the Facility
is expected to be shut down for maintenance or modifications, the estimated
expenses for the Facility during each Contract Year, including an annual expense
budget, and Operator's forecast of Major Maintenance activities and the
associated costs thereof for the upcoming five Contract Year period, which plan
and budget shall contain the information required by Schedule B attached hereto.
"Power Purchase Agreement" means the Power Purchase and Operating
Agreement between SEI Birchwood, Inc. and Virginia Electric and Power Company,
effective July 13, 1990, as amended
3
<PAGE> 8
from time to time, which has been or will be assigned to the owner by SEI
Birchwood, Inc.
"Party" means the Operator or the Owner.
"Project Agreements" means the agreements listed in Schedule A, as
each such agreement may be amended or modified from time to time.
"Prudent Utility Practices" means the practices, methods, materials,
supplies and equipment, as changed from time to time, that are commonly used in
the electric power production industry to operate and maintain power plant
equipment or any practices, methods and acts which, in the exercise of
reasonable judgment, could have been expected to accomplish the desired result
at the lowest reasonable cost consistent with good business practices,
reliability, safety and expedition; provided that Prudent Utility Practices is
not intended to be limited to optimum practices, methods or acts to the
exclusion of all others, but rather to be a range of possible practices, methods
or acts taken or engaged in by entities that operate and maintain power plants
in the electric power production industry. Whether any particular practice,
method or act complies with Prudent Utility Practices is to be judged in light
of the facts known at the time that the particular practice, method or act was
taken or engaged in.
"Reimbursable Expenses" shall have the meaning given in Section 6.3(a)
hereof.
"Release Date" means the date on which Owner, or its designee, notifies
Operator that Contractor is nearing completion of the Facility and is ready to
commence training of Operator's personnel or otherwise requests the
participation of Operator's operations and maintenance personnel, such date to
occur at least one hundred eighty (180) days prior to the date on which
Operator's personnel are required to be made available to Owner.
"Routine Maintenance" means all of the operations and maintenance
activities required to be performed by Operator hereunder which are typically
performed on an annual basis or more frequently, but excluding any activities
that constitute Major Maintenance.
"Start-Up and Mobilization Plan" means the plan and budget agreed to by
the Parties for the period from the Mobilization Date to the Commercial
Operation Date, which shall include the staffing schedule and mobilization
budget set forth in Attachment 1 to Schedule C as it may be revised from time
to time.
"Subcontractor(s)" means those persons or companies who have a contract
with Operator for the performance of any part of the
4
<PAGE> 9
operations and maintenance services to be performed by Operator hereunder.
"Term" means the initial term of this Agreement as specified in Section
2.1, plus any extended term determined pursuant to Section 2.2.
"Turnkey Contract" means the Engineering, Procurement and Construction
Agreement between Owner and the Contractor.
"Vendor(s)" means those persons or companies who supply materials or
equipment to Operator or any Subcontractor for the Facility.
"Virginia Power" means Virginia Electric and Power Co.
ARTICLE II
TERM OF AGREEMENT
2.1 Initial Term. This Agreement shall be effective from the date set
forth above and, unless earlier terminated in accordance with the terms of
Article VIII, shall continue for a period of twenty-five (25) years from the
Commercial Operations Date, subject to extension in accordance with this Article
II.
2.2 Extension of Term. If the Power Purchase Agreement is extended in
accordance with Article 5 thereof, the Parties will endeavor to extend this
Agreement, with mutually satisfactory terms and conditions, for a period equal
to the Power Purchase Agreement extension period, provided that any such
extension and the terms and conditions thereof are agreed to by the Parties no
later than one (1) year prior to the expiration of the initial Term of this
Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Owner Representations and Warranties. Owner hereby represents and
warrants to Operator as follows:
(a) Organization and Existence. Owner is a limited partnership,
duly organized, validly existing and in good standing under the laws
of the State of Delaware and has sufficient partnership power and
authority to execute and deliver this Agreement and to perform its
obligations hereunder and to carry on its business as it is now being
conducted and as it is contemplated hereunder to be conducted in
the future.
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(b) Due Authorization. The execution, delivery and
performance of this Agreement by Owner has been duly and effectively
authorized by all requisite partnership action. This Agreement has been
duly and effectively executed and delivered by Owner and constitutes
the legal, valid and binding obligation of Owner, enforceable against
Owner in accordance with its terms, except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws
affecting the rights of creditors generally and by general principles
of equity.
(c) Litigation. There is no action, suit, claim, proceeding
or investigation pending or, to Owner's knowledge, threatened against
Owner by or before any Governmental Authority having jurisdiction over
owner or its properties which, if adversely determined, would have a
material adverse effect upon Owner's ability to enter into and perform
its obligations and consummate the transactions contemplated by this
Agreement. Owner is not subject to any outstanding judgment, order,
writ, injunction or decree of any Governmental Authority having
jurisdiction over owner or its properties which would materially and
adversely affect its ability to enter into and perform its obligations
under this Agreement.
(d) No Material Violation, No Material Impairment. There is
no provision of Owner's limited partnership agreement or certificate of
limited partnership, nor any existing statute, law, regulation, nor any
note, bond, resolution, indenture, agreement or instrument to which
Owner is a party and which is enforceable against Owner which would be
violated by or which would impair Owner's entry into this Agreement or
the performance by Owner of its obligations hereunder in accordance
with the terms hereof or the consummation of the transactions
contemplated hereby in accordance with the terms hereof.
(e) Approvals. All approvals and consents, including,
without limitation, all approvals and consents of Governmental
Authorities necessary for Owner to enter into this Agreement, to
perform its obligation hereunder and to consummate the transactions
contemplated hereby have been received and are in full force and
effect.
3.2 Operator Representations and Warranties. Operator hereby
represents and warrants to Owner as follows:
(a) Organization and Existence. Operator is a
corporation, duly organized, validly existing and in good standing
under the laws of the State of Delaware and has sufficient corporate
power and authority to execute and deliver this Agreement and to
perform its obligations
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hereunder and to carry on its business as it is now being
conducted and as it is contemplated hereunder to be conducted
in the future.
(b) Due Authorization. The execution, delivery and
performance of this Agreement by Operator has been duly and
effectively authorized by all requisite corporate action. This
Agreement has been duly and effectively executed and delivered
by Operator and constitutes the legal, valid and binding
obligation of Operator, enforceable against Operator in
accordance with its terms, except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other
laws affecting the rights or creditors generally and by general
principles of equity.
(c) Litigation. There is no action, suit, claim,
proceeding or investigation pending or, to Operator's
knowledge, threatened against Operator by or before any
Governmental Authority having jurisdiction over Operator or its
properties which, if adversely determined, would have a
material adverse effect upon Operator's ability to enter into
and perform its obligations under this Agreement. Operator is
not subject to any outstanding judgment, order, writ,
injunction or decree of any Governmental Authority having
jurisdiction over Operator or its properties which would
materially and adversely affect its ability to enter into and
perform its obligations under this Agreement.
(d) No Material Violation, No Material Impairment.
There is no provision of Operator's charter or bylaws, nor any
existing statute, law, regulation, nor any material note, bond,
resolution, indenture, agreement or instrument to which
Operator is a party and which is enforceable against Operator
which would be violated by or which would impair Operator's
entry into this Agreement or the performance by Operator of its
obligations hereunder in accordance with the terms hereof.
(e) Approval. All approvals and consents,
including, without limitation, all approvals and consents of
Governmental Authorities, necessary for Operator to enter into
this Agreement, and to perform its obligations hereunder have
been received and are in full force and effect.
ARTICLE IV
COVENANTS OF OPERATOR
4.1 Operator's Responsibilities Prior to Commercial
Operation. Prior to the Commercial Operations Date, Operator
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shall perform the services set forth in this Section 4.1 and the additional
services set forth in Schedule C.
(a) Review of Facility Design. Operator shall review and comment
on the Facility design regarding matters of operability and maintainability.
This review shall not constitute any acceptance of liability or the creation of
any warranty on the part of Operator with respect to the engineering, design or
construction of the Facility. Operator's design review will begin immediately
following execution of this Agreement and will continue until the final design
and construction for the Facility are completed. To conduct the review, Operator
shall have access to all plans, specifications, drawings of machinery and
equipment layout. Owner shall advise Operator of any design or specification
change within fifteen (15) days of the change.
(b) Appointment of Facility Manager. Operator shall designate a
Facility manager approximately eighteen (18) months prior to the Anticipated
Commercial Operations Date. The Facility manager shall supervise the performance
of Operator's duties and have authorization to act on behalf of Operator.
Operator may replace the Facility manager from time to time with the consent of
the Owner (which shall not be unreasonably withheld). Operator shall replace the
Facility manager for cause upon Owner's request specifying the reason for such
replacement.
(c) Personnel. Operator shall provide the services of operations
and maintenance personnel listed in Attachment 1 to Schedule C, in accordance
with the schedule set forth in Schedule C. Such personnel will participate in
training (if any) provided by the Contractor pursuant on the Turnkey Contract,
and, if requested by the Contractor, will support start-up activities and
testing of the Facility under the Contractor's control and supervision.
Operator shall have no liability or responsibility for acts or omissions of
operations and maintenance personnel acting under Contractor's control and
supervision.
(d) Operation of Equipment and Systems. After Owner and Contractor,
with Operator's concurrence, have determined that equipment and systems are
complete and safe to operate, Operator shall operate and maintain each system
within the Facility on behalf of the Owner.
(e) Operating Manual. No later than one hundred eighty (180) days
after receiving operating manuals prepared by Contractor, Operator will submit
for Owner's approval an operating manual containing procedures and schedules to
be followed in providing operations and maintenance services hereunder.
(f) Mobilization Period. Upon the Mobilization Date, Operator shall
implement the Start-Up and Mobilization Plan, with
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such changes or modifications as Owner shall have approved. During this period,
Operator shall interface and provide operating support to the Contractor,
including without limitation start-up support. Operator shall provide personnel
to participate in the initial training from the Contractor within one hundred
eighty (180) days of the Release Date in accordance with the staffing schedule
set forth on Attachment 1 to Schedule C hereto.
(g) Permits: Licenses, Etc. Operator shall assist owner in
obtaining all Applicable Permits, in each case on or before the dates on which
such Applicable Permits are required to be obtained, and thereafter shall use
its best efforts to maintain all such Applicable Permits in full force and
effect.
4.2 Operator's Responsibilities After Commercial Operation. On
and after the Commercial Operations Date, Operator shall provide the services in
this Section 4.2 and the additional services set forth in Schedule D.
(a) Operation and Maintenance Services. Operator shall
provide operation and maintenance services in connection with the Facility as
follows:
(i) Operator shall operate the Facility in accordance with
Prudent Utility Practices, manufacturers' specifications and
warranties (to the extent consistent with Prudent Utility
Practices), the current operating manual prepared by operator
and approved by Owner, and Applicable Permits, and shall use
its best efforts to comply with all applicable laws, rules and
regulations and the Project Agreements;
(ii) Operator shall provide the services of the operations
and maintenance personnel listed in Attachment 1 to Schedule B;
(iii) Operator shall perform Routine Maintenance;
(iv) Operator shall procure in accordance with the
Operating Plan and Budget and for the account of Owner
services, materials, equipment, chemicals and supplies
necessary or appropriate for the operation and maintenance of
the Facility. Operator shall obtain from all Vendors such
indemnities, warranties and guarantees as are commercially
available on reasonable terms;
(v) Operator shall assist Owner in Owner's efforts to
cause compliance with applicable federal, state and local laws,
rules and regulations and all Applicable Permits; and
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(vi) Operator shall administer all Project Agreements (to
the extent associated with the operations and maintenance of
the Facility), and contracts for Major Maintenance and Capital
Improvements.
(b) Generation. Operator shall attempt to maximize the
Facility's generation of electrical energy and shall provide maintenance in a
cost effective manner to prevent deterioration of the Facility, normal wear and
tear excepted. Such efforts shall necessarily be limited by the operating life,
capacity and maintenance life of the Facility, by Prudent Utility Practices, by
the reasonableness of the cost of an activity compared to the expected benefit
of such activity, by the requirements of this Agreement, the Project Agreements,
all applicable laws, rules and regulations and by Applicable Permits.
(c) Reports. Operator shall prepare and maintain the
records and reports specified in Schedule F. Owner shall have the right, during
normal business hours and with twenty-four (24) hours notice, to inspect
Operator's books and records relating to the Facility, and to cause an audit
thereof at its own expense. Copies of all records and reports shall be retained
by Operator for at least five (5) years after preparation.
(d) Meetings with Owner and Lender. Operator will meet
and consult with Owner and Lender or their respective representatives regarding
the operations and maintenance of the Facility, as reasonably requested by
Owner or Lender. Owner or Owner's representative shall have the right to be
present at any meeting with Operator that may be requested by Lender.
(e) Waste Handling. Operator, as Owner's agent, shall
arrange for the handling and proper preparation for disposal of all wastes
produced by the Facility, including all hazardous wastes produced by the
Facility, provided that Owner or Owner's representative shall be responsible for
selection of the site for disposal of all hazardous wastes produced by the
Facility and shall sign all required manifests and shipping forms as the
generator of such wastes.
(f) Sale of Used Equipment. Operator shall, as agent for
Owner, undertake to sell equipment that is no longer used or useful in the
operations of the Facility and for which a replacement has been obtained. The
terms of any such sale shall be subject to Owner's prior approval.
4.3 No Obligations. Operator shall not be responsible for any
obligations of Owner, including, without limitation, obligations to make any
payments pursuant to or otherwise comply with any Project Agreement or any other
agreement to which owner is or may be a party, nor shall Operator have any
obligations with respect to the decommissioning or costs of decommissioning
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of the Facility, including remediation of the Facility site and dismantling and
disposal of equipment.
4.4 Curtailment of Facility Operations.
(a) Operator, through its Facility manager or otherwise,
shall have the right to curtail or to shut down the Facility if such curtailment
or shut down is necessary in order to fulfill its obligations under this
Agreement, to protect the Facility from any potential material damage or in
order to comply with Prudent Utility Practices, Applicable Permits, or
applicable laws, provided however, that Operator shall not be relieved of its
obligations to Owner if the necessity for curtailing or shutting down the
Facility in order to comply with the foregoing is the result of Operator's
action or inaction.
(b) The Parties agree that if Virginia Power reasonably
determines and notifies operator that a condition exists which may have a
material adverse physical impact on the electric system or the equipment of
Virginia Power's customers and which, in Virginia Power's sole judgment,
requires a change in electricity deliveries by Operator, then Operator shall
immediately suspend or reduce electricity deliveries as requested by Virginia
Power upon oral notice or written notice, as appropriate, to the extent required
to eliminate such adverse impact, whether or not Owner has also received a copy
of such notice.
(c) The Parties agree that if Virginia Power requests
Owner to delay construction and/or commencement of commercial operations of the
Facility, Owner may, by giving written notice to Operator, delay or suspend
Operator's performance under this Agreement.
ARTICLE V
RESPONSIBILITIES OF OWNER
5.1 Items to be Furnished by Owner. Owner shall furnish to
Operator, at Owner's expense, the information, services, materials and other
items described below in this Section 5.1. All such items shall be made
available at such times and in such manner as may be required for the
expeditious and orderly performance of the services by Operator.
(a) Project Agreements. Owner shall deliver to Operator
full and complete copies of the Project Agreements and shall promptly provide
all amendments, modifications or revisions of any such agreements.
(b) Permits and Licenses. Owner shall, with Operator's
assistance, as provided in Section 4.1(g), obtain and
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maintain all Applicable Permits (including renewals or updates thereof) and
shall deliver to Operator copies of all Applicable Permits together with all
renewals or amendments thereof.
(c) Fuel, Utilities, Other Services, etc. Owner shall
provide, at its expense, all fuel necessary for the operation of the Facility,
all necessary utilities, including standby electric power and water, and provide
for disposal of fly ash, bottom ash and hazardous materials produced by or
purchased for the operations and maintenance of the Facility.
(d) Contractor's Operating Manual. Owner shall deliver or
cause Contractor to deliver to Operator operating manuals containing equipment
descriptions and equipment operations and maintenance instructions for all
equipment necessary to operate the Facility.
5.2 Access. Owner shall provide Operator and its agents, employees,
Subcontractors and Vendors full access to, and rights of access to and use of,
the Facility.
5.3 Owner's Representative. On or before the Release Date, Owner
shall appoint a representative who shall be authorized to act on behalf of
Owner, with whom Operator may consult, and whose instructions, requests and
decisions will be binding on Owner as to all matters pertaining to this
Agreement. All communications, requirements and instructions given to the
Owner's representative shall have the same effect as if given to Owner. In no
case will the decisions of Owner's representative be binding on Operator where,
in the opinion of Operator, any such decision could cause injury or damage to
personnel or equipment.
5.4 Taxes. Owner shall pay all real and personal property taxes and
any assessments levied against or in connection with the Facility or the
Facility site and all sales and use taxes on items to be provided by Owner
hereunder.
ARTICLE VI
EXPENSES AND PAYMENTS
6.1 Operator's Fee. Owner shall pay Operator, in consideration of
Operator's performance of its obligations under this Agreement, the fees and
bonuses set forth in Schedule G.
6.2 Annual Operating Plan and Budget.
(a) Preparation and Approval. Operator shall prepare and
submit for Owner's approval at least one hundred fifty (150) days in advance of
the beginning of each Contract Year a proposed Operating Plan and Budget for
such Contract Year containing the information required by Schedule B, except
that the initial
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operating Plan and Budget shall be submitted for Owner's approval no later than
one hundred fifty (150) days prior to the Anticipated Commercial Operations Date
and shall cover the period from the Anticipated Commercial Operations Date
through December 31, 1997. The annual operating budget shall be in the form of
Attachment 1 to Schedule B. No later than sixty (60) days after receipt of the
proposed Operating Plan and Budget, Owner shall notify Operator in writing of
Owner's acceptance or disapproval thereof, and, if Owner disapproves of the
proposed Operating Plan and Budget, or any part thereof, shall state the basis
for its objection and suggest appropriate changes. The Parties shall proceed in
good faith to resolve any objections to the proposed Operating Plan and Budget
made by the Owner before the beginning of the next Contract Year. If the Parties
are unable to resolve any such objections to the proposed Operating Plan and
Budget before the beginning of the next Contract Year, then the interim annual
operating budget ("Interim Budget") for such Contract Year shall be equal to the
annual operating budget approved as a part of the Operating Plan and Budget for
the preceding Contract Year, except that (i) the "Labor Expense," "Maintenance
Expense," and "Operating Expense" categories (as such categories appear on
Attachment 1 to Schedule B hereto) shall be escalated in accordance with the
United States Producer Price Index (not to exceed five percent in any year), and
(ii) any expenditures for Major Maintenance and any increases in costs
attributable to additions to plant personnel approved by Owner shall be
reimbursed in full. Such Interim Budget shall be the basis for determining the
bonus or rebates payable under Section 6.4 until such time as an Operating Plan
and Budget is agreed upon. Operator shall operate and maintain the Facility on
the basis set forth in the approved Operating Plan and Budget. If, during any
Contract Year, Operator believes that a significant variance will occur between
the total actual expenses of operating the Facility and the total expenses
budgeted in the approved annual operating budget, Operator shall promptly notify
Owner of such belief and advise Owner of the necessary revisions to the annual
operating budget and the reasons for these revisions; provided that the
foregoing is not intended to require such revision on a line item basis. The
Parties shall proceed in good faith to revise the Operating Plan and Budget in
such manner for the balance of such Contract Year.
(b) Amendments. In addition to the foregoing, Owner,
subject to obtaining the consent of the Lender if and to the extent required by
the Financing Agreements, shall approve changes or amendments to the approved
Operating Plan and Budget in any Contract Year as required to provide for
changes in Facility operations and reimbursement to Operator of all increased
operations and maintenance expenses and for appropriate adjustments to Schedules
in connection with any of the following:
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(i) The execution of new Project Agreements or
amendments, modifications or replacements of
Project Agreements;
(ii) Any failure of Owner to perform its material
obligations under this Agreement in a timely
manner;
(iii) The occurrence or continuation of any event
of Force Majeure or of an event described in
Section 4.4; or
(iv) Changes or additions to the services to be
rendered by Operator pursuant to this
Agreement or any amendment hereof.
6.3 Payment of Operator's Expenses. Owner shall pay, or reimburse
Operator for, all Reimbursable Expenses incurred by or on behalf of Operator in
connection with the performance of services under this Agreement.
(a) Reimbursable Expenses. Reimbursable Expenses shall
include all expenses incurred or paid by Operator in connection with the
performance of its obligations under this Agreement, including, without
limitation, in connection with providing the services specified in Article IV
and Schedules C and D, that have been included in the Start-Up and Mobilization
Plan or Operating Plan and Budget (or Interim Budget), as the case may be, as
either such plan may be amended in accordance with this Agreement; all costs of
clarifier sludge disposal, pyrites disposal costs, and other waste disposal
costs including hazardous wastes; all un-budgeted or unplanned spare or
replacement parts costs including but not limited to major turbine parts such as
nozzles, blades, casings, auxiliary parts, control and stop valve parts; motors;
pumps, rotating elements or volutes, and fans or fan wheels; hydraulic couplings
or torque converters, transformers; air heater baskets; SCR catalyst; control
components, including, without limitation, computer cards, transmitters, valve
actuators, and valve motor operators; valves; safety relief valves; pulverizer
parts; filter bags for the baghouse; HVAC units; demineralizer resins; air
compressors; boiler parts, including, without limitation, headers and tube banks
or pendants; and all legal or other expenses incurred by Operator on the Owner's
behalf and at the Owner's request that relate to the Facility, to the
enforcement of Project Agreements and other rights of the Owner and/or Operator,
to complying with all applicable laws, or to obtaining, renewing or complying
with Applicable Permits. The term Reimbursable Expenses does not include
Operator's home office, general and administrative, and technical support
expenses in excess of budgeted amounts; travel expenses of Operator's employees
which are not for the benefit of the Facility; or legal expenses of the Operator
that do not
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relate to the Facility or to actions of the Operator that are contemplated
under the Agreement.
(b) Payments From Imprest Account. Owner shall establish
and maintain an escrowed bank account in a bank approved in advance by operator
(the "Imprest Account") from which Operator shall have the unrestricted
authority to draw funds for payment of Reimbursable Expenses. Owner shall
deposit funds into the Imprest Account on the first business day of each month
during the Term hereof based on the amounts set forth in the Start-Up and
Mobilization Plan or Operating Plan and Budget (or Interim Budget) then in
effect. If funds remain in the Imprest Account at the end of any month, the
amount thereof shall be credited against the amount to be deposited therein on
the first business day of the following month. Once Owner has deposited funds
into the Imprest Account, Owner may not withdraw the funds without Operator's
prior written consent. Within fifteen (15) business days following the end of
each calendar month during the Term of this Agreement, Operator shall submit to
owner invoices and other documentation to support the amount of any draws from
the Imprest Account made during the immediately preceding calendar month for
payment of Reimbursable Expenses.
(c) Payment of Other Reimbursable Expenses. If
insufficient funds are available in the Imprest Account to cover any
Reimbursable Expenses, or if operator incurs and pays Reimbursable Expenses that
are not budgeted, then Owner shall pay the amount thereof directly to Operator
in cash or certified funds within thirty (30) days of receipt of Operator's
invoice for such payment, together with supporting documentation.
6.4 Operator's Annual Guarantees.
(a) Annual Guarantees. Operator guarantees that the
Facility will meet the Annual Guarantees set forth on Schedule E.
(b) Adjustments to Annual Guarantees. Upon "Substantial
Completion" (as that term is defined in the Turnkey Contract), Operator may
propose an adjustment to any or to all of the Annual Guarantees based upon (i)
the results of the "Performance Test" (as defined in the Turnkey Contract), or
(ii) workmanship defects attributable to the Contractor which materially and
adversely affect Operator's ability to operate the Facility at agreed upon
performance levels. In the latter case, Operator shall have the burden of
demonstrating that the Facility is not capable of meeting any or all of the
Annual Guarantees set forth in Schedule E. In addition, appropriate equitable
adjustments shall be made to any or all of the Annual Guarantees in any Contract
Year in which there occurs any of the following:
(A) Disapproval by Owner of the Operator's proposed
annual Operating Plan and Budget, including,
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without limitation, the Major Maintenance plans and
inventory levels;
(B) Any event of Force Majeure, including, without
limitation, any material change in Applicable Permits,
or any event described in Section 4.4 hereof;
(C) Any other material act or omission of the Owner (other
than as a result of any of the foregoing) in the
performance of its obligations under this Agreement;
or
(D) Any delay in the repair or replacement of a major
component of the Facility or delay or acceleration of
a scheduled or unscheduled outage of the Facility
which has been directed or approved by the Owner, if,
as a result thereof, Operator's ability to meet any of
the Annual Guarantees is adversely affected.
The Parties shall proceed in good faith to make appropriate equitable
adjustments in the Annual Guarantees. If the Parties are unable to resolve any
dispute within sixty (60) days of the date on which Operator notifies Owner of
any requested adjustment to the Annual Guarantees, such dispute shall be
resolved in accordance with the procedures in Article XII.
(c) Rebates. Subject to the limitation of Section 7.2, if
the Operator fails to meet the Annual Guarantees in any Contract Year (other
than as a result of events or circumstances requiring adjustments to such Annual
Guarantees under subsection (b), above), Operator shall pay to Owner, as a
rebate and not as a penalty, a payment calculated in accordance with the
formulas set forth in Schedule G. Owner and Operator acknowledge and agree that
the amounts so calculated are reasonable, considering the actual reduction in
the value of the Facility that Owner will sustain in the event of Operator's
failure to meet any of the Annual Guarantees. The payment of such rebates shall
be Operator's sole liability or responsibility for failure to achieve the Annual
Guarantees in any Contract Year.
6.5 Payment and Interest on Payment Delays; Disputes Concerning
Payments. Except as otherwise provided herein, Owner shall pay all amounts owing
to Operator under this Agreement within thirty (30) days after the date of
Owner's receipt of an invoice therefor. Any such amounts which are not paid
within such thirty (30) day period shall accrue interest at the prime commercial
lending rate announced from time to time by The Chase Manhattan Bank, N.A., at
its principal office, presently located at 1 Chase Manhattan Plaza, New York,
New York 10081 on the date on which payment was due, plus two (2) percentage
points.
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Interest at the rate defined above shall be computed monthly and prorated daily
from the time such obligation arises. Should Owner dispute any portion of the
amount invoiced, the undisputed portion of such amount shall be paid within the
time stated above, and, at the same time, Owner shall advise Operator in writing
of the disputed portion. Any disputes over payments shall be resolved in
accordance with the procedures set forth in Article XII. The Parties shall
continue to perform under this Agreement during the period in which any such
disputes are being resolved.
6.6 Taxes. The amounts payable to Operator hereunder are exclusive
of any sales, use, service, excise, property, or other federal, state or local
tax levied on the price, delivery or performance of the Operator's obligations
under this Agreement. Owner shall reimburse Operator for all such taxes required
to be paid by Operator (other than income taxes payable on operator's net
income).
6.7 Subordination of Base Operations Fee and Net Bonus. If, on any
date following the Commercial Operations Date on which a payment of the Base
Operations Fee or of the net amount of any Bonus (as defined in Schedule G
hereto) is required hereunder to be made, Owner does not have available to it
under the terms of the Financing Agreements funds in an amount sufficient to
make such payment due to Owner's obligation to pay all other operating costs of
the Facility, Major Maintenance expenses, interest, principal and fees and other
amounts then due to the lenders under the Financing Agreements, and to make
deposits into the repair and maintenance account required by the Financing
Agreements, then Owner may defer payment to Operator of the Base Operations Fee
or net amount of any Bonus (together with interest on any such deferred
payments) in the amount by which any such payment exceeds the funds then so
available to the Owner, and Owner's failure to pay such Base Operations Fee or
net amount of any Bonus as a result of such deferral shall not be deemed a
default hereunder. Any such deferred portion of the Monthly Base Operations Fee
or net Bonus (collectively, a "Deferred Payment") shall become an obligation of
Owner to Operator that is subordinated to payment of Owner's senior secured
indebtedness in accordance with the subordination terms included in and made a
part of the applicable Financing Agreements. Each Deferred Payment shall accrue
interest until paid at the prime commercial lending rate specified in Section
6.5 hereof, plus three (3) percentage points per annum, with such interest being
payable as and when permitted under the security deposit agreement which is part
of the Financing Agreements. If, during any period in which there shall remain
outstanding and unpaid any Deferred Payment, Operator shall become obligated to
pay any Rebate (as defined in Schedule G), the amount of such Deferred Payment,
and interest accrued thereon, shall be credited against the amount of such
Rebate. The terms of this Section 6.7 shall not apply to any
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other amounts that may be or become due and payable to Operator under the terms
of this Agreement, including without limitation any reimbursement of
Reimbursable Expenses or indemnification payments.
ARTICLE VII
LIMITATIONS ON OPERATOR'S LIABILITY
7.1 Correction of Non-Conforming Services. Except as otherwise
provided in Section 6.4, Operator's sole liability for non-conforming services
shall be limited to the correction of such non-conforming services in accordance
with this Agreement, provided any claim by Owner asserting such non-conforming
services is made within twelve (12) months following performance of the service
with respect to which such claim is made.
7.2 Total Limitation of Operator's Liability. It is the intention
and agreement of the Parties hereto that Operator's total liability to Owner for
payment of damages, rebates, indemnities, or any other payments arising under
this Agreement or as a result of Operator's performance hereunder, whether by
reason of acts and omissions of Operator (or alleged against Operator),
including, without limitation, liability for breach of covenant or warranty
hereunder, or liability based on contract (including any obligation hereunder to
indemnify), tort (including negligence and gross negligence), strict liability,
or any other cause or form of action whatsoever, shall be limited in any
Contract Year to an amount equal to the Base Operations Fee for such Contract
Year. In the event that any particular application of any of the limitations of
liability contained in this Section 7.2 should be finally adjudicated to be void
as a violation of public policy, then such limitation of liability shall not
apply with respect to such application to the extent (but only to the extent)
required in order for such limitation of liability not to be void as a violation
of such public policy, and such limitations of liability shall remain in full
force and effect with respect to all other applications to the fullest extent
permitted by law.
7.3 Exclusion of Certain Damages. Neither Owner nor Operator shall
be liable to the other, whether arising out of contract, tort (including
negligence), strict liability or any other cause or form of action whatsoever,
for any special, incidental, or consequential loss or damage of any nature,
including, without limitation, loss of anticipated profits, loss by reason of
Facility shutdown, non-operation or increased expense of operation, loss of
revenue or loss of use of capital or revenue.
7.4 Equipment. Owner acknowledges that Operator is not a
manufacturer or vendor of equipment and agrees that Operator
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shall not be liable to Owner for any damage, liability, judgment, settlement,
penalty, cost, fine or expense, including without limitation attorneys' fees,
court costs and other expenses of litigation, incurred by or imposed against
Owner by reason of or in connection with any act or omission of any Vendor
whether in contract, warranty, tort (including negligence), strict liability or
any other cause or form of action whatsoever.
7.5 Disclaimer of Warranty. EXCEPT AS PROVIDED IN SECTION 6.4,
OPERATOR, FOR ITSELF, ALL OF ITS AFFILIATES AND THE SUCCESSORS AND ASSIGNS OF
EACH OF THEN, MAKES NO WARRANTIES OR GUARANTEES, EXPRESSED OR IMPLIED, WRITTEN
OR ORAL, RELATING TO ITS SERVICES, AND OPERATOR DISCLAIMS ALL IMPLIED WARRANTIES
OR WARRANTIES IMPOSED BY LAW (INCLUDING WARRANTIES OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE AND ALL WARRANTIES OF COURSE OF DEALING OR USAGE OF
TRADE) WHETHER CONCERNING ANY SERVICES OF, OR ANY EQUIPMENT, MATERIALS, SUPPLIES
OR OTHER GOODS INSTALLED, USED, OPERATED, REPAIRED AND/OR APPROVED BY OPERATOR.
ARTICLE VIII
TERMINATION, DEFAULTS AND REMEDIES
8.1 Termination by Either Party. This Agreement may be terminated
by either Party upon thirty (30) days' written notice in the event of (i) the
total destruction or other complete loss of the Facility, or condemnation of
such a substantial portion of the Facility or Facility site that the remainder
is not sufficient to permit the operation of the Facility on a commercially
feasible basis, provided that Operator may not terminate this Agreement on
account of any such destruction or loss if Owner notifies Operator of its
intention to rebuild or restore the Facility from the proceeds of insurance or
otherwise within twelve (12) months following the occurrence of any such
destruction or loss; or (ii) the existence of an event of Force Majeure
substantially preventing performance hereunder by either Party occurs and
continues for more than eighteen (18) months. In the event of termination under
this Section 8.1, Operator shall be compensated under Article VI for all
services provided hereunder prior to termination and for all costs and expenses
of demobilization.
8.2 Termination by Owner for Cause. Owner may terminate this
Agreement upon written notice to Operator in the event Operator is adjudged a
bankrupt or insolvent, or makes a general assignment for the benefit of its
creditors, or if a trustee or receiver is appointed for Operator or for any of
its property, or if it files a petition seeking protection under any debtor's
act or to reorganize under bankruptcy or similar laws. In addition, Owner may
terminate this Agreement upon thirty (30) days written notice to Operator in the
event of a material breach by Operator
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(other than a failure to achieve the Annual Guarantees, which shall be governed
by Sections 6.4 and 8.3) of any material provision of this Agreement, if
Operator does not cure such breach within thirty (30) days of the receipt of
written notice thereof from Owner; provided, however, that Operator shall have
such additional period of time as is reasonably necessary to correct or cure
such breach, not to exceed ninety (90) additional days without the consent of
the Owner, if Operator commences and diligently pursues a cure within such
thirty (30) day period, the breach or the conditions giving rise to it are not
reasonably susceptible to correction or cure within such thirty (30) day period,
and the Owner is not, as a result of the continuation thereof, in breach of any
material provision of any Project Agreement to which it is a party which cannot
be cured within the additional time period provided to Operator to cure such
breach under this Agreement. In the event of a termination under this Section
8.2, Operator shall be compensated under Article VI for all services provided by
Operator prior to termination.
8.3 Additional Right of Owner to Remove Operator. If Operator shall
fail to perform hereunder in accordance with Prudent Utility Practices and, as a
result thereof, shall fail to meet the Annual Guarantees, as such Annual
Guarantees may be adjusted from time to time in accordance with Section 6.4(b)
hereof, for two (2) consecutive years or for five (5) years in the aggregate,
and, as a direct result thereof, the Owner incurs or suffers a loss or reduction
in revenues that is greater than 125% of the aggregate amount of rebates paid by
Operator in respect of its failure to meet such Annual Guarantees in those
years, Owner may remove Operator by providing written notice of removal to
Operator at least one hundred twenty (120) days prior to the effective date of
such removal (which notice shall be irrevocable) as specified in such notice,
and, on the date of such removal, Southern Electric International, Inc. shall
cease to be the Operator hereunder; provided, however, that any purported
removal of Operator by Owner pursuant to this Section 8.3 shall not be effective
unless it has been consented to by the Lenders. Upon the removal of Operator
hereunder, Operator shall have no further rights, obligations, responsibilities
or liabilities under this Agreement other than those which by the express terms
of this Agreement are to survive the termination of this Agreement. In the event
Operator is removed under this Section 8.3, Operator shall be entitled to
receive compensation under Article VI for all services provided hereunder prior
to the effectiveness of such removal, and, in addition, Operator shall be
entitled to receive reimbursement for all costs and expenses of demobilization.
8.4 Termination by Operator for Cause. Operator may terminate this
Agreement in the event of a material breach by Owner of any provision of this
Agreement, if Owner does not cure such breach within thirty (30) days of the
receipt of written
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notice thereof from Operator; provided, however, that except in the case of a
payment default, so long as Owner is diligently pursuing a cure of such breach,
Owner shall have such additional period of time, not to exceed ninety (90) days
without the consent of the Operator, as is reasonably necessary to correct or
cure such breach if Owner commences a cure within such thirty (30) day period
and the breach or the conditions giving rise to it are not reasonably
susceptible to correction or cure within such thirty (30) day period. In the
event of termination under this Section 8.4, Operator shall be entitled, in
addition to any other rights or remedies available to Operator at law or in
equity, to receive compensation under Article VI for all services provided
hereunder prior to termination and reimbursement of all Reimbursable Costs and
of all other costs and expenses of demobilization.
8.5 Additional Right of Operator to Resign. Operator may resign
during the Term hereof by giving Owner at least thirty (30) days' prior written
notice upon the occurrence of either of the following:
(a) Owner shall refuse to accept or shall disapprove Operator's
proposed Operating Plan and Budget, following good faith efforts on the part of
the Parties to resolve Owner's objections thereto in accordance with the
procedures specified in Section 6.2(a) hereof, for any two (2) consecutive
Contract Years or for any five (5) Contract Years in total; or
(b) Affiliates of The Southern Company, a Delaware corporation,
shall cease to own at least (i) a 50% general partnership interest in the Owner
and (ii) a 35% economic interest in the Owner and the Facility, other than as a
result of a transfer of interests by such Affiliates in violation of the
Financing Agreements.
Operator's resignation under this Section 8.5 shall not be effective until
Operator has been replaced by an operator acceptable to Owner of good reputation
in the operation and maintenance of power production facilities similar to the
Facility. Upon receipt of notice from Operator of its intention to resign
hereunder, Owner shall promptly and diligently use its best efforts to locate
and retain a replacement operator meeting the above standard as expeditiously as
is practicable. Notwithstanding the foregoing, if Owner fails to replace
Operator with an operator acceptable to Owner within one hundred eighty (180)
days after the date of such notice, Operator's resignation shall then be
effective. Upon the effectiveness of Operator's resignation hereunder, Operator
shall have no further rights, obligations, responsibilities or liabilities under
this Agreement other than those which by the express terms of this Agreement are
to survive the termination of this Agreement. In the event Operator resigns
under this Section 8.5 Operator shall be
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entitled to receive compensation under Article VI for all services provided
hereunder prior to the effectiveness of such resignation, and, in addition, if
such resignation is for cause, in addition to any other rights or remedies
available to Operator at law or in equity, Operator shall be entitled to receive
reimbursement for all costs and expenses of demobilization.
ARTICLE IX
INDEMNIFICATION
9.1 Indemnification by Operator. Subject to the limitation of Section
7.2, Operator shall indemnify, save harmless and defend Owner and Owner's
directors, officers, agents, employees, successors and assigns of each of them
(the "Owner's Indemnified Parties"), from and against any and all losses,
costs, damages, injuries, liabilities, claims, demands, fines, penalties,
interest and causes of action, including without limitation reasonable
attorneys' fees (collectively, a "Loss"), directly or indirectly arising out of,
resulting from or related to this Agreement, including without limitation any
damage to or destruction of property of, or death of or bodily injury to,
persons arising out of or in connection with any acts or omissions of operator
or its agents or employees that involve gross negligence or wilful misconduct.
9.2 Indemnification by Owner. Owner shall indemnify, save harmless and
defend Operator and Operator's Affiliates, and their respective directors,
officers, agents, employees, successors and assigns ("Operator's Indemnified
Parties") from and against any Loss directly or indirectly arising out of or
relating to the acts or omissions of Owner or any person employed or engaged by
Owner, or to the services to be performed by Operator hereunder, but only to the
extent any such Loss was not caused by Operator's or any of Operator's
Indemnified Parties' negligence or wilful misconduct. Owner shall also
indemnify, save harmless and defend Operator's Indemnified Parties from and
against all fines and clean-up costs levied against Operator or the Facility as
a result of Operator's performance of waste handling services under Section
4.2(e) hereof, except to the extent that any such fines and clean-up costs are
the result of Operator's gross negligence or wilful misconduct.
9.3 Survival. The duty of either Party to indemnify under this Article
IX will continue in full force and effect, notwithstanding the expiration or
termination of this Agreement, with respect to any claim or action based on acts
or conditions which occurred prior to such termination.
9.4 Notice and Legal Defense. Promptly after receipt by a person
entitled to indemnification under Section 9.1 or 9.2 of any claim or notice of
the commencement of any action
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administrative or legal proceeding, or investigation as to which the indemnity
provided may apply, such person shall notify the indemnifying Party in writing
of such fact. The indemnifying Party shall assume on behalf of the indemnified
person and conduct with due diligence and in good faith the defense thereof with
counsel reasonably satisfactory to the indemnified person; provided that if the
defendants in any such action include the indemnifying Party and the indemnified
person shall have reasonably concluded that there may be legal defenses
available to it which are different from or additional to, or inconsistent with,
those available to indemnifying Party, the indemnified person shall have the
right to select separate counsel to participate in the defense of such action on
its own behalf at the indemnifying Party's expense.
9.5 Failure to Defend Action. If any claim, action, proceeding or
investigation arises as to which the indemnity provided for in Section 9.1 or
9.2 hereof may apply, and the indemnifying Party fails to assume the defense of
such claim, action, proceeding or investigation, then the indemnified person may
at the indemnifying Party's expense contest (or, with the prior written consent
of the indemnifying Party, settle) such claim.
ARTICLE X
INSURANCE
10.1 Obligation to Obtain. The Parties each agree to obtain and
maintain insurance of the types, in the amounts, and otherwise in accordance
with the provisions of this Article X. The Parties agree to coordinate their
insurance acquisition efforts with respect to the Facility, the services to be
provided and the requirements of any Lender under any Financing Agreements to
avoid duplication of coverage, minimize premiums and ensure that the amounts
payable under the policies required hereunder are not reduced by the existence
of additional policies not required hereunder. The Parties further agree to
provide all information required by any of the Parties in carrying out the
requirements of this Article X, including copies of all Project Agreements and
documents which relate to the purchase and maintenance of insurance coverage on
the Facility and/or the Owner and/or to the Operator. All insurance policies
shall also contain any other provisions necessary to comply with the
requirements of the Power Purchase Agreement and with any other written
requirements of the Owner.
10.2 Coverage Which Must be Purchased by the Operator. Subject to the
foregoing, Operator shall obtain prior to the Mobilization Date the following
insurance, and shall name the Owner as named insured under the policies
specified in paragraphs (b), (c) and (d) of this Section 10.2. All premiums and
other
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expenses associated with such insurance shall be Reimbursable Expenses. In
addition, Owner shall reimburse Operator for all payments made by Operator under
such policies within the deductible limits thereof, except to be extent that any
such payment is required as a result of Operator's gross negligence or wilful
misconduct.
(a) Workers' Compensation Insurance. Workers' compensation
insurance, in accordance with Virginia law, on all persons employed by
Operator in conjunction with its performance of the duties under this
Agreement with statutorily required limits, including "All States"
Endorsement; and Employer's Liability insurance with limits of not less
than $1,000,000.00 each person and $1,000,000.00 each person and
aggregate for injury by disease.
(b) Automobile Liability Insurance. Automobile liability
insurance, including but not limited to, coverage for owned, non-owned
and hired automobiles with limits of not less than $5,000,000.00 per
occurrence and containing no-fault insurance provisions as required
under Virginia law, covering automobiles used by the Operator or its
agents in connection with Facility operations.
(c) Comprehensive General Liability Insurance. Comprehensive
general liability insurance policy covering personal injury and
property damage to third parties and covering liability for damage to
property of third parties in the care, custody and control of Owner,
Operator and/or their respective employees and subcontractors in
connection with operations at the Facility. The coverage referred to
herein shall be provided either in a single policy or through a
combination of policies. Such policy or policies may have personal
injury deductible and property damage deductibles of not more than
$500,000.00 per event or occurrence and shall have a limit of not less
than $1,000,000.00 per occurrence, or such greater deductibles as may
be agreed to by the Owner. Comprehensive general liability insurance
policies shall contain a Broad Form Property Damage Endorsement and
shall also insure contractual liability for all written, oral and
implied contracts, including this Agreement.
(d) Umbrella Liability Insurance. Umbrella liability insurance
increasing the limits and coverages of that insurance required in
paragraphs (b) and (c) hereof with a limit of not less than
$10,000,000.00 per event or occurrence.
10.3 Coverage Which Must be Purchased by the Owner. Subject to the
foregoing Sections 10.1 and 10.2, Owner shall obtain and maintain at its
expense, as of the dates set forth below, the
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following insurance, and shall name the Operator as an additional insured under
the policies specified in paragraphs (b) and (c), below. Owner shall bear
responsibility for all deductibles under Section 10.3, except as provided in
paragraph (c), below
(a) Workers' Compensation Insurance. Workers' Compensation
insurance, in accordance with Virginia law, on all persons employed by
Owner in conjunction with its performance of its duties under this
Agreement with statutorily required limits, including "All States"
endorsement, and Employers' Liability insurance with limits of not less
than $1,000,000.00 each person for injury by accident, and
$1,000,000.00 each person and aggregate for injury by disease.
(b) Automobile Liability Insurance. Automobile Liability
Insurance, including but not limited to, coverage for owned, non-owned
and hired automobiles with limits of not less than $1,000,000 per
occurrence and containing no-fault insurance provisions as required
under Virginia law, covering automobiles used by the Owner or its
agents in connection with Facility operations.
(c) All Risk Physical Damage/Business Interruption Insurance.
"All-Risk" physical damage insurance, including coverage for the perils
of earthquake and flood with limits equal to the full replacement cost
of all real and personal property of the Facility (or such other amount
as may be required by Lenders under the terms of any Financing
Agreement). Earthquake, windstorm, and flood perils may be insured for
sub-limits lower than the limit required for other "All-Risk" perils,
if full replacement cost limits for these perils are not available or
cannot be purchased on a commercially reasonable basis, but in no case
shall flood, windstorm, and earthquake perils be insured for limits of
less than $5,000,000.00 per event or occurrence. Deductibles for
"All-Risk" perils shall not be in excess of $500,000.00 per event or
occurrence. Deductibles for earthquake and flood perils shall not be in
excess of five (5) percent of the total insured values of the Facility
per event or occurrence. Subject to the limitation in Section 7.2,
Operator shall bear responsibility for the deductible limits of any
physical damage losses arising solely from Operator's gross negligence
or wilful misconduct. For all other losses, Owner shall bear
responsibility for such deductible amounts. Such limitations shall only
be exceeded with the prior written consent of the other Party to this
Agreement. In conjunction with such physical damage insurance, Owner
shall also purchase business interruption insurance covering Owner's
net income and continuing fixed operating expenses in the case of a
loss with an indemnity period of no less than twelve (12) months and a
deductible
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no greater than sixty (60) days. All insurance amounts, deductibles,
terms and conditions are subject to their availability at commercially
reasonable terms.
10.4 Form and Content. All insurance policies with respect to coverage
maintained by either Operator or Owner pursuant to this Article X shall:
(a) Be placed with insurance companies rate "A+" or better
(and a minimum size rating of IX by Best's Insurance Guide and Key
Ratings (or an equivalent rating by another nationally recognized
insurance rating agency of similar standing if Best's Insurance Guide
and Key Ratings shall no longer be published) or other insurance
companies of recognized responsibility satisfactory to the Owner's
Lenders.
(b) State that it is primary, or excess only with respect to
the specified primary policy provided by the same Party for such
coverage, and not excess or contributing with respect to any other
insurance (or self-insurance available to Owner, Operator or other
named insured and that all provisions thereof, except the limits of
liability, shall operate in the same manner as if there were a separate
policy covering each named insured under each such policy.
(c) Provide that there will be no recourse against the named
insured (other than the Party obtaining such policy) for the payment of
premiums, additional premiums or assessments, it being understood that
these are obligations of the Party providing such insurance pursuant to
this Agreement.
(d) With respect to the insurance described in this Article X,
where appropriate, waive any right of subrogation of the insurers
thereunder against Owner, Operator, or the Lenders under any Financing
Agreements and the officers, directors and employees of each of them,
and any right of the insurers to any set-off or counterclaim or any
other deduction, whether by attachment or otherwise, in respect of any
liability of any such person insured under such policy.
(e) Provide that it may not be canceled, non-renewed or
materially changed without giving Owner, Operator, other named or
additional insureds, and the Lenders under any of Owner's Financing
Agreements sixty (60) days prior written notification thereof.
10.5 Certificates, Proof of Loss. On or before the required date for
the insurance to be provided hereunder, each Party shall furnish certificates of
insurance to the other Party evidencing the insurance required of such Party
pursuant to this
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Agreement. The Party maintaining each insurance hereunder shall make all proofs
of loss under each such policy and shall take all other action reasonably
required to ensure collection from insurers for any loss under each such policy.
10.6 No Limitation on Liability. The provision of any insurance
hereunder shall not be construed to limit or expand the liability of either
Party hereto under this Agreement.
ARTICLE XI
THIRD PARTIES
11.1 Engagement of Third Parties. Except as otherwise provided herein,
Operator may engage such persons, corporations or other entities, including
Affiliates of Operator, as it deems advisable for the purpose of performing or
carrying out any of the obligations of Operator under this Agreement, provided
that Operator shall remain responsible for all obligations under this Agreement,
and further provided that Operator shall not subcontract all or substantially
all of its obligations under this Agreement without the prior written consent of
Owner and Lender, which consent shall not be unreasonably withheld or delayed.
11.2 Assignment of Rights or Obligations. Neither Party shall assign
all or any of the rights or obligations under this Agreement without the prior
written consent of the other Party, and any assignment in violation of this
Section 11.2 shall be null and void. Notwithstanding the foregoing, Southern
Electric International, Inc. shall have the right to assign its interest under
this Agreement to an Affiliate and to subcontract certain of its obligations to
third parties (whether Affiliates or otherwise), provided that no such
assignment or subcontract shall relieve Southern Electric International, Inc. of
its obligations hereunder.
ARTICLE XII
DISPUTES
12.1 Good Faith Resolution. The Parties agree to make a diligent, good
faith attempt to resolve all disputes. If the representatives of the Parties are
unable to resolve a dispute within fifteen (15) days after notice from one Party
to the other, such dispute shall be submitted promptly to the chief executive
officers of the Parties, who shall meet, in person or by telephone, not later
than fourteen (14) days after the date such dispute was submitted to them. In
the event that the officers cannot resolve the dispute within sixty (60) days
after the matter is submitted to them, then, unless otherwise agreed, such
dispute shall be submitted to arbitration.
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12.2 Arbitration Notice. If a Party elects to submit a dispute to
arbitration, such Party shall serve an arbitration notice on the other Party.
The arbitration notice shall contain a detailed description of the dispute,
including the amount involved, the position of the Party serving the notice, the
remedy sought and the name of one (1) independent arbitrator. Within twenty (20)
days after receipt of an arbitration notice, the receiving Party shall send a
notice to the other Party containing a detailed response to the claim giving the
position of the Party and the remedy sought, and an acceptance of the arbitrator
designated in the arbitration notice or a designation of a second arbitrator.
12.3 Selection of Arbitrators. If the Parties agree to a single
arbitrator, the arbitration shall be decided by such arbitrator. If the Parties
each designate an arbitrator, the arbitrators designated by the Parties shall
designate a third arbitrator within ten (10) days after the date of the notice
in response to the arbitration notice, and the arbitration shall be decided by
the three arbitrators. In the event the two arbitrators cannot or do not select
a third independent arbitrator within ten (10) days of such second notice,
either Party may apply to the American Arbitration Association for the purpose
of appointing any person listed with the American Arbitration Association as the
third independent arbitrator.
12.4 Procedure. A hearing shall be held by the arbitrators within sixty
(60) days following designation of the arbitrators and a resolution of the
matter submitted shall be rendered within thirty (30) days after the hearing.
The arbitration shall be conducted pursuant to the Commercial Arbitration rules
of the American Arbitration Association or such other additional procedures
agreed to by the Parties; provided, however, that the Parties shall have the
right to engage in reasonable discovery of documents involved in the dispute.
All arbitration hearings shall be held in Atlanta, Georgia. Nothing contained
herein shall limit the right of either Party, conferred elsewhere in this
Agreement, to obtain documents from the other Party.
12.5 Binding Nature. The arbitration shall be final and binding on the
Parties and not subject to any appeal. The costs of arbitration and all expenses
related thereto, including, without limitation, each Party's attorneys' fees,
shall be borne and paid by the nonprevailing Party; provided that if a Party is
nonprevailing only in part, such Party shall bear the expenses in proportion to
the extent to which it is nonprevailing.
12.6 Enforceability. The foregoing agreement to arbitrate shall be
specifically enforceable, the award rendered by the arbitrators shall be final
and judgment may be entered upon it
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in accordance with applicable law in any court having jurisdiction thereof.
ARTICLE XIII
GENERAL PROVISIONS
13.1 Capital Improvements. All Capital Improvements shall be made only
upon approval of Owner. Operator shall not perform any Capital Improvement
unless Owner and Operator agree upon the terms and conditions under which
operator is to perform the Capital Improvement, including time of performance
and cost.
13.2 Notices. Any notice required or permitted under this Agreement
shall be in writing and shall be valid and sufficient if delivered personally or
mailed by registered or certified mail, postage prepaid or delivered by courier
service, addressed to the Party's address shown below or to such other address
as a Party may designate by prior written notice given in accordance with this
provisions to the other Party:
If to Operator: Southern Electric International, Inc.
900 Ashwood Parkway, Suite 300
Atlanta, Georgia 30338
Attention: Vice President - Power Supply
If to Owner: Birchwood Power Partner, L.P.
c/o SEI Birchwood Inc.
900 Ashwood Parkway, Suite 300
Atlanta, Georgia 30338
Attention: Project Manager
13.3 Governing Law. This Agreement shall be governed by and construed
under the laws of the State of Georgia.
13.4 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
13.5 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the Parties hereto and their respective successors and
permitted assigns.
13.6 Waiver. The waiver of any breach of any term or condition of this
Agreement shall not be deemed a waiver of any other or subsequent breach,
whether of like or different nature.
13.7 Not for the Benefit of Third Parties. This Agreement and each and
every provision thereof is for the exclusive benefit of the Parties and, to the
extent specifically provided, for the
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benefit of the Lender, and not for the benefit of any other third party.
13.8 Attorneys' Fees. Notwithstanding any other provision of this
Agreement, if any action or proceeding is brought by either Party to remedy a
breach of this Agreement or to enforce any of its provisions, the prevailing
Party shall be entitled, in addition to any other relief granted in such action
or proceeding, to receive reasonable attorneys' fees, disbursements and court
costs.
13.9 Confidentiality. Operator shall hold in confidence, and shall use
only in connection with the operation and maintenance of the Facility, any and
All Proprietary Information disclosed to Operator for a period of three (3)
years after the termination of this Agreement; provided, however, that Operator
may disclose Proprietary Information (i) to its and its Affiliates' officers,
directors, employees and agents in connection with the performance of services
hereunder, and (ii) as necessary to comply with laws, rules, regulations and
orders of Governmental Authorities. For the purposes of this Section 13.9, the
term "Proprietary Information" shall mean all financial, technical and
operations and maintenance information which Operator, directly or indirectly,
acquires from the Owner, and shall also include any other information which
Owner expressly designates in writing to be confidential. However, Proprietary
Information shall exclude information falling into any of the following
categories:
(a) Information that, at the time of disclosure, is in the public
domain;
(b) Information that, after disclosure, enters the public domain
other than by breach of this Agreement;
(c) Information that, prior to disclosure hereunder, was in the
Operator's possession, either without limitation on disclosure
to others or subsequently becoming free of such limitations;
(d) Information obtained by the Operator from a third party having
an independent right to disclose this information; and
(e) Information that is available through independent research
without the use of or access to the Proprietary Information
acquired from the Owner.
13.10 Force Majeure. If either Party is rendered wholly or partially
unable to perform or is delayed in performing its obligations under this
Agreement because of the occurrence and existence of an event of Force Majeure,
that Party will be
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excused from whatever performance is affected by such event of Force Majeure to
the extent and for the time so affected, except that Owner shall not be excused
from its obligations to make timely payments hereunder; provided that:
(a) The non-performing Party gives the other Party notice
describing the particulars of the occurrence within
seventy-two (72) hours thereafter, including an estimate of
its expected duration and probable impact on the performance
of such Party's obligations hereunder, and continues to
furnish timely, regular reports with respect thereto during
the continuation of the event of Force Majeure;
(b) The suspension or delay of performance shall be of no greater
scope and of no longer duration than is reasonably required by
the event of Force Majeure;
(c) No liability of either Party which arose before the occurrence
of the event of Force Majeure causing the suspension or delay
of performance shall be excused as a result of the occurrence;
(d) The non-performing Party shall mitigate or limit damages to
the other Party;
(e) The non-performing Party shall use its best efforts to
continue to perform such of its obligations hereunder as are
not affected by the event of Force Majeure and to correct or
cure the event or condition giving rise to the event of Force
Majeure; and
(f) When the non-performing 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 shall
promptly resume performance hereunder.
13.11 Publicity Release. Operator shall not issue any press or
publicity release or any advertisement, or publish any information concerning
the Facility without the express written consent of Owner; provided, however,
that in the event of unusual circumstances or emergency when, in Operator's
judgment, a public statement or press release should be made and Owner's written
consent cannot be timely obtained, Operator through the Facility manager or his
designee shall be permitted to make public statements and/or press releases
which in its judgment are necessary and proper and shall promptly notify Owner
of all such statements and releases.
13.12 Severability. Should any Article or Section or any part of any
Section hereof for any reason be declared invalid or
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unenforceable by final and unappealable order of any court of competent
jurisdiction, the remaining portions of this Agreement shall remain in full
force and effect, and the Parties hereto shall immediately renegotiate in good
faith the Article or Section or part of any Section declared invalid or
unenforceable so as to eliminate such invalidity or unenforceability.
13.13 Owner's and Operator's Obligations Non-recourse. The Parties
acknowledge that the Owner and Operator each has entered into this Agreement
entirely on its own behalf, and in no manner on behalf of its Affiliates, and
that neither Owner nor Operator shall have any recourse against any of the
other's Affiliates, partners, joint venturers, officers, directors, successors
or assigns for any reason whatsoever, except with respect to any guarantee that
may be executed by any such Affiliate.
13.14 Interpretation. This Agreement sets forth the full and complete
agreement of the Parties relating to the subject matter hereof and supersedes
all prior agreements and representations. The Article and Section headings have
been provided for convenience of reference only and shall not affect the meaning
or construction of any provision of this Agreement. In the event of any conflict
or inconsistency between any provision contained in the Articles of this
Agreement and any Schedule hereto, the provision contained in the Articles shall
govern.
13.15 Relationship of the Parties. Nothing in this Agreement shall be
deemed to constitute either party hereto a partner, agent (except as
specifically provided in paragraphs (e) and (f) of Section 4.2 hereof) or legal
representative of the other party, or to create a fiduciary relationship between
the parties. Operator is and shall remain an independent contractor in the
performance of this Agreement, maintaining complete control of its personnel,
workers, subcontractors and operations required for performance of its
obligations hereunder.
32
<PAGE> 37
IN WITNESS WHEREOF, the parties hereto have caused this agreement to be
executed by their respective duly authorized representatives on this 18th day
of May, 1994.
SOUTHERN ELECTRIC INTERNATIONAL, INC.
By /s/ R. E. Leggett
----------------------------------
Name: R. E. Leggett
Title: Vice-President, Power Supply
BIRCHWOOD POWER PARTNERS, L.P.,
a Delaware limited partnership
By: SEI Birchwood, Inc., a General
Partner
By /s/ Mark S. Lynch
----------------------------------
Name: Mark S. Lynch
Title: Vice President
33
<PAGE> 38
SCHEDULE A
PROJECT AGREEMENTS
The Power Purchase Agreement
The Turnkey Contract
Ash Management Services Agreement between Owner and J.T.M. Industries, Inc.
Any Financing Agreement
Steam Sales Agreement between Birchwood Power Partners, L.P. and
Dominion Growers of Fredericksburg Incorporated.
Interface Operating Procedures as developed per the above Power Purchase
Agreement in Section 4.5.
Voltage Schedule as developed per the above Power Purchase Agreement in
Section 4.5.
Fuel Supply Contracts
Fuel Transportation Contract
Interconnection Agreement
Pyrites Disposal Contract
Hazardous Waste Disposal Contract
1
<PAGE> 39
SCHEDULE B
OUTLINE OF OPERATING PLAN AND BUDGET
1.0 Operations & Maintenance Budget
1.1 Station Labor Expenses
1.2 Routine Maintenance Expenses Other Than Station Labor
1.3 Equipment Expenses Other Than Station Labor
1.4 Operating Expenses Other Than Station Labor
1.5 Administrative Expenses Other Than Station Labor
1.6 Insurance Expenses
1.7 Inventory Levels and Expenses
1.8 Annual Outage Expenses Other Than Station Labor
1.9 Major Maintenance Expenses Other Than Station Labor and Escrow
Account Analysis (5 year projection)
1.10 Capital Expenses (5 year projection)
1.11 Operator Insurance Expenses
2.0 Schedule Outage Work Plan
3.0 Staffing Plan
4.0 Projected Generation
5.0 Projected Fuel Consumption
6.0 Projected Flash, Bottom Ash, and Pyrites To Be Generated
7.0 Other Non-Operations and Maintenance Expenses
ATTACHMENT 1. Form of Annual Operating Budget.
1
<PAGE> 40
SCHEDULE C
OPERATOR'S SERVICES PRIOR TO COMMERCIAL OPERATION
1. GENERAL OPERATOR REQUIREMENTS
1.1 Cost Accounting System - Operator shall establish a Cost and Budget
Accounting System that Operator will implement for Facility operations.
This program must be in place ninety (90) days prior to the Anticipated
Commercial Operations Date.
1.2 Spare Parts Program - Operator shall review the recommended spare parts
lists prepared by Contractor and make recommendations to Owner
concerning spare parts inventory and procurement. Operator shall make
recommendations to Owner concerning stocking levels for consumable
materials and stores stock.
1.3 Office and Shop Furnishings and Equipment - Operator shall recommend to
Owner office, shop and maintenance furnishings and equipment. Upon
approval by Owner, Operator shall purchase, receive, inventory, and
install such furnishings and equipment.
1.4 Operational Programs - Operator shall develop and submit to Owner
for approval complete administration, operation and maintenance
programs and procedures, including without limitation the interface
operating procedures and voltage schedules referred to in Sections 4.5
and 4.6 of the Power Purchase Agreement, and similar interface
procedures with fuel suppliers and governmental authorities. These
programs and procedures must be in place ninety (90) days prior to the
Anticipated Commercial Operations Date.
1.5 Facility Turnover - The Facility will be turned over to the Operator
on the earlier to occur of (i) "Minimum Performance Acceptance," and
(ii) "Substantial Completion," determined in accordance with the
Turnkey Contract. The Operator will provide labor to work under
Contractor's supervision and direction prior to and following the
Commercial Operations Date, as requested by Contractor. Operator shall
assist Owner in system walkdown to create punchlists and shall witness
tests. Operator shall provide Owner with a written report of observed
deficiencies or indicate acceptability of systems for operation.
Operator will provide Contractor access to the site after turnover to
complete punch list items and construction demobilization and other
contractually required activities.
1.6 Manual Review - Operator shall review and comment on the adequacy
of the operating manuals, the system descriptions and vendor operation
and maintenance manuals supplied by Contractor.
1
<PAGE> 41
1.7 Design Review - Operator shall review and comment on the design
documents prepared and submitted by Contractor on matters relating to
the operation and maintenance of the Facility.
1.8 Site Drawings - Operator shall review drawing lists and define which
drawings are required at the job site. Such drawings shall be provided
to Operator by Owner and Operator shall prepare and maintain a file of
drawings at the job site.
ATTACHMENT 1. Attachment 1 sets forth the mobilization period budget and
staffing schedule agreed to by the Parties as of the date of this Agreement.
Appropriate adjustments shall be made to Attachment 1 if, by reason of any of
the events specified in Section 6.2(b), the staffing schedule or expenses of
mobilization shall change. Operator shall promptly notify Owner of any such
change and advise Owner of any necessary revisions. The Parties shall proceed in
good faith to revise the Start-Up and Mobilization Plan. Any disputes shall be
resolved in accordance with the procedures set forth in Article XII.
2
<PAGE> 42
SCHEDULE D
OPERATOR'S SERVICES AFTER COMMERCIAL OPERATION
1.0 GENERAL OPERATOR REQUIREMENTS
After the Commercial Operations Date, Operator shall assume care, custody and
control of the Facility. Without limiting the terms of the Agreement, Operator
shall provide the following services:
1.1 Staff the Facility 24 hours a day, 365 days, or 366 days as
appropriate, a year to perform the services and provide training of all
personnel in accordance with the standards set forth in the Agreement.
1.2 Comply with the Power Purchase Agreement, including without
limitations, the dispatch provisions thereof. Operator shall provide
operating interface with the utility's operations center and provide
operating reports required by the Power Purchase Agreement.
1.3 Implement an administrative program for establishing specific
operating goals for each functional Facility area, for managing
resources to minimize personnel turnover, and for qualifying personnel
to operate and maintain the Facility (including the basis for
qualification of personnel).
1.4 Implement the program developed during the pre-operational phase, as
approved by Owner, for communicating and interfacing with the utility,
Owner, fuel suppliers, ash disposal contractor, governmental
authorities and contractors.
1.5 Operate the Facility according to procedures established during the
pre-operational phase and monitor, evaluate, and propose revisions to
such procedures from time to time.
1.6 Required Programs.
1.6.1 The Facility operations program will include:
Monitoring Facility Performance
Shift Routines/Operating Practices
Operation and Control of Equipment
Water and Waste Water Management
Chemistry Control
Training Programs
Operating Qualification
Operating Procedures
1
<PAGE> 43
1.6.2 The maintenance program will include:
Performance of Routine and Scheduled Maintenance Activities
Performance of Emergency Corrective Maintenance Activities
Implementation of An Automated Work Order Control System
Implementation of A Maintenance Planning
Implementation of Maintenance Procedures
Implementation of a Preventative Maintenance Program
Implementation of a Predictive Maintenance Program
Implementation of Safety Goals
Preparation of budgets for major maintenance
Management and coordination of equipment suppliers and other
subcontractors
1.6.3 The materials management program will include:
Procuring Materials and Tools
Warehousing
Maintaining Proper Inventory Levels and Control
Renewal of Inventories
Storage Maintenance
Staging of Materials
1.7 Implement a performance testing program for maintaining the Facility
and equipment at the optimum performance levels.
1.8 Implement a security program for maintaining the Facility in a secure
and protected environment.
1.9 Implement a housekeeping/cleanliness program which provides:
Hazardous Material Control
Grounds/Building Maintenance
Material Condition Inspections
1.10 Implement a problem assessment program which provides methods for
determining the cause of Facility failures and means of prevention.
1.11 Implement a records management program for maintaining documentation
of Facility performance as required under the Agreement, system
problems logged by system and/or equipment number.
1.12 Conduct a Facility safety program which provides:
2
<PAGE> 44
Clearance and Tagging Procedures
Safety Monitoring
Safety Meetings
Accident Prevention Program
Accident Reporting
1.13 Execute reporting systems for Facility performance to Owner and others
as required.
1.14 Conduct a permit compliance program.
1.15 Provide Owner with documentation and other assistance and site
coordination required for Contractor warranty administration.
1.16 Provide Owner with invoice quantity verification on matters reported to
Owner.
1.17 Assist Owner with its community relations program, at Owner's request.
1.18 Procure replacements for all spare parts used by Operator, in order to
maintain the initial inventory of spare parts provided by Owner, and
procure lubricants and other consumables. Prepare annual inventory
reports of tools, spare parts and consumables.
1.19 Prepare the annual Operating Plan and Budget.
1.20 Specify and contract for outside services such as engineering
consulting, major equipment maintenance, and modification work as
specified in the annual Operating Plan and Budget or as otherwise
approved by Owner.
1.21 Prepare all notices and reports required under this Agreement.
1.22 Procure and maintain insurance coverages in accordance with this
Agreement.
1.23 Read metering devices and send notices of steam delivered, as
required under the Steam Sales Agreement, and comply with all other
requirements of Owner under the Steam Sales Agreement.
1.24 Receipt, unloading, storage and accounting for fuel inventories,
including coal and No. 2 diesel fuel.
1.25 Storage, loading for shipment and accounting for all ash disposal under
the Ash Management Services Contract.
3
<PAGE> 45
SCHEDULE E
ANNUAL GUARANTEES
1.0 Dependable Capacity Guarantee.
Operator guarantees that the Facility will meet or exceed the
Dependable Capacity level determined in accordance with Article II of the Power
Purchase Agreement. If the Operator fails to meet or exceed the Power Purchase
Agreement Dependable Capacity level, Operator agrees to pay Owner a rebate as
described in Schedule G.
2.0 Heat Rate Guarantee.
Operator guarantees the Facility will be operated to attain a net
operating heat rate value equal to the value represented on the corrected
input/output curve developed for the Facility by the Operator, with the
assistance of the Contractor, as contemplated in Appendix G to the Turnkey
Contract, and approved by Owner prior to the Commercial Operations Date,
adjusted by the applicable Heat Rate Degradation Factors listed below (the
"Guaranteed Heat Rate"). On or prior to the Commercial Operations Date, Owner
and Operator will agree to use the Degradation Factors that are appropriate for
a five year or six year major maintenance cycle, and will resolve any dispute
with respect to the appropriate Degradation Factors in accordance with the
procedures set forth in Article XII. (The annual Guaranteed Heat Rate for
purposes of this Agreement will be calculated using the input/output curve
specified above integrated hourly consistent with the Power Purchase Agreement
over the Contract Year for all hours that the Facility is at or above 32% of the
Power Purchase Agreement Dependable Capacity rating.)
For purposes of this Agreement, the actual net operating heat rate will
be calculated using the actual measured fuel consumption, the weighted calorific
value of the coal delivered to the plant bunkers during the subject Contract
Year, and the measured net generation in kWh (corrected for process steam flow)
for all hours the Facility is at or above 32% of the Power Purchase Agreement
Dependable Capacity rating.
A bonus will be paid to the Operator by the Owner in accordance with
Schedule G when the net operating heat rate is below the Guaranteed Heat Rate by
an amount in excess of 25 btu/kWh and a rebate will be paid to the Owner by the
Operator when the net operating heat rate is above the Guaranteed Heat Rate by
an amount in excess of 25 btu/kWh. It is agreed that the value of one (1)
btu/kWh/year based on a fuel price of $[xxx] per million btu as of July 1990 is
$[xxx]. It is also agreed that the value of one (1) btu/kWh/year will be
adjusted on an annual basis by a factor equal to the adjustment to the
4
- ------------
[xxx] These portions of this exhibit have been omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
<PAGE> 46
Base Fuel Compensation Price determined in accordance with Article 10 of the
Power Purchase Agreement.
Following the completion of one (1) calendar year of operation, the
Operator may request adjustment of the Guaranteed Heat Rate curve based on the
correlation of the actual net operating heat rate and the Guaranteed Heat Rate.
Operator must provide information to Owner supporting the Operator's request for
adjustment of the Guaranteed Heat Rate curve. Owner shall in good faith respond
to such request within thirty (30) calendar days. If the Owner fails to approve
such request for adjustment of the Guaranteed Heat Rate curve, the matter shall
be resolved in accordance with Article XII of this Agreement.
Heat Rate Degradation Factors
(Five Year Major Maintenance Cycle)
<TABLE>
<CAPTION>
Contract Degradation Contract Degradation
Year Factor Year Factor
<S> <C> <C> <C>
1 1.0130 14 1.0287
2 1.0164 15 1.0308
3 1.0199 16 1.0250
4 1.0197 17 1.0280
5 1.0218 18 1.0310
6 1.0193 19 1.0315
7 1.0207 20 1.0337
8 1.0237 21 1.0302
9 1.0258 22 1.0309
10 1.0257 23 1.0339
11 1.0222 24 1.0360
</TABLE>
5
<PAGE> 47
12 1.0252 25 1.0388
13 1.0265
6
<PAGE> 48
Heat Rate Degradation Factors
(Six Year Major Maintenance Cycle)
<TABLE>
<CAPTION>
Contract Degradation Contract Degradation
Year Factor Year Factor
<S> <C> <C> <C>
1 1.0130 14 1.0259
2 1.0164 15 1.0289
3 1.0199 16 1.0287
4 1.0197 17 1.0308
5 1.0218 18 1.0330
6 1.0240 19 1.0269
7 1.0188 20 1.0299
8 1.0218 21 1.0329
9 1.0249 22 1.0327
10 1.0247 23 1.0349
11 1.0268 24 1.0370
12 1.0290 25 1.0398
13 1.0229
</TABLE>
3.0 Demonstrated Capacity Guarantee.
Beginning with the first Dependable Capacity Demonstration Period
following the Initial Dependable Capacity Summer Demonstration Period and the
Initial Dependable Capacity Winter Demonstration Period, as such terms are
defined in the Power Purchase Agreement, the Operator guarantees the Facility
will demonstrate a Dependable Capacity
7
<PAGE> 49
equal to or greater than the capacity demonstrated during the previous
Dependable Capacity Summer Demonstration Period and the previous Dependable
Capacity Winter Demonstration Period. The Dependable Capacity Rating can be
adjusted up or down by mutual agreement between the Owner and Operator. If
either party desires to adjust the Summer or Winter Dependable Capacity Rating
of the Facility, the party desiring the change must notify the other party sixty
(60) days prior to the next Dependable Capacity Demonstration Period stating the
desired Dependable Capacity Rating and the reasons for the requested adjustment.
If the Operator fails to meet or exceed the Demonstrated Dependable Capacity
Guarantee, the Operator agrees to pay the Owner a rebate as outlined in Schedule
G.
8
<PAGE> 50
SCHEDULE F
REPORTING REQUIREMENTS
Monthly Fuel Burn Report, as defined in the Power Purchase Agreement Section
6.17.
Daily Operations Report, as defined in the Power Purchase Agreement Section 7.1.
Maintenance Schedule, as defined in the Power Purchase Agreement Section 7.2.
Operating Log, as defined in the Power Purchase Agreement Section 7.4(b).
NERC GADS Reports, as defined in the Power Purchase Agreement Section 7.4(d).
Plant Performance Report, which will be prepared monthly and will include data
about plant current performance against the plan goals as well as significant
operating events.
Major Maintenance Reports, which will be prepared for each scheduled outage and
include all equipment inspection and maintenance performed during the outage.
They will have as attachments, reports prepared by outside contractors engaged
for the outage.
Unit Trip Reports, which will be prepared for each unscheduled outage and
include explanations of the reason for the trip and corrective actions taken to
repair equipment as well as any actions taken to prevent a similar trip.
Completed Work Orders, which will be kept on site and include details of the
reason for the generation of the work order and the actions taken to correct the
source of the work order.
Administration Report, reporting accounting, human resource, and warehousing
activities.
Reports and data required to be prepared, maintained, and filed under terms of
Applicable Permits.
1
<PAGE> 51
SCHEDULE G
FEE, REBATE & BONUS SCHEDULE
1.1 Base Operations Fee. Commencing on the last day of each month after the
Mobilization Date, and on the last day of each month thereafter through the
Commercial Operations Date, Owner shall pay Operator a Base Operations Fee of
$[xxx] per month. Commencing on the last day of the calendar quarter in which
the Commercial Operations Date shall occur, and on the last day of each calendar
quarter thereafter, Owner shall pay Operator a Base Operations Fee calculated at
the rate of $[xxx] per month. The Base Operations Fee for the purpose of
determining Rebates and Bonus will be defined as the monthly Base Operations Fee
multiplied by twelve (12). Payments of the Base Operations Fee for any month or
quarter, as applicable, shall be pro-rated for the actual number of days elapsed
in such month or quarter.
1.2 Escalation of Base Operations Fee. The Base Operations Fee shall be adjusted
based on the Gross National Product Implicit Price Deflator on an annual basis
and such adjustments shall become effective on January 1 of each Contract Year
during the Term hereof. Should this index be discontinued, an index specified by
the appropriate government agency as the replacement index, if any, shall be
used. If no replacement index is specified, a new index which most accurately
reflects changes for the applicable cost component shall be substituted by
mutual agreement of the Parties.
1.3 Dependable Capacity Rebate. Operator agrees to rebate to the Owner any
amount that the Dependable Capacity Payments to the Owner are reduced as a
result of the Facility's failure to meet the Power Purchase Agreement Guaranteed
Dependable Capacity rating after adjustments are made including "Non-Reduction
Amounts" for the current year and utilization of "Credits" from the
"Availability Bank." (Details of the Dependable Capacity Reduction Formula are
contained in Article 10, Paragraph 15 of the Power Purchase Agreement.) The
total amount of the Rebate for the Facility's failure to meet the Power Purchase
Agreement Guaranteed Dependable Capacity rating after adjustments is limited to
thirty-three percent (33%) of the annual Base Operations Fee. Dependable
Capacity Rebates will be due fifteen (15) days after receipt of documentation
from Owner indicating that Owner has experienced a reduction in capacity
payments in accordance with the Power Purchase Agreement.
1.4 Dependable Capacity Bonus. No bonus shall be paid for exceeding the
Guaranteed Dependable Capacity rating of the Facility.
1.5 Operating Heat Rate Rebate. Beginning on March 31, 1998 and on each March 31
thereafter, Operator agrees to pay Owner a rebate equal to $[xxx] per Btu/kWh
multiplied by the Net Output Factor as defined by NERC for each Btu that the
annual net operating heat rate for the previous Contract Year was greater than
25 btu/kWh above the Guaranteed Annual Heat Rate as defined in Schedule E. An
example of the Heat Rate Rebate calculation is contained in Section 2.1 of this
Schedule G. (Note: The $[xxx] per Btu/kWh factor shall
1
- ------------
[xxx] These portions of this exhibit have been omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
<PAGE> 52
be adjusted on an annual basis by a factor equal to the fuel adjustment clause
as defined in the Power Purchase Agreement). The Operating Heat Rate Rebate is
limited to an amount equal to thirty-three percent (33%) of the annual Base
Operations Fee.
1.6 Operating Heat Rate Bonus. Beginning on March 31, 1998 and on each March 31
thereafter, Owner agrees to pay Operator a bonus equal to $[xxx] per Btu/kWh
multiplied by the Net Output Factor as defined by NERC for each Btu that the
annual net operating heat rate for the previous Contract Year was less than 25
btu/kWh below the Guaranteed Annual Heat Rate as defined Schedule E. An example
of the Heat Rate Bonus calculation is contained in Section 2.2 of this Schedule
G. (Note: The $[xxx] per Btu/kWh factor in the formula shall be adjusted on an
annual basis by a factor equal to the fuel adjustment clause as defined in the
Power Purchase Agreement). The Operating Heat Rate Bonus is not limited to any
specific percentage of the Base Operations Fee.
1.7 Demonstrated Capacity Rebate. Beginning with the first Dependable Capacity
Demonstration following the Initial Dependable Capacity Demonstration, Operator
agrees to rebate to Owner an amount equal to the Capacity Purchase Price
specified in the Power Purchase Agreement, expressed as $/KW per month, or a
prorated amount as appropriate for every KW that the Demonstrated Capacity for
the current Summer Period and/or Winter Period is less than the previous year's
corresponding Demonstrated Capacity. Demonstrated Capacity Rebates will be due
on the last day of each calendar quarter and payable by the fifteenth (15th).
The Demonstrated Capacity Rebate for any given year is limited to an amount
equal to thirty-three percent (33%) of the annual Base Operations fee. An
example of this calculation is contained in Section 2.3 of this Schedule G.
1.8 Demonstrated Capacity Bonus. No bonus will be paid for exceeding the
previous year's Summer or Winter Demonstrated Capacity.
1.9 Example Dependable Capacity Rebate Calculations. See Article 10 of the Power
Purchase Agreement.
2
- ------------
[xxx] These portions of this exhibit have been omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
<PAGE> 53
2.1 Example of Operating Heat Rate Rebate.
Assumptions
Net Electrical Output for Contract Year: 1,576,000,000 kWh
Load Profile for Contract Year: 6,000 hours at 200 MW
2,000 hours at 150 MW
760 hours at 100 MW
Note: This would be done for every hour for the Contract Year.
Guaranteed Heat Rate Curve: (EXAMPLE CURVE ONLY)
[xxx/xxx = (xxxxxxxxxx) / xx) + (xxxxxx(xxxx) +]
[(xxx(xx) x xx)]
Fuel Consumption for Contract Year: [xxx]
(Fuel Consumption to Be Defined As Coal
Consumed When Facility Is At Or Above 32%
of the Facility Dependable Capacity Rating.)
Calculations:
Guaranteed Heat Rate; (Guaranteed Heat Rate Curve)
200,000 KW = > [xxx = ]
150,000 KW = > [xxx = ]
76,000 KW = > [xxx = ]
Note: This would be done for every hour of the Contract Year.
Guaranteed fuel consumption integrated over Contract Year:
(6,000 x 200,000 x [xxx + ]
(2,000 x 150,000 x [xxx + ]
( 760 x 100,000 x [xxx = xxx]
Note: This would be done for every hour of the Contract Year.
Guaranteed Heat Rate integrated over Contract Year:
[xxx / xxx = xxx]
Operating Heat Rate: [xxx / xxx = xxx]
Heat Rate Deviation: [xxx - xxx = xxx - xxx = xxx]
3
- ------------
[xxx] These portions of this exhibit have been omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
<PAGE> 54
Operating Heat Rate Rebate: [xxx x xxx x xxx xxx = xxx]
4
- ------------
[xxx] These portions of this exhibit have been omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
<PAGE> 55
2.2 Example of Operating Heat Rate Bonus.
Assumptions
Net Electrical Output for Contract Year: 1,576,000,000 kWh
Load Profile for Contract Year: 6,000 hours at 200 MW
2,000 hours at 150 MW
760 hours at 100 MW
Note: This would be done for every hour for the Contract Year.
Power Purchase Agreement Heat Rate Curve:
[xxx/xxx (xxx / xxx) + xxx + ]
[xxx x xxx]
Fuel Consumption for Contract Year: [xxx]
(Fuel Consumption To Be Defined As Coal
Consumed When Facility Is At Or Above 32%
of the Facility Dependable Capacity Rating.)
Calculations:
Guaranteed Heat Rate at load points, using Tested Heat Rate Curve:
200,000 KW - > [xxx =]
150,000 KW = > [xxx =]
76,000 KW = > [xxx =]
Note: This would be done for every hour of the Contract Year.
Guaranteed fuel consumption integrated over Contract Year:
(6,000 x 200,000 x [xxx +]
(2,000 x 150,000 x [xxx +]
( 760 x 100,000 x [xxx = xxx]
Note: This would be done for every hour of the Contract Year.
Guaranteed Heat Rate integrated over Contract Year:
[xxx / xxx = xxx]
Operating Heat Rate: [xxx / xxx = xxx]
Heat Rate Deviation: [xxx - xxx = xxx - xxx = xxx]
Operating Heat Rate Rebate: [xxx x xxx x xxx = xxx]
5
- ------------
[xxx] These portions of this exhibit have been omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
<PAGE> 56
bonus due the Partnership from the Operator. The Bonus
for Heat Rate is not limited to any percentage of the Annual
Base Operations Fee.
Note: The Heat Rate Rebate and Bonus will be adjusted annually by a factor
equal to the Fuel Adjustment Clause as defined in the Power Purchase
Agreement.
6
<PAGE> 57
2.3 Example of Demonstrated Capacity Rebate Calculation.
Assumptions: Facility demonstrates Summer Dependable Capacity of 222.2 MW and
a Winter Dependable Capacity rating of 217.8 MW during the
initial Demonstration Periods. During the next Demonstration
Period, Facility demonstrates a Summer Dependable Capacity of
220.2 MW and a Winter Dependable Capacity rating of 217.8 MW.
Calculations: Initial Winter Demonstrated Dependable Capacity = 217.8 MW
Subsequent Winter Demonstrated Dependable Capacity = -217.8 MW
--------
0.0 MW
No Rebate Due For "Winter Period"
Initial Summer Demonstrated Dependable Capacity = 222.2 MW
Subsequent Summer Demonstrated Dependable Capacity = -220.2 MW
--------
2.0 MW
2 MW x 1000KW x $20.8570 = $41,714 per month or a prorated amount based
on 730 hours in a month for all months during
the "Summer Period"
7
<PAGE> 1
EXHIBIT 10.6
POWER PURCHASE AND OPERATING AGREEMENT
BETWEEN
SEI BIRCHWOOD, INC.
AND
VIRGINIA ELECTRIC AND POWER COMPANY
<PAGE> 2
Page 2 of 138
POWER PURCHASE AND OPERATING
AGREEMENT
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Article Page
<S> <C> <C>
1 Definitions 4
2 Sale and Purchase of Energy and Capacity 14
3 Notices 19
4 Pre-Operation Period 20
5 Term, Defaults, and Termination 25
6 Representations, Warranties and Covenants 45
7 Control and Operation of Facility; Dispatching 59
8 Interconnection 66
9 Metering 71
10 Compensation, Payment, and Billings 73
11 Testing and Capacity Ratings 89
12 Insurance 98
13 Liability, Noncompliance and Guarantees 102
14 Force Majeure 117
15 Taxes and Claims for Labor and Materials 120
16 Choice of Law 121
17 Miscellaneous Provisions 121
18 Statutory and Regulatory Changes 126
19 Coordination of Communications 131
20 Option to Purchase 131
21 Regulatory Changes 135
22 Entirety 137
</TABLE>
<PAGE> 3
Page 3 of 138
POWER PURCHASE AND OPERATING AGREEMENT
BETWEEN
SEI BIRCHWOOD, INC.
AND
VIRGINIA ELECTRIC AND POWER COMPANY
THIS AGREEMENT, effective July 13, 1990, is by and between SEI
BIRCHWOOD, INC., a Delaware corporation with its principal office located in
Atlanta, Georgia ("Operator"), and VIRGINIA ELECTRIC AND POWER COMPANY, a
Virginia public service corporation with its principal office located in
Richmond, Virginia ("Virginia Power"). Both Operator and Virginia Power are
herein individually referred to as "Party" and collectively referred to as
"Parties".
R E C I T A L S
WHEREAS, Operator plans to own and operate a new electric
generating facility located within Virginia Power's certificated retail service
area in King George County, Virginia, with an estimated nameplate rating of
292,000 kVA; such facility in all future correspondence to be identified as
Birchwood (or "Facility");
WHEREAS, the Parties currently anticipate that the Commercial
Operations Date (as defined in this Agreement) will occur on or prior to the
Anticipated Commercial Operations Date (as defined in this Agreement);
<PAGE> 4
Page 4 of 138
WHEREAS, Operator wishes to sell, exclusively to Virginia
Power, all of the Facility's electrical energy and capacity made available for
sale, such sale to be pursuant to the terms and conditions set forth herein; and
WHEREAS, Virginia Power wishes to purchase electrical energy
and capacity which may be Dispatched (as defined in this Agreement) by Virginia
Power pursuant to the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of these premises and of the
mutual covenants and agreements hereinafter set forth, Operator and Virginia
Power agree to the following:
ARTICLE 1: DEFINITIONS
Whenever the following terms appear in this Agreement and in
the Recitals or preamble hereto, whether in the singular or in the plural,
present or past tense, they shall have the meaning stated below:
1.1 "Agreement Year" - The twelve month period beginning on
the Commercial Operations Date or anniversary of the Commercial Operations Date.
1.2 "Anticipated Commercial Operations Date" - November 29,
1996.
1.3 "Business Day" - Monday through Friday excluding holidays
recognized by Virginia Power. As of the date of this Agreement, these holidays
include New Year's Day, Good Friday,
<PAGE> 5
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Memorial Day, Fourth of July, Labor Day, Veteran's Day, Thanksgiving Day, day
after Thanksgiving Day, Christmas Eve and Christmas Day. Such holidays may be
changed by Virginia Power upon ten (10) Days written notice to Operator.
1.4 "Capacity Purchase Price" - The price Virginia Power will
pay Operator for Dependable Capacity in accordance with Article 10.
1.5 "Commercial Operations Date" - The first Day following the
Day Operator notifies Virginia Power that the Facility is available for Dispatch
which date may be no earlier than fifteen (15) Days prior to the Anticipated
Commercial Operations Date.
1.6 "Commercial Operations Test" - The test performed pursuant
to Article 11 which determines the Commercial Operations Date and allows
Operator to establish the Initial Dependable Capacity for the appropriate Summer
Demonstration Period or Winter Period.
1.7 "Construction Start" - The first date upon which all of
the following have occurred: (i) the issuance by Operator to its construction
contractor of a Notice-to-Proceed, (ii) release of orders for the boiler(s) and
turbine generator and (iii) mobilization of construction office facilities on
site.
1.8 "Day" - The 24-hour period beginning and ending at 12:00
midnight the prevailing Eastern Standard or Daylight Savings Time.
1.9 "Change of Law" - A change in, or change in the
interpretation of, or the adoption of, any constitution, charter, act, statute,
law, ordinance, code, rule, regulation or order, or change in the specified
standards of objective criteria contained
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in a permit, license or other approval, which standards or criteria must be met
in order for either party to perform under this Agreement, or other legislative
or administrative action of any governmental or other official agency, or a
final decree, judgment or order of a court, including temporary restraining
orders, or litigation, which occurs subsequent to the effective date of this
Agreement.
1.10 "Dependable Capacity" - The amount of capacity determined
by testing for each Summer Demonstration Period and Winter Demonstration Period
pursuant to Article 11 and made available from the Facility to Virginia Power.
1.11 "Design Limits" - When the Facility operates pursuant to
Virginia Power's Dispatch rights in accordance with this Agreement, it is
capable of operation over the continuous range from approximately 32% of the
Dependable Capacity (the "Minimum Operating Level") through 100% of the
Dependable Capacity (the "Maximum Operating Level"). For example, if the
Dependable Capacity for the Winter period is 202 MW, the Minimum Operating Level
is 65 MW (202 MW x 32%) and the Maximum Operating Level is 202 MW (202 MW x
100%). After the Facility has been off line due to a Scheduled Outage, a Forced
Outage, or in response to Virginia Power's Dispatch of the Facility, it can
achieve the levels of operation specified below within the approximate time
periods indicated below:
(a) If the Facility has been off line for less
than 2 hours (hot start), it can be
resynchronized within 0.5 hours and can
achieve its Minimum Operating
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Level within 1.5 hour following Virginia
Power's notice to start-up.
(b) If the Facility has been off line between 2
hours and 8 hours (warm start), it can be
resynchronized within 1 hour and can achieve
its Minimum Operating Level within 1.75
hours following Virginia Power's notice to
start-up.
(c) If the Facility has been off line for more
than 8 hours (cold start), it can be
resynchronized within 3 hours and can
achieve its Minimum Operating Level within
4.5 hours following Virginia Power's notice
to start-up.
Once the Facility has been synchronized with Virginia Power's system and brought
to its Minimum Operating Level, its Net Electrical Output may be increased at an
emergency rate of approximately 3% per minute for up to five (5) consecutive
minutes with a normal rate of approximately 0.9 % per minute. If the Facility is
operating above its Minimum Operating Level, its Net Electrical Output may be
reduced at an emergency rate of approximately 3% per minute for up to five (5)
consecutive minutes down to the Minimum Operating Level with a normal rate of
approximately 0.9% per minute. The Design Limits are subject to refinement
pursuant to Section 4.5 and will be finalized in the procedures manual prepared
pursuant to Section 4.5.
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1.12 "Dispatch" - The right of Virginia Power, or its exercise
in accordance with Prudent Utility Practices, to (i) determine, as provided for
in Section 7.5, the generating level of the Facility in order to commence,
increase, decrease or cease the delivery of the Net Electrical Output to the
Virginia Power system and (ii) distribute the total Virginia Power energy needs
among available electric energy sources for optimum system economy with due
consideration of the Design Limits, incremental generating costs, incremental
power purchase costs, incremental transmission losses, load flow considerations
and other operational considerations as determined solely by Virginia Power.
1.13 "Emergency" - A condition or situation which in the sole
judgment of Virginia Power affects or may affect Virginia Power's ability to
meet its obligations to maintain safe and reliable electric service to Virginia
Power's customers and/or the customers of any member of NERC.
1.14 "Energy Purchase Price" - The price per kilowatthour
Virginia Power will pay Operator for energy delivered to Virginia Power in
accordance with Article 10, Sections 1 through 14. The Energy Purchase Price is
a function of the Fuel Compensation Price, the Heat Rate, and the variable O&M
Price. Accordingly, the Energy Purchase Price for the integrated hourly Net
Electrical Output = FH + V where (i) F= Fuel Compensation Price, (ii) H = Heat
Rate, and (iii) V = O&M Price.
1.15 "Estimated Dependable Capacity" - The Dependable Capacity
for each Summer Period and Winter Period to which Operator commits as set forth
in Section 11.1.
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1.16 "FERC" - The Federal Energy Regulatory Commission or any
successor thereto.
1.17 "Facility" - Operator's generation plant located within
King George County, Virginia, including without limitation or regard to level of
development, land, engineering and design documents, all energy producing
equipment and its auxiliary equipment, fuel handling equipment and all equipment
either installed or to be installed on Operator's side of the Interconnection
Point that is not Interconnection Facilities. The Facility is composed of one
generating unit.
1.18 "Financial Closing" - The later of (a) the date on which
documents which provide funding for the construction of the Facility are
executed, or (b) the date such funds are made available pursuant to those
documents.
1.19 "Forced Outage" - An interruption or reduction of the
Facility's ability to generate that is neither: (i) the result of a Scheduled
Outage; nor (ii) requested by Virginia Power pursuant to the terms of this
Agreement; provided, however, that any interruption or reduction of the
Facility's ability to generate resulting from non-performance by Operator of any
provision of this Agreement (other than due to an event of Force Majeure as
defined in Article 14) shall be a Forced Outage.
1.20 "Fuel Compensation Price" - The Base Fuel Compensation
Price as adjusted from time to time in accordance with Sections 10.2 through
10.13 of this Agreement.
1.21 "Heat Rate" - The number of British Thermal Units (Btu)
projected by the Operator that are required to produce one kilowatthour of
energy at the Facility using the higher heating
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value (HHV) of the fuel. This value will vary with respect to the output level
of the Facility as determined by the Input/Output curve of the form Y = A + BX +
CX2 where (i) the coefficients A, B, and C are provided by the Operator pursuant
to Section 10.1 of this Agreement, (ii) Y is in Btus and (iii) X is the Net
Electrical Output as measured, in accordance with Article 9, by the Virginia
Power-owned meters for one (1) hour. Accordingly, the Heat Rate is (Y + X)
=(A/X) + B + CX.
1.22 "Initial Dependable Capacity" - The Dependable Capacity
level established by testing for the first Summer Period or Winter Period
pursuant to Section 11.6.
1.23 "Initial Synchronization Date" - The first date upon
which (a) energy is generated by the Facility and (b) such energy is metered by
the Virginia Power-owned metering equipment.
1.24 "Interconnection Facilities" - All the facilities,
wherever located, installed by Virginia Power to enable Virginia Power to
receive energy, or energy and Dependable Capacity, from the Facility, including
but not limited to all metering and telemetering equipment; transmission lines,
distribution lines, if any, and all associated equipment; transformers and
associated equipment; relay and switching equipment; and protective devices and
safety equipment.
1.25 "Interconnection Point" - The physical point(s) to be
identified in the Interconnection Study performed by Virginia Power pursuant to
Article 8.5 where the Net Electrical Output of the Facility is delivered to the
Virginia Power system. This point will be on the high voltage side of the
Operator's step-up transformer and, based upon the Facility being located in
Virginia
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Power's certificated retail service area, located in the Facility's switchyard.
1.26 "Interest Rate" - At any time, the rate of interest from
time to time publicly announced by The Chase Manhattan Bank, N.A., at its
principal office, presently located at 1 Chase Manhattan Plaza, New York, New
York 10081, as its prime commercial lending rate. Interest at the Interest Rate
shall be computed Monthly and prorated daily from the time such obligation
arises.
1.26a "Lender" - Any or all lenders (including the indenture
trustee, if any) and equity investors providing any part of either or both the
construction and permanent financing for the Facility or providing lease
financing for any part or all of the Facility.
1.27 "Month" - The period beginning at 12:00 midnight on the
last Day of a month and ending at 12:00 midnight on the last Day of the next
month.
1.28 "NERC" - The North American Electric Reliability Council,
including any successor thereto and subdivisions thereof.
1.29 "Net Electrical Output" - All of the Facility's
electrical generating output made available for sale; such Net Electrical Output
shall be provided at sixty (60) hertz and measured by the Virginia Power-owned
metering equipment located on the Virginia Power side of the Interconnection
Point.
1.30 "Off-Peak Hours" - The hours between 10:00 PM and 7:00 AM
Monday through Friday and all Day Saturday and Sunday.
1.31 "On-Peak Hours" - The hours between 7:00 AM and 10:00 PM
Monday through Friday.
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1.32 "O&M Price" - The price Virginia Power will pay Operator
for variable operations and maintenance expenses in accordance with Section
10.14.
1.33 "Prudent Electrical Practices" - The use of equipment,
practices, methods, adherence to applicable industry codes, standards, and
regulations required (i) to protect Virginia Power's system, employees, agents,
and customers from malfunctions occurring at the Facility and (ii) to protect
the Facility, and Operator's employees and agents at the Facility, from
malfunctions occurring on Virginia Power's system or on any other electric
utility with which Virginia Power is directly or indirectly electrically
connected.
1.34 "Prudent Utility Practices" - The practices generally
followed by the electric utility industry, as changed from time to time, which
generally include, but are not limited to, engineering and operating
considerations, the use of equipment, practices, methods, and adherence to
applicable industry codes, standards, and regulations.
1.35 "PURPA" - The Public Utility Regulatory Policies Act of
1978.
1.36 "QF" - A cogeneration facility or a small power
production facility which is a Qualifying Facility under Subpart B of Subchapter
K, Part 292 of Chapter I, Title 18, Code of Federal Regulations, promulgated by
the FERC.
1.37 "Quarter" - A 3-Month period beginning 12:00 midnight on
December 31, March 31, June 30, or September 30.
1.38 "SCC" - The State Corporation Commission of Virginia or
any successor thereto.
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1.39 "Scheduled Outage" - A planned interruption of the
Facility's generation that (a) has been coordinated in advance with Virginia
Power with a mutually agreed start date, time, and duration pursuant to Article
7 and (b) is required for inspection, routine, preventive, or corrective
maintenance.
1.39 "Solid Fuel" - Eastern bituminous coal.
1.41 "Summer Demonstration Period" - The period beginning
12:00 midnight on June 14 and ending at 12:00 midnight on the following
September 15, or some other three consecutive Month portion of the Summer Period
designated by Virginia Power upon twelve (12) Months prior written notice to
Operator.
1.42 "Summer Period" - The Months of April through September.
1.43 "Term" - The initial term of this Agreement as specified
in Section 5.1 plus any renewal term determined pursuant to Section 5.2.
1.44 "Winter Demonstration Period" - The period beginning
12:00 midnight on November 30 and ending at 12:00 midnight on the last Day of
the following February, or some other three consecutive Month portion of the
Winter Period designated by Virginia Power upon twelve (12) Months prior written
notice to Operator.
1.45 "Winter Period" - The Months of October through March.
1.46 "Year" - The 12-Month period beginning 12:00 midnight on
December 31 and ending at 12:00 midnight on the subsequent December 31.
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ARTICLE 2: SALE AND PURCHASE OF ENERGY AND CAPACITY
2.1 Subject to the terms and conditions of this Agreement,
including without limitation Virginia Power's right to Dispatch the Facility
off-line, Operator agrees to sell and Virginia Power agrees to purchase the Net
Electrical Output of the Facility, whenever produced.
2.2 Except as otherwise provided herein, and subject to other
terms hereof, Operator agrees to sell and Virginia Power agrees to purchase
Dependable Capacity from the Facility after the Commercial Operations Date as
determined pursuant to Article 11.
2.3 Notwithstanding anything in this Agreement to the
contrary, and without limiting any other obligations of Operator in this
Agreement, Virginia Power's obligation to purchase Net Electrical Output and
Dependable Capacity from Operator at the rates specified in Article 10 is
contingent upon Operator's submittal to Virginia Power of all the following:
(a) Evidence demonstrating that Operator has
title to the Facility site or a lease of the
Facility site allowing for the construction
and operation of the Facility for the Term
of this Agreement.
(b) No later than Financial Closing, a report by
the financing institution's independent
engineer stating that the Facility, if
operated and maintained in accordance with
Prudent Electrical Practices and Prudent
Utility Practices, can be reasonably
expected to have a useful life at least
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equal to the Term of this Agreement. Such a
report should include EPC Contractor's Scope
documents; major equipment specifications;
preliminary heat, water and mass balance
diagrams; plant general arrangement drawings;
electrical one-lines; soil reports; air and
water preliminary support documents; and
preliminary AGC interface logic.
(c) No later than the Commercial Operations Date,
documents and other evidence demonstrating that
the Facility has been constructed in compliance
with the terms of this Agreement and the
information submitted pursuant to Section
2.3(b).
(d) No later than the Initial Synchronization
Date, evidence that the Operator is in
compliance with Section 4.1(a)(3) hereof.
(e) No later than Construction Start, certificates of
insurance coverage, copies of insurance policies
or evidence of self-insurance as required or
permitted by Article 12.
(f) No later than the Initial Synchronization
Date, evidence that Operator has obtained all
necessary permits, licenses, approvals and other
governmental authorizations needed to generate
and
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transmit electricity from the Facility to
Virginia Power.
(g) No later than the Initial Synchronization
Date, evidence to the reasonable satisfaction
of Virginia Power that Operator has complied
with all requirements of Article 4, to the
extent compliance is required before the Initial
Synchronization Date; provided, however, that if
Virginia Power has not indicated its
satisfaction with same within 40 Days of its
receipt of a completed submission (or prior to
the Commercial Operations Date if earlier), then
Virginia Power will be deemed to have indicated
such satisfaction. Virginia Power will inform
Operator if a submission is incomplete as soon
as practicable after submission.
(h) No later than the Initial Synchronization
Date, documents and other evidence to the
reasonable satisfaction of Virginia Power that
Operator has complied with the requirements of
Article 8; provided, however, that if Virginia
Power has not indicated its satisfaction with
same within 35 Days of its receipt of a
completed submission (or prior to the Commercial
Operations Date if earlier), then Virginia Power
will be deemed to have indicated such
satisfaction. Virginia Power
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will inform Operator if a submission is
incomplete as soon as practicable after
submission.
(i) As soon as available, but no later than thirty
(30) Days prior to Financial Closing, Operator
shall provide to Virginia Power its fuel supply
strategy and any draft or executed fuel supply
contracts (from which contracts pricing and
other competitive terms may be deleted by
Operator) along with evidence of a
transportation contract or, if no contract has
been finalized, evidence indicating that
Operator is diligently pursuing one.
(j) As soon as available, but no later than
Financial Closing, Operator shall provide to
Virginia Power evidence demonstrating that
Operator (i) has obtained from federal, state
and local government agencies and authorities
having jurisdiction all other material permits,
licenses, approvals and other governmental
authorizations, including the necessary air
quality, water use and discharge, solid waste
and hazardous waste disposal permits and
approvals, required for the design and
construction of the Facility in accordance with
the provisions of this Agreement for the Term
specified herein or (ii) has a plan to obtain
the permits, licenses, approvals and other
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governmental authorizations not obtainable as
of Financial Closing prior to the Anticipated
Commercial Operations Date.
(k) As soon as available, but no later than
Financial Closing, Operator shall provide
Virginia Power, at no cost to Virginia Power,
with an environmental assessment of any
environmental problems existing at the Facility
or the presence at the Facility of materials
that are polychlorinated biphenyls, materials
stored in underground storage tanks, wastes that
would qualify as hazardous wastes under the
Resource Conservation and Recovery Act or
hazardous substances under the Comprehensive
Environmental Response Compensation and
Liability Act (in each case including the rules
and regulations adopted thereunder) or any
applicable rule or regulation, other than those
materials in such quantities and concentrations
routinely occurring in nature (collectively,
"Hazardous Substances"). Said environmental
assessment shall be in a form reasonably
acceptable to Virginia Power; provided, however,
that if Virginia Power has not indicated its
satisfaction within 20 Days of its receipt of
same, then Virginia Power will be deemed to have
indicated such satisfaction.
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(l) As soon as available, but prior to the
Commercial Operations Date, receipt by
Virginia Power of a certificate from the
financing institution's engineer, or an
independent engineer who is satisfactory to
Virginia Power, that the Facility has been
designed and constructed such that Operator
is able to operate the Facility in
accordance with the terms and conditions of
this Agreement.
ARTICLE 3: NOTICES
3.1 Any notice or communication required by this Agreement or
Virginia Power to be in writing shall be deemed to be given when sent only if
sent by any means that provides for the verification by an independent third
party of the date sent, including, but not limited to, the following: registered
or certified mail, commercial courier or telegram. Any notice or communication
sent by any other means, including first class mail, telex or telecopy, shall be
deemed to be given when received. Notice or communications (other than Dispatch
orders) sent by telex, telecopy, or telegram shall be confirmed by depositing a
copy of same in any commercial courier service or the postal service for
transmission by registered or certified mail in an envelope properly addressed.
Any notice or communication shall be sent to the respective Parties at the
following addresses:
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In the case of Operator to:
SEI Birchwood, Inc.
100 Ashford Center North, Ste. 400
Atlanta, GA 30338
Attention: President
In the case of Virginia Power to:
Virginia Electric and Power Company (if by hand)
Manager - Capacity Acquisition
One James River Plaza, 15th Floor
701 East Cary Street
Richmond, Virginia 23219
Virginia Electric and Power Company (if by mail)
Manager - Capacity Acquisition
P. O. Box 26666
Richmond, Virginia 23261
3.2 Either Party may, by written notice to the other, change
the representative or the address to which notices and communications are to be
sent.
3.3 Operator shall provide Virginia Power with three (3)
copies of any written notice, communication or submittal called for by this
Agreement that is of an odd size, shape or material or otherwise not readily
reproducible on conventional office copiers.
ARTICLE 4: PRE-OPERATION PERIOD
4.1 (a) Operator shall, at its expense, acquire, and maintain
in effect, from the FERC and from any and all other federal, state and local
agencies, commissions and authorities with jurisdiction over Operator and/or the
Facility, all material permits, licenses, and approvals, and complete or have
completed all environmental impact studies necessary as follows:
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(1) For the construction, operation and
maintenance of the Facility.
(2) For Operator to perform its
obligations under this Agreement.
(3) Either (i) to obtain and maintain
certification as a QF, or (ii) to
have Operator's ability to perform
this Agreement approved by all
applicable state and federal
regulatory agencies, if not a QF.
(b) Prior to the Commercial Operations Date,
Virginia Power shall, at its expense, acquire, and maintain in effect, from the
FERC and from any and all other federal, state and local agencies, commissions
and authorities with jurisdiction over Virginia Power and/or its electric
system, all material permits, licenses, and approvals, and complete or have
completed all environmental impact studies necessary for Virginia Power to
perform its obligations under this Agreement.
(c) Each Party shall provide assistance to the
other Party, upon request of the other Party, as necessary or appropriate for
the other Party to fulfill its obligations under Sections 4.1(a) and 4.1(b).
4.2 Beginning with the effective date of this Agreement and
continuing until the Initial Synchronization Date, Operator shall submit
progress reports in a form reasonably satisfactory to
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Virginia Power prior to the tenth (10th) Business Day of each Month. Such report
shall cover progress for the preceding Month.
4.3 On a date to be specified by Virginia Power in the
interconnection study, Operator shall submit for Virginia Power's review its
construction schedule. At least thirty (30) Days prior to start-up and testing
of the Facility, Operator shall submit to Virginia Power, a start-up and test
schedule for the Facility. Operator shall notify Virginia Power of any changes
to such construction and start-up and test schedules in a timely manner.
Virginia Power shall have the right to reasonably review, monitor and physically
inspect all aspects and phases of the project including the engineering/design,
procurement, construction, and start-up and testing of the Facility, and
Operator shall comply with all reasonable requests of Virginia Power resulting
therefrom. Operator shall cooperate in such reviews, monitoring and physical
inspections of the Facility as may be reasonably required by Virginia Power
before, during, and after completion of construction. Virginia Power's technical
review and inspection of the Facility shall not be construed as endorsing the
design thereof nor as any warranty of the safety, durability, reliability, or
suitability of the Facility. Such review and inspection shall not relieve
Operator of any of Operator's obligations under this Agreement.
4.4 Beginning with the Commercial Operations Date, Operator
will submit to Virginia Power (and update such submittals from time to time as
is necessary) the following:
(a) electrical one line diagrams with logic
descriptions as needed;
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(b) heat, water, and mass balance diagrams;
(c) major equipment vendor specifications;
(d) plant general arrangement drawings;
(e) necessary air and water permit documents; and
(f) AGC interface logic.
4.5 Operator and Virginia Power shall mutually develop written
interface operating procedures no later than one hundred and twenty (120) Days
prior to the Anticipated Commercial Operations Date. The interface operating
procedures will be a mutual agreement based on the design of the Facility and
the design of the interconnection to Virginia Power's bulk electric system. The
interface operating procedures will (i) refine the Design Limits in accordance
with Prudent Utility Practices to reflect the capabilities of the equipment
ordered for the Facility and (ii) be intended as a guide on how to integrate the
Operator's Facility and output into Virginia Power's bulk electric system. Such
operating procedures shall specify, among other things, that in determining
whether and when Operator's unit will be Dispatched off-line and on-line,
Virginia Power will use the dispatch logic appropriate for Virginia Power's
pulverized coal unit nearest in size to Operator's Facility. Topics covered
shall include, but not necessarily be limited to, method of day-to-day
communications, key personnel lists for Operator and Virginia Power, clearances
and switching
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practices, outage reporting and scheduling, daily capacity and energy reports,
unit operations log, and reactive power support.
4.6 Virginia Power shall prepare and submit to Operator a
written voltage schedule no later than sixty (60) Days prior to the Anticipated
Commercial Operations Date. Virginia Power may change such voltage schedule any
time during the Term of this Agreement upon thirty (30) Days prior written
notice to Operator. Operator shall use such voltage schedule in the operation of
its Facility. This voltage schedule shall be based on the normally expected
operating conditions for the Facility including the Design Limits and the
capabilities of Operator's equipment as identified in the interconnection study
and as refined during the design of such equipment.
4.7 Operator shall notify Virginia Power of its planned
Initial Synchronization Date in writing no less than thirty (30) Days prior to
that date. Virginia Power and Operator shall agree on the Initial
Synchronization Date and Virginia Power shall have the right to have
representatives present at the initial synchronization.
4.8 Virginia Power reserves the right to delay the Initial
Synchronization Date due to problems with the Facility which in its reasonable
judgment, based on Prudent Utility Practices, could adversely affect Virginia
Power's operations. In such event, Virginia Power shall give Operator reasonable
notice of such problems as soon as practicable after Virginia Power has
knowledge of such problems and Operator shall remedy any such problems relating
to facilities or equipment that Operator installed or maintains.
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ARTICLE 5: TERM AND TERMINATION
5.1 The Term of this Agreement shall begin upon execution and
shall continue for a period of twenty-five (25) years from the Commercial
Operations Date unless extended under this Article 5, terminated, or canceled.
If the Term is extended under this Article 5, the word "Term" shall thereafter
be deemed to mean the original Term so extended.
5.2 The Parties may extend this Agreement, with mutually
satisfactory terms and conditions, for periods of up to five (5) years (or such
other period as the Parties agree) provided that no later than three (3) years
prior to the expiration of the Term the Party requesting such extension notifies
the other Party of its desire to extend the Agreement and such extension and its
terms and conditions are agreed to by the Parties no later than two (2) years
prior to the expiration of this Agreement.
5.3 The following conditions apply to defaults under this
Agreement:
(a) Events of Default - Operator - Any of the
following failures or actions shall
constitute an "Event of Default" as to
Operator, if Operator fails to cure such
failure or action within (i) sixty (60)Days
after receipt of notice from Virginia Power
describing the default failure or action,
and (ii) an additional sixty (60) Day
period, granted by Virginia Power, which
Virginia Power shall grant if such failure
or action cannot reasonably be cured within
such initial sixty (60)
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Day period, and Operator can demonstrate
that it has used due diligence to cure
during such initial sixty (60) Day period,
and (iii) within such additional cure
periods as Virginia Power may, at its sole
option, grant to Operator:
(1) Failure to complete
Financial Closing by
November 30, 1994;
(2) Failure to achieve
Construction Start of the
Facility by May 1, 1995;
(3) Abandonment of construction
or operation of the
Facility at any time;
(4) Failure to provide, in
accordance with this
Agreement, executed fuel
supply contract(s) by
September 29, 1995;
(5) Operator, at any time,
shall fail to pay pursuant
to this Agreement any sum
due and payable to Virginia
Power hereunder, which
failure has continued for
20 Days after notice
thereof has been given by
Virginia Power to Operator;
provided, however, that
failure to pay the sums
described in Section
5.3(a)(11) hereof shall be
governed by that
subsection;
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(6) Any representation or
warranty made by Operator
herein or in any
certificate delivered to
Virginia Power pursuant
hereto or thereto shall
prove to be incorrect in
any material respect when
made, unless (i) the fact,
circumstance or condition
that is the subject of such
representation or warranty
is made true within 20 days
after notice thereof has
been given to Operator by
Virginia Power and (ii)
such cure removes any
adverse effect on Virginia
Power of such fact,
circumstance or condition
being otherwise than as
first represented, or
unless such fact,
circumstance or condition
being otherwise than as
first represented does not
materially adversely affect
Virginia Power;
(7) A court having jurisdiction
shall enter (i) a decree or
order for relief in respect
of Operator in an
involuntary case or
proceeding under any
applicable Federal or state
bankruptcy, insolvency,
reorganization or other
similar law, or (ii) a
decree or order
adjudicating Operator
bankrupt or insolvent, or
approving as properly filed
a petition
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seeking reorganization,
arrangement, adjustment or
composition of or in
respect of Operator under
any applicable Federal or
state law, or appointing a
custodian, receiver,
liquidator, assignee,
trustee, sequestrator or
other similar official of
Operator or of any
substantial part of its
affairs; provided, however,
that if Operator can
demonstrate that the
bankruptcy, insolvency or
reorganization is not
likely to lead to a
rejection of this Agreement
and Operator can still
perform under this
Agreement, then such event
shall not be deemed an
Event of Default;
(8) Operator shall (i) commence
a voluntary case or
proceeding under any
applicable Federal or state
bankruptcy, insolvency,
reorganization or other
similar law or any other
case or proceeding to be
adjudicated a bankrupt or
insolvent, or (ii) consent
to the entry of a decree or
order for relief in respect
of Operator in any
involuntary case or
proceeding under any
applicable Federal or state
bankruptcy, insolvency,
reorganization or other
similar law or to the
commencement
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of any bankruptcy or
insolvency case or
proceeding against it, or
(iii) file any petition,
answer or consent seeking
reorganization or relief
under any applicable
Federal or state law, or
(iv) consent to the filing
of any petition or to the
appointment of or taking
possession by a custodian,
receiver, liquidator,
assignee, trustee,
sequestrator or similar
official of Operator or of
any substantial part of its
property, or (v) make an
assignment for the benefit
of creditors, or (vi) be
unable, or admit in writing
its inability, to pay its
debts as they become due,
or (vii) take any action in
furtherance of any of the
foregoing; provided,
however, that if Operator
can demonstrate that the
bankruptcy, insolvency or
reorganization is not
likely to lead to a
rejection of this Agreement
and Operator can still
perform under this
Agreement, then such event
shall not be deemed an
Event of Default;
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(9) In connection with any
event described in
subsections (7) or (8) of
this Section, this
Agreement shall be rejected
within the meaning of the
Bankruptcy Reform Act of
1978, as amended, for which
event no cure period shall
be permitted hereunder;
(10) Management directed or
endorsed acts by Operator,
or its employees,
contractors or
subcontractors of any tier,
of tampering with any
Virginia Power-owned meters
or metering devices and/or
Interconnection Facilities,
for which event no cure
period shall be permitted
hereunder;
(11) Failure to post security as
stipulated in Sections 13.3
and 13.5; for which event
no cure period shall be
permitted hereunder and
Operator agrees that in no
event shall Operator be
entitled to any extension
of the deadline for the
posting of security
pursuant to Sections 13.3
or 13.5, including by
reason of Force Majeure
pursuant to Article 14;
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(12) Failure to achieve the
Commercial Operations Date
by November 24, 1997, for
which event no cure period
shall be permitted
hereunder; or
(13) After the Commercial
Operations Date, Operator,
at any time, shall fail to
discharge or perform any
other material duty or
obligation of Operator
under this Agreement.
(b) Lender shall have the right, upon written
notice to Virginia Power, to effect a cure,
as specified in 5.3(a); above, in the stead
of Operator, of any failure or action that
could lead to an Event of Default as to
Operator under Section 5.3(a). If Lender
gives such notice during the first 60-day
cure period specified in 5.3(a) above, and
attempts to cure in the stead of Operator,
Lender automatically will be granted an
additional 90 Day period after the
expiration of the original cure period,
which shall be in lieu of the additional 60
Day period provided for in Section 5.3(a);
and thereafter, Virginia Power may, at its
sole option, grant further periods in which
to cure such default. An "Event of Default"
shall not have occurred as to Operator
unless Lender fails to cure within the
additional ninety (90)
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Day period and such other cure periods as
Virginia Power may grant to Lender under
this Section 5.3(b).
(c) Rights of Virginia Power for Event of
Default of Operator - If an Event of Default
as to Operator has occurred and shall be
continuing at the conclusion of the cure
period applicable to such Event of Default,
Virginia Power, shall be entitled to
exercise the remedies set forth below, which
shall be exclusive:
(1) If an Event of Default as to
Operator has occurred under Sections
5.3(a)(1), (2), (3), (4) and
5.3(a)(12), Virginia Power, at its
discretion, may terminate this
Agreement by notice to Operator and
retain the security provided by
Operator pursuant to Section 13.3 or
Section 13.5, as appropriate.
(2) If an Event of Default as to
Operator has occurred under Section
5.3(a)(5) or 5.3(a)(6), Virginia
Power, at its discretion, may
recover its actual damages from
Operator.
(3) If an Event of Default as to
Operator has occurred under Section
5.3(a)(7), (8), (9), (10), (11) and
(13), Virginia Power, at its
discretion, may take either or both
of the
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following actions: (i) proceed by
appropriate proceedings, judicial,
administrative or otherwise at law,
in equity or otherwise, to protect
and enforce its rights, to recover
any damages to which it may be
entitled, and to enforce performance
by Operator, including specific
performance of Operator's
obligations hereunder; and (ii)
terminate this Agreement by notice
to Operator.
No delay or omission of Virginia Power to
exercise any right or remedy accruing upon
any Event of Default as to Operator shall
impair any such right or remedy or
constitute a waiver of such event or an
acquiescence thereto; except to the extent
that the Event of Default has been cured or
that Operator has expended money to
effectuate a cure after having received
Virginia Power's assurance that it would
waive such rights and remedies if such
actions were undertaken and were successful.
Every right and remedy given by this
Agreement to Virginia Power may be exercised
from time to time, and as often as may be
deemed expedient, by Virginia Power.
(d) Events of Default - Virginia Power - Any of
the following failures or actions shall
constitute an "Event of Default" as to
Virginia Power, if Virginia Power fails to
cure such failure or
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action within (i) sixty (60) Days after
receipt of notice from Operator describing
the failure or action, and (ii) an
additional sixty (60) Day period granted by
Operator, which Operator shall grant if such
failure or action cannot reasonably be cured
within such initial sixty (60) Day period,
and Virginia Power can demonstrate that it
has used due diligence to cure during such
initial sixty (60) Day period, and (iii)
within such additional cure periods as
Operator may, at its sole option, grant to
Virginia Power:
(1) Virginia Power shall fail to pay
pursuant to this Agreement any
amount due and payable under this
Agreement and such failure shall
have continued for a period of 20
Days after notice thereof has been
given by Operator to Virginia Power;
(2) Virginia Power shall fail to accept
or purchase Net Electrical Output in
accordance with this Agreement, and
such failure shall (i) not arise
from Virginia Power's good faith
belief that it is entitled to
suspend or curtail receipt or
purchase of Net Electrical Output
pursuant to the terms of this
Agreement, and (ii) continue for a
period of ten (10) Days after notice
thereof
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shall have been given to Virginia
Power by Operator; or
(3) Virginia Power shall fail to
discharge or perform any other
material duty or obligation of
Virginia Power under this Agreement.
(e) Rights of Operator for Event of Default of
Virginia Power - If an Event of Default as
to Virginia Power has occurred and shall be
continuing at the conclusion of the cure
period applicable to such Event of Default,
Operator shall be entitled to exercise the
remedies set forth below, which shall be
exclusive:
(1) proceed against Virginia Power by
appropriate proceedings, judicial,
administrative or otherwise, at law,
in equity or otherwise, to protect
and enforce its rights, to recover
any damages to which it may be
entitled and to enforce performance
by Virginia Power, including
specific performance of Virginia
Power's obligations hereunder; and
(2) by written notice to Virginia Power,
suspend its obligations hereunder
until such failure is cured, and if
such failure continues for ten (10)
days after such notice of
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suspension, Operator may terminate
this Agreement by notice to Virginia
Power.
No delay or omission of Operator to
exercise any right or remedy accruing upon
any Event of Default as to Virginia Power
shall impair any such right or remedy or
constitute a waiver of such event or an
acquiescence thereto; except to the extent
that the Event of Default has been cured or
that Virginia Power has expended money to
effectuate a cure after having received
Operator's assurance that it would waive
such rights and remedies if such actions
were undertaken and were successful. Every
right and remedy given by this Agreement to
Operator may be exercised from time to time,
and as often as may be deemed expedient, by
Operator.
(f) If Operator terminates this Agreement
pursuant to Section 5.3(e)(2) or Virginia
Power terminates this Agreement pursuant to
Section 5.6, Operator may require Virginia
Power to provide, and Virginia Power shall
provide, transmission services at
compensatory, nondiscriminatory rates
subject to approval by the appropriate
regulatory authority to Operator sufficient
for Operator to wheel energy generated by
Facility to any other utility outside of
Virginia Power's control area with which
Virginia Power is directly interconnected,
so long as such transmission
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service does not adversely affect the
reliability of Virginia Power's service to
its retail and wholesale customers.
(g) (1) If a Party disputes the amount or
propriety of a payment claimed by
the other Party to be due and
payable hereunder, then the Parties
shall continue to fulfill their
respective obligations under and in
accordance with this Agreement and
will not terminate the Agreement, or
reduce payments, except as provided
in subparagraph 2, unless and until
the dispute or allegation has been
finally resolved by agreement of the
Parties, settlement, litigation, or
other proceeding providing
otherwise. Furthermore, upon the
occurrence of and during the
pendency of the default cure periods
or an Event of Default by Operator,
Virginia Power shall continue to
make payments under this Agreement
except as provided in subparagraph
2 below or until such time as it
terminates this Agreement.
(2) Each Party shall pay to the other
Party all undisputed payments and
charges owed to or assessed by such
other Party under this Agreement as
and when due hereunder. To the
extent that any Party disputes any
payments or charges owed to or
assessed by the other
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Party under this Agreement, the
disputing Party shall deposit the
disputed payment or charge into an
interest-bearing escrow account with
a bank and upon terms agreed to by
both Parties (such agreement not to
be unreasonably withheld). The funds
contained in such account shall be
released upon the final resolution
of such dispute by agreement of the
Parties, settlement, litigation or
other proceeding providing
otherwise.
5.4 In the event Virginia Power terminates this Agreement
for an Operator Event of Default prior to the Commercial Operations Date in
accordance with this Article 5, Virginia Power may retain or draw upon all of
the security provided pursuant to Section 13.3 as liquidated damages to offset
damages Virginia Power incurs or reasonably expects to incur as a result of
Operator's Default. The Parties acknowledge that Virginia Power is relying on
the availability of the Dependable Capacity and Net Electrical Output for the
term of this Agreement and that in the event of termination of the Agreement
due to Operator default, Virginia Power will be damaged. The Parties further
acknowledge that the amount of such damages are not susceptible to an accurate
determination; therefore, the Parties agree that the liquidated damages set
forth herein represent a fair and reasonable amount of all damages under the
circumstances.
5.5(a) In the event Virginia Power terminates this Agreement
after the Commercial Operations Date for reasons of an
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Event of Default by Operator, then Virginia Power, in addition to its other
rights and remedies under Section 5.3(c), may (so long as all obligations and
liabilities of Operator (other than financial obligations and liabilities) have
been either assumed by Virginia Power (and Operator released therefrom) or
terminated) purchase the Facility and its assets, including, but not limited to,
its fuel, materials, records, drawings and spare parts inventory, upon paying
Operator in immediately available funds the greater of the following:
(i) an amount not in excess of the amount of the original
permanent financing for the Facility obtained by Operator, as
escalated by changes to the Gross National Product Implicit
Price Deflator (GNPIPD) from the Month in which the date said
original permanent financing occurred to the Month in which
date of the Event of Default occurs (or, if termination occurs
before the date of permanent financing, the amount of the
construction financing for the Facility obtained by Operator,
as escalated by changes to the GNPIPD from the Month in which
the date said construction financing was obtained to the Month
in which the date of sale occurs); or
(ii) the fair market value of the Facility, determined by an
appraiser appointed pursuant to the procedure set forth in
Section 5.5(f) below, the appraiser having taken into account
the condition of the Facility as of the date of the Event of
Default,
plus, in either case, the following:
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(iv) an amount equal to the federal, state and local taxes payable
as a result of the sale and transfer of the Facility to
Virginia Power; and
(v) any and all amounts payable by Operator either (x) to
terminate any and all other obligations and liabilities of
Operator, or (y) in connection with the assumption by Virginia
Power of, and the release of Operator from, any and all other
obligations and liabilities of Operator, or (z) a combination
of x and y above; and
(vi) all costs, expenses and other amounts incurred by Operator in
connection with Virginia Power's purchase of the Facility
pursuant to this Section 5.5
(b) Virginia Power shall give written notice to Operator of
its intent to purchase the Facility within 60 Days after the maturation of an
Event of Default giving Virginia Power a termination remedy, and Operator and
Virginia Power shall commence the appraisal procedure set forth in Section
5.5(f) to determine the fair market value of the Facility. Virginia Power shall
give Operator a binding commitment to purchase the Facility within twelve (12)
Months of its notice of intent to purchase the Facility. If Virginia Power
declines to exercise such option, or does not give Operator notice within such
twelve (12) Month period, the option shall expire and the Agreement shall expire
thirty (30) Days after Operator's receipt of such declination of the option or
the end of such twelve (12) Month period. Unless and until Virginia Power's
purchase of the Facility is consummated, this Agreement shall survive and
Virginia Power shall continue to
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purchase the Dependable Capacity and Net Electrical Output pursuant to and in
accordance with the provisions hereof. This Agreement shall terminate upon the
consummation of Virginia Power's purchase of the Facility. Transfer of the
Facility to Virginia Power shall be contingent on Virginia Power's receiving
marketable title to the Facility, free of any financial, vendors' or mechanics'
liens, but subject to covenants, conditions, reservations and restrictions of
record, if any.
(c) After transfer of title to the Facility to Virginia Power,
Operator shall indemnify and hold harmless Virginia Power from any and all
claims and liabilities placed on or against the Facility which arose prior to
transfer of title to the Facility to Virginia Power, save and except those
claims and liabilities placed on or against the Facility as a result of an act
or omission of Virginia Power, whether during or after the period Operator owned
the Facility.
(d) Upon giving to Operator notice that Virginia Power intends
to purchase to the Facility as provided in this Section 5.5, Virginia Power's
obligation to take title shall be subject to Virginia Power obtaining acceptable
releases and approvals from all governmental and regulatory bodies and agencies
with jurisdiction over Virginia Power's acquisition of the Facility.
(e) Not used.
(f) The fair market value of the Facility on the date of
the maturation of Event of Default shall be determined by an independent
appraiser qualified to appraise the fair market value of Facility. The
determination of the fair market value by the appraiser shall be binding upon
both Parties. If the Parties
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cannot agree upon a single appraiser, each Party shall select an appraiser and
those two appraisers shall select a third appraiser, and the determination of
the fair market value by the third appraiser shall be binding upon the Parties.
Virginia Power shall pay for the costs of implementing this appraisal procedure.
5.6 Virginia Power may terminate this Agreement at its
convenience upon three hundred and sixty-five (365) Days notice to the Operator.
In such event, Virginia Power shall pay Operator on the date of termination in
immediately available funds a lump sum amount equal to the sum of:
(a) the greater of (i) the net book value of the Facility (as
determined in accordance with generally accepted accounting principles)
or (ii) the amount of the original permanent financing for the Facility
obtained by Operator, as escalated by changes to the GNPIPD from the
month in which the date of such original permanent financing occurred
to the month in which the date of such termination occurs (or, if
termination occurs before the date of permanent financing, the amount
of the construction financing for the Facility obtained by Operator, as
escalated by changes to the GNPIPD from the month in which the date
said construction financing occurred to the month in which the date of
termination occurs);
plus, in either case, the following:
(b) any and all costs, expenses, and other amounts
incurred by Operator incident to prepaying its financing; plus
(c) any and all amounts payable by Operator to terminate
any and all other obligations and liabilities of Operator; plus
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(d) all costs, expenses and other amounts incurred by
Operator in connection with Virginia Power's termination under Section
5.6; plus
(e) an amount equal to the amount of federal, state and local
taxes payable as a result of the payment to Operator of the amounts set
forth in Section 5.6 (a) through (e); plus
(f) the net present value of Operator's anticipated pre-tax
profits for what would have been the remaining term of this Agreement
had this Agreement not been terminated by Virginia Power;
all of the above to be full and complete compensation to Operator for such
termination; provided, however, that in no event will such amount be less than
the amount necessary to obtain a release of the Facility from any lien thereon
securing an amount not in excess of the amount of the original permanent
financing (or, if termination occurs before the date of permanent financing, the
construction financing) obtained by Operator. In the event the Facility is
re-valued or re-financed for any reason, the net book value or lien amount used
herein shall be the value that would otherwise be in effect under the original
devaluation methodology or lien amortization schedule. In order to determine the
amount to be paid pursuant to Section 5.6(e) above, the Parties shall retain an
independent appraiser qualified to make such determination. Such determination
by the appraiser shall be binding upon both Parties. If the Parties cannot agree
upon a single appraiser, each Party shall select an appraiser and those two
appraisers shall select a third appraiser and the determination of the third
appraiser shall
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be binding upon the Parties. Upon payment in immediately available funds of the
amount calculated hereunder, this Agreement shall automatically terminate,
except as set forth above, and Operator shall retain title the Facility.
Virginia Power shall pay for the costs of implementing the above appraisal
procedure.
For what would have been the remaining term of this Agreement had this
Agreement not been terminated by Virginia Power, Operator shall pay to Virginia
Power annually no later than twenty (20) Business Days after its auditors have
issued its financial statements (the "Current Financials") with respect to the
most recently ended calendar year (the "Past Year") an amount equal to five
percent (5%) of the Operator's gross revenues for the Past Year as set forth in
the then Current Financials, but in no event shall the amount paid in respect of
any Past Year pursuant to this paragraph exceed fifty percent (50%) of
Operator's pre-tax profits with respect to such Past Year. With respect to the
amount payable under this paragraph, such obligation by Operator shall be in the
nature of a royalty and the Parties acknowledge that such obligation shall not
create an association, joint venture or partnership between the Parties or
impose any partnership obligation or liability upon the Operator or give any
management rights to Virginia Power.
5.7 Operator shall cooperate with Virginia Power in Virginia
Power's exercise of its rights under this Article 5 by (i) providing to Virginia
Power all the documentation necessary and appropriate to the determination of
the net book value or lien value of the Facility, in the case of an exercise
under 5.5 or 5.6,
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(ii) executing all documents necessary and appropriate to the transfer of title
in the Facility to Virginia Power, in the case of an exercise under 5.5, (iii)
providing Virginia Power with good and marketable title to the Facility free and
clear of all liens and encumbrances in the case of an exercise under 5.5, and
(iv) mothballing the Facility in the case of an exercise under 5.6.
ARTICLE 6: REPRESENTATIONS, WARRANTIES AND COVENANTS
6.1 Operator covenants that (i) beginning with the Commercial
Operations Date and at all times thereafter until the termination of this
Agreement, Operator will have a reliable supply of fuel of quality and in
quantity sufficient to meet the energy and Dependable Capacity delivery
requirements hereunder and (ii) Operator shall maintain at least a thirty (30)
Day (at full load) supply of such fuel stored within one (1) mile of the
Facility site. From time to time, as Virginia Power may reasonably request,
Operator shall provide Virginia Power evidence of its compliance with this
obligation, which shall include fuel transportation arrangements, short and long
term fuel procurement strategies and reasonable evidence of executed fuel
contracts (such as memoranda of such contracts). Operator's inventory of coal
and availability of any alternate supplies of fuel will be considered in
determining whether Operator has a reliable supply of fuel.
6.2 Operator covenants that the Facility will be operated
and maintained in accordance with the following:
(a) Operating and maintenance standards
recommended by the Facility's equipment
suppliers.
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(b) Operating procedures developed pursuant to
Section 4.5.
(c) Prudent Utility Practices, including without
limitation, synchronizing, voltage and
reactive power control.
(d) Generally accepted Prudent Electrical
Practices.
(e) Any applicable laws, regulations, permits
and licenses.
6.3 Operator covenants that the Facility will be operated in
accordance with Prudent Utility Practices in such a manner so as not to have an
adverse effect on Virginia Power's voltage level or voltage waveform.
6.4 Operator covenants that the Facility will be operated at
the voltage levels determined pursuant to Section 4.6.
6.5 Operator covenants that the Facility will be designed,
constructed and completed in a good and workmanlike manner, only with materials
and equipment that are new and of utility-grade quality, in such a manner as to
provide a reasonable likelihood that the useful life of the Facility will be at
least equal to the Term and strictly in accordance with (i) the plans and
specifications and accompanying data reviewed by Virginia Power pursuant to this
Agreement, (ii) all applicable laws, rules, regulations, permits and licenses,
(iii) sound engineering and
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construction practices, Prudent Electrical Practices and Prudent Utility
Practices; and (iv) such requirements as Virginia Power may reasonably deem
necessary or desirable in order for the Interconnection Facilities to be
designed and constructed in accordance with sound engineering practices, Prudent
Electrical Practices and Prudent Utility Practices.
6.6 Operator covenants that it shall obtain and maintain the
insurance coverage specified in and in accordance with Article 12 of this
Agreement with respect to the construction and operation of the Facility.
6.7 Operator covenants that Virginia Power shall, on such
notice as is practicable under the circumstances, have access to and the right
to inspect the Facility at reasonable times on a recurring basis as deemed
necessary by Virginia Power including, but not limited to, during construction
of the Facility.
6.8 Operator covenants that, to the extent it does not have a
material adverse effect on Operator's ability to perform under this Agreement,
it shall, (a) at all times, comply with all applicable laws, ordinances, rules
and regulations applicable to it; (b) give all required material notices (and
all notices from Operator to Virginia Power concerning the operations and
availability of the Facility are deemed material), procure and maintain all
governmental permits, licenses and inspections necessary for its performance of
this Agreement; and (c) pay all charges and fees in connection therewith.
6.9 Operator covenants that it shall comply with all
applicable provisions, and successor provisions thereto of Executive Order
11246, as amended; Section 503 of the Rehabilitation Act
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of 1973, as amended; Section 402 of the Vietnam Era Veterans Readjustment
Assistance Act of 1974, as amended; and implementing regulations set forth in 41
C.F.R. Sections 60-1, 60-250, and 60-741 and the applicable provisions relating
to the utilization of small and minority business concerns as set forth in 15
U.S.C. Section 637, as amended. Operator agrees that the equal opportunity
clause set forth in 41 C.F.R. Section 60-1.4 and the affirmative action clauses
set forth in 41 C.F.R. Section 60-250.4 and 41 C.F.R. Section 60-741.4 and the
clauses relating to the utilization of small and minority business concerns set
forth in 15 U.S.C. Section 637(d)(3) and 48 C.F.R. Section 52-219.9 are hereby
incorporated by reference and made a part of this Agreement. If this Agreement
has a value of more than $500,000, Operator shall adopt and comply with a small
business and small disadvantaged business subcontracting plan which shall
conform to the requirements set forth in 15 U.S.C. Section 637(d)(6). The
provisions of this Section 6.9 shall apply to Operator only to the extent that:
(a) such provisions are required of Operator
under existing law,
(b) Operator is not otherwise exempt from said
provisions, and
(c) compliance with said provisions is
consistent with and not violative of 42
U.S.C. Section 2000e et seq., 42 U.S.C.
Section 1981 et seq., or other acts of
Congress.
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6.10 (a) Any fines or other penalties incurred by Operator or
its agents, employees or subcontractors for noncomplitlee by Operator, its
agents, employees, or subcontractors with laws, rules, regulations or ordinances
shall not be reimbursed by Virginia Power but shall be the sole responsibility
of Operator. If fines, penalties or legal costs are assessed against Virginia
Power by any government agency or court due to noncompliance by Operator with
any of the laws, rules, regulations or ordinances referred to in Sections 6.8
and 6.9 above or any other laws, rules, regulations or ordinances with which
compliance is required herein, or if the work of Operator or any part thereof is
delayed or stopped by order of any government agency or court due to Operator's
noncompliance with any such laws, rules, regulations or ordinances, Operator
shall indemnify and hold harmless Virginia Power against any and all fines,
penalties, losses, liabilities, damages, claims, costs, and expenses suffered or
incurred because of the failure of Operator to comply therewith; provided,
however, that damages to Virginia Power resulting from a delay in the Commercial
Operations Date will be covered by Section 13.4 herein. Operator shall also
reimburse Virginia Power for any and all legal or other expenses (including
reasonable attorneys' fees and disbursements) reasonably incurred by Virginia
Power in connection with such fines, penalties,losses, liabilities, damages,
claims, costs or expenses.
(b) Any fines or other penalties incurred by Virginia
Power or its agents, employees or subcontractors for noncompliance by Virginia
Power, its agents, employees, or subcontractors with laws, rules, regulations
or ordinances shall not be reimbursed by
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Operator but shall be the sole responsibility of Virginia Power. If fines,
penalties or legal costs are assessed against Operator by any government agency
or court due to noncompliance by Virginia Power with any of the laws, rules,
regulations or ordinances referred to in Sections 6.8 and 6.9 above or any other
laws, rules, regulations or ordinances with which compliance is required herein,
or if the work of Operator or any part thereof is delayed or stopped by order of
any government agency or court due to Virginia Power's noncompliance with any
such laws, rules, regulations or ordinances, Virginia Power shall indemnify and
hold harmless Operator against any and all fines, penalties, losses,
liabilities, damages, claims, costs and expenses suffered or incurred because of
the failure of Virginia Power to comply therewith. Virginia Power shall also
reimburse Operator for any and all legal or other expenses (including reasonable
attorney's fees and disbursements) reasonably incurred by Operator in connection
with such fines, penalties, losses, liabilities, damages, claims, costs or
expenses.
6.11(a) The Operator hereby represents and warrants:
(1) The Operator is a corporation duly
organized, validly existing and in
good standing under the laws of the
State of Delaware and is qualified
as a foreign corporation in good
standing in Virginia if not
incorporated in Virginia and in each
other jurisdiction where the failure
so to qualify would have a material
adverse effect
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upon the business or financial
condition of the Operator; and the Operator
has all requisite power and authority to
conduct its business, to own its properties,
and to execute, to deliver, and to perform
its obligations under this Agreement.
(2) The execution, delivery and performance by
the Operator of this Agreement have
been duly authorized by all necessary
corporate action, and do not and will not
(i) require any consent or approval of the
Operator's Board of Directors, or
shareholders, other than that which have
been obtained (evidence of which shall be,
if it has not heretofore been, delivered to
Virginia Power), (ii) violate any provisions
of the Operator's corporate bylaws or other
organic documents, any material indenture,
contract or agreement to which it is a party
or by which it or its properties may be
bound, or any law, rule, regulation, order,
writ, judgement, injunction, decree,
determination, or award presently in effect
having applicability to the Operator, or
(iii) result in a breach or constitute a
default under the Operator's corporate
bylaws, other organic documents or other
material indentures, contracts, or
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agreements, and the Operator is not in
default under its corporate bylaws or other
organic documents or other material
indentures, contracts, or agreements to
which it is a party or by which it or its
property may be bound.
(3) No authorizations or approval by any
governmental or other official agency is
necessary for the due execution, delivery
and performance by the Operator of this
Agreement as in effect on the date hereof;
other than those associated with permitting
and licensing the Facility and other than
SEC approvals or no-action letters, the
procurement of which Operator may deem to be
necessary or appropriate.
(4) This Agreement is a legal, valid and
binding obligation of Operator
enforceable in accordance with its terms,
except as such enforceability may be limited
by bankruptcy, insolvency, reorganization or
similar laws relating to or affecting the
enforcement of creditors' rights generally
or by general equitable principles,
regardless of whether such enforceability is
considered in a proceeding in equity or at
law.
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(5) There is no pending or, to the best of
Operator's knowledge, threatened action or
proceeding affecting the Operator before any
court, governmental agency or arbitrator
that could reasonably be expected to affect
materially and adversely the financial
condition or operations of the Operator or
the ability of the Operator to perform its
obligations hereunder, or which purports to
affect the legality, validity or
enforceability of this Agreement (as in
effect on the date hereof).
(b) Virginia Power hereby represents and
warrants:
(1) Virginia Power is a corporation duly
organized, validly existing and in good
standing under the laws of the Commonwealth
of Virginia and is qualified as a foreign
corporation in each other jurisdiction where
the failure so to qualify would have a
material adverse effect upon the business or
financial condition of Virginia Power; and
Virginia Power has all requisite power and
authority to conduct its business, to own
its properties, and to execute, to deliver,
and to perform its obligations under this
Agreement.
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(2) The execution, delivery and performance
by Virginia Power of this Agreement have
been duly authorized by all necessary
corporate actions, and do not and will not
(i) require any consent or approval of
Virginia Power's Board of Directors, or
shareholders, other than that which have
been obtained (evidence of which shall be,
if it has not heretofore been, delivered to
Operator); (ii) violate any provisions of
Virginia Power's corporate by-laws or other
organic documents, any material indenture or
financing agreement to which it is a party
or by which it or its properties may be
bound, or any law, rule, regulation, order,
writ, judgment, injunction, decree,
determination or award presently in effect
having applicability to Virginia Power, or
(iii) result in a breach or constitute a
default under Virginia Power's corporate
by-laws, other organic documents or other
material indentures, or financing
agreements, and Virginia Power is not in
default under its corporate by-laws or other
organic documents or other material
indentures or financing agreements to which
it is a party or by which it or its
properties may be bound.
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(3) No authorizations or approval by any
governmental or other official agency is
necessary for the due execution and delivery
by Virginia Power of this Agreement as in
effect on the date hereof.
(4) This Agreement is a legal, valid and
binding obligation of Virginia Power
enforceable in accordance with its terms,
except as such enforceability may be limited
by bankruptcy, insolvency, reorganization or
similar laws relating to or affecting the
enforcement of creditors' rights generally
or by general equitable principles,
regardless of whether such enforceability is
considered in a proceeding in equity or at
law.
(5) There is no pending or, to the best of
Virginia Power's knowledge, threatened
action or proceeding affecting Virginia
Power before any court, governmental agency
or arbitrator that could reasonably be
expected to affect materially and adversely
the financial condition or operations of
Virginia Power or the ability of Virginia
Power to perform its obligations hereunder,
or which purports to affect the legality,
validity or
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enforceability of this Agreement
(as in effect on the date hereof).
6.12(a) Operator agrees that upon request of Virginia Power,
Operator shall, at Virginia Power's cost, cause its counsel to issue an opinion
to Virginia Power addressing the representations in Section 6.11(a) and
addressing such further matters as Virginia Power may reasonably request;
provided, however, that where the request for such opinion is in response to a
valid and applicable requirement of a governmental agency with jurisdiction over
Virginia Power, Operator shall assume the cost of the opinion.
(b) Virginia Power agrees that upon the request of Operator,
Virginia Power shall, at Operator's cost, cause its counsel to issue an opinion
to Operator addressing the representations in Section 6.11(b) and addressing
such further matters as Operator may reasonably request.
6.13 Operator agrees that, upon request of Virginia Power, it
shall deliver or cause to be delivered from time to time to Virginia Power
certifications of its officers, accountants, engineers, or agents addressing
such matters as Virginia Power may reasonably request.
(b) Virginia Power agrees that, upon the request of Operator,
it shall deliver or cause to be delivered from time to time to Operator
certifications of its offices, accountants, engineers, or agents addressing such
matters as Operator may reasonably request.
6.14(a) Operator, agrees to preserve and keep in force and
effect its corporate existence and all franchises,
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licenses and permits, material to the
proper conduct of business under this
Agreement, including without limitation
the business of constructing, owning and
operating the Facility.
(b) Virginia Power agrees to preserve and keep
in force and effect its corporate existence
and all franchises, licenses and permits,
material to the proper conduct of business
under this Agreement.
6.15 Operator will keep proper books of record and account in
which full and correct entries will be made of all dealings or transactions of
or in relation to its business and affairs, in accordance with generally
accepted accounting principles, consistently applied, and will furnish the
following to Virginia Power so long as this Agreement is in effect:
(a) Quarterly Statements. Within sixty (60) Days
after the end of each quarterly fiscal
period (except the last) of each fiscal
year, copies of balance sheets of Operator
as of the close of such period, subject to
changes resulting from year-end adjustments;
prepared in accordance with generally
acceptable accounting principles.
(b) Annual Statements. As soon as available and
in any event within one hundred twenty (120)
Days after the close of each fiscal year of
Operator, copies of balance sheets of
Operator as of the close of such fiscal
year, prepared in accordance with generally
accepted accounting principles.
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(c) Third Party Reports. Operator will allow a
certified public accountant to examine the
books and records of Operator with a view
toward reporting to Virginia Power whether
or not, in the accountant's opinion, (i)
Operator is capable of, and has a financial
condition sufficient to support, continuing
operations as a going concern and (ii)
Operator is able to perform under this
Agreement. In giving its report, the
accountant may advise Virginia Power as to
whether a particular financial condition of
Operator is improving, deteriorating or
stable, but shall not disclose any dollar
amounts. Prior to examining the books and
records of Operator, the certified public
accountant must have entered into a
confidentiality agreement with Operator,
satisfactory to Operator, prohibiting the
accountant from disclosing any information
or giving any report to Virginia Power or
making any statement regarding Operator to
Virginia Power except as permitted by this
Section 6.15(c). Operator will pay all
expenses of the accountant and of his
examination of Operator's books and records.
This Section 6.15(c) does not give Virginia
Power any right for Virginia Power itself to
examine any books or records of Virginia
Power or to receive any information or
report from the accountant other than the
referenced opinions.
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(d) Amortization Schedule. Within thirty (30)
Days after Financial Closing, a copy of the
Operator's amortization schedule resulting
from Financial Closing.
6.16 Operator shall provide Virginia Power copies of any
maintenance evaluations or reports it performs for or obtains from any third
party including those with a financial security interest in or lien on the
Facility. The Operator shall use its best efforts to obtain for Virginia Power
copies of any evaluations or reports generated at the request of such third
parties or performed by an engineer employed by such third party.
6.17 Operator will provide to Virginia Power, on a Monthly
basis, a notarized statement of the quantity and cost of fuel consumed in the
Facility on an aggregate basis.
ARTICLE 7: CONTROL AND OPERATION OF THE FACILITY; DISPATCH
7.1 Prior to the beginning of each operating Day (such Day to
be defined in the operating procedures developed pursuant to Section 4.5)
Operator shall inform the Virginia Power operations center designated in the
interconnection study performed pursuant to Article 8 as to the daily operating
availability and expected maximum generation capability of its Facility,
including, without limitation, any anticipated Forced Outage.
7.2 Operator shall, at least thirty (30) Days prior to the
Commercial Operations Date, submit a written maintenance schedule
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for the first year of the Facility's operations. Thereafter, Operator shall
submit to Virginia Power, in writing, by September 1 of each Year, its desired
Scheduled Outage periods for the next Year. Operator shall not schedule such
maintenance shutdown of its Facility during the Winter Demonstration Period or
during the Summer Demonstration Period of any Year if such shutdown would
decrease the Net Electrical Output of the Facility below the Dependable Capacity
level established by testing pursuant to Article 11 without the prior written
consent of Virginia Power. Operator agrees and understands that Virginia Power
shall not be obligated to grant approval for such periods. Such Scheduled
Outages shall not exceed 18 Days in each Year except that every 5th year up to
39 Days may be scheduled. By October 31 of each Year, Virginia Power shall
notify Operator in writing whether the requested Scheduled Outage periods are
acceptable. If Virginia Power cannot accept any of the requested Scheduled
Outage periods, Virginia Power shall advise Operator of the time period closest
to the requested period when the outage can be scheduled.
7.3 Virginia Power shall have the right, upon twelve
(12)months prior written notice, to revise (but not to increase the number of)
the months during which Operator shall not, unless mutually agreed, schedule a
maintenance shutdown, but Virginia Power shall not exercise such right in a
manner which deprives Operator of maintenance periods as designated in this
Agreement.
7.4 Each Party shall keep complete and accurate records and
all other data required by each of them for the purposes of proper
administration of this Agreement in accordance with the following guidelines:
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(a) All such records shall be maintained for a
minimum of five (5) years after the creation
of such record or data and for any
additional length of time required by
regulatory agencies with jurisdiction over
the Parties; provided, however, that
Operator shall not dispose of or destroy any
such records even after the five (5) years
without thirty (30) Days prior notice to
Virginia Power.
(b) Operator shall maintain an accurate and
up-to-date operating log at the Facility
with records of: (i) real and reactive power
production for each clock hour; (ii) changes
in operating status, Scheduled Outages and
forced outages; and (iii) any unusual
conditions found during operation or
inspections.
(c) Either Party shall have the right from time
to time, upon fourteen (14) Days written
notice to the other Party, to examine the
records and data of the other Party relating
to this Agreement any time during the period
the records are required to be maintained.
(d) Operator shall provide Virginia Power with
Facility performance and events data to be
submitted Quarterly in accordance with
current
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NERC and Generating Availability Data
Systems (GADS) reporting standards.
7.5 Virginia Power agrees to Dispatch the Facility so that the
Facility is operated at no less than its Minimum Operation Level, except to the
extent Virginia Power has the right to Dispatch the Facility offline and except
to the extent that the Facility is being so ramped down to begin an outage or
ramped up to initiate a start-up. Operator shall operate the Facility and
control its output manually whenever it is being Dispatched below 50% of its
Dependable Capacity or above 100% of its Dependable Capacity. Virginia Power
shall have the right to control the output of the Facility pursuant to Automatic
Generation Control when it is being Dispatched at or above 50% of its Dependable
Capacity and at or below 100% of its Dependable Capacity. Virginia Power and
Operator will include Dispatch procedures (including without limitation
consideration of technical matters that could affect safety, reliability,
efficiency or life of the Facility, such as, without limitation, minimum
loadings and unit ramp rates) in the manual to be developed pursuant to Section
4.5. Operator agrees to operate the Facility consistent at all times with
Virginia Power's Dispatch of the Facility and the terms of this Agreement;
provided, however, that Virginia Power shall not be obligated to purchase or
receive, and may require Operator to reduce or cease energy deliveries in
accordance with the terms of this Agreement; and provided, further that this
Section 7.5 shall not relieve Virginia Power of its obligation to make capacity
payments as and when required hereunder. In particular, Operator shall comply
with Virginia Power's Dispatch orders when:
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(a) Notwithstanding the provisions of Section
7.8 hereof, in Virginia Power's sole
opinion, a condition exists which presents a
physical threat to any persons or property;
or
(b) Subject to the provisions of Section 7.8
hereof, it is necessary to construct,
install, maintain, repair, replace, remove,
investigate, inspect or test any part of the
Facility or the Interconnection Facilities,
or any other affected part of Virginia
Power's system.
Virginia Power will make a reasonable effort to notify and coordinate such
reductions with Operator. With respect to Section 7.5(b) above, Virginia Power
shall provide Operator with at least forty-eight (48) hours prior notice when
practicable. Any reduction required of Operator pursuant to subsection (a) above
shall be implemented and completed as soon as possible consistent with Prudent
Utility Practices.
7.6 Except as allowed by Section 7.5(a), Virginia Power shall
Dispatch the Facility in accordance with the Design Limits and the following
notice provisions:
(a) On Friday of each week, Virginia Power will
provide Operator with a projected schedule
of operations for the following week. The
actual operating level will be determined
by the requirements for
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operation in accordance with Dispatch
and/or Automatic Generation Control and may
be substantially different than the schedule
provided in accordance with this Section.
(b) Virginia Power will provide Operator with
five (5) minutes notice of changes in
operating levels to be achieved by the
Facility in accordance with the Design
Limits, except that when the Facility is
operated with Automatic Generation Control,
pursuant to the terms hereof, Virginia Power
shall not be required to provide such
notice.
Operator agrees to comply with the notices received from Virginia Power pursuant
to (a) and (b) above.
7.7 Operator shall employ qualified personnel for monitoring
the Facility and for coordinating operations of the Facility with Virginia
Power's system. Operator shall ensure that such personnel are on duty at all
times, twenty-four (24) hours a Day and seven (7) Days a week.
7.8 The Parties recognize that Virginia Power is a member of
NERC and that, to ensure continuous and reliable electric service, Virginia
Power operates its system in accordance with the operating criteria and
guidelines of NERC. If an Emergency is declared, Virginia Power's operations
center will notify Operator's
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personnel and, if requested by Virginia Power, Operator shall use all reasonable
efforts, in the Operator's sole judgment, to comply with Virginia Power's
request during such Emergency, consistent with the capability of the Facility at
the time and under the circumstances. Without limiting the foregoing, Virginia
Power's operations center may require Operator's personnel to raise or lower
production of energy generated by the Facility to maintain safe and reliable
load levels and voltages on Virginia Power's transmission and/or distribution
system; provided, however, any changes in the level of the Net Electrical Output
required of Operator hereunder shall be implemented in a manner consistent with
safe operating procedures and within the Facility's Design Limits.
7.9 Operator shall cooperate with Virginia Power in
establishing Emergency plans, including without limitation, recovery from a
local or widespread electrical blackout; voltage reduction in order to effect
load curtailment; and other plans which may arise. The Operator shall make
technical references available concerning start-up times, black-start
capabilities (if applicable) and minimum load-carrying ability.
7.10 If Operator has a Scheduled Outlee, and such Scheduled
Outage occurs or would occur coincident with an Emergency, Operator shall make
all good faith efforts to reschedule the outage or, if the outage has begun, to
expedite the completion thereof.
7.11 Operator shall operate the Facility with its speed
governors, voltage regulators and, subject to Section 7.5, Automatic Generation
Control (AGC) equipment operable whenever the Facility is connected to or
operated in parallel with the Virginia Power system pursuant to Virginia Power's
Dispatch rights;
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provided, however, that Operator shall not be required to go off line or cease
operating the Facility because the AGC equipment does not operate.
7.12 In the event of failure of the AGC equipment to operate,
Virginia Power will endeavor to Dispatch the Facility by alternative means over
the operating range controlled by the AGC equipment. The use of such alternative
means of Dispatch will be used until the failure of the AGC equipment is
corrected. Operator will use its best efforts to correct the failure of their
AGC equipment as soon as possible.
ARTICLE 8: INTERCONNECTION
8.1 Operator shall be responsible for the design,
construction, installation, maintenance and ownership of the Facility (which as
defined herein includes without limitation auxiliaries and interconnection
equipment on Operator's side of the Interconnection Point).
8.2 If it is determined in the interconnection study performed
by Virginia Power pursuant to Section 8.5 that the Virginia Power-owned metering
facilities (which will include current and potential transformers and
telemetering equipment) should be installed on Operator's property then: (i)
Virginia Power shall provide the Operator with the metering equipment, (ii)
Operator shall be required to install such metering equipment and (iii) such
installation shall be done as prescribed by Virginia Power.
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8.3 Virginia Power shall be responsible and shall pay for the
design, construction, installation (except as provided herein), maintenance and
ownership of the Interconnection Facilities.
8.4 By December 31, 1990, Operator shall provide to Virginia
Power the data required in Exhibit A attached hereto, including proposed
performance dates and a proposed schedule which shall be consistent with
milestone dates provided in Section 5.3 of this Agreement. Virginia Power shall
have the right to comment on and suggest revisions to Operator's proposed
schedule; provided, however, that if Virginia Power has not responded within 30
Days of its receipt thereof, it will be deemed to have no comments or revisions.
All site plans and one-line diagrams provided shall be certified by an engineer
licensed by the state in which the Facility is located. Operator shall update
the proposed schedule in its monthly progress reports provided to Virginia Power
pursuant to Section 4.2 hereof; provided, however, that any changes in the
proposed schedule shall be consistent with the milestone dates provided in
Section 5.3 hereto. Virginia Power shall have the right to evaluate the
reasonableness of the schedule and monitor progress of the development of the
Facility to assess whether Operator will meet the Anticipated Commercial
Operations Date. Operator shall comply with all reasonable requests of Virginia
Power to modify the proposed schedule if Virginia Power reasonably believes such
changes are necessary for Operator to have the Commercial Operations Date occur
within fifteen (15) Days prior to or fifteen (15) Days after the Anticipated
Commercial Operations Date; provided, however, that if Virginia Power has not
responded
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within 30 Days of its receipt of the schedule, it will be deemed to have no
comments or revisions.
8.5 Virginia Power shall perform an interconnection study
within one hundred and twenty (120) Days of Operator's completion of the
requirements of Section 8.4 above. The interconnection study shall, at a
minimum, (i) determine the Interconnection Point and the time required to
complete the Interconnection Facilities and (ii) designate the Virginia Power
operations center that will coordinate the operation of the Facility. The
Interconnection Facility design shall be consistent with Prudent Utility
Practices considering the functional one-line diagram and site plan provided to
Virginia Power pursuant to Section 8.4.
8.6 Within thirty (30) Days of receipt of the interconnection
study, Operator agrees: (i) to grant to Virginia Power all necessary rights of
way and easements, including adequate and continuing access rights on property
of Operator, to install, operate, maintain, replace and/or remove the
Interconnection Facilities located on property of Operator; and (ii) to provide
a site plan drawing showing the Facility's grid system tied to the site property
lines and switchyard for the purpose of the transmission line survey. No later
than one hundred and twenty (120) Days prior to commencement of construction of
the Interconnection Facilities, Operator shall execute any documents as Virginia
Power may require to record such rights of way and easements. Consideration for
such grants, deeds or documents shall be the execution of this Agreement and no
other consideration shall be required. Operator agrees that rights of way and
easements shall survive termination or expiration of this Agreement.
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8.7 When Operator has completed the requirements of Section
8.6 above, Virginia Power shall engineer and construct the Interconnection
Facilities in accordance with the design determined in the interconnection study
performed pursuant to Section 8.5. Failure by Virginia Power to complete the
Interconnection Facilities within the time period determined pursuant to Section
8.8 shall not be considered a default of this Agreement if such failure can
reasonably be attributed to any of the following:
(a) Events beyond Virginia Power's reasonable
control, including without limitation, time
delays incident to the SCC's granting of any
required certificate(s) of convenience and
necessity, time constraints associated with
the procurement of necessary equipment.
(b) The failure of Operator to execute in time
sufficient for Virginia Power to complete
the Interconnection Facilities grants,
deeds, or documents as Virginia Power may
require to record rights of way, easements,
or other grants in accordance with Section
8.6.
(c) Failure of Operator to provide by the
required dates technical data necessary for
Virginia Power to perform interconnection.
8.8 Subject to the provisions of Section 8.7 above, Virginia
Power shall be obligated to have the Interconnection
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Facilities completed no later than 120 Days prior to the Anticipated Commercial
Operations Date and shall endeavor to have such facilities completed 180 Days
prior to the Anticipated Commercial Operations Date if the interconnection study
shows such earlier date to be practicable. Virginia Power's obligation is
expressly conditioned on Operator's submission of data in a timely manner as
required under this Agreement, in form and substance meeting reasonable
standards and expectations of Virginia Power and supportive of the
interconnection. Upon 18 months prior notice by Operator, Virginia Power will
endeavor to complete the Interconnection Facilities at a date requested by
Operator that is more than 180 Days prior to the Anticipated Commercial
Operations Date. If, at the request of Operator, Virginia Power completes the
Interconnection Facilities more than 180 Days prior to Anticipated Commercial
Operations Date, Operator will pay Virginia Power's standard facilities charge
for the use of such Interconnection Facilities atlehe monthly rate specified in
Section IV E.4 of the Terms and Conditions on file with the SCC from the date
such facilities are completed until 180 Days prior to the Commercial Operations
Date.
8.9 Virginia Power reserves the right to modify or expand its
requirements for protective devices to conform with Prudent Electrical Practices
and Prudent Utility Practices and to ensure safe uninterrupted operation of its
electrical system.
8.10 Each Party shall notify the other in advance of any
changes to its system that will affect the proper coordination of protective
devices on the two systems.
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ARTICLE 9: METERING
9.1 (a) Virginia Power shall own and maintain all meters and
metering devices (including remote terminal units) used to measure, for payment
purposes, the delivery to Virginia Power of the Facility's Net Electrical Output
and Dependable Capacity. Nothing in this Agreement shall prevent Operator,
solely for Operator's purposes, from installing Operator-owned and maintained
meters and metering devices in addition to Virginia Power owned and maintained
meters and metering devices.
(b) If any tests under Section 9.2 show that the meters
fail to meet the accuracy requirements provided in the SCC's regulations
(or in the absence thereof are more than two percent (2%) fast or slow), the
Parties shall review all pertinent metering and other records and attempt to
determine actual deliveries of electricity. Virginia Power shall make offsetting
adjustments in all monthly statements and other records and in all previous
energy and capacity payments for any known or agreed upon period of inaccuracy.
In the absence of such knowledge or agreement, Virginia Power shall make such
adjustment for the second half of the period since the most recent meter test.
Virginia Power or Operator shall make such payment to the other as is necessary
to effectuate such adjustment by adjusting the appropriate payments during the
next monthly billing statement and payment cycle. Any such meters or associated
metering equipment of Virginia Power shall be promptly replaced, repaired, or
readjusted by Virginia Power.
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9.2 All Virginia Power-owned meters and metering equipment
used to determine the Net Electrical Output and Dependable Capacity delivered to
Virginia Power shall be sealed, and the seals opened only by Virginia Power
personnel when the meters are to be inspected, tested, or adjusted; Virginia
Power shall give Operator prior written notice thereof and Operator shall have
the right to be present. Virginia Power will test the meter(s) in accordance
with the provisions for meter testing set forth in Virginia Power's approved
Terms and Conditions for Supplying Electricity as filed with the SCC at the time
the test is performed.
9.3 Operator shall provide at its expense:
(a) For the purpose of telemetering, a
telecommunication circuit to the operations
center designated by Virginia Power;
(b) A voice telephone extension for the purpose
of accessing Virginia Power's dial-up
metering equipment and for communicating
with the designated Virginia Power
operations center;
(c) An extension of Virginia Power's system
operations center's PBX system in the
control room of the Facility;
(d) Equipment to transmit and receive telecopies
for purposes of generation scheduling,
Dispatch orders and coordination of
switching.
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Each of the items provided by Operator in accordance with this Section 9.3 shall
be subject to the approval of Virginia Power, which approval shall not be
unreasonably withheld.
9.4 Operator shall test and adjust its Automatic Generation
Control System in accordance with Prudent Utility Practices and the results of
such tests shall be reported to Virginia Power.
ARTICLE 10: COMPENSATION, PAYMENT, AND BILLINGS
10.1 The Operator shall be compensated for the Net Electrical
Output of the Facility on a cents per kWh basis at a rate equal to the Energy
Purchase Price. The Energy Purchase Price is composed of the Base Fuel
Compensation Price, the Fuel Compensation Price or the discounted Fuel
Compensation Price, as applicable, as determined in Sections 10.2 - 10.13 below,
multiplied by the Heat Rate and then increased by the variable O&M Price
specified in Section 10.14. The Input/Output curve coefficients in the formula
specified in Section 1.20 are A = 2.26117 x 10(8), B = 7.64063 x 10(3) and C =
4.27130 x 10(-3) and shall remain fixed for the term of the Agreement.
The Facility is composed of 1 generating
unit with Input/Output curve coefficients as
follows:
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INPUT/OUTPUT CURVE COEFFICIENTS:
<TABLE>
<CAPTION>
Unit No. A B C
- -------- --------------- --------------- ----------------
<S> <C> <C> <C>
1 2.26117 x 10(8) 7.64063 x 10(3) 4.27130 x 10(-3)
</TABLE>
10.2 The Base Fuel Compensation Price (BFCP) shall be the
initial price Virginia Power will pay the Operator for the fuel portion of the
Energy Purchase Price. The Base Fuel Compensation Price, effective October 1,
1989 for energy received from the Facility, shall be based on a delivered fuel
cost of 163.0c./million Btus. The Base Fuel Compensation Price shall be subject
to adjustment only as specified herein.
10.3 For the purpose of this Section, the following terms,
whether in the singular or in the plural, shall have the meaning stated below:
(a) Base Eastern Bituminous Coal Index (BEBCI) -
The Eastern Bituminous Coal Index for the
second Calendar Quarter of 1989. Using the
definitions specified herein, it is
designated (EBCI)(2,1989) and is equal to
147.7 cents per million Btu as of the
Execution of this Agreement.
(b) Eastern Bituminous Coal Index (EBCI) - The
average cost of coal (including the impact
of any applicable tax credit, e.g. the
Virginia Tax Credit) purchased for Virginia
Power's in-system coal fired stations (which
excludes Mt. Storm)
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reported in cents per million Btu for the
Calendar Quarter in question. The index is
calculated using the weighted average
delivered cost of solid fuel, in c./million
Btu, reported on FERC Form 423. The EBCI
shall be abbreviated as EBCI(q,y) where q is
the Calendar Quarter and y is the year.
10.4 At least two (2) weeks prior to the Initial
Synchronization Date and at least two (2) weeks prior to the beginning of each
subsequent Calendar Quarter thereafter, the Fuel Compensation Price that will be
effective during that next subsequent Calendar Quarter shall be calculated as
follows:
EBCI(q-2,y)-1
Fuel Compensation Price = ---------------------- X BFCP
BEBCI-1
Thus, if the Fuel Compensation Price were being determined for the first
Calendar Quarter of 1990, the numerator of the above equation would be
EBCI(3,1989).
10.5 THIS SECTION IS NOT USED.
10.6 Operator may, with at least two (2) weeks prior written
notice, specify, revise, or revoke a discount to the Fuel Compensation Price to
be used in the following Calendar Month. This discount shall then be applied
against the Fuel Compensation Price as calculated herein, and the resultant
price will be used in lieu of the Fuel Compensation Price for the purposes of
payments and Dispatch, whereas the non-discounted Fuel Compentleion Price shall
continue to be calculated in accordance with this Article 10. This discount will
be effective, in the form specified in the
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Operator's notice, until Operator provides further notice as specified in this
Section 10.6, except, however, that such discount shall be effective for at
least one Calendar Month. The resultant discounted Fuel Compensation Price shall
not exceed the non-discounted Fuel Compensation Price calculated in accordance
with this Article 10.
10.7 Opportunities to redetermine the BEBCI, the EBCI, and/or
the fuel component of the Base Fuel Compensation Price shall begin on the third
July 1 after the signing of this Agreement and every third July 1 thereafter
("Redetermination Date"). Either Party may submit written notice to the other
Party requesting such redetermination no less than four (4) Calendar Months
prior to the Redetermination Date. Such written notice shall include any
proposed change(s) and the basis for such change(s). The Parties shall then
enter into good faith negotiations for the purpose of revising the BEBCI, the
EBCI, and/or the Base Fuel Compensation Price to reflect more accurately the
prices then prevailing in the market for prudent purchases of Solid Fuel. If
such redetermination is not complete within thirty (30) Days after the
Redetermination Date, either Party may submit the matter to binding arbitration
as discussed in Sections 10.8 through 10.13, below.
10.8 The location of arbitration shall be in Richmond,
Virginia, unless otherwise mutually agreed. The method of arbitration shall be:
(a) The Parties shall agree upon a single
arbitrator with knowledge of and experience
in the matter of Solid Fuel and the
procurement and use of Solid
<PAGE> 77
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Fuel in electric power plants or the
electric utility industry, or, if the
Parties cannot agree;
(b) Each Party shall designate one arbitrator
and the individuals so designated shall
jointly select a third arbitrator, or, if
this arbitrator selection process fails;
(c) Either Party may request the American
Arbitration Association to appoint the
arbitrator(s), who shall be a specialist(s)
in the matter of solid fuel.
10.9 Either Party may submit a written statement of its position
to the arbitrator(s) and the other Party within thirty (30) Days of
appointment. The other Party shall then have no more than twenty (20) Days to
provide the arbitrator(s) and the other Party with a written response to such
statement. These statements shall be the sole subject of the arbitration,
except, however that the matters subject to arbitration shall be limited to:
(a) A determination of a new Base Fuel
Compensation Price based on the fair market
price(s) which a prudent purchaser would pay
for Solid Fuel to be delivered and used
during the Month of the Redetermination
Date; and/or
(b) A determination of appropriate indices to
adjust the Base Fuel Compensation Price in
the
<PAGE> 78
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future so as to track the fair market
price(s) in the future for Solid Fuel in
such a facility following the
Redetermination Date.
10.10 In the redetermination of the Base Fuel Compensation Price,
the arbitrators shall:
(a) Consider a fair market price for Solid Fuel
delivered to power generation facilities
within Virginia Power's certificated service
area during the Month of the Redetermination
Date using both price quotes referenced in
fuel contracts and prices received on either
a contract or spot basis during the twelve
(12) Month period preceding the
Redetermination Date;
(b) Consider prices referenced pursuant to
Section 10.10(a) above only when such prices
apply for volumes in excess of 6,000 tons
per Month for use in a fully Dispatchable
Facility with a generating capacity of no
less than 100 MW and located within Virginia
Power's service territory;
(c) Consider prices specified for Solid Fuel
only when such Solid Fuel is of similar
quality and characteristics as Solid Fuel
used in
<PAGE> 79
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pulverized coal boilers in Virginia Power's
service territory; and
(d) Not consider prices specified for solid fuel
for which either Party has an economic
interest in the determination of the revised
Base Fuel Compensation Price or in the
consideration of the revised indices.
10.11 In the redetermination of indices to govern future price
adjustments, the arbitrator(s) shall:
(a) Consider indices that are similar in
operation and intent to the indices
specified herein reflecting increases and
decreases in average delivered Solid Fuel
prices, and which rely on objective, average
price data for those fuels;
(b) Consider indices that take into account the
delivered cost to fully dispatchable Solid
Fuel fired electric generating facilities
with capacity ratings of at least 100 MW
located in Virginia Power's service
territory;
(c) Consider indices that use data that is
verifiable by independent third parties and
updated regularly; and
<PAGE> 80
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(d) Not consider indices that use solid fuel
data when such solid fuels are not of
similar quality and characteristics as Solid
Fuel used in pulverized coal boilers in
Virginia Power's service territory.
10.12 The decisions of the arbitrator(s) on the matters
presented shall be rendered within thirty (30) Days following the submissions,
if any, of the Parties. The Base Fuel Compensation Price and/or the associated
indices established in accordance with this Article 10 shall be binding on the
Parties, and shall be enforced before any court of competent jurisdiction and,
upon application to such court, shall be enforced by an appropriate judicial
order. If the arbitration is conducted by one arbitrator, the Parties shall bear
the expenses of arbitration equally. If the arbitration is conducted by three
arbitrators, each Party shall bear the expenses of the arbitrator appointed by
itself and the Parties shall bear the expenses of the third arbitrator equally.
All other expenses incurred by either Party shall be borne by the Party
incurring the expenses.
10.13 Following the decision of the arbitrator(s), the Base
Fuel Compensation Price, the Base Solid Fuel Index, and the Solid Fuel Index as
defined herein shall be replaced in accordance with those decisions, and
adjustments to the Fuel Compensation Price shall thereafter be performed as if
such decisions had been included in this Agreement. The effective date of
changes determined by such redeterminations shall be one week after the
completion of such redetermination.
<PAGE> 81
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10.14 Virginia Power shall also pay Operator, on a per kWh
basis, a variable operation and maintenance adjustment. This O&M Price shall be
0.3333 cents/kWh and shall be increased or decreased, as appropriate, on April
1, 1990 and on each April 1 thereafter by the percent change in the Gross
National Product Implicit Price Deflator (GNPIPD) for the previous Year as
specified by the Bureau of Labor Statistics. Should the index specified herein
be discontinued, an index specified by the appropriate government agency as the
replacement index, if any, shall be used. If no replacement index is specified,
a new index which most accurately reflects changes for the applicable cost
component shall be substituted by mutual agreement of the Parties. In the event
thetlerties fail to agree, such matter will be submitted to arbitration under
the rules of the American Arbitration Association. If the basis of the
calculation of the index specified herein is substantially modified, the index
as modified will continue to be used unless another index is substituted by
mutual agreement of the Parties. In the event the Parties fail to agree, such
matter will be submitted to arbitration under the rules of the American
Arbitration Association. A change in the base year reporting basis, minor
changes in weighing, and minor changes in benchmarks shall not be construed as
substantial modification to the index and the affected values shall be
re-established in accordance with the instructions issued by the appropriate
government agency.
10.15 The Operator shall be paid for Dependable Capacity on a
Monthly basis (with payments actually to be made periodically
<PAGE> 82
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pursuant to the schedule determined pursuant to Section 10.17) as follows:
(a) If pursuant to Section 14.3 Virginia Power
is required to make payments for Dependable
Capacity prior to the Commercial Operations
Date, Virginia Power will pay $20.8570/kW
per Month multiplied by the Estimated
Dependable Capacity specified in Section
11.1 for the Applicable Period.
(b) If there is an event of Force Majeure that
causes a deferral of the Commercial
Operations Date, other than an event of
Force Majeure prior to the Commercial
Operations Date described in Section 14.3,
Virginia Power will not be required to pay
for Dependable Capacity prior to the
Commercial Operations Date. In such event,
however, the applicable $/kW per Month
payments for Dependable Capacity shown in
(c), below, shall be those that would have
applied if the Commercial Operations Date
had occurred on the date it would have
occurred but for the Force Majeure event.
(Thus, for example, if there had been an 18
Month deferral of the Commercial Operations
Date, Operator would be paid the Monthly
price shown for Agreement Year 2 for the
first six Months following the Commercial
Operations Date, then the price shown for
Agreement Year 3 for the following twelve
Months, and so on.)
<PAGE> 83
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Further, the drop in payments shown in (c),
below, occurring at the end of Agreement
Year 20 shall be deferred for a period of
time equal to the deferral of the Commercial
Operations Date due to the event of Force
Majeure described above (the "Deferral
Period") in the following manner:
(i) for each Month of Agreement Year 21
as is necessary to equal the
Deferral Period, the $/kW per Month
shown in (c) below for Agreement
Year 20, increased by two percent
(2%), shall apply (the "Revised
Agreement Year 21 Payments") rather
than the $/kW per Month shown for
Agreement Year 21;
(ii) for each Month of Agreement Year 22,
as necessary, together with the
Months from Agreement Year 21, to
equal the Deferral Period, the
Revised Agreement Year 21 Payments,
again increased by two percent (2%),
should apply, rather than the $/kW
per Month shown for Agreement Year
22;
(iii) in the event Virginia Power has not
exercised its right to terminate
this Agreement for a Force Majeure
delay of the Commercial Operations
Date that extended for more than 18
months, the same procedure shall be
followed to calculate the applicable
$/kW per Month for subsequent
Agreement Years
<PAGE> 84
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until an amount of time equal to the
Deferral Period has passed; and
(iv) thereafter, the applicable $/kW per
Month shall revert to those shown in
(c) below, as originally stated
(such that, for example, if there
had been a ten Month Force Majeure
deferral and a ten Month payment
adjustment pursuant to (i), above,
the $/kW per Month for Agreement
Year 21 would then apply for two
Months and then the price shown in
Agreement Year 22 would apply for
the successive twelve Months, and so
on.)
(c) Subject to Section 10.15(6), commencing with
the Commercial Operations Date and
continuing for twenty-five (25) Agreement
Years from the Commercial Operations Date,
Virginia Power will pay the Capacity
Purchase Price specified below multiplied by
the Dependable Capacity during the relevant
Month. The equivalent hourly Capacity
Purchase Price used in this Section 10.15
and in Article 18 is also specified below.
<TABLE>
<CAPTION>
AGREEMENT YEAR $/kW per month $/kWh
-------------- -------------- -----
<S> <C> <C>
1 20.8570 0.02857
2 21.3836 0.02929
3 21.9236 0.03003
</TABLE>
<PAGE> 85
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<TABLE>
<S> <C> <C>
4 22.4771 0.03079
5 23.0447 0.03157
6 23.6266 0.03237
7 24.2231 0.03318
8 24.8348 0.03402
9 25.4619 0.03488
10 26.1048 0.03576
11 26.7639 0.03666
12 27.4397 0.03759
13 28.1326 0.03854
14 28.8429 0.03951
15 29.5712 0.04051
16 30.3179 0.04153
17 31.0834 0.04258
18 31.8682 0.04366
19 32.6729 0.04476
20 33.4979 0.04589
21 18.6680 0.02557
22 19.0150 0.02605
23 19.3750 0.02654
24 19.7500 0.02705
25 20.1400 0.02759
26 20.5428 0.02814
27 20.9537 0.02871
28 21.3728 0.02928
29 21.8003 0.02986
30 22.2363 0.03046
31 22.6810 0.03107
32 23.1346 0.03169
</TABLE>
<PAGE> 86
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(d) For each hour (rounded to the nearest hour)
where Operator fails, after two (2) oral
notifications from Virginia Power (second
notification to be provided not less than
fifteen (15) minutes from first
notification), to operate within plus/equal
to 5% of the Dispatch level specified by
Virginia Power, pursuant to Section 7.5 and
7.6, then, the deviation (measured in kWh)
shall be applied as follows:
(1) Each Agreement Year shall have a
"Non-Reduction Amount" equal to the
product of (i) 610 hours per kW
(plus an additional 710 hours per kW
in Agreement Year 1), times (ii) the
average of the Dependable Capacity
in the previous Agreement Year (or
the Estimated Dependable Capacity in
Agtleement Year 1). The Hourly
Capacity Payment Reduction Table
shown in Section 10.15(d)(2) shall
not apply to the Non-Reduction
Amount kWh.
(2) After Operator has utilized the
Non-Reduction Amount kWh in an
Agreement Year, as the Non-Reduction
Amount kWh may be increased by
Operator, from time to time,
according to the provisions of
Section 10.15(d)(3), Virginia Power
may reduce,
<PAGE> 87
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according to the Hourly Capacity
Payment Reduction Table shown below,
the payments made to the Operator
for Dependable Capacity. The
reductions are disproportionately
higher than the actual difference in
kWh. Such reductions shall be
calculated in accordance with the
following formula where; A =
Dependable Capacity; B = Dispatch
level during the period subject to
reduction; C = Net Electrical Output
during the period subject to
reduction; D = the number of hours
subject to reduction; E = the
appropriate Penalty Reduction Factor
from the Hourly Capacity Payment
Reduction Table; F = kWh of the
subject Capacity Payment reduction;
G = Hourly Capacity Purchase Price
in Section 10.15(c):
[|1 - (C / B)| + E] x D x A = F
Note, the expression |1 - (C / B)|
is the Dispatch Deviation, which is
a mathematical absolute value.
F x G = Amount that Operator's
Capacity Payment is reduced
<PAGE> 88
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The following example is provided to
illustrate the aforementioned
calculation. The example has these
assumptions:
A - Dependable Capacity = 200,000 kW
B - Dispatch Level = 100,000 kW
C - Net Electrical Output = 85,000
kW
The 7 hour time period in this
example is in July of Agreement Year
1 between 6:00 PM and 1:00 AM the
following day; therefore,
D - number of hours subject to
reduction = 4 On-Peak Hours and 3
Off-Peak Hours
E - appropriate Penalty Reduction
Factor = 0.07 for On-Peak Hours and
0.04 for Off-Peak Hours
F - MWH subject Capacity Payment
reduction = determined by
calculation
G - Hourly Capacity Purchase Price =
$0.02857/kWh
Reduction for On-Peak Hours
[|1 - (C / B)| + E] x D x A =
F [|1 - (85000 / 100000)| + .07] x
4 x 200000 = 176000
<PAGE> 89
Page 89 of 138
F x G = Amount that Operator's
Capacity Payment is reduced 176000 x
$0.02857 = $5,028.32 (On-Peak Hours
reduction)
Reduction for Off-Peak Hours [|1 -
(C / B)| + E] x D x A =
F [|1 - (85000 / 100000)| + .04] x
3 x 200000 = 114000
F x G = Amount that Operator's
Capacity Payment is reduced 114000 x
$0.02857 = $3,256.98 (Off-Peak Hours
reduction)
Total Reduction to payments for
Dependable Capacity $5,028.32 +
$3,256.98 = $8,285.30
HOURLY CAPACITY PAYMENT REDUCTION TABLE
<TABLE>
<CAPTION>
Demonstration Period
<S> <C>
Hourly Payment Reduction
On-Peak Hour Off-Peak Hour
- --------------------------------------------------------------------------------
Dispatch Deviation + 0.07* Dispatch Deviation + 0.04*
<CAPTION>
Non-Demonstration Period
<S> <C>
Hourly Payment Reduction
On-Peak Hour Off-Peak Hour
- --------------------------------------------------------------------------------
Dispatch Deviation + 0.03* Dispatch Deviation + 0.01*
</TABLE>
* Penalty Reduction Factor
<PAGE> 90
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(3) There shall be a tracking account,
denominated "the Availability Bank," so that
Operator may use unutilized Non-Reduction
Amount kWh ("Credits") in some Agreement
Years to increase the Non-Reduction Amount
in subsequent Agreement Years; provided,
however, that (i) Credits which were
recorded more than five (5) Agreement Years
preceding the current Agreement Year will
expire and may not be used; (ii) Credits
will be applied on a first-in, first-out
basis; and (iii) such Credits used to
increase the Non-Reduction Amount in a
single Agreement Year shall never exceed the
product of 610 hours per kW times the
average of the Dependable Capacity in the
previous Agreement Year. With the consent of
Virginia Power, which shall not be
unreasonably withheld, Operator may convert
Credits on a one-for-one basis to increase
Scheduled Outage hours above the levels
specified in Section 7.2, subject to the
notice and scheduling provisions of that
section. Once Credits are thus converted,
they shall be deducted from the Availability
Bank. In no event will Virginia Power be
required to make any cash payment for any
Credits or positive balance in the
Availability Bank.
<PAGE> 91
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(e) To the extent that the Initial Dependable
Capacity for the first Summer Period as
determined by testing pursuant to Section
11.6 is set below the Estimated Dependable
Capacity for the Summer Period as specified
in Section 11.1, Operator shall pay to
Virginia Power within thirty (30) Days of
the test $18.00 per Kw for the difference as
liquidated damages for the detrimental
impact upon Virginia Power's generation
planning.
(f) To the extent that the Initial Dependable
Capacity for the first Winter Period as
determined by testing pursuant to Section
11.6 is set below the Estimated Dependable
Capacity for the Winter Period as specified
in Section 11.1, Operator shall pay to
Virginia Power within thirty (30) Days of
the test $18.00 per Kw for the difference as
liquidated damages for the detrimental
impact upon Virginia Power's generation
planning.
(g) If, as a result of any Summer Demonstration
Period or Winter Demonstration Period
testing done pursuant to Article 11, the
Facility's Dependable Capacity is set at a
level less than the lower of (A) 90% of the
Initial Dependable Capacity established in
the first Summer Period (if for a Summer
Period) or first Winter Period (if for a
Winter Period) or (B) the Dependable
Capacity set
<PAGE> 92
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in the immediately preceding Summer Period
(if for a Summer Period) or immediately
preceding Winter Period (if for a Winter
Period), then Operator shall, in addition to
any other liabilities due hereunder, pay to
Virginia Power, within thirty (30) Days of
such testing, an amount equal to $40.00 per
kW of such deficit (in 1989 dollars,
escalated by the percentage change in the
Gross National Product Implicit Price
Deflator beginning on April 1, 1990 and on
each April 1 thereafter), as liquidated
damages for the detrimental impact of such
lower Dependable Capacity on Virginia
Power's generation planning.
10.16 Operator shall pay Virginia Power an amount reflecting
all reasonable costs incurred by Virginia Power for meter reading and billing.
The monthly meter reading and billing charge per meter shall equal the basic
customer charge in the Rate Schedule under which the Operator lerchases
electricity from Virginia Power in effect at the time the meter is read.
10.17 Meters shall be read, and bills rendered, according to
the meter reading and billing schedule established by Virginia Power. Such
Schedule normally results in twelve (12) readings per year. Payment for the
energy, or energy and Dependable Capacity, delivered to Virginia Power, during
the billing period shall be made within twenty-eight (28) Days of the meter
reading date. Interest at the Interest Rate shall accrue on the outstanding
<PAGE> 93
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payments due Operator commencing on the twenty-ninth (29) Day after the meter
reading date. However, any amounts due Virginia Power, including amounts arising
from cases where Operator, at the same site, sells to and purchases from
Virginia Power, or other amounts due Virginia Power arising out of this
Agreement, may (at Virginia Power's sole discretion) be offset against the
amounts due to Operator. In such event, the net result shall be paid to the
appropriate Party within twenty-eight (28) days of the meter reading date.
Operator agrees that its purchase of electricity from Virginia Power will be on
a rate schedule approved by the SCC and such schedule may change from time to
time and the terms and conditions of such changed schedule will supersede any
provisions herein that are in conflict.
Payment to Virginia Power shall be made by check to the following address:
Virginia Power
P.O. Box 26019
Richmond, Virginia 23260-6019
Payment to Operator shall be made by check to the following address:
SEI Birchwood, Inc.
100 Ashford Center North, Ste. 400
Atlanta, GA 30338
Either Party may, by written notice to the other, change the address to which
such payments are to be sent.
10.18 The Parties agree that Virginia Power will be
substantially damaged in amounts that will be difficult or impossible to
determine if the Facility:
(a) Is not in-service by the Anticipated
Commercial Operations Date.
<PAGE> 94
Page 94 of 138
(b) Is not capable of achieving the original
Estimated Dependable Capacity set forth in
Section 11.1.
(c) Cannot maintain Dependable Capacity of at
least ninety (90) percent of the Initial
Dependable Capacity level established by
testing as determined pursuant to Section
11.6.
Therefore, to the limited extent set forth in this Agreement,
the Parties have agreed on sums which the Parties agree are reasonable as
liquidated damages for such occurrences. It is further understood and agreed
that the payment of the liquidated damages is in lieu of any and all damages for
such occurrences which would otherwise be owing to Virginia Power. Operator
hereby waives any defense as to the validity of any liquidated damages stated in
this Agreement as they may appear on the grounds that such liquidated damages
are void as penalties .
ARTICLE 11: TESTING AND CAPACITY RATINGS
11.1 Operator's Estimated Dependable Capacity is 198 MW for
the Summer Period and 202 MW for the Winter Period.
11.2 The Dependable Capacity level for which the Operator will
be paid the Capacity Purchase Price shall be determined for each Summer and
Winter Period by testing as set forth in this Article 11.
11.3 When the Facility is ready to establish the Commercial
Operations Date, the Operator shall notify Virginia Power that it
<PAGE> 95
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is ready to attempt a Commercial Operations Test of the Dependable Capacity of
the Facility and such Test shall be initiated and monitored by Virginia Power
within fourteen (14) days of Virginia Power's receipt of such notification.
11.4 If Operator is not satisfied with the results of the
attempted Commercial Operations Test, Operator may request additional tests to
establish the Commercial Operations Date with at least three (3) Business Days
notice provided to Virginia Power between tests, but Operator will not be paid
for capacity for the time period(s) between tests to establish the Commercial
Operations Date.
11.5 When the Operator is satisfied with a test to establish
the Commercial Operations Date, the Operator shall provide written notice to
Virginia Power that it has designated such test as the Commercial Operations
Test and shall set the Initial Dependable Capacity for the appropriate Summer or
Winter Period at any level up to the tested level but such level shall not
exceed one-hundred ten (110)% of the Estimated Dependable Capacity level for the
appropriate Summer Demonstration Period or Winter Demonstration Period.
11.6 In addition to the Commercial Operations Test, Initial
Dependable Capacity for the Summer Demonstration Period and Winter Demonstration
Period shall be determined by testing as follows:
a) The Commercial Operations Test shall constitute
the Initial Dependable Capacity for the
appropriate Summer Demonstration Period or
Winter
<PAGE> 96
Page 96 of 138
Demonstration Period in which such Test
occurs.
b) Within the first 14 Days of the Summer
Demonstration Period or Winter Demonstration
Period that follows the Summer Demonstration
Period or Winter Demonstration Period in
which the Commercial Operations Date
occurred, Operator shall perform a test of
the Initial Dependable Capacity for such
Period. The Operator may request a maximum
of two (2) tests during such 14 Day period.
11.7 After the Initial Dependable Capacity level has been
established for both the Summer Demonstration Period or Winter Demonstration
Period pursuant to testing in accordance with Section 11.6, Operator may request
additional test(s) for Dependable Capacity rating each Summer Demonstration
Period and Winter Demonstration Period throughout the Term of this Agreement and
such test(s) will be performed and monitored within the first fourteen (14) days
of each Summer Demonstration Period and Winter Demonstration Period. The
Operator may request a maximum of two (2) tests within the fourteen (14) Day
period for each Summer Demonstration Period or Winter Demonstration Period.
11.8 Upon completion of such Summer Demonstration Period or
Winter Demonstration Period test(s), Operator shall notify Virginia Power to
reset the Dependable Capacity level at any level up to the tested level but not
to exceed one-hundred ten percent
<PAGE> 97
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(110%) of the Estimated Dependable Capacity level specified in Section 11.1, and
payment for Dependable Capacity shall be adjusted accordingly effective the day
after such testing is complete.
11.9 In addition to Operator requested tests, Virginia Power
may require tests of the Dependable Capacity throughout the Term of this
Agreement as follows:
(a) Once per Demonstration Period at Virginia
Power's sole discretion, except (i) during a
Scheduled Outage period, (ii) during a
Forced Outage period of which Virginia Power
has been notified or (iii) during any outage
which is due to a Force Majeure event and
(b) At any time Operator fails two (2)
consecutive times to operate within
plus/equal to 5% of the operating level
prescribed by Virginia Power, pursuant to
Section 7.6.
For tests pursuant to Section 11.9(a), Operator may, at its sole discretion,
request one additional test within seven (7) Days of the Virginia Power required
test if Operator is not satisfied with the results of the Virginia Power
required test. Upon completion of such test, Operator shall set the Dependable
Capacity at any level up tlethe tested capacity, except that the Operator may
not set the Dependable Capacity at any level in excess of one hundred and ten
percent (110%) of the Estimated Dependable Capacity as specified in Section
11.1. Payments for Dependable Capacity shall be adjusted
<PAGE> 98
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accordingly, effective the day after any such testing is performed pursuant to
this Section 11.9.
11.10 Testing of the Dependable Capacity shall be in
accordance with procedures established by Virginia Power in accordance with
Prudent Utility Practices. Any test during the Summer Demonstration Period
Demonstration Period shall be a twelve (12) hour test at maximum output and
during the Winter Demonstration Period Demonstration Period shall be a six (6)
hour test at maximum output. Any test that is affected by a Forced Outage will
not count as a test made pursuant to Section 11.7 or 11.9. Subject to the
provisions of this Agreement, at the end of any test, Operator may set the
Dependable Capacity at any level up to the average of the hourly Net Electrical
Output during the period of the test.
ARTICLE 12: INSURANCE
12.1 Operator shall obtain and maintain the following policies
of insurance, provided that amounts of coverage listed below shall be adjusted
every five (5) years to reflect changes in the Gross National Product Implicit
Price Deflator beginning on April 1, 1995:
(a) During the Term of this Agreement, Worker's
Compensation insurance which complies with
the laws of the Commonwealth of Virginia, or
any other applicable jurisdiction and
Employers' Liability Insurance with limits
of at least $1,000,000;
<PAGE> 99
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(b) During the Term of this Agreement,
Comprehensive or Commercial General
Liability insurance with bodily injury and
property damage combined single limits of at
least $5,000,000 per occurrence. Such
insurance shall include, but not necessarily
be limited to, specific coverage for
contractual liability encompassing the
indemnification provisions in Article 13 (to
the extent commercially available), broad
form property damage liability, personal
injury liability, explosion and collapse
hazard coverage, products/completed
operations liability, and, where applicable,
watercraft protection and indemnity
liability;
(c) During the Term of this Agreement,
Comprehensive Automobile Liability insurance
with bodily injury and property damage
combined single limits of at least
$5,000,000 per occurrence covering vehicles
owned, hired or non-owned;
(d) During the Term of this Agreement, Excess
Umbrella Liability Insurance with a single
limit of at least $5,000,000 per occurrence
in excess of the limits of insurance
provided in subparagraphs (a), (b), and (c)
above; and
<PAGE> 100
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(e) Through the Commercial Operations Date,
Builders' Risk Insurance on an "all risk"
basis on a completed value form with
"extended coverage" and "soft expense
coverage" on an "agreed amount" basis.
12.2 The amounts of insurance required in Section 12.1 above
may be satisfied by the Operator purchasing primary coverage in the amounts
specified or by buying a separate excess Umbrella Liability policy together with
lower limit primary underlying coverage. Operator may elect to self-insure the
coverage required under the Agreement only if such self-insurance is guaranteed
by Southern Electric International Inc. The structure of the coverage is the
Operator's option, so long as the total amount of insurance meets Virginia
Power's requirements.
12.3 The coverage requested in Section 12.1 above and any
Umbrella or Excess coverage should be "occurrence" form policies to the extent
available at commercially reasonable terms and reasonable rates. In the event
Operator has "claims-made" form coverage, Operator must obtain prior approval of
all "claims-made" policies from Virginia Power which approval shall not be
unreasonably withheld.
12.4 Operator shall cause its insurers to amend its
Comprehensive or Commercial General Liability and, if applicable, Umbrella or
Excess Liability policies with endorsement items substantially in the form of
items (a) through (e); and to amend Operator's Workers' Compensation and Auto
Liability policies with endorsement item (e):
<PAGE> 101
Page 101 of 138
(a) Virginia Power, its directors, officers, and
employees are additional Insureds under this
Policy as to liability arising from the
operations of Operator;
(b) This insurance is primary with respect to
the interest of Virginia Power, its
directors, officers, and employees and any
other insurance maintained by them is excess
and not contributory with this insurance;
(c) The following Cross Liability clause is made
a part of the policy: "In the event of
claims being made by reason of (i) personal
and/or bodily injuries suffered by any
employee or employees of one insured
hereunder for which another insured
hereunder is or may be liable, or (ii)
damage to property belonging to any insured
hereunder for which another insured is or
may be liable, then this policy shall cover
such insured against whom a claim is made or
may be made in the same manner as if
separate policies have been issued to each
insured hereunder, except with respect to
the limits of insurance";
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(d) Insurer hereby waives all rights of
subrogation against Virginia Power, its
officers, directors and employees; and
(e) Notwithstanding any provision of the policy,
this policy may not be canceled,
non-renewed, or materially changed by the
insurer without giving thirty (30) Days
prior written notice to Virginia Power;
provided, however, that such notice may be
ten (10) days in the event of nonpayment of
premiums. All other terms and conditions of
the policy remain unchanged.
12.5 Operator shall cause its insurers or agents to provide
Virginia Power with certificates of insurance (or in the case of self-insurance,
with an officer's certificate) evidencing the policies and endorsements or
coverage listed above. Failure of Virginia Power to obtain certificates of
insurance does not relieve Operator of the insurance requirements set forth
herein. Failure to obtain the insurance coverage required by this Article 12
shall in no way relieve or limit Operator's obligations and liabilities under
other provisions of this Agreement.
ARTICLE 13: LIABILITY, NONCOMPLIANCE AND GUARANTEES
13.1 In addition to the other indemnities provided for in this
Agreement, Operator and Virginia Power agree to indemnify and hold each other
harmless from and against all claims, demands,
<PAGE> 103
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losses, liabilities, expenses, damages and costs (including reasonable
attorneys' fees and disbursements) for personal injury, bodily injury, or death
to persons and damage to each other's property or facilities or the property of
any other person, entity, or corporation to the extent arising out of, resulting
from or caused by their negligence, gross negligence, reckless, willful or
intentional acts, or omissions in connection with this Agreement.
13.2 (1) In the event any claim, action, suit or proceeding is made or
brought by any third party against a Party indemnified under this Agreement,
with respect to which an indemnifying Party may have liability under this
Section 13.2, the indemnifying Party shall be entitled to participate in, and,
to the extent that it shall wish, jointly with any other indemnifying Party, to
assume the defense, with independent counsel reasonabllesatisfactory to such
indemnified Party, provided that in assuming the defense of any such third party
claim, action, suit or proceeding, the indemnifying Party acknowledges in
writing to the indemnified Party that the indemnifying Party shall thereafter be
liable for any fines, penalties, losses, liabilities, damages, claims, costs and
expenses, and to the extent herein provided any legal or other expenses
(including reasonable attorneys' fees and disbursements) with respect to such
claim, action, suit or proceeding.
(2) If the indemnifying Party elects to assume the defense of
any such third-party claim, the indemnifying Party may contest, pay, settle or
compromise any such claim on such terms and conditions as the indemnifying Party
may determine. After notice from the indemnifying Party to such indemnified
Party of its
<PAGE> 104
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election so to assume the defense thereof, the indemnifying Party shall not be
liable to such indemnified Party for any legal or other expenses incurred after
the date of receipt of such notice by the indemnified Party, other than
reasonable costs of investigation subsequently incurred by such indemnified
Party in connection with the defense thereof. The indemnified Party shall have
the right to employ its own counsel and such counsel may participate in such
action, but the fees and expenses of such counsel shall be at the expense of
such indemnified Party, when and as incurred, unless (i) the employment of
counsel by such indemnified Party has been authorized in writing by the
indemnifying Party, (ii) the indemnified Party shall have reasonably concluded
that there may be a conflict of interest between the indemnifying Party and the
indemnified Party in the conduct of the defense of such action, (iii) the
indemnifying Party shall not in fact have employed independent counsel
reasonably satisfactory to the indemnified Party to assume the defense of such
action and shall have been so notified by the indemnified Party, or (iv) the
indemnified Party shall have reasonably concluded and specifically notified the
indemnifying Party either that there may be specific defenses available to it
which are different from or additional to those available to the indemnifying
Party or that such claim, action, suit or proceeding involves or could have a
material adverse effect upon it beyond the scope of this Agreement. If clause
(ii), (iii) or (iv) of the preceding sentence shall be applicable, then counsel
for the indemnified Party shall have the right to direct the defense of such
claim, action, suit or proceeding on behalf of the
<PAGE> 105
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indemnified Party and the reasonable fees and disbursements of such counsel
shall constitute legal or other expenses hereunder.
(3) If the indemnifying Party does not elect to assume the
defense of any such claim, the indemnified Party may engage independent counsel
selected by the indemnified Party to assume the defense and may contest, pay,
settle or compromise any such claim on such terms and conditions as the
indemnified Party may determine. The fees and disbursements of such counsel
shall constitute legal or other expenses hereunder.
(4) The indemnified Party and the indemnifying Party, as the
case may be, shall be kept fully informed of such claim, action, suit or
proceeding at all stages thereof whether or not such party is represented by its
own counsel.
13.3 Within sixty (60) Days after the effective date of this
Agreement, Operator shall provide to Virginia Power security in the form of an
irrevocable letter of credit, or a surety bond containing features reasonably
similar to a letter of credit, either of which must be issued by an institution
reasonably acceptable to Virginia Power in form and substance reasonably
acceptable to Virginia Power in an amount equal to $7,272,000 ($36.00 per kW for
the Estimated Dependable Capacity for the Winter Demonstration Period Period
specified in Section 11.1). The letter of credit or surety bond shall provide
for draws by Virginia Power on a monthly basis and must permit presentation at a
bank located in Richmond, Virginia for immediately available funds. The letter
of credit or surety bond provided pursuant to this Section will
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terminate, or in the case of a surety bond may be cancelled by Operator, on the
later of the Commercial Operations Date or the issuance of the security pursuant
to 13.5.
13.4 If the Commercial Operations Date has not occurred on or before
the Anticipated Commercial Operations Date, then commencing the Day after
the Anticipated Commercial Operations Date and continuing each Day for three
hundred and sixty (360) Days or until the Commercial Operations Date, Virginia
Power shall be entitled to draw upon the letter of credit provided in Section
13.3 above at a rate of $3.00 per kW per month of Estimated Dependable Capacity
of such security as liquidated damages for the detrimental impact of such
delayed availability of Dependable Capacity on Virginia Power's generation
planning; provided, however, that Virginia Power may not draw on such security
if the Commercial Operations Date occurs within 15 Days after the Anticipated
Commercial Operations Date; but provided, further, that if the Commercial
Operations Date has not occurred on or after the sixteenth Day after the
Anticipated Commercial Operations Date, Virginia Power will be entitled to draw
upon such letter of credit for the period commencing on the Anticipated
Commercial Operations Date.
13.5 Commencing with the Commercial Operations Date, Operator shall
provide and maintain, at Operator's sole expense, security as described in
Section 13.6, in an amount equal to $7,272,000 ($36.00 per kW for the Estimated
Dependable Capacity for the Winter Demonstration Period Period pursuant to
Section 11.1). Such security shall be maintained throughout the Term of this
Agreement
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and may be used to offset any amounts Operator may owe Virginia Power.
13.6 Security provided pursuant to Section 13.5 above shall consist of
an irrevocable direct pay letter of credit, or a surety bond containing features
reasonably similar to a letter of credit, either of which must be issued by an
institution reasonably acceptable to Virginia Power, in form and substance
acceptable to Virginia Power, shall provide for draws by Virginia Power on a
monthly basis and must permit presentation at a bank located in Richmond,
Virginia for immediately available funds; provided, however, that in lieu of
such letter of credit or surety bond, upon the prior approval of Virginia Power
(which approval shall be in Virginia Power's sole discretion), Operator may
provide one of the following:
(a) Power plant performance insurance (if available on
commercially reasonable terms) provided in a form
and by an insurer acceptable to Virginia Power; or
(b) A corporate guarantee issued by Southern Electric
International, Inc.
13.7 Virginia Power shall have an exclusive right of first
refusal to purchase or lease any Transfer Interest (as hereinafter defined) on
the terms and conditions set forth as follows; provided, however, (i) if
Operator arranges for a single steam buyer, Operator may grant such steam buyer
a right of first refusal to purchase any Transfer Interest, which right shall be
prior to Virginia Power's right of first
<PAGE> 108
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refusal, or (ii) if Operator arranges for two or more steam buyers, Operator may
grant such steam buyers a right of first refusal to purchase any Transfer
Interest, which right shall be prior to Virginia Power's right of first refusal,
only upon the prior written consent of Virginia Power, which may be withheld in
Virginia Power's sole absolute discretion. Any such right of first refusal
granted to the steam buyer under Section 13.7 shall require the stele buyer to
continue operating the Facility in accordance with the provisions of this
Agreement:
(a) "Transfer Interest" shall include the right,
title or interest in the Facility, or any
part thereof, held by Operator.
(b) If the steam buyer has been granted a right
of first refusal as set forth above, the
Operator shall offer the Transfer Interest
to the steam buyer in accordance with the
terms of the steam buyer's right of first
refusal. If the steam buyer waives its right
with respect to the Transfer Interest or the
steam buyer does not have a right of first
refusal, then if Operator ever desires (i)
to dispose of such Transfer Interest (other
than non-material transfers in the ordinary
course of business) or (ii) if Operator
receives a bona fide offer to purchase or
lease a Transfer
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Interest, which offer Operator is prepared
to accept, Operator shall give notice
thereof in writing to Virginia Power (the
"Notice"). The Notice shall (iii) specify
the terms under which Operator is prepared
to dispose of the Transfer Interest,
including the purchase price of the Transfer
Interest or (iv) include a copy of the
acceptable offer received, as the case may
be.
(c) For a period of ninety (90) Days after
receipt by Virginia Power of the Notice,
Virginia Power shall have the right to
exercise its right of first refusal with
respect to the Transfer Interest by giving
written notice thereof to Operator.
(d) If Virginia Power elects not to exercise its
right of first refusal pursuant to the
foregoing provisions, or if the 90 Day
period in Subsection 13.7(c) above expires,
then for a period of one year thereafter,
Operator shall be free to transfer such
Transfer Interest at a price no lower and on
terms not more favorable to the purchaser
than those offered in the Notice. If the
Transfer Interest is not fully consummated
within one year of the earlier of the date
Virginia Power elected not to acquire the
Transfer Interest or the expiration of the
90 Day period in Section 13.7(c) above,
Operator agrees that
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Virginia Power's right of first refusal to
purchase or lease the Facility, or any part
thereof, shall continue on the terms and
conditions set forth herein. Operator shall
insure that by the terms of such transfer,
the transferee shall agree that Virginia
Power's right of first refusal to purchase
or lease the Facility or any part thereof
shall continue on the terms and conditions
contained herein with respect to any
transfer by such transferee.
(e) If Virginia Power elects to exercise its
right of first refusal with respect to the
Transfer Interest, Virginia Power will use
its best efforts to fully consummate its
acquisition of the Transfer Interest within
150 Days after Virginia Power notifies
Operator that it intends to exercise its
right of first refusal.
(f) (i) Prior to Initial Synchronization,
(x) except as set forth
hereafter, Operator may
sell or issue, and any
holder of any equity
interest may sell, an
equity interest in Operator
to any person or entity,
and Virginia Power shall
have no right of first
refusal or consent so long
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as upon the consummation of
such sale or issuance, SEI
Birchwood, Inc. would not
hold less than a fifty
percent (50%) equity
interest in the Operator,
and
(y) with respect to the sale or
issuance of any general
partnership interest,
Virginia Power shall have
the right to determine in
its reasonable judgment,
exercised in good faith,
whether the proposed
general partner will have
the financial capability
and requisite business
expertise to function as
general partner of the
Operator. If Virginia
Power shall not advise the
Operator of its
determination within ten
Days of its receipt of a
notice advising it of the
proposed general partner,
Virginia Power shall be
deemed to have consented to
such general partner.
(ii) From and after Initial
Synchronization,
(w) Operator may sell or issue
limited partnership
interests to any person or
entity, and Virginia Power
shall have no right of
first refusal or consent
with respect to any such
sale or issuance so long as
upon the consummation of
such sale or issuance, no
holder of any equity
interest in the Operator
would hold a
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greater equity interest
than SEI Birchwood, Inc.;
(x) any holder of a limited
partnership interest may
transfer such interest to
any other person or entity
and Virginia Power shall
have no right of first
refusal or consent so long
as upon the consummation of
such sale or issuance, no
holder of any equity
interest in the Operator
would hold a greater equity
interest than SEI
Birchwood, Inc.; and
(y) any holder of a general
partnership interest may
sell such interest to any
person, subject to Virginia
Power's right of first
refusal; provided, however,
Virginia Power shall not
have such a right of first
refusal if the Facility
would lose its QF status
under PURPA or if any
holder of any equity
interest in the Facility
would become subject to
regulation under the
Public Utility Holding
Company Act of 1935 as a
result of its interest in
the Facility; provided,
further, if Virginia Power
is not able to exercise its
right of first refusal
because of the terms of the
preceding proviso, it shall
have the right to determine
in its reasonable
<PAGE> 113
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judgment, exercised in good
faith, whether the proposed
general partner has the
financial capability and
requisite business
expertise to function as
general partner of the
Operator and if Virginia
Power so determines that
the proposed general
partner does not have such
expertise, then the sale
shall not occur; and
(z) if Virginia Power shall
acquire a right to exercise
its right of first refusal
pursuant to Section
13.7(f)(ii), 13.7(w),
13.7(x) or 13.7(y),
Virginia Power shall
exercise such right of
first refusal in accordance
with the procedures set
forth in Sections 13.7(c)
through (e) (it being
agreed that for the
purposes of this Section
13.7(ii)(z), the term
"Transfer Interest" used in
13.7(c) through (e) shall
refer to the equity
interest being
transferred).
(g) Any sale of any Transfer Interest shall not
extinguish Virginia Power's right of first
refusal with respect to any portion of the
Facility or the Operator, as the case may
be, not transferred pursuant to such sale.
Any lease of any Transfer Interest shall not
extinguish Virginia Power's
<PAGE> 114
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right of first refusal with respect to any
extensions of such lease or with respect to
any other leases, sales or other
dispositions of any Transfer Interest.
Operator agrees that it will ensure that the
terms of any transfer (other than a transfer
to Virginia Power) of all or a portion of
its interest in the Facility provides for
the continued operation of the Facility in
accordance with and under the terms of this
Agreement. Any transfer (other than a
transfer to Virginia Power) which results in
a transfer of management control over the
operation of the Facility shall require the
transferee's acceptance of an assignment of
the transferor's obligations under this
Agreement with respect to the operation of
the Facility pursuant to Section 17.1 of
this Agreement. Operator will not
consolidate with or be a Party to a merger
with any other corporation; provided,
however, that:
(1) Any wholly owned subsidiary of
Operatolemay merge, consolidate or
exchange shares with or into
Operator so long as, in any such
merger or consolidation, Operator
shall be the surviving or continuing
corporation;
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(2) Operator may consolidate or merge
with any other corporation if (i)
the successor formed by or resulting
from such consolidation or merger
shall be a solvent corporation
organized under the laws of the
United States of America or a state
thereof or the District of Columbia,
(ii) after giving effect to such
merger or consolidation, no default
under this Agreement shall exist,
(iii) such successor or transferee
corporation shall expressly assume
in writing the due and punctual
performance and observance of all
the terms, covenants, agreements and
conditions of this Agreement and
shall furnish Virginia Power an
opinion of independent counsel to
the surviving corporation to the
effect that each of the corporations
participating in such consolidation
or merger or transfer of assets was,
at the time thereof, duly created,
validly existing, in good standing
and otherwise in compliance with the
applicable provisions of the
corporation laws of its respective
state of incorporation, that the
surviving corporation is duly
incorporated, validly existing and
in good standing, that the
<PAGE> 116
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surviving corporation has all
requisite power and authority to
assume and perform this Agreement,
that such assumption and performance
have been duly authorized by all
necessary corporate action on the
part of the surviving corporation
and that compliance by the surviving
corporation with the terms of this
Agreement will not conflict with, or
result in any breach of any of the
provisions of, or constitute a
default under, any agreement to
which it is a party, or result in
the creation or imposition of a lien
upon the property of the surviving
corporation.
(h) Notwithstanding the foregoing provisions of
this Section 13.7, Virginia Power agrees
that its right of first refusal as set forth
in this Agreement shall not apply to any
grant by Operator of any lien or security
interest in any Transfer Interest to any of
the Lenders.
(i) In the event that pursuant to Section
13.7(ii) above, Virginia Power refuses to
consent to Operator's granting of a right of
first refusal to multiple steam buyers and
Virginia Power exercises its right to first
refusal under this Section, Virginia Power
agrees to assume Operator's obligations to
such steam
<PAGE> 117
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buyers in proportion to the Transfer
Interest Virginia Power obtains pursuant to
its exercise of that right.
(j) The Operator covenants and agrees to sign,
execute and deliver, or cause to be signed,
executed and delivered, and to do or make,
or cause to be done or made, upon the
written request of Virginia Power, any and
all agreements, instruments, papers, deeds
or acts supplemental, confirmatory or
otherwise, as may be reasonably necessary
for the purpose of or in connection with
Virginia Power's right of first refusal
established hereby.
13.8 Notwithstanding any other provision of this Agreement,
neither Party shall be liable to the other Party for indirect, incidental or
consequential damages (including, without limitation, replacement capacity or
energy) under, arising out of, due to or in connection with such Party's
performance or nonperformance of this Agreement or any of its obligations
herein, whether based on contract, tort (including without limitation
negligence), strict liability, warranty or otherwise. Operator and Virginia
Power agree that liquidated damages represent an approximation of actual damages
and are not consequential damages.
<PAGE> 118
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ARTICLE 14: FORCE MAJEURE
14.1 Notwithstanding any other provision of this Agreement,
including without limitation Section 5.3, neither Party shall be responsible or
liable for or deemed in breach or default hereof because of any delay in the
performance of, or inability to perform, its respective obligations hereunder
due solely to circumstances beyond the reasonable control of the Party
experiencing such delay, or inability to perform, including, but not limited to,
acts of God; unusually severe weather conditions; strikes or other labor
difficulties; war; riots; requirements, actions or failures to act on the part
of governmental authorities preventing performance; inability despite due
diligence to obtain required licenses, permits and approvals; Change of Law;
failure or faulty design of major equipment which could not reasonably be
detected through Standard Quality Assurance/Quality Control procedures;
accident; or fire (such causes hereinafter called "Force Majeure"); provided
that:
(a) The non-performing Party gives the other
Party, within seventy-two (72) hours of the
non-performing Party becoming aware of the
occurrence, written notice describing the
particulars of the occurrence;
(b) The suspension of performance is of no
greater scope and of no longer duration than
is required by the Force Majeure;
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(c) The non-performing Party uses its best
efforts to remedy its inability to perform;
(d) When the non-performing Party is able to
resume performance of its obligations under
this Agreement, that Party shall give the
other Party written notice to that effect;
(e) The Force Majeure was not caused by or
connected with any negligent or intentional
acts, errors, or omissions, or failure to
comply with any law, rule, regulation, order
or ordinance or for any breach or default of
this Agreement; and
(f) The Force Majeure was not attributed to
normal wear and tear of power generation
materials and equipment.
14.2 The term Force Majeure does not include (i)
governmental action that affects the cost of Operator's supply of fuel or any
alternate supplies of fuel or the demand for Operator's products or, (ii)
changes in market conditions that affect the cost or availability of Operator's
supply of fuel or any alternate supplies of fuel or the demand for Operator's
products. In addition, Force Majeure when applied to Operator does not include
unavailability of equipment, inability to obtain or renew permits, labor
strikes or slowdowns of Operator's employees specifically following the
Commercial Operations Date, or failure or
<PAGE> 120
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unavailability of Operator's transmission or distribution capability, unless
same is caused by an occurrence which would fit the definition of Force Majeure
in this Article 14.
14.3 If Operator fails to achieve the Commercial Operations
Date within fifteen (15) Days of the Anticipated Commercial Operations Date due
solely to a Force Majeure experienced by Virginia Power, then Virginia Power
will commence making capacity payments based on the Estimated Dependable
Capacity in accordance with 10.15(a), notwithstanding the fact that the Facility
has not achieved the Commercial Operations Date by such date. After the
Commercial Operations Date, if Virginia Power experiences a Force Majeure that
renders it unable to accept delivery of energy and Dependable Capacity from
Operator, Virginia Power will continue to make payments to Operator as provided
in Article 10. After the Commercial Operations Date, if Operator experiences a
Force Majeure that renders it unable to deliver any or all of the energy and
Dependable Capacity to Virginia Power, Virginia Power will not be required to
make payments as provided in Article 10 for any such energy or Dependable
Capacity not delivered by Operator due to such Force Majeure.
14.4 In no event will any condition of Forceleajeure extend
(i) the deadline for Operator posting security pursuant to this Agreement or
(ii) the Term of this Agreement. If any condition of Force Majeure delays a
Party's performance for a time period greater than eighteen (18) months, the
Party not delayed by such Force Majeure may terminate this Agreement, without
further obligation, or extend such period at its sole discretion if the
<PAGE> 121
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Party delayed by such Force Majeure is exercising due diligence in its efforts
to cure the condition of Force Majeure.
ARTICLE 15: TAXES AND CLAIMS FOR LABOR AND MATERIALS
15.1 All present or future federal, state, municipal or other
lawful taxes applicable by reason of the sale by Operator of energy or
Dependable Capacity shall be paid by Operator.
15.2 Operator will promptly pay and discharge all lawful
taxes, assessments and governmental charges or levies imposed upon it or upon or
in respect of all or any part of its property or business, all trade accounts
payable in accordance with usual and customary business terms, and all claims
for work, labor or materials which, if unpaid, might become a lien or charge
upon any of its property; provided, however, that Operator shall not be required
to pay any such tax, assessment, charge, levy, account payable or claim if (i)
the validity, applicability or amount thereof is being contested in good faith
by appropriate actions or proceedings which will prevent the forfeiture or sale
of any property of Operator or any material interference with Operator's use
thereof and (ii) Operator shall set aside on its books reserves deemed by it to
be adequate with respect thereto.
<PAGE> 122
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ARTICLE 16: CHOICE OF LAW
16.1 This Agreement shall be interpreted, construed and
governed by the laws for the Commonwealth of Virginia. The Parties hereby submit
to the jurisdiction of courts located in, and venue is hereby stipulated to be
in Richmond, Virginia.
ARTICLE 17: MISCELLANEOUS PROVISIONS
17.1 (a) Neither Operator nor Virginia Power may
assign this Agreement except with the prior
written consent of the other Party, which
consent shall not be unreasonably withheld,
provided that:
(1) the assignee shall expressly assume the
assignor's obligations hereunder;
(2) no such assignment shall impair any security
granted by Operator to Virginia Power
hereunder;
(3) unless expressly agreed to by the other
Party, no assignment shall release or
discharge assignor from any of its
obligations or liabilities hereunder in the
event its assignee fails to perform such
obligations or satisfy such liabilities; and
<PAGE> 123
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(4) the assignee has reasonably demonstrated
that it is capable of fulfilling, or has a
plan in place to fulfill, the assignor's
obligations under this Agreement.
(b) Notwithstanding the provisions of Section 17.1(a),
Operator may in its sole discretion, without the
prior written consent of Virginia Power, assign all
of its rights, titles and interests under this
Agreement:
(1) prior to the Commercial Operations Date to
any affiliated corporation of Operator or to
any entity of which Operator is a partner or
shareholder provided that (x) such assignee
shall expressly assume Operator's
obligations hereunder and (y) no such
assignment shall impair any security granted
by Operator to Virginia Power hereunder;
provided, further, that notwithstanding the
provisions of Section 17.1(a)(3), upon such
assignment, the then Operator shall be
released and discharged from any and all
obligations and liabilities under this
Agreement;
(2) to any one or more Lenders; provided,
however, that any consent, opinion or other
documents required from Virginia Power by
such Lender will be on terms and conditions
reasonably acceptable to Virginia Power; and
<PAGE> 124
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(3) for the purpose of any sale-leaseback of the
Facility.
(c) Virginia Power shall not acquire any rights of first
refusal or offer purchase rights under Section 13.7
in the event of, due to or resulting from, an
assignment of this Agreement by Operator pursuant to
either Section 17.1(b)(1) or Section 17.1(b)(2).
17.2 This Agreement, including the appendices and/or Exhibits
hereto, can be amended only by agreement between the Parties in writing.
17.3 The failure of either Party to insist in any one or more
instances upon strict performance of any 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 right or any
other right hereunder, which shall remain in full force and effect.
17.4 The headings contained in this Agreement are used solely
for convenience and do not constitute a part of the Agreement between the
Parties hereto, nor should they be used to aid in any manner in the construction
of this Agreement.
17.5 This Agreement is intended solely for the benefit of, and
shall be binding upon, the Parties hereto and their respective successors and
assigns. Nothing in this Agreement shall be construed to create any duty to, or
standard of care with reference to, or any liability to, or any recourse
against, any person or entity not a Party to this Agreement, including without
limitation
<PAGE> 125
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any affiliate of any Party. Without limiting the generality of the foregoing,
Virginia Power expressly agrees that it will have no recourse against any
partner or security holder of Operator, or against any partner or security
holder of any such partner or security holder of Operator, or against any
officer, employee, director or agent of any of them, for any of Operator's
duties or obligations under this Agreement.
17.6 This Agreement shall not be interpreted or construed to
create an association, joint venture, or partnership between the Parties or to
impose any partnership obligation or liability upon either Party. Neither Party
shall have any right, power or authority to enter into any Agreement or
undertaking for, or act on behalf of, or to act as or be an agent or
representative of, or to otherwise bind, the other Party.
17.7 Cancellation, expiration or earlier termination of this
Agreement shall not relieve the Parties of obligations that by their nature
should survive such cancellation, expiration or termination, including without
limitation warranties, remedies, promises of indemnity and confidentiality.
17.8 All terms and conditions of the Confidentiality Agreement
between Virginia Power and Operator dated as of June 21, 1990 shall survive and
remain in effect during the Term of this Agreement and the cancellation,
expiration or earlier termination of this Agreement shall not relieve the
Parties of obligations under such Confidentiality Agreement that by their nature
should survive such cancellation, expiration or termination.
17.9 Notwithstanding any other provision of this Agreement,
the exercise or non-exercise of any power, judgment,
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duty, right, privilege, discretion, option, action, consent or approval
hereunder or in any way pertinent hereto shall be reasonable and in good faith.
17.10 As soon as available, but no later than thirty (30) days prior
to Financial Closing, Operator shall provide Virginia Power with (i)
copies of proposed financing documents sufficient to permit Virginia Power to
provide the legal opinions and consents needed for Financial Closing, and (i)
forms of the legle opinions and consents needed for Financial Closing; all
containing terms and conditions consistent with this Agreement. Within ninety
(90) days after the Financial Closing Operator shall provide Virginia Power with
a copy of the executed financing documents which shall contain terms and
conditions consistent with this Agreement.
17.11 OPERATOR AND EACH OF ITS AGENTS, EMPLOYEES, OFFICERS, DIRECTORS,
SUCCESSOR AND ASSIGNS, AND EACH PERSON OR ENTITY CONTROLLED BY, UNDER COMMON
CONTROL WITH OR CONTROLLING IT, HEREBY DISCLAIMS ANY AND ALL EXPRESS, IMPLIED OR
STATUTORY WARRANTIES CONCERNING THE FACILITY, ANY PERFORMANCE, OR ANY
FACILITIES, EQUIPMENT OR OTHER DEVICES CONSTRUCTED, INSTALLED, OPERATED OR
REPAIRED, BY ANY ONE OR MORE OF THEM, INCLUDING WITHOUT LIMITATION ANY AND ALL
WARRANTIES AS TO MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE,
AVAILABILITY, QUALITY, QUANTITY OR OTHERWISE.
17.12 Virginia Power and Operator agree that the rights and remedies
set forth in this Agreement are exclusive and in lieu of all other remedies. No
right or remedy provided in this Agreement for any action, set of circumstances,
decision or other event or occurrence may be expanded or added to in any suit,
action or proceeding of any nature whatsoever, whether the claim underlying
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such suit, action or proceeding is based on contract, tort (including without
limitation negligence), strict liability, warranty or otherwise.
ARTICLE 18: STATUTORY AND REGULATORY CHANGES
18.1 The Parties recognize and hereby agree that if any
federal, state or municipal government or regulatory authority, including
without limitation the SCC, should for any reason enter an order, modify its
rules, or take any action whatsoever, having the effect of disallowing Virginia
Power the recovery from its customers of all or any portion of the payments for
Dependable Capacity hereunder in excess of the sum of: (x) $6.00 per kW per
Month in 1989 dollars as escalated by the Gross National Product Implicit Price
Deflator beginning April 1, 1990, and continuing each April until termination of
this Agreement; plus (y) an amount in each Month equal to the product of the Net
Electrical Output for that Month multiplied by the non-firm energy payment
specified in Virginia Power's Schedule 19, supplements thereto and reissues and
replacements thereof, on file with the SCC and in effect from time to time,
including additions to or escalations of such payments whether included in
Schedule 19 or referenced therein; such amount in excess being hereinafter
referred to as the Disallowance (except where such disallowance is due to
Virginia Power's failure to seek recovery or comply with procedural requirements
governing recovery of such costs), then:
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(a) If the Disallowance occurs before the
twentieth anniversary of the Commercial
Operations Date, Virginia Power shall
continue to pay for Dependable Capacity at
the Capacity Purchase Price set forth in
Article 10 through the twentieth anniversary
of the Commercial Operations Date. Payments
for Dependable Capacity beginning on the
twentieth anniversary of the Commercial
Operations Date shall not exceed the amount
unaffected by the Disallowance. Further,
Virginia Power may, at its option, beginning
on the twentieth anniversary of the
Commercial Operations Date withhold up to
seventy-five (75) percent of the payments
for Dependable Capacity until the sooner of
(i) the twenty-first anniversary of the
Commercial Operations Date or (ii) the Day
the entire amount of the Disallowance is
repaid with interest at the Interest Rate
minus two percentage points from the date
each part of the Disallowance was paid to
Operator. In the event that such withholding
does not fully repay the Disallowance and
accrued interest by the twenty-first
anniversary of the Commercial Operations
Date, then Operator shall pay the remainder
to Virginia Power within twenty eight (28)
Days after the twenty-first anniversary of
the Commercial Operations Date in a lump
sum; provided, however, that if Operator
demonstrates to Virginia Power that it is
unable
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to borrow funds (without recourse to
partners in, or shareholders of, Operator or
affiliates of either, as described more
fully in Section 17.5 of this Agreement),
sufficient to make such lump sum payment at
all or on terms that would permit continued
operation of the Facility by Operator at a
profit, then the Term of this Agreement
shall be automatically extended for an
additional five (5) Years. The Capacity
Purchase Price and equivalent hourly
Capacity Purchase Price applicable to such
extension period shall be those set out in
Section 10.15(b) of this Agreement for
Agreement Years 26, 27, 28, 29 and 30 and
all other terms and conditions of this
Agreement shall continue and be in full
force and effect.
(b) If the Disallowance occurs after the
twentieth anniversary of the Commercial
Operations Date, all future payments for
Dependable Capacity shall not exceed the
amount unaffected by the Disallowance.
Further, the Operator shall repay the full
amount of the Disallowance with interest by
the earlier of (i) one year from the date of
such Disallowance or (ii) the expiration of
this Agreement; provided, however, that if
Operator demonstrates to Virginia Power that
it is unable to borrow funds (without
recourse to partners in, or shareholders of,
Operator or affiliates of either,
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as described more fully in Section 17.5 of
this Agreement), sufficient to make such
lump sum payment at all or on terms that
would permit continued operation of the
Facility by Operator at a profit, then the
Term of this Agreement shall be
automatically extended for an additional
five (5) Years. The Capacity Purchase Price
and equivalent hourly Capacity Purchase
Price applicable to such extension period
shall be those set out in Section 10.15(b)
of this Agreement for Agreement Years 26,
27, 28, 29 and 30 and all other terms and
conditions of this Agreement shall continue
and be in full force and effect.
(c) On the twentieth (20th) anniversary of the
Commercial Operations Date or thereafter,
Operator shall have the option to propose
any or all of the following actions: (i)
repay any total disallowance, including
without limitation interest, and renegotiate
a lower purchase price for the Facility's
capacity; or (ii) transfer ownership of the
Facility to Virginia Power in full
settlement of all of Operator's duties and
obligations under this Agreement, including
without limitation any duties or obligations
under this Section 18.1.
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The Parties obligate themselves to use all good faith efforts to establish, if
practicable, an appeal and overruling of the Disallowance or a superseding
order, approval of modified rules or tariffs, or other action so as to allow
timely resumption of full, or failing that, adjusted payments hereunder.
18.2 Operator agrees that if there is a Disallowance which
Operator chooses to repay under Section 18.1(b)(ii) over an extended Term (which
was extended pursuant to the proviso to Section 18.2(b)), then Operator will
provide, prior to the date on which the Term would have expired absent such sum,
in addition to any other security posted under this Agreement, a letter of
credit, or a surety bond containing features reasonably similar to a letter of
credit, either of which must: (i) be issued by an institution reasonably
acceptable to Virginia Power, (ii) be in form and substance reasonably
acceptable to Virginia Power, (iii) provide for draws by Virginia Power on a
monthly basis, and (iv) permit presentation at a bank located in Richmond,
Virginia for immediately available funds in the amount of such disallowance for
the remaining term of this Agreement, which letter of credit shall be maintained
until the earlier of the termination of this Agreement or the date by which the
disallowance has belen recovered by Virginia Power pursuant to Section 18.1 at
which time the letter of credit or surety bond provided pursuant to this Section
will terminate, or in the case of a surety bond may be cancelled by Operator.
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ARTICLE 19: COORDINATION OF COMMUNICATIONS
19.1 Each Party agrees to coordinate with the other Party all
press, news, or other releases to private or public media groups that relate to
the Facility or this Agreement and to allow the other Party to review such
releases in advance of release; further each Party agrees to comply with all
reasonable requests of the other Party as to the content or manner of
publication of such releases.
19.2 Operator agrees to allow Virginia Power, at Virginia
Power's option, to accompany Operator and/or participate in any discussions or
filings with the FERC or the SCC.
ARTICLE 20: OPTION TO PURCHASE
20.1(a) Virginia Power shall have the option to purchase the
Facility at either (i) the end of the original Term, or (ii) the end of any
extended Term if the Term is extended pursuant to Section 18.1(a) or 18.1(b), at
a price determined pursuant to Section 20.2, which price Virginia Power shall
pay to Operator in immediately available funds in a lump sum at the end of the
Term. If Virginia Power believes that it may wish to exercise such option,
Virginia Power shall give notice to Operator at least forty-eight (48) Months
prior to the end of the Term. Upon Operator's receipt of such notice, Operator
and Virginia Power shall commence the appraisal procedure set forth in section
5.5(f) to determine the fair market value of the Facility. If Virginia Power
decides to exercise such option, it shall give Operator notice of its decision
at least thirty-six (36) Months prior to the end of the Term. If Virginia Power
declines to exercise such
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option, or does not give Operator notice thirty-six (36) Months prior to the end
of the Term, the option shall expire. If Virginia Power exercises the option on
a timely basis prior to the end of the initial Term, and thereafter the Term is
extended pursuant to Section 18.1, Virginia Power shall automatically be deemed
not to have exercised its option prior to the end of the initial Term, but its
option to purchase the Facility at the end of the extended Term under this
Section 20.1 shall be reinstated, to be exercised in the manner and on the
schedule set out above as though the extended Term were part of the initial
Term. If Virginia Power exercises the option at the end of the initial or any
extended Terms on a timely basis but has not received all necessary approvals
from governmental or other official agencies prior to the end of the Term, then
Virginia Power will be deemed not to have exercised the option and shall have no
further right to purchase the Facility under this Article 20.
(b) In the event Virginia Power does not exercise its
option in Section 20.1(a) above, Operator may require Virginia Power to provide,
and Virginia Power shall provide, transmission services at compensatory,
nondiscriminatory rates, subject to approval by the appropriate authority, to
Operator sufficient for Operator to wheel the energy generated by the Facility
to any other utility outside of Virginia Power's control area with which
Virginia Power is directly interconnected, so long as such transmission service
does not adversely affect the reliability of Virginia Power's service to its
retail and wholesale customers.
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20.2 The purchase price to be paid by Virginia Power for the
Facility, if Virginia Power exercises its option to purchase the Facility
pursuant to this Article 20, shall be the fair market value of the Facility,
determined by an appraiser appointed pursuant to the procedure set forth in
Section 5.5(f) above, the appraiser having taken into account the condition of
the Facility as of the date of the Event of Default, determined in current Year
dollars as of the date Virginia Power notifies Operator that Virginia Power may
wish to exercise such option, as escalated by changes to the Gross National
Product Implicit Price Deflator (GNPIPD) from the month in which Virginia Power
gives such notice to the month in which the purchase is consummated; plus the
following (determined at the end of the Term):
(i) an amount equal to the federal, state and local taxes payable
as a result of the sale and transfer of the Facility to
Virginia Power (including those resulting from the payment
pursuant to this (i));
(ii) any and all amounts payable by Operator (x) to terminate any
and all obligations and liabilities of Operator, or (y) in
connection with the assumption by Virginia Power of, and the
release of Operator from, any and all obligations and
liabilities of Operator, or (z) a combination of x and y; and
(iii) all other costs, expenses and other amounts payable by
Operator in connection with Virginia Power's purchase of the
Facility pursuant to this Article 20 (including Operator's
costs of operating and maintaining the Facility
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from the end of the Term until Virginia Power's purchase is
consummated, if applicable).
20.3 Operator shall cooperate with Virginia Power in Virginia
Power's exercise of its rights under this article by (i) providing to Virginia
Power all the documentation necessary and appropriate to the determination of
the purchase price, (i) executing all documents necessary and appropriate to the
transfer of title in the Facility to Virginia Power, (iii) providing Virginia
Power with good and marketable title to the Facility free and clear of all liens
and encumbrances, and (iv) maintaining the Facility in reasonable operating
condition until title has been transferred to Virginia Power.
ARTICLE 21: REGULATORY CHANGES
21.1 Operator's agreement to the provisions of this transaction is
based on current law, on Operator's understanding of best available control
technology (BACT) requirements and environmental regulations as of the time (the
"Response Date") of Operator's response to Virginia Power's letter dated March
27, 1990, and that the equipment that formed the basis upon which the emissions
and efficiency characteristics set forth in Operator's response constituted BACT
and environmental compliance as of such Response Date. In the event and to the
extent that any such governmental requirements become more onerous than on the
Response Date, either through the enactment of Federal, state or local
legislation, through the promulgation of regulations by any
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governmental or other official agency or through any other action by any
governmental or other official agency: (a) Virginia Power shall allow the
Operator the right through December 31, 1990 to terminate this Agreement without
any liability to either Party by providing notice to Virginia Power prior to
December 31, 1990. Upon such termination of the Agreement by the Operator,
Virginia Power shall immediately release or return to Operator any and all
security provided by Operator hereunder, including without limitation under
Article 13; and (b) Virginia Power (at any time during the Term, whether before
or after December 31, 1990) will not, solely because the Facility is not owned
by Virginia Power, discriminate between the Facility and any other generating
unit, facilities or agreements in which Virginia Power has an interest or from
which it receives or will receive capacity or energy, when taking any action
with regard to either or both the allocation or creation of emissions allowances
or otherwise with regard to complying with BACT requirements or other
environmental regulations.
ARTICLE 22: Entirety
22.1 This Agreement and the Exhibit A attached hereto aee
intended by the Parties as the final expression of their agreement and is
intended also as a complete and exclusive statement of the terms of their
agreement with respect to the Net Electrical Output and Dependable Capacity sold
and purchased hereunder and the manner of operation and maintenance of the
Facility. All prior written or oral understandings, offers or other
communications of every kind
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pertaining to the sale of energy and Dependable Capacity hereunder to Virginia
Power by Operator are hereby abrogated and superseded.
<PAGE> 138
IN WITNESS WHEREOF, the Parties hereto have caused this
Agreement to be executed as of the 13th day of July, 1990.
VIRGINIA ELECTRIC AND POWER COMPANY SEI BIRCHWOOD, INC.
By: /s/ Larry W. Ellis By: /s/ Gilbert B. Waldman
---------------------------------- -------------------------------------
Senior Vice President-Power
Title: Operations and Planning Title: Vice President
------------------------------- ----------------------------------
<PAGE> 139
EXHIBIT A
DATA REQUIRED TO PERFORM INTERCONNECTION STUDY
1. Electrical one-line of the Facility.
2. Explanation of proposed equipment protection and control scheme (may be
shown functionally on the one-line).
3. Site plan showing plant layout, property lines, access roads and
switchyard boundaries.
4. Preliminary equipment layout and arrangement for switchyard and
generator step-up transformer (GSU).
5. Estimated GSU impedance +/- 20 percent.
6. GSU connection and winding.
7. Estimated generator reactances +/- 20 percent.
8. Estimated generator kilowatt rating +/- 10 percent.
9. Estimated generator kilovar rating +/- 10 percent.
10. Explanation of proposed excitation system.
11. Estimated station auxiliary load +/- 20 percent.
12. Requirements for construction and start-up power.
13. Project schedule (I-J or bar chart format) including but not limited
to the following milestones:
- QF status obtained.
- Engineering 30% complete
- One-line approved
- Financial Closing
- Major licenses/permits
- Major material procurement
- Start construction
- Engineering 70% complete
- Utility technical submittals complete
- Operating procedures finalized
- Start test and start-up
- Roll turbine
- Initial synchronizing date
- Capacity test complete
- Commercial operation
Data submitted in a preliminary or estimated form shall be updated
within 30 days after final equipment arrangements and specifications are
established.
<PAGE> 140
BIRCHWOOD POWER PARTNERS, L.P.
CONSENT TO ASSIGNMENT
<PAGE> 141
VIRGINIA ELECTRIC AND POWER COMPANY
CONSENT TO ASSIGNMENT
---------------------
This CONSENT TO ASSIGNMENT OF AGREEMENT (the "Consent to Assignment"),
dated as of May 23, 1994, is made among (i) VIRGINIA ELECTRIC AND POWER COMPANY,
a Virginia public service corporation ("Virginia Power"), (ii) BIRCHWOOD POWER
PARTNERS, L.P., a Delaware limited partnership (the "Assignor"), and (iii)
CREDIT SUISSE, as Security Agent (together with its successors and assigns in
such capacity, the "Assignee") for the benefit of the Secured Parties (the
"Secured Parties") referred to in the Credit Line Deed of Trust, Assignment and
Security Agreement dated as of May 18, 1994 from the Assignor to Lawyers Title
Insurance Corporation as trustee for the Assignee (as amended, supplemented or
otherwise modified from time to time, the "Mortgage and Assignment"). Virginia
Power, Assignor, and Assignee are herein referred to individually as a "Party"
and collectively as the "Parties". Capitalized terms used herein shall have the
meaning specified in the POWER PURCHASE AND OPERATING AGREEMENT between Assignor
and Virginia Power dated as of July 13, 1990, as amended, supplemented or
otherwise modified from time to time (the "Power Purchase Agreement") unless
otherwise defined herein. As used in this Consent to Assignment, "Assignee" may
also mean (i) the trustee for the Assignee under the Mortgage and Assignment and
(ii) any entity directly or indirectly wholly owned by the Assignee or one or
more Secured Parties which is created for the sole purpose of holding interests
in the Facility or in the Assignor pursuant to an exercise of rights hereunder
or under the Mortgage and Assignment or the Loan Agreement or Security Documents
hereinafter referred to, provided, however, there shall only be one Assignee at
any one time.
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RECITALS
--------
A. Pursuant to the Power Purchase Agreement, Virginia Power has agreed
to purchase electricity and capacity from the Facility and Operator has agreed
to provide exclusively to Virginia Power all of the Facility's electrical
generation other than that necessary for the Facility's operation. Pursuant to
the Assignment and Assumption Agreement dated as of May 18, 1994, among SEI
Birchwood, Inc., the Assignor, and Virginia Power, all right, title, interest,
and obligations of SEI Birchwood, Inc. in, to, and under the Power Purchase
Agreement have been assigned to, and have been accepted and assumed by, the
Assignor (who has succeeded to SEI Birchwood, Inc. as the "Operator" thereunder)
with the consent of Virginia Power.
B. Assignor and Assignee have informed Virginia Power that Assignor has
entered into a Loan and Reimbursement Agreement dated as of May 18, 1994 (as
amended, supplemented, or otherwise modified from time to time, the "Loan
Agreement") among the Assignor, the Lenders (as defined in the Loan Agreement),
the Co-Agents named therein, and Credit Suisse, as Issuing Bank and as
Administrative Agent, in order to finance the acquisition, construction, and
initial operation of the Facility, and is securing the payment of the Secured
Obligations (as defined in the Loan Agreement) by, among other things,
mortgaging the Facility to Assignee and assigning to Assignee all of Assignor's
right, title, and interest in, to, and under the Power Purchase Agreement
pursuant to the Mortgage and Assignment.
C. Assignor and Assignee have informed Virginia Power that the Loan
Agreement requires that Virginia Power will deliver this Consent to Assignment
as a condition, among others, to making loans and otherwise extending credit to
Assignor thereunder.
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D. Virginia Power and Assignor are parties to a Right of First Refusal
Agreement dated as of May 23, 1994, and recorded in the real estate records of
the County of King George, Virginia (the "First Refusal Agreement").
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which hereby are acknowledged, the Parties hereto agree as
follows:
DEFINITIONS
-----------
"Equity Interest" is any partnership interest or other equity
interest in Operator.
"Lump Sum Amount" is any Disallowance that remains unpaid
under Section 18.1(a) of the Power Purchase Agreement after the exercise by
Virginia Power of its offset rights.
"Monetary Obligations" shall mean, on any date of calculation
under this Consent to Assignment, any monetary amounts remaining unpaid to the
Secured Parties under the Mortgage and Assignment on such date of calculation
or, in the event Assignee acquires title to the Facility, all such amounts which
would have remained unpaid on such date of calculation if Assignee had not
acquired title to the Facility.
"Monetary Default" is an Event of Default which has resulted
from Assignor not paying to Virginia Power amounts due under the Power Purchase
Agreement.
"Scrap Purchaser" shall mean any person who acquires the
Facility or any part thereof from Assignee in accordance with Section 9(d) of
this Consent to Assignment.
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"Transferee" shall mean a person who (i) is either an
experienced power plant operator, legally permitted to operate the Facility, or
shall have agreed for the Term to engage the services of another person who is
an experienced power plant operator legally permitted to operate the Facility,
(ii) shall have assumed in writing for the benefit of Virginia Power the
obligations of "Operator" under the Power Purchase Agreement, (iii) shall have
cured, or made arrangements reasonably satisfactory to Virginia Power for the
curing of, all material defaults under the Power Purchase Agreement previously
notified by Virginia Power to Assignee (other than defaults not susceptible of
being cured) and paid all amounts if any, then due and payable by Assignor to
Virginia Power under the Power Purchase Agreement up to but not exceeding the
then undrawn amount of the security required to be provided to Virginia Power
pursuant to Section 13.3 or 13.5, as the case may be, of the Power Purchase
Agreement.
1. Consent to Assignment. Virginia Power hereby consents to the
assignment of all of Assignor's right, title, and interest in, to and under the
Power Purchase Agreement by Assignor to Assignee as security for the Secured
Obligations of Assignor. Except as expressly provided herein, neither the giving
of this Consent to Assignment nor such assignment or any of the terms of this
Consent to Assignment, such assignment, the Mortgage and Assignment, the Loan
Agreement, or any of the Security Documents shall modify Assignor's obligations,
or excuse Assignor from fully performing its obligations, under the Power
Purchase Agreement.
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2. Notice of Assignor's Defaults and Termination. (a) Notwithstanding
anything in the Power Purchase Agreement to the contrary, for so long as there
are any Monetary Obligations, Virginia Power shall provide to Assignee a copy of
any notice of default sent to Assignor pursuant to the Power Purchase Agreement.
Such notices shall be in writing and shall be deemed to be given when sent in
accordance with the provisions of Article 3 of the Power Purchase Agreement.
Failure of Virginia Power to provide such notice to Assignee shall not
constitute a breach of this Consent to Assignment. Assignee agrees that Virginia
Power shall have no liability to Assignee for such failure whatsoever; provided,
however, that no claim for rescission or termination of the Power Purchase
Agreement by Virginia Power shall be binding upon Assignee without the giving of
such notice to Assignee and the expiration of the applicable cure period, if
any, from the date of such notice. Assignee may make any payment or perform any
act required under the Power Purchase Agreement to be made or performed by
Assignor, with the same effect as if made or performed by Assignor, but Assignee
shall be under no obligation to make any payment or to perform any such act
except to the extent set forth in Section 9 of this Consent to Assignment. If
Assignee or Assignor fails to cure any default under the Power Purchase
Agreement within the applicable cure period, if any, such cure period to
commence upon the later date upon which such notices are delivered by Virginia
Power to Assignor and Assignee, Virginia Power shall have all of its rights and
remedies with respect to such default and right of termination as set forth in
the Power Purchase Agreement.
(b) All notices and other communications provided for in this
Consent to Assignment shall be addressed (unless and until such other address is
specified in a notice to the sending party delivered in conformity with
subsection (a) of this Section 2) as follows:
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Assignee:
---------
Credit Suisse
Tower 49
12 E. 49th Street
New York, New York 10017
Attn: Project Finance
Telecopy: 212-238-5390
Virginia Power:
---------------
Delivered by U.S. mail:
Virginia Electric and Power Company
Post Office Box 26666
Richmond, Virginia 23261
Delivered by hand or courier:
Virginia Electric and Power Company
One James River Plaza, First Floor
701 East Cary Street
Richmond, Virginia 23219
In each case:
Attention: Manager Capacity Acquisition
Telecopy: (804) 771-3005
3. No Previous Assignment. Except as set forth above, Virginia Power
warrants and represents to Assignee that it has not consented to any assignment,
transfer or hypothecation of the Power Purchase Agreement.
4. Payments. Assignor hereby requests and Virginia Power agrees that
all payments to be made by Virginia Power with respect to the Power Purchase
Agreement shall be paid directly to Assignee at its address set forth in Section
2 above for deposit into the Project Control Account (Account No. ___________)
(or, upon not less than thirty (30) days prior written notice to Virginia Power
from Assignee, to such other person or entity or other address for the project
control account as may be specified in writing by Assignee). Assignor agrees
that all payments made by Virginia Power to Assignee, and in the event that
Assignee requests Virginia Power to make payments directly to
<PAGE> 147
Page 7 of 22
another specified person or entity as set forth above, any and all payments made
by Virginia Power pursuant to such request, shall in each case fully satisfy and
discharge Virginia Power's obligations to make such payments pursuant to the
Power Purchase Agreement as if paid to Assignor. Assignor hereby releases and
agrees to indemnify and hold harmless Virginia Power from any and all liability
for making payments to or as directed by Assignee in accordance herewith.
5. Acknowledgment of Assignee's Obligations and Rights. Assignee shall
have no obligation to Virginia Power under the Power Purchase Agreement until
such time as it expressly assumes the Assignor's obligations under such Power
Purchase Agreement in accordance with Section 9 of this Consent to Assignment.
Upon notification by Assignee to Virginia Power of the occurrence and
continuance of an event of default under the Loan Agreement, Assignee shall have
the right to take possession of the Facility and, prior to commercial operation
of the Facility, complete construction of the Facility and operate the same and,
after commercial operation of the Facility, operate the same.
6. Representations. Virginia Power represents and warrants as follows:
(a) Virginia Power is a public service corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Virginia and is in good standing in all places where
necessary in light of the business it conducts and the properties it
owns.
<PAGE> 148
Page 8 of 22
(b) Each of the Power Purchase Agreement and this Consent to
Assignment has been duly executed and delivered and constitutes a valid
and binding obligation of Virginia Power.
(c) Virginia Power is not in default in the performance of any
of its obligations under the Power Purchase Agreement.
7. No Present Defaults. Virginia Power acknowledges that as of the date
hereof Virginia Power has no knowledge of any default by Assignor in any respect
in the performance of any provision of the Power Purchase Agreement.
8. Additional Provisions. (a) Notwithstanding the provisions of Section
13.7 of the Power Purchase Agreement and the First Refusal Agreement, the
Parties hereby acknowledge and agree that the only transfer of a Transfer
Interest which is not subject to Virginia Power's right of first refusal (other
than a merger or consolidation permitted by Section 13.7(g)(1) or (2) of the
Power Purchase Agreement, and a grant by Operator of a prior right of first
refusal to a steam buyer) is a grant by Assignor of any lien or security
interest to Assignee or future Lenders. Any foreclosure or similar action with
respect to such lien or security interest shall be governed by Section 9 of this
Consent to Assignment.
(b) The Parties agree that Assignor and Assignee shall be the
only parties to receive notices under the Power Purchase Agreement and this
Consent to Assignment and that notice to Assignee shall be sufficient notice to
the Secured Parties. The Secured Parties shall exercise any rights hereunder
only through the Assignee (including any trustee or other entity referred to in
<PAGE> 149
Page 9 of 22
the last sentence of the first paragraph of this Consent and Agreement) as
their agent.
(c) The Parties hereby acknowledge and agree that the word
"Operator" is substituted for the words "Virginia Power" on the twenty-sixth
line of Section 6.15(c) of the Power Purchase Agreement.
(d) The Parties hereby acknowledge and agree that the
reference to "Section 10.15(6) on the first line of Section 10.15(c) of the
Power Purchase Agreement is changed to "Section 10.15(b)".
(e) Virginia Power hereby acknowledges that Assignor has
satisfied the conditions set forth in clauses (a), (b), (e), (i), (j), and (k)
of Section 2.3 of the Power Purchase Agreement.
(f) The Parties agree that the reference to Section "10.15(b)"
in the last sentence of Section 18.1(a) of the Power Purchase Agreement should
be to "Section 10.15(c)".
9. Right of First Refusal. (a) Notwithstanding the provisions of
Section 13.7 of the Power Purchase Agreement and the First Refusal Agreement,
Assignee agrees that if it acquires a Transfer Interest, or an Equity Interest
which results in a transfer in management control over the operation of the
Facility, through an exercise of rights pursuant to any security, pledge, deed
of trust, deed in lieu of foreclosure, or otherwise in connection with the
financing of the Facility, that it will, upon such acquisition of a Transfer
Interest, expressly assume in writing for the benefit of Virginia Power the
<PAGE> 150
Page 10 of 22
Power Purchase Agreement and agree to perform all of the obligations of the
"Operator" under the Power Purchase Agreement as modified by the terms of this
Consent to Assignment, including but not limited to Section 9(c), and upon such
acquisition of such Equity Interest it will expressly assume in writing for the
benefit of Virginia Power and agree to perform all obligations of the transferor
of such Equity Interest under the Power Purchase Agreement. Virginia Power
agrees not to exercise its right of first refusal pursuant to Section 13.7 of
the Power Purchase Agreement or the First Refusal Agreement with respect to such
acquisitions.
(b) The Parties agree that any subsequent transfer by Assignee
of any interest in the Facility, or of any Equity Interest which results in a
transfer in management control over operation of the Facility, acquired by
Assignee through an exercise of rights pursuant to any security, pledge, deed of
trust, deed in lieu of foreclosure, or otherwise, in connection with the
financing of the Facility shall be subject to Virginia Power's right of first
refusal set forth in Section 13.7 of the Power Purchase Agreement as modified by
this Consent to Assignment and, in the event of a transfer by Assignee of any
interest in the Facility that is not to Virginia Power, such transfer shall be
to a Transferee or to a Scrap Purchaser as those terms are defined in this
Consent to Assignment. Virginia Power will consent to an assignment of the Power
Purchase Agreement to a Transferee or Scrap Purchaser in the event that Virginia
Power either does not exercise its right of first refusal or does not acquire
such interest in the Facility pursuant to its right of first refusal.
(c) For a period not to exceed eighteen (18) months after
Assignee acquires title to the Facility and assumes the Power Purchase
<PAGE> 151
Page 11 of 22
Agreement, Assignee's obligation to cure Events of Default which occurred prior
to Assignee's assumption of the Power Purchase Agreement shall be suspended.
Virginia Power agrees that during such period it will not terminate the Power
Purchase Agreement as the result of Events of Default which occurred prior to
Assignee's assumption of the Power Purchase Agreement. In no event shall
Assignee be obligated to cure any such Event of Default that is not susceptible
of being cured. During such eighteen (18) month period, Assignee shall perform
all other obligations of Operator under the Power Purchase Agreement.
Prior to the expiration of the eighteen (18) month period
referred to above, Assignee shall either (i) except as set forth in the next
sentence, transfer the Facility to a Transferee or a Scrap Purchaser, which
transfer shall be subject to Virginia Power's right of first refusal set forth
in Section 13.7 of the Power Purchase Agreement, or (ii) give notice to Virginia
Power that it will continue to operate the Facility in accordance with the terms
of the Power Purchase Agreement until there are no Monetary Obligations. If
Assignee has elected to transfer the Facility to a Transferee or a Scrap
Purchaser in accordance with (i) above, and within the eighteen (18) month
period referred to above, such Transferee or Scrap Purchaser has executed a
letter of intent with Assignee in relation to such transfer, the eighteen (18)
month period referred to above shall be extended under the same terms, if
necessary, to consummate the sale to such Transferee or Scrap Purchaser, for up
to an additional six (6) month period after the date on which Virginia Power
notifies Assignee that it does not elect to exercise its right of first refusal,
or the date Virginia Power notifies Assignee that it has failed to obtain
necessary FERC, SCC or other governmental or regulatory approval with respect to
the consummation of the sale to Virginia Power. Upon either notice from Assignee
that Assignee has elected to continue to operate the Facility in
<PAGE> 152
Page 12 of 22
accordance with the terms of the Power Purchase Agreement until there are no
Monetary Obligations, or the expiration of such eighteen (18) month period
without Assignee having informed Virginia Power of Assignee's election to either
operate the Facility or transfer the Facility to a Transferee or a Scrap
Purchaser, or the expiration of such time periods set forth in this Section 9 to
transfer the Facility to a Transferee or a Scrap Purchaser, Assignee and
Virginia Power shall have all of their respective rights and resume performance
of all of their respective obligations under the Power Purchase Agreement except
as set forth below.
Notwithstanding the preceding provision of this subparagraph
(c), if prior to foreclosure Assignee shall have informed Virginia Power that
operating the Facility in accordance with the terms of the Power Purchase
Agreement would result in a negative cash flow (taking in to account operating
expenses, any capital expenditures necessary to insure performance under the
Power Purchase Agreement and regularly scheduled debt service which would have
been due and owing to the Secured Parties if Assignee had not acquired title to
the Facility), then if requested by Assignee, Assignee's and Virginia Power's
obligations under the Power Purchase Agreement shall be suspended for up to
eighteen (18) or twenty-four (24) months after Assignee acquires title to the
Facility, as applicable in accordance with the immediately preceding paragraph
(and no liability shall accumulate as a result thereof) until (i) Assignee
notifies Virginia Power that Assignee will continue to operate the Facility in
accordance with the terms of the Power Purchase Agreement until there are no
Monetary Obligations, (ii) Assignee transfers the Facility to a Transferee or a
Scrap Purchaser, which transfer shall be subject to Virginia Power's right of
first refusal set forth in Section 13.7 of the Power Purchase Agreement, as
modified by this Consent to Assignment, or (iii) the expiration of such
<PAGE> 153
Page 13 of 22
eighteen (18) or twenty-four (24) month period as applicable without Assignee
informing Virginia Power of Assignee's election either to operate the Facility
in accordance with the terms of the Power Purchase Agreement or to transfer the
Facility to a Transferee or a Scrap Purchaser, at which time Assignee and
Virginia Power shall have all of their respective rights and resume performance
of all of their respective obligations under the Power Purchase Agreement except
as set forth below.
If at the time that Assignee acquires title to the Facility
there are any outstanding Events of Default by the Assignor under the Power
Purchase Agreement, or if there ever is a Disallowance whether before or after
Assignee acquires title to the Facility, then upon Assignee's notice to Virginia
Power that it has elected to continue to operate the Facility in accordance with
the terms of the Power Purchase Agreement until there are no Monetary
Obligations, or the expiration of the time periods set forth above, Assignee's
obligation to cure any Monetary Default, and its obligation to pay a Lump Sum
Amount, shall be suspended, and Virginia Power shall not exercise any remedies
against Assignee available to it under the Power Purchase Agreement or otherwise
relating to any Monetary Default or Lump Sum Amount unless Assignee has breached
its obligations under Section 9(e) of this Consent to Assignment.
Notwithstanding the foregoing, nothing in this Section 9(c) shall relieve
Assignee of liability for any Event of Default under the Power Purchase
Agreement occurring after Assignee has assumed the obligations under the Power
Purchase Agreement, or prevent Virginia Power from exercising its offset rights
pursuant to Section 18.1(a) of the Power Purchase Agreement. In addition, if at
the time that Assignee acquires title to the Facility, there are outstanding
liabilities to Virginia Power from Assignor which are not the result of a
Monetary Default or Disallowance, Virginia Power shall have the right to draw
<PAGE> 154
Page 14 of 22
the amount available to be drawn, up to the amount of such outstanding
liabilities, under the letter of credit initially provided by Assignor pursuant
to Section 13.5 of the Power Purchase Agreement and upon such draw all such
liabilities shall be deemed canceled as to Assignee.
If Assignee transfers the Facility to a Transferee prior to
the expiration of the applicable eighteen (18) or twenty-four (24) month period
provided in this subparagraph (c), the Transferee shall, within one year of the
effective date of such transfer, either (i) elect to cure all Monetary Defaults
and pay all Lump Sum Amounts to Virginia Power or (ii) elect not to cure all
Monetary Defaults and pay all Lump Sum Amounts to Virginia Power (in which case
the Transferee's obligations to cure all Monetary Defaults and pay all Lumps Sum
Amounts to Virginia Power shall be suspended and Virginia Power shall not
exercise any remedies against the Transferee relating to such Monetary Defaults
and Lump Sum Amounts unless the Transferee breaches the Transferee Agreement
(hereinafter defined)) If the Transferee makes the election in clause (ii)
above, it shall agree (the "Transferee Agreement") that upon the 25th
anniversary of the Commercial Operations Date, it shall offer to convey the
Facility to Virginia Power without any representations or warranties for the
price of $1.00 and, if within the time constraints set forth in Article 13.7 of
the Power Purchase Agreement Virginia Power accepts such offer, the Transferee
shall agree to convey the Facility without any representations and warranties to
Virginia Power within the time constraints set forth in Article 13.7 of the
Power Purchase Agreement. Upon such conveyance by Assignee to a Transferee, all
liability of the Assignee for any uncured Monetary Defaults and unpaid Lump Sum
Amounts shall terminate, and upon such conveyance by a Transferee to Virginia
Power for the price of $1.00 all liability of the Transferee for any uncured
Monetary Defaults and unpaid Lump Sum Amounts shall terminate.
<PAGE> 155
Page 15 of 22
Notwithstanding the foregoing, nothing in this paragraph shall relieve the
Transferee of liability for any Event of Default under the Power Purchase
Agreement occurring after the Transferee has assumed the obligations under the
Power Purchase Agreement.
Following the expiration of the applicable eighteen (18)
months or twenty-four (24) months period referred to above in this Section 9(c),
provided that prior to the expiration of such period Assignee shall have cured
all Monetary Defaults and paid all Lump Sum Amounts to Virginia Power, Assignee
shall be free to transfer the Facility to a Transferee. Such transfer shall be
subject to Virginia Power's right of first refusal set forth in Section 13.7 of
the Power Purchase Agreement, as modified by this Consent to Assignment.
(d) In the event that Assignee transfers the Facility to a
Scrap Purchaser, such Scrap Purchaser shall agree, as a condition to such
acquisition, to enter into an agreement with Virginia Power (the "Assumption
Agreement") providing that the Scrap Purchaser shall not generate, or cause to
be generated, electrical energy at its present location from that portion of the
Facility that is to be acquired by the Scrap Purchaser, without first assuming
in writing the Power Purchase Agreement and agreeing to perform the obligations
of Operator thereunder for a term equal to the term that was remaining at the
time such Scrap Purchaser acquired the Facility. The Assumption Agreement shall
(i) provide that Virginia Power shall be entitled to injunctive relief to
enforce its rights under the Assumption Agreement, (ii) provide Virginia Power
the right to sue for specific performance of the Scrap Purchaser's obligations
under the Assumption Agreement, and (iii) state that the Scrap Purchaser waives
any right it may have to claim that Virginia Power has an adequate remedy at law
for failure to comply with its obligation under
<PAGE> 156
Page 16 of 22
the Assumption Agreement. The Power Purchase Agreement will be an attachment
to the Assumption Agreement.
(e) The Parties agree that if Assignee acquires title to the
Facility pursuant to the exercise of rights pursuant to any security, pledge,
deed of trust, deed in lieu of foreclosure, or otherwise in connection with the
financing of the Facility, and does not transfer the Facility to a Transferee or
to a Scrap Purchaser, then (unless all Monetary Defaults have been cured and all
Lump Sum Amounts have been paid by Assignee within the applicable eighteen (18)
months or twenty-four (24) months period provided in Section 9(c) above),
Assignee shall offer to convey the Facility to Virginia Power at the time there
are no Monetary Obligations without any representations or warranties for a
price of $1.00, and in the event that there still are Monetary Obligations at
the end of the twenty-fifth year after the Commercial Operations Date, Virginia
Power may, at its sole option, elect to purchase the Facility for a price equal
to the Monetary Obligations, or extend the term of the Power Purchase Agreement
for an additional period of time, and then at the time there are no Monetary
Obligations, Virginia Power shall be entitled to purchase the Facility for
$1.00. The Capacity Purchase Price and the equivalent hourly Capacity Purchase
Price applicable to such extension period (through the 31st anniversary of the
Commercial Operations Date if necessary) shall be those set out in Section
10.15(c) of the Power Purchase Agreement. If within the time constraints set
forth in Article 13.7 of the Power Purchase Agreement, Virginia Power accepts
any such offer or elects to exercise any such option to purchase the Facility as
set forth above, Assignee shall convey the Facility without any representations
or warranties to Virginia Power within the time constraints set forth in Article
13.7 of the Power Purchase Agreement, as modified by Section 9
<PAGE> 157
Page 17 of 22
of this Consent to Assignment. Upon any conveyance of the Facility pursuant to
this Section 9(e), all liability of the Assignee for any unpaid Monetary
Defaults and Lump Sum Amounts shall terminate. Notwithstanding the foregoing, if
the Assignee has acquired title to the Facility as aforesaid, Virginia Power
shall have the right at its sole option to allow the Power Purchase Agreement to
terminate without an extension (except during any period during which it is
exercising its right or option to purchase the Facility pursuant to this Section
9(e) of this Consent to Assignment). In addition, nothing herein is intended to
create an obligation on the part of Virginia Power to purchase the Facility.
(f) Virginia Power and Assignee shall have no further
obligations, duties or liabilities to each other under the Power Purchase
Agreement (beyond those which accrued prior to the occurrence of the events set
forth in (i) through (iii) below) upon the earliest to occur of (i) the
conveyance of the Facility to Virginia Power for $1.00, (ii) passage of ninety
(90) days from the date Assignee offered to convey the Facility to Virginia
Power for $1.00 without Virginia Power accepting such offer, or (iii) the
consummation of a sale of the Facility, consistent with the terms of this
Consent to Assignment, from Assignee to a Transferee or Scrap Purchaser.
(g) Assignee hereby agrees to give Virginia Power written
notice prior to exercising any rights to acquire any Transfer Interest or Equity
Interest. Virginia Power's waiver of its right of first refusal as set forth in
this Section 9 is contingent on Assignee providing such prior written notice.
<PAGE> 158
Page 18 of 22
(h) So long as Virginia Power is in the process of exercising
its right of first refusal under Section 13.7 of the Power Purchase Agreement as
modified by this Consent, the Power Purchase Agreement as so modified, shall
continue in full force and effect.
(i) Virginia Power hereby acknowledges that the provision of
Article 17.5 of the Power Purchase Agreement shall apply to any entity expressly
assuming the obligations of the Operator under the Power Purchase Agreement.
(j) Notwithstanding anything to the contrary in Section 13.7
of the Power Purchase Agreement or in the First Refusal Agreement, any election
by Virginia Power to exercise its right of first refusal with respect to
transfers to or by Assignee shall be made within ninety (90) days after Assignee
notifies Virginia Power of a proposed transfer subject to Virginia Power's right
of first refusal, and such exercise must be consummated within one hundred and
fifty (150) days after notice from Virginia Power that it elects to exercise
such right unless (subject to the provisions set forth in the next sentence) the
failure to consummate the applicable transfer to Virginia Power within such one
hundred and fifty (150) days period arises out of the failure of Virginia Power
to obtain necessary FERC, SCC or other governmental or regulatory approval with
respect to such consummation. Provided that Virginia Power has used during the
one hundred and fifty (150) days period referred to in the preceding sentence,
and continues to use, its best efforts to obtain all such governmental or
regulatory approvals as soon as possible and so long as Virginia Power
reasonably believes that such approvals (including approval of the purchase
price proposed by Virginia Power) will be obtained, then such one
<PAGE> 159
Page 19 of 22
hundred and fifty (150) days period referred to in the previous sentence shall
be extended for the time necessary to obtain such approvals (but in no event
longer than an additional one hundred and twenty (120) days unless all such
approvals have been obtained within such additional period, in which case
Virginia Power shall in no event have more than sixty (60) days from the date
the last such approval is obtained to consummate such transfer to Virginia
Power).
(k) Virginia Power's rights under this Consent to Assignment
shall not apply to the extent its exercise of such rights would violate
applicable law.
10. Limitation of Liability. Except as otherwise expressly provided
herein, it is hereby agreed and acknowledged that Virginia Power shall not have
any direct contractual obligations to Assignee, and Assignee hereby acknowledges
that, in connection with lending arrangements with Assignor, Assignee has not
relied upon any representations of or statements (oral or written) by Virginia
Power, except as provided herein and in the Power Purchase Agreement. In
addition, Assignee agrees that in no event shall Virginia Power be liable for
any claims, losses, expenses or damages whatsoever other than the liability
Virginia Power may have to Assignee hereunder, or to Assignor and its permitted
successors and assigns, including Assignee, under the Power Purchase Agreement.
11. Binding Upon Successors. All agreements, covenants, conditions and
provisions of this Consent to Assignment shall be binding upon and inure to the
benefit of the permitted successors and assigns of each of the Parties hereto.
<PAGE> 160
Page 20 of 22
12. Captions. The captions or headings at the beginning of each Section
are for the convenience of the Parties only and are not a part of this Consent
to Assignment.
13. GOVERNING LAW. THIS CONSENT TO ASSIGNMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF VIRGINIA APPLICABLE
TO CONTRACTS MADE AND PERFORMED IN THE COMMONWEALTH OF VIRGINIA.
14. Amendment. This Consent to Assignment may be modified, amended or
rescinded only by a writing expressly referring to this Consent to Assignment
and signed by all of the Parties.
15. Severability. Every provision of this Consent to Assignment is
intended to be severable. If any term or provision hereof is declared by a court
of competent jurisdiction to be illegal, invalid or unenforceable for any reason
whatsoever, such illegality, invalidity or unenforceability shall not affect the
other terms and provisions hereof, which terms and provisions shall remain
binding and enforceable, and to the extent possible all of such other provisions
shall remain in full force and effect.
16. Counterparts. This Consent to Assignment may be executed in any
number of counterparts, each of which shall be deemed an original, and all of
which taken together shall constitute but one and the same agreement.
<PAGE> 161
Page 21 of 22
17. Inconsistent Provisions. In the event of any conflict or
inconsistency between the Power Purchase Agreement, the First Refusal Agreement,
and this Consent to Assignment, the terms and conditions of this Consent to
Assignment shall control.
18. Termination. This Consent to Assignment shall terminate at the
earlier to occur of (i) the termination of the Power Purchase Agreement or (ii)
the date on which no amount remains unpaid under the Loan Agreement and all
commitments to make loans or otherwise extend credit under the Loan Agreement
have terminated.
19. Order of Recordation. Assignor and Assignee agree that Assignor
will record the Right of First Refusal Agreement dated as of May 23, 1994,
between Assignor and Virginia Power, after recordation of the deed to the
property on which the Facility is located and prior to the recordation of any
lien related to the Loan Agreement.
<PAGE> 162
Page 22 of 22
IN WITNESS WHEREOF, each of Virginia Power, Assignor and Assignee has
duly executed this Consent to Assignment as of the date first above written.
VIRGINIA ELECTRIC AND POWER COMPANY
By: /s/ Gary L. Edwards
-------------------------------------
Name: Gary L. Edwards
Title: Manager-Capacity Acquisition
BIRCHWOOD POWER PARTNERS, L.P.,
by SEI Birchwood, Inc.,
a General Partner
By: /s/ Mark S. Lynch
-------------------------------------
Name: Mark S. Lynch
Title: Vice President
CREDIT SUISSE, as Agent
By: /s/ Tony K. Muoser
-------------------------------------
Name: Tony K. Muoser
Title: Member of Senior Management
By: /s/ Bruce W. Hurd
-------------------------------------
Name: Bruce W. Hurd
Title: Associate
<PAGE> 1
Confidential Treatment
EXHIBIT 10.7
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COAL SUPPLY AGREEMENT
FOR
SEI BIRCHWOOD POWER FACILITY
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
JULY 22, 1993
-------
SEI Birchwood Contract No. 6709-P-003
----------
<PAGE> 2
COAL SUPPLY AGREEMENT
(Birchwood Project)
TABLE OF CONTENTS
ARTICLE 1 - DEFINITIONS................................................... 2
Section 1.1. Definitions................................................... 2
ARTICLE 2 - TERM.......................................................... 8
Section 2.1. Term.......................................................... 8
ARTICLE 3 - PAYMENT FOR COAL.............................................. 9
Section 3.1. Price......................................................... 9
Section 3.2. Quarterly Adjustments......................................... 9
Section 3.3. Indices....................................................... 9
Section 3.3.1. Base Eastern Bituminous Coal Index (BEBCI).......... 9
Section 3.3.2. Eastern Bituminous Coal Index (EBCI)................ 9
Section 3.4. Adjustments to Coal Price..................................... 10
Section 3.5. Price Changes As a Result of Redetermination of Adjustment
Factors....................................................... 10
Section 3.5.1. Redetermination Provisions.......................... 10
Section 3.5.2. Notice to Seller and Right to Participate........... 11
Section 3.5.3. Request by Buyer to Redetermine..................... 11
Section 3.5.4. Revocation of Participation Rights.................. 12
Section 3.5.5. Adjustments to Price for Coal....................... 12
Section 3.6. Special Adjustments Agreement................................. 13
Section 3.7. Price Adjustments for Quality Variance........................ 13
Section 3.7.1. Ash Content......................................... 13
Section 3.7.2. BTU................................................. 13
Section 3.7.3. Adjustments to Ash Content and BTU Rates............ 14
ARTICLE 4 - OPERATION OF THE MINE......................................... 15
Section 4.1. Seller's Skill, Capital and Facilities........................ 15
Section 4.2. Compliance With Law........................................... 15
ARTICLE 5 - CONSTRUCTION AND OPERATION OF THE FACILITY.................... 16
Section 5.1. Notice of Build-Up Period................................. 16
Section 5.2. Notice of Start-Up Date................................... 16
Section 5.3. No Duty to Construct or Operate the Facility.............. 16
ARTICLE 6 - QUANTITY...................................................... 17
Section 6.1. Build-Up Period............................................... 17
Section 6.2. Operating Period.............................................. 17
ARTICLE 7 - QUALITY REQUIREMENTS.......................................... 18
Section 7.1. No Foreign Matter............................................. 18
Section 7.2. Individual Specifications..................................... 18
Section 7.3. Guaranteed Specifications..................................... 19
Section 7.4. Temporary Adjustments to Individual Specifications............ 19
Section 7.5. Permanent Adjustments to Individual and Guaranteed
Specifications................................................ 20
Section 7.6. Buyer's Remedies for Failure to Meet Specifications........... 22
ARTICLE 8 - SOURCE OF COAL AND MINE RESERVES............................... 27
Section 8.1. Source of Coal................................................ 27
Section 8.2. Restrictions on Transfer of Mine Reserves..................... 27
Section 8.3. Substitute Coal............................................... 28
ARTICLE 9 - DELIVERY, LOADING AND TRANSPORTATION........................... 30
Section 9.1. Scheduling of Deliveries...................................... 30
Section 9.2. Delivery...................................................... 31
Section 9.3. Weighing...................................................... 32
Section 9.3.1. Seller Weights...................................... 32
Section 9.3.2. When Seller's Weights Not Available................. 34
Section 9.4. Loading....................................................... 34
Section 9.5. Transportation................................................ 36
Section 9.6. Shipping Notice............................................... 36
Section 9.7. Assurances of Delivery........................................ 37
<PAGE> 3
ARTICLE 10 - SAMPLING AND ANALYSIS........................................... 38
Section 10.1. Procedures.................................................... 38
Section 10.2. Selection and Discharge of the Lab............................ 38
Section 10.3. Duties of the Lab............................................. 39
Section 10.4. Failure of Sampling or Analysis Procedures.................... 40
Section 10.5. Rights of Buyer and Seller in Sampling and Analysis........... 40
Section 10.6. Costs of the Lab.............................................. 41
ARTICLE 11 - PAYMENTS, ADJUSTMENTS FOR QUALITY AND DEFERRED
PAYMENTS............................................ 42
Section 11.1. Invoices...................................................... 42
Section 11.2. Payment....................................................... 42
Section 11.3. Disputed Invoices............................................. 42
Section 11.4. Records....................................................... 43
ARTICLE 12 - INSURANCE....................................................... 44
Section 12.1. Insurance..................................................... 44
Section 12.2. Coverages..................................................... 44
Section 12.3. Evidence of Coverage.......................................... 45
Section 12.4. Liability Notwithstanding Insurance Coverage.................. 45
ARTICLE 13 - INDEMNIFICATION................................................. 46
Section 13.1. Environmental................................................. 46
Section 13.2. Notice and Legal Defense...................................... 46
Section 13.3. Failure to Defend Action...................................... 47
Section 13.4. Indemnification Account....................................... 48
Section 13.5. Survival...................................................... 48
ARTICLE 14 - FORCE MAJEURE................................................... 49
Section 14.1. Definition.................................................... 49
Section 14.2. Effect of Force Majeure....................................... 50
Section 14.3. Notice........................................................ 52
Section 14.4. Burden of Proof............................................... 53
Section 14.5. Buyer's Right to Suspend or Terminate......................... 53
Section 14.6. Seller's Right to Suspend or Terminate........................ 54
Section 14.7. Extension of Term............................................. 55
ARTICLE 15 - BUYER'S RIGHT TO BUY OUT........................................ 56
Section 15.1. Payment to Seller............................................. 56
ARTICLE 16 - EVENTS OF DEFAULT; REMEDIES..................................... 57
Section 16.1. Event of Default.............................................. 57
Section 16.2. Remedy for Breach............................................. 57
Section 16.3. Specific Performance and Injunctive Relief.................... 58
ARTICLE 17 - WAIVER.......................................................... 59
Section 17.1. Waiver........................................................ 59
ARTICLE 18 - SUCCESSORS AND ASSIGNS.......................................... 60
Section 18.1. Consent Generally Required for Assignment..................... 60
Section 18.2. Seller's Right to Assign...................................... 60
Section 18.3. Buyer's Right to Assign....................................... 61
Section 18.4. Financing Parties' Beneficiaries.............................. 62
Section 18.5. Successors and Assigns........................................ 63
ARTICLE 19 - ARBITRATION..................................................... 64
Section 19.1. Scope......................................................... 64
Section 19.2. Arbitration Panel............................................. 64
Section 19.3. Arbitrator(s) Decision........................................ 65
Section 19.4. Confidentiality of Proceeding................................. 65
Section 19.5. Survival...................................................... 65
- ii -
<PAGE> 4
<TABLE>
<S> <C> <C>
ARTICLE 20 - NOTICES................................................................................. 66
Section 20.1. Notices............................................................................... 66
Section 20.2. Effectiveness......................................................................... 67
Section 20.3. Changes in Persons and Addresses...................................................... 67
ARTICLE 21 - MISCELLANEOUS........................................................................... 68
Section 21.1. Independent Contractor................................................................ 68
Section 21.2. Agents of Seller; Subcontractors...................................................... 68
Section 21.3. Confidentiality....................................................................... 69
Section 21.4. Amendments............................................................................ 69
Section 21.5. Choice of Law......................................................................... 70
Section 21.6. Severability and Renegotiation........................................................ 70
Section 21.7. Other Agreements...................................................................... 70
Section 21.8. Captions.............................................................................. 70
Section 21.9. Counterparts.......................................................................... 71
Section 21.10. Non-Recourse Nature of Certain Obligations........................................... 71
Section 21.11. Construction......................................................................... 71
</TABLE>
- iii -
<PAGE> 5
COAL SUPPLY AGREEMENT
(Birchwood Project)
THIS COAL SUPPLY AGREEMENT (the "Agreement"), made and entered into as
of this 22nd day of July, 1993, by and among BIRCHWOOD POWER PARTNERS, L.P., a
limited partnership, organized under the laws of the State of Delaware and
having its principal office at 100 Ashford Center North, Atlanta, Georgia 30338
(hereinafter referred to as "Buyer"), on the one hand; and AGIPCOAL HOLDING USA,
INC. ("Holding"), AGIPCOAL SALES USA, INC. ("Sales"), LAUREL CREEK CO., INC.
("Laurel") and ROCKSPRING DEVELOPMENT, INC. ("Rockspring"), all being
corporations organized under the laws of the State of Delaware and, in the case
of Holding, having a principal office c/o C T Corporation, 1209 Orange Street,
Wilmington, Delaware, 19801, in the cases of Laurel and Rockspring having
principal offices at Right Fork of Camp Creek, East Lynn, West Virginia 25512,
and in the case of Sales, having a principal office at 401 Tenth Street, Suite
301, Huntington, West Virginia 25701, on the other, (Holding, Sales, Laurel and
Rockspring being collectively and jointly and severally referred to as
"Seller").
W I T N E S S E T H:
WHEREAS, Buyer, or a designee, assignee or affiliate thereof, desires to
construct and operate a cogeneration facility to be located in King George
County, Virginia, for the production and sale of steam and electricity;
<PAGE> 6
WHEREAS, Holding is the parent corporation of Sales, Laurel and
Rockspring and together with such subsidiaries owns and controls the "Mine" (as
hereinafter defined);
WHEREAS, Buyer desires to secure, and Seller desires to supply, an
assured and dependable supply of Coal suitable for use in the cogeneration
facility; and
WHEREAS, the parties hereto desire to set forth their mutual agreements
and covenants with regard to the Coal supply;
NOW, THEREFORE, in consideration of the mutual agreements and covenants
hereinafter stated, Seller agrees to obtain, sell and deliver to Buyer, and
Buyer agrees to purchase, accept and pay for, Coal of the quantity and quality
hereinafter stated, upon the following terms and conditions:
ARTICLE 1 - DEFINITIONS
Section 1.1. Definitions. As used in this Agreement, the following words
and phrases shall have the following meanings:
"Adjusted Base Price" - the purchase price per Ton of Coal delivered by
Seller to Buyer during a particular Year as adjusted from time to time in
accordance with the provisions of Sections 3.2, 3.3 and 3.4 of this Agreement.
"As Received" - Coal without drying or processing other than crushing.
"ASTM" - American Society for Testing and Materials.
"Base Fuel Compensation Price" - shall have the meaning provided in the
Power Agreement. Such meaning includes the transportation of Coal.
- 2 -
<PAGE> 7
"Base Price" - the price for Coal provided in Section 3.1 of this
Agreement.
"Birchwood Power Partners, L.P." - a limited partnership organized under
the laws of Delaware presently consisting of SEI Birchwood, Inc. and Birchwood
Development Corp., each organized under the laws of Delaware.
"BTU" - British Thermal Unit.
"Build-Up Period" - a period of time prior to the Start-Up Date during
which Buyer will accumulate (i) a supply of Coal sufficient to complete the
necessary testing requirements of the Facility and (ii) a supply of Coal
sufficient to initially operate the Facility and (iii) a supply of coal to
create an inventory of thirty (30) days' storage.
"Buyer" - Birchwood Power Partners, L.P. and its successors and assigns,
or its designee, assignee or affiliate designated to own and/or operate the
Facility, including the Facility Operator.
"Call Amount" - the amount provided in Section 15.1 of this Agreement.
"Coal" - Coal tendered by Seller for delivery to Buyer under this
Agreement.
"Delivered Cost" - the total cost per Ton incurred by Buyer in
connection with (i) purchasing or otherwise acquiring Coal for use at the
Facility and (ii) transporting such Coal to the Facility.
"ERLB" - ER&L-Birchwood, Inc., a Delaware corporation.
- 3 -
<PAGE> 8
"Event of Default" - shall have the meaning set forth in Section 16.1
of this Agreement.
"Facility" - the cogeneration facility (including all additions,
replacements and substitutions thereto) to be located in King George County,
Virginia.
"Facility Operator" - the person or entity designated by Buyer to
manage, operate and maintain the Facility.
"Financing Documents" - the loan agreements, notes, indentures,
security agreements, subordination agreements and other documents relating to
the construction and permanent financing of the Facility.
"Financing Parties" - (i) any and all lenders providing the
construction and/or permanent financing for the Facility, and the indenture
trustee or trustees, if any, and (ii) any and all equity investors (other than
Buyer) providing funding for the Facility, and the owner trustee or trustees, if
any.
"Force Majeure" - shall have the meaning set forth in Section 14.1 of
this Agreement.
"Fuel Compensation Price" - shall have the meaning provided in the
Power Agreement. Such meaning includes the transportation of Coal.
"Guaranteed Specifications" - the specifications and quality
characteristics set forth in Section 7.3 of this Agreement.
"Hazardous Materials" - all pollutants, contaminants, chemicals or
industrial, toxic or hazardous substances or wastes proscribed under any
applicable Federal, State or local statute,
- 4 -
<PAGE> 9
law, regulation, ordinance, rule, judgment, order or decree including, without
limitation, the Resource Conservation and Recovery Act, as amended, 42 U.S.C.
Section 6901, et seq., the Federal Clean Water Act, as amended, 33 U.S.C.
Section 1251, et seq., the Federal Clean Air Act, as amended, 42 U.S.C. Section
7401, et seq., the Comprehensive Environmental Response, Compensation and
Liability Act, as amended, 42 U.S.C. Section 9601, et seq.
"Individual Specifications" - the specifications and quality
characteristics set forth in Section 7.2 of this Agreement of a Shipment of Coal
tendered by Seller for delivery to Buyer pursuant to this Agreement.
"Initial Synchronization Date" - the first date upon which (i) energy
is generated by the Facility and (ii) such energy is metered by Virginia Power.
"Lab" - the person, company or other entity selected and retained by
the Parties to perform the sampling and analyses of Coal pursuant to Article 10
of this Agreement.
"Mine" - Seller's respective mining complex at Camp Creek and Ten Mile,
West Virginia, together with coal loading facilities at Laurel Creek and Ten
Mile, West Virginia, including structures, equipment, excavations, roadways,
waste disposal sites, and transportation, loading, connecting and related
facilities which may be required for Seller's performance of this Agreement. For
purposes of Section 3.1 of this Agreement, Mine shall mean the
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<PAGE> 10
place where railroad cars are loaded and tendered to the Transportation Company.
"Mine Reserves" - recoverable Coal reserves or deposits located at the
Mine.
"Operating Period" - the period of time commencing on the Start-Up Date
and continuing thereafter during the term of this Agreement.
"Party" or "Parties" - as the case may be, a signatory or the
signatories to this Agreement.
"Permit" - any valid waiver, exemption, variance, franchise, permit,
authorization, license or similar order of or from any Federal, state or local
government, authority, agency, court or other body having jurisdiction over the
matter in question.
"Power Agreement" - the Power Purchase and Operating Agreement dated as
of July 13, 1990 between SEI Birchwood, Inc. and Virginia Electric and Power
Company, including all appendices and all amendments thereto that may be made
from time to time.
"Prime Rate" - the rate of interest publicly announced from time to
time as its prime rate by Citibank, N.A., New York.
"Quality Adjustments" - adjustments made to the purchase price of Coal
based on quality variances as provided in Section 3.6 of this Agreement.
"Requirements" - the total number of Tons of Coal purchased or acquired
by Buyer for use at the Facility.
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<PAGE> 11
"Seller" - AgipCoal Holding USA, Inc., AgipCoal Sales USA, Inc., Laurel
Creek Co., Inc. and Rockspring Development, Inc. and their respective successors
and assigns.
"Shipment" - such amount of Coal as the Transportation Company accepts
for any single trainload shipment, approximately ninety (90) carloads, of Coal
tendered by Seller for delivery to Buyer under this Agreement.
"Special Adjustments Agreement" - that certain Agreement between Buyer,
Seller and ERLB dated as of even date herewith.
"Start-Up Date" - the date which Buyer designates as the date on which
regular commercial operation of the Facility shall commence.
"Ton" - a short net ton of two thousand (2,000) pounds (avoirdupois).
"Transportation Company" - the railroad arranged for by ERLB to provide
transportation of the Coal from the Mine to the Facility.
"Virginia Power" - Virginia Electric and Power Company.
"Year" - the period of time from the date of the first delivery of
Coal pursuant to this Agreement through the next succeeding December 31 and,
thereafter, the period of time from January 1 through December 31 in each
succeeding calendar year during the term of this Agreement.
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<PAGE> 12
ARTICLE 2 - TERM
Section 2.1. Term. This Agreement shall be effective from the date
hereof and, unless earlier terminated in accordance with the provisions hereof
or extended pursuant to Section 14.7 of this Agreement, shall continue in effect
until the twenty-fifth (25th) anniversary of the Start-Up Date. The Start-Up
Date shall be no later than November 24, 1997, unless extended due to Force
Majeure as provided in Article 14 of this Agreement.
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<PAGE> 13
ARTICLE 3 -- PAYMENT FOR COAL
Section 3.1. Price. The price to be paid by Buyer to Seller for
deliveries of Coal shall be the Base Price, F.O.B. Mine, loaded in railroad cars
of the Transportation Company, adjusted as provided herein. The Base Price based
on the Guaranteed Specifications shall be:
$[xxx] per net Ton as of October 1, 1989.
Section 3.2. Quarterly Adjustments. Adjustments, up or down, by use of
percentages equal to the percent changes of the indices provided herein shall be
applied quarterly to the price for Coal.
Section 3.3. Indices. For the purpose of this Section, the following
terms, whether in the singular or in the plural, shall have the meanings stated
below:
Section 3.3.1. Base Eastern Bituminous Coal Index (BEBCI). The
Base Eastern Bituminous Coal Index ("BEBCI") is the Eastern Bituminous Coal
Index for the second calendar quarter of 1989. Using the definitions specified
herein, it is designated (EBCI) (2d Q., 1989) and is equal to 147.7 cents per
million BTU.
Section 3.3.2. Eastern Bituminous Coal Index (EBCI). The Eastern
Bituminous Coal Index ("EBCI") is the average cost of Coal (including the impact
of any applicable tax credit, e.g. the Virginia Tax Credit) purchased for
Virginia Power's in-system coal-fired stations (which excludes Mt. Storm)
reported in cents per million BTU for the calendar quarter in question. The
index is calculated using the weighted average delivered cost of solid fuel,
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- ------------
[xxx] These portions of this exhibit have been omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
<PAGE> 14
in c./million BTU, reported on Virginia Power's FERC Form 423. The EBCI shall be
abbreviated as "EBCI (q,y)" where "q" is the calendar quarter and "y" is the
year.
Section 3.4. Adjustments to Coal Price. At least two (2) weeks prior to
the Initial Synchronization Date and at least two (2) weeks prior to the
beginning of each subsequent calendar quarter thereafter, the Adjusted Base
Price for Coal that will be effective during that next subsequent calendar
quarter shall be calculated as follows:
Adjusted Base Price = EBCI(q-2,y)-l X Base Price
-----------------------
BEBCI-1
Thus, if the price for Coal were being determined for the first calendar quarter
of 1990, the numerator of the above equation would be "EBCI(3d Q., 1989)-l."
Section 3.5. Price Changes As a Result of Redetermination of Adjustment
Factors.
Section 3.5.1. Redetermination Provisions. The Adjusted Base
Price of Coal shall be changed when the Base Fuel Compensation Price or the
indices of the fuel component provided in the Power Agreement are redetermined
between Virginia Power and Buyer. Buyer warrants and represents that Attachment
A hereto is a true copy of the pertinent provisions, as edited by Virginia
Power, of the executed Power Agreement providing for redetermination of fuel
component adjustment factors. Buyer shall promptly notify Seller in writing of
any changes to such provisions.
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<PAGE> 15
Section 3.5.2. Notice to Seller and Right to Participate. If a
notice is served and negotiations or arbitration undertaken under the Power
Agreement as to adjustment factors therein, Buyer shall promptly advise Seller
in writing. Buyer will designate Seller as a representative of Buyer in order to
allow Seller to participate fully in the negotiation and/or arbitration process
regarding adjustments to the Fuel Compensation Price under the Power Agreement.
In the event negotiations under the Power Agreement do not resolve the
redetermination of the Fuel Compensation Price under the Power Agreement and
arbitration is invoked by Virginia Power or Buyer under the Power Agreement,
Seller shall, in its role as a representative of Buyer, participate in preparing
the written arbitration statement of Buyer under the Power Agreement and have
the right to approve any arbitrator designated by Buyer under Section 10.8 of
the Power Agreement, which approval shall not be unreasonably withheld or
denied. In participating in such redetermination of the Fuel Compensation Price
under the Power Agreement Seller shall honor and abide by all rules, obligations
and process of the redetermination process imposed on Buyer under the Power
Agreement. Buyer will not settle any negotiation or arbitration over the
adjustment to the Fuel Compensation Price under the Power Agreement without the
consent of Seller, which consent will not be unreasonably withheld or delayed.
Section 3.5.3. Request by Buyer to Redetermine. Buyer agrees to
initiate a written notice requesting a redetermination
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<PAGE> 16
under the Power Agreement of the BEBCI, the EBCI and/or the fuel component of
the Base Fuel Compensation Price only at Seller's prior written request. If
Seller in writing requests Buyer to make a redetermination as provided in
Section 10.7 of the Power Agreement (as provided in Attachment A hereto), Buyer
shall submit within fifteen (15) days after receipt of such request a written
notice to Virginia Power requesting redetermination.
Section 3.5.4. Revocation of Participation Rights. Buyer shall
have the right to revoke Seller's designation as a representative of Buyer in
the redetermination of the Fuel Compensation Price under the Power Agreement (by
negotiations and/or arbitration) and Seller's other rights under Sections 3.5.2
and 3.5.3 above upon the occurrence of an Event of Default hereunder by Seller
for which Seller has received appropriate notice under Section 16.1 of this
Agreement and has not cured in accordance with the applicable time periods
referred to in Section 16.1 of this Agreement.
Section 3.5.5. Adjustments to Price for Coal. In the event the
negotiations or arbitration with Virginia Power results in a change, up or down,
in the Fuel Compensation Price provided in the Power Agreement, the same
proportionate change shall be applied to the then Adjusted Base Price for Coal
under this Agreement at the same time that such change applies to the Fuel
Compensation Price. If the change is a percent change, the same percent change
shall be applied to the then Adjusted Base Price for Coal. If the change is a
dollar change, a percent change shall be
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<PAGE> 17
determined based on the dollar change and the resulting percent change shall be
applied to the then Adjusted Base Price of Coal.
Section 3.6. Special Adjustments Agreement. The parties acknowledge and
agree that the Special Adjustments Agreement may alter the amount to be paid to
Seller for the Adjusted Base Price of Coal, and that Buyer will have no
liability under this Agreement in the event Buyer pays Seller for Coal the
amounts that may be determined under the Special Adjustments Agreement. No
dispute arising under the Special Adjustments Agreement shall relieve Seller
from performing its obligations and duties under this Agreement.
Section 3.7. Price Adjustments for Quality Variance. Adjustments
determined either by subtractions from or additions to the Adjusted Base Price
based on quality variances of Coal ("Quality Adjustments") shall be made for (i)
ash content and (ii) BTU content from variances from the Guaranteed
Specifications as follows:
Section 3.7.1. Ash Content. For ash content which exceeds 10%,
the Adjusted Base Price shall be reduced by $[xxx] per Ton as of October 1, 1989
for each additional percentage point over 10% (rounded to the nearest .1%). The
foregoing adjustments shall be calculated on a pro rata basis in the event of
partial differences and accounted for monthly pursuant to Section 11.1 of this
Agreement. No additions to the Adjusted Base Price shall be made for shipments
of Coal having an ash content of less than 10%.
Section 3.7.2. BTU. For shipments having less than 12,300
BTU/lb., the Adjusted Base Price shall be reduced at the rate of $[xxx] per Ton
as of October 1, 1989 for each 100 BTU/lb.
- 13 -
- ------------
[xxx] These portions of this exhibit have been omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
<PAGE> 18
under 12,300 BTU/lb. For shipments having more than 12,300 BTU/lb., the
Adjusted Base Price shall be increased at the rate of $[xxx] per ton as of
October 1, 1989 for each 100 BTU/lb. above 12,300 BTU/lb. The foregoing
adjustments shall be calculated on a pro rata basis in the event of partial
differences and accounted for monthly pursuant to Section 11.1 of this
Agreement.
Section 3.7.3. Adjustments to Ash Content and BTU Rates. The
rates provided in Sections 3.7.1 and 3.7.2 of this Agreement shall be adjusted
at the same time and by the same method as the Base Price is adjusted as
provided in Sections 3.2, 3.3 and 3.4 of this Agreement.
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- ------------
[xxx] These portions of this exhibit have been omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
<PAGE> 19
ARTICLE 4 - OPERATION OF THE MINE
Section 4.1. Seller's Skill, Capital and Facilities. Seller represents,
warrants and covenants that (i) its management is and shall continue to be
composed of experienced and skillful operators in the business of producing
Coal, (ii) it shall exercise in the performance of its obligations under this
Agreement that degree of care of persons so skilled, and (iii) it shall at all
times have adequate skilled personnel, machinery, equipment, facilities and
capital to mine, produce, prepare and deliver the quantity and quality of Coal
required under this Agreement.
Section 4.2. Compliance With Law. Seller represents, warrants and
covenants that it currently has, and during the term of this Agreement shall
maintain, all permits that are or may be required for Seller's operation of the
Mine and/or Seller's performance of any of its obligations under this Agreement.
Seller shall, in the performance of its obligations under this Agreement, fully
comply with all applicable laws, statutes, regulations, ordinances, permits,
governmental orders or common law duties. Seller shall promptly notify Buyer of
any actual or threatened change in or breach by a third party of any applicable
law, statute, regulation, ordinance, permit, governmental order or common law
duty that may adversely affect the timely supply of Coal under this Agreement.
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<PAGE> 20
ARTICLE 5 - CONSTRUCTION AND OPERATION OF THE FACILITY
Section 5.1. Notice of Build-Up Period. Buyer shall notify Seller of
the commencement date of the Build-Up Period not less than ninety (90) days
prior to such commencement date.
Section 5.2. Notice of Start-Up Date. Buyer shall notify Seller of the
estimated Start-Up Date not less than ninety (90) days prior to such Start-Up
Date.
Section 5.3 No Duty to Construct or Operate the Facility.
Notwithstanding any other provision contained in this Agreement, Buyer shall
have no obligation to design, plan, finance, construct or operate the Facility.
If Buyer in its sole and unfettered discretion at any time discontinues or
abandons the design, planning, financing, construction or operation of the
Facility or if the Power Agreement is terminated, Buyer shall have the right to
terminate this Agreement upon providing Seller not less than thirty (30) days'
prior written notice of such termination. Buyer's termination of this Agreement
pursuant to this Section 5.3 shall not constitute an Event of Default within the
meaning of Article 16 of this Agreement, and shall not result in liability of
either Party to the other except for payments due and owing and claims in
dispute on the date of such termination.
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<PAGE> 21
ARTICLE 6 - QUANTITY
Section 6.1. Build-Up Period. During the Build-Up Period, Seller shall
mine, sell and deliver to Buyer, and Buyer shall purchase, accept and pay for,
an amount of Coal sufficient to operate the Facility and complete any testing
requirements of the Facility and to create an inventory of thirty (30) days'
storage as determined by Buyer in its discretion.
Section 6.2. Operating Period. During the Operating Period, Seller
shall mine, sell and deliver to Buyer, and Buyer shall purchase, accept and pay
for, an amount of Coal representing one hundred percent (100%) of the Buyer's
Requirements of the Facility, as determined by Buyer in its discretion.
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<PAGE> 22
ARTICLE 7 - QUALITY REQUIREMENTS
Section 7.1. No Foreign Matter. Coal tendered by Seller for delivery to
Buyer shall be substantially free from impurities including, but not limited
to, bone, salt, earth, rock, wood, tramp metal and mine debris and shall not
contain any Hazardous Materials. In this regard Seller shall not be required to
use freeze-proof materials specified under Section 9.4 if such freeze-proof
materials contain Hazardous Materials. No oil or other material shall be added
to the Coal to change its natural heating value.
Section 7.2. Individual Specifications. Each individual Shipment of
Coal tendered by Seller for delivery to Buyer shall meet, on an As Received
basis, the following Individual Specifications based on the analysis of such
Coal performed pursuant to Article 10 of this Agreement:
<TABLE>
<CAPTION>
Individual Specs
----------------
Max. Min. ASTM
---- ---- ----
<S> <C> <C> <C>
Moisture Content (%) 9 3 D-3302
Ash Content (%) 12 NA D-3174
Sulphur Content (%) .95 NA D-4239
Volatile Matter (%) 36 32 D-3175
BTU/lb. N/A 12,000 D-2015
Delivered Size (inches) 2 NA D-4749
Ash Fusion Temp. (degrees F) H=W N/A 2,500 D-1857
Reducing Conditions
Grindability (HGI) 45 38 D-409
Fines (% less than 28 Mesh.) 20 NA D-4749
</TABLE>
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<PAGE> 23
Section 7.3. Guaranteed Specifications. Coal tendered by Seller for
delivery to Buyer during each calendar month shall meet the following Guaranteed
Specifications based on the weighted average analyses performed pursuant to
Article 10 of this Agreement regarding each Shipment of Coal delivered to Buyer
during such calendar month:
<TABLE>
<CAPTION>
ASTM
Guaranteed Specs Method
---------------- ------
<S> <C> <C>
Moisture Content (%) 8 max. D-3302
Ash Content (%) 10 max. D-3174
Sulphur Content (%) .95 max. D-4239
Volatile Matter (%) 36 max. 32 min. D-3175
BTU/lb. 12,300 min. D-2015
Delivered Size (inches) 2 max. D-4749
Ash Fusion Temperature (degrees F.) H=W 2,500 min. D-1857
Reducing Conditions
Grindability (HGI) 40 min. D-409
Fines (% less than 28 Mesh.) 15 max. D-4749
</TABLE>
Section 7.4. Temporary Adjustments to Individual Specifications. If,
after taking into account (i) the quantities, qualities and characteristics of
all Coal previously delivered by Seller during the then-current calendar month,
(ii) the quantities, qualities and characteristics of Coal scheduled or expected
to be delivered by Seller during the remainder of such calendar month and
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<PAGE> 24
(iii) any other relevant factors, Buyer determines that the Coal to be supplied
by Seller during such calendar month will not meet the Guaranteed
Specifications, then Buyer may request (and Seller shall be obligated to accept)
reasonable changes of any or all of the Individual Specifications which must be
satisfied by subsequent Shipments during such calendar month so as to ensure
that the total amount of Coal supplied by Seller during such calendar month will
meet the Guaranteed Specifications. Buyer shall notify Seller of any such
changes of the Individual Specifications, and Shipments tendered by Seller for
delivery more than two (2) days after such notice shall meet the revised
Individual Specifications requested by Buyer pursuant to this Section 7.4.
Section 7.5. Permanent Adjustments to Individual and Guaranteed
Specifications.
(a) Buyer may request changes of any or all of the Individual
Specifications or Guaranteed Specifications under the following circumstances:
(i) If, on the basis of test burns of Coal conducted at the
Facility or regular operations at the Facility, Buyer determines that changes of
any or all of the Individual Specifications or Guaranteed Specifications are
necessary (without otherwise requiring changes to the physical plant of the
Facility) for continued safe and efficient operations of the Facility, then
Buyer may request changes of any such Individual Specifications or Guaranteed
Specifications so as to ensure such continued safe and efficient operation; or
- 20 -
<PAGE> 25
(ii) If the Facility is required as a result of any law,
Permit or governmental order or regulation to burn Coal having specifications
and quality characteristics different from the Individual Specifications or
Guaranteed Specifications set forth in Sections 7.2 and 7.3 of this Agreement,
then Buyer may request changes of any such Individual Specifications or
Guaranteed Specifications as may be necessary (without otherwise requiring
changes to the physical plant of the Facility) to comply with such law, Permit,
governmental order or regulation. Buyer shall promptly notify Seller of any such
requested changes of the Individual Specifications.
(b) Not more than thirty (30) days after Buyer requests changes of
any of the Individual Specifications or Guaranteed Specifications pursuant to
Section 7.5(a) of this Agreement, Seller shall notify Buyer whether it intends
to supply Coal meeting the revised Individual Specifications or Guaranteed
Specifications requested by Buyer without any increase in the otherwise
applicable Adjusted Base Price. If Seller notifies Buyer that it will supply
Coal meeting the revised Individual Specifications or Guaranteed Specifications
requested by Buyer without any increase in the otherwise applicable Adjusted
Base Price, then such revised specifications shall be deemed to have been
substituted for the Individual Specifications and Guaranteed Specifications set
forth in Sections 7.2 and 7.3 of this Agreement and shall thereafter become the
operative specifications for purposes of this Agreement. If Seller notifies
Buyer that it will not supply Coal meeting the
- 21 -
<PAGE> 26
revised Individual Specifications or Guaranteed Specifications without any
increase in the otherwise applicable Adjusted Base Price, or if Seller fails to
provide Buyer timely notice as required under this Section 7.5(b), then either
Party may request a negotiation meeting; and the Parties, within seven (7) days
after one Party serves written notice on the other for a meeting, shall meet
and attempt in good faith to negotiate a new Adjusted Base Price. If the Parties
are unable to negotiate a new Adjusted Base Price, either Party shall have the
right to have the new Adjusted Base Price set by arbitration pursuant to Article
19 of this Agreement. The arbitrator(s) must determine that (a) the new Adjusted
Base Price will allow the Facility to operate economically, and (b) the new
Adjusted Base Price will allow a reasonable economic return for Seller. If such
determinations are not made, either Party may terminate this Agreement.
Termination of this Agreement pursuant to this Section 7.5(b) shall not
constitute an Event of Default within the meaning of Article 16 of this
Agreement, and shall not result in liability of either Party to the other except
for payments due and owing and claims in dispute on the date of such
termination.
Section 7.6. Buyer's Remedies for Failure to Meet Specifications.
Seller recognizes that the failure to deliver Coal meeting the applicable
Individual Specifications and/or Guaranteed Specifications may, among other
things, (i) cause the Facility to be unable to operate without violating
applicable laws, permits, governmental orders or regulations (including laws,
permits,
- 22 -
<PAGE> 27
governmental orders and regulations pertaining to environmental matters), which
violation could subject Buyer to civil and criminal penalties and result in
orders or injunctions restraining operation of the Facility, (ii) cause damage
to the Facility or (iii) prevent the Facility from operating in the safe,
efficient and economic manner for which it was designed. Based on this
understanding, the Parties agree as follows:
(a) Buyer shall have the right to reject, at any time prior to
unloading the railcars of Coal at the Facility, in whole or in part, any
individual Shipment of Coal that fails to meet the Individual Specifications,
subject to the following: (i) if Buyer rejects a partial Shipment of Coal which
is not unloaded because the Shipment fails to meet Individual Specifications,
Buyer shall reject the entire, unloaded, balance of the Shipment; or (ii) if
Buyer rejects an individual car of Coal, which is part of a Shipment, because
such individual car of Coal visibly and patently contains foreign matter as
described in Section 7.1 of this Agreement, Buyer shall not reject the balance
of the Shipment, unless the balance fails to meet the Individual Specifications.
Buyer shall notify Seller of the rejection of any such Shipment and of the
reasons for such rejection as soon as practicable. Buyer shall not be liable to
Seller for the Adjusted Base Price under Article 3 of this Agreement for any
Shipment of Coal rejected by Buyer under this Section 7.6(a). Seller at its own
expense shall promptly arrange with ERLB for the disposition of any Shipment of
Coal rejected pursuant to this Section 7.6(a) and (to the extent
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<PAGE> 28
that Buyer has not purchased replacement Coal pursuant to Section 7.6(c) of this
Agreement) shall cure any deficiency in the supply of Coal caused by such
rejection not more than seven (7) days after such rejection. Seller shall
reimburse Buyer for all costs incurred by Buyer to transport any rejected
Shipment between the Mine and the Facility or the point of reconsignment or
reshipment and for all costs incurred by Buyer and caused by or incurred because
of the rejected Shipment, including, but not limited to, demurrage.
(b) If, during any thirty (30) consecutive days, Seller tenders
for delivery to Buyer two (2) or more Shipments that fail to meet the Individual
Specifications (whether or not such Shipments have been or could be rejected by
Buyer pursuant to Section 7.6 (a) of this Agreement), then Buyer may (i)
request that Seller provide at its own expense assurances to Buyer's
satisfaction that future Shipments of Coal will meet the Individual
Specifications and/or (ii) direct Seller by notice to suspend further
deliveries of Coal under this Agreement. Any such suspension of deliveries shall
continue until the earlier of (x) Buyer's notice to Seller to resume deliveries
of Coal under this Agreement or (y) Seller's provision and Buyer's acceptance of
the assurances requested by Buyer. If Seller fails to provide the assurances
requested by Buyer within ten (10) days after such request, or if Seller within
sixty (60) days after the resumption of Coal deliveries tenders for delivery to
Buyer any Shipment that fails to meet the Individual Specifications, then Buyer
shall have
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<PAGE> 29
the right (in addition to pursuing any other remedy provided under this
Agreement) to terminate this Agreement upon providing Seller not less than ten
(10) days' prior notice of such termination.
(c) If, during any two (2) consecutive calendar months, Seller's
deliveries of Coal under this Agreement fail to meet the Guaranteed
Specifications, then Buyer may (i) request that Seller provide at its own
expense assurances to Buyer's satisfaction that future deliveries of Coal will
meet the Guaranteed Specifications, and/or (ii) direct Seller by notice to
suspend further deliveries of Coal under this Agreement. Any such suspension of
deliveries shall continue until the earlier of (x) Buyer's notice to Seller to
resume deliveries of Coal under this Agreement or (y) Seller's provision and
Buyer's acceptance of the assurances requested by Buyer. If Seller fails to
provide the assurances requested by Buyer within ten (10) days after such
request, or if Seller fails to meet the Guaranteed Specifications during the
next succeeding calendar month after the resumption of Coal deliveries, then
Buyer shall have the right (in addition to pursuing any other remedy provided
under this Agreement) to terminate this Agreement upon providing Seller not less
than ten (10) days' prior notice of such termination.
(d) Buyer shall have the right to purchase for use at the
Facility Coal from alternative sources to replace (i) shipments of Coal that
were rejected by Buyer but not cured in a timely manner by Seller pursuant to
Section 7.6(a) of this Agreement or (ii) deliveries of Coal that would have been
made during any period
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in which such deliveries are suspended pursuant to Sections 7.6(b) or 7.6(c) of
this Agreement. Seller shall use its best efforts to assist Buyer in finding and
acquiring such replacement Coal. In the event that Buyer purchases replacement
Coal pursuant to this Section 7.6(d), Seller shall reimburse Buyer for the
amount by which the Delivered Cost of such replacement Coal exceeds the
Delivered Cost of Coal delivered pursuant to this Agreement. Seller shall
reimburse Buyer for such excess costs not more than thirty (30) days after
receipt from Buyer of an invoice documenting such excess costs. For purposes of
determining Buyer's compliance with the Requirements of Section 6.2 of this
Agreement, replacement Coal purchased by Buyer pursuant to this Section 7.6(d)
shall be treated as Coal delivered by Seller and accepted by Buyer pursuant to
this Agreement.
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ARTICLE 8 - SOURCE OF COAL AND MINE RESERVES
Section 8.1. Source of Coal. Except as otherwise provided in Section
8.3 of this Agreement, all Coal tendered by Seller for delivery to Buyer
pursuant to this Agreement shall be mined and produced from the Mine Reserves.
Seller represents and warrants that it owns in fee, leases and/or otherwise
possesses the legal right to mine and sell to Buyer Mine Reserves in such
quantity and of such quality as will meet the requirements of this Agreement
throughout the term of this Agreement. Seller shall permit Buyer reasonable
visits and views of the Mine Reserves during normal operating hours. Within
ninety (90) days after the end of each calendar year during the term of this
Agreement and any extension thereof, Seller shall develop a mining plan for the
Mine Reserves for the next calendar year together with representative core
samples of the Mine Reserves. Upon timely notice to Seller, Buyer may visit the
Mine, inspect the Mine Reserves, and obtain a copy of the mining plan. Seller
hereby irrevocably commits to the performance of this Agreement Mine Reserves in
such quantity and of such quality as will meet the requirements of this
Agreement. Seller further represents and warrants that it will not sell or
contract to sell any Coal from the Mine Reserves to any other party if to do so
would, at any time during the term of this Agreement, prevent Seller from
meeting its obligations to supply Coal to Buyer under this Agreement.
Section 8.2. Restrictions on Transfer of Mine Reserves. During the term
of this Agreement, Seller shall not sell, lease,
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encumber or otherwise transfer any of its ownership interests in the Mine
Reserves which are necessary pursuant to prudent mining engineering practice to
protect the requirements of this Agreement to any other party (including any
parent, subsidiary or affiliate of Seller) unless such sale, lease, encumbrance
or transfer occurs in connection with an assignment of this Agreement by Seller
in accordance with the provisions of Article 18 of this Agreement.
Section 8.3. Substitute Coal. Seller shall have the right to supply
substitute Coal to Buyer from sources other than the Mine Reserves only if and
to the extent that (i) Buyer grants its prior written consent to such
substitution of Coal (which consent shall not be unreasonably withheld) or (ii)
Seller is unable, because of the occurrence of an event of Force Majeure as
defined in Article 14 of this Agreement, to supply Coal to Buyer from the Mine
Reserves. Such substitute Coal shall meet all of the quantity and quality
requirements specified in this Agreement and shall be supplied by Seller at a
Delivered Cost to Buyer that is no greater than the Delivered Cost of Coal
supplied by Seller from the Mine Reserves. Seller shall as necessary adjust the
purchase price for such substitute Coal or reimburse Buyer for its increased
costs of transporting such substitute Coal to the Facility so as to ensure that
the Delivered Cost of such substitute Coal to Buyer is no greater than the
Delivered Cost of Coal supplied by Seller from the Mine Reserves. Such
substitution of Coal shall also be subject to the following additional
conditions: (i) Buyer's satisfaction with test analyses of the substitute Coal;
(ii) Seller's provision to
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Buyer of amounts of such substitute Coal sufficient for performing satisfactory
test burns or similar tests thereof at the Facility; (iii) Seller's provision of
other means of proof, satisfactory to Buyer, of the compliance of such
substitute Coal with the quality requirements specified in this Agreement; and
(iv) Buyer's sole approval of the transportation arrangements for such
substitute Coal. Buyer's consent to Seller's supply of substitute Coal shall not
be construed as an acknowledgment by Buyer that any delivery of such substitute
Coal to Buyer satisfies the quality requirements specified in this Agreement.
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ARTICLE 9 -- DELIVERY, LOADING AND TRANSPORTATION
Section 9.1. Scheduling of Deliveries.
(a) Not less than fourteen (14) days prior to the beginning of the
Build-Up Period, Buyer shall notify Seller of the amount of Coal to be delivered
by the beginning of the Build-Up Period, and shall also notify Seller of the
amount of Coal thereafter to be delivered during each calendar month of the
Build-Up Period. Not less than fourteen (14) days prior to the beginning of each
calendar month subsequent to the beginning of the Build-Up Period, Buyer shall
notify Seller of the amount of Coal to be delivered during such calendar month.
Upon Seller's receipt of each such monthly notice from Buyer, the Parties shall
confer and arrange a delivery schedule for such calendar month consistent with
the operating requirements of the Facility and Buyer's needs.
(b) Not less than fourteen (14) days prior to the beginning of each
calendar month of the Operating Period, Buyer shall notify Seller of the amount
of Coal to be delivered during such calendar month, and shall also furnish
Seller with an estimate of the amount of Coal to be delivered during each of the
three (3) next succeeding calendar months of the Operating Period. Upon Seller's
receipt of each such monthly notice from Buyer, the Parties shall confer and
arrange a delivery schedule for such calendar month consistent with the
operating requirements of the Facility and Buyer's needs.
(c) At Buyer's request, Seller shall use its best efforts to modify any
monthly delivery schedule previously agreed
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to by the Parties in order to accommodate unforeseen changes in the operating
requirements of the Facility or Buyer's needs.
Section 9.2. Delivery.
(a) Seller shall tender all Coal for delivery to Buyer f.o.b.
the Mine loaded in the railroad cars of the Transportation Company, by use of a
ninety (90) car four (4) hour rapid load system or other system approved by
Buyer. In the event that Seller elects to supply substitute Coal from sources
other than the Mine Reserves pursuant to Section 8.3 of this Agreement, Buyer
and Seller shall mutually agree to the place of tendering for delivery for such
substitute Coal and to any necessary and appropriate related changes regarding
delivery arrangements for such substitute Coal.
(b) Title to Coal shall pass from Seller to Buyer at the
Facility, but risk of loss shall pass from Seller to Buyer at the Mine when
loaded in the Transportation Company's railcars. Seller warrants that title to
all Coal tendered for delivery under this Agreement shall be good and
merchantable and its transfer lawful, and that such Coal shall be free and
clear of any lien, claim, demand, security interest or other encumbrance.
(c) Upon Buyer's acceptance of delivery and certification of
the quality of Coal by the Lab pursuant to Section 10.3 of this Agreement, but
subject to Buyer's right to reject individual Shipments pursuant to Section 7.6
(a) of this Agreement, Buyer shall be obligated to pay Seller the applicable
purchase price for the amount of Coal accepted.
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Section 9.3. Weighing.
Section 9.3.1. Seller Weights. The weight to be used in
determining the quantity of Coal for which invoices are to be tendered and
payments made in accordance with Article 11 of this Agreement shall be
determined under this Section 9.3. Seller shall install and maintain at Seller's
expense a weighing system which meets the requirements of the Transportation
Company, and Transportation Company agrees to use Seller's weights for
transportation purposes. Seller's weights will be used to determine the weight
of Coal as required by this Agreement. Seller's weighing system must meet and
be maintained and certified as required by the National Institute of Standards
and Technology Handbook 44 (NIST H 44) as amended or any substitutes provided
therefor and the Association of American Railroads Scale Handbook as amended or
any substitutes provided therefor and any state, county or local jurisdiction
rules which may apply. Copies of the certification shall be provided to Buyer
as and when requested by Buyer. All scales used in Seller's weighing system to
determine the governing weight of the Coal shall at Seller's cost be
appropriately tested and certified on a periodic basis reasonably satisfactory
to Buyer. The weighing system shall be maintained at all times as close as
practicable to the condition established during the certification tests.
Stenciled tare weights shall not be used by Seller in calculating net weight of
coal shipped. All maintenance, other than routine, or modifications to the
weighing system shall be promptly reported to Buyer. In the event Seller's
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weighing system ceases to operate properly, Seller shall immediately notify
Buyer's representative.
A net weight shall be determined and reported for each shipment of coal
hereunder. Buyer shall have the right to have representatives and members of
regulatory bodies having jurisdiction over the weighing device present, at
their own risk and expense, at any and all times to observe determination of
weights. If Buyer at any time questions the accuracy of the weights, Seller
shall be advised; and Seller shall then permit Buyer's representatives to test,
at their own risk and expense, Seller's weighing devices or methods. If such
tests show the weighing devices to be out of tolerance, appropriate steps
shall be taken to adjust the weighing devices to an accurate condition. In
the event Buyer and Seller are unable to agree upon such tests and adjustments
to the weighing devices and methods, the weighing devices and methods shall be
tested and adjusted to a condition of accuracy by a qualified third party,
mutually chosen by Buyer and Seller; and the cost of the testing and adjusting
by such third party shall be shared equally by Buyer and Seller.
If Seller's weighing devices or methods are determined to be out of
tolerance as established by the applicable standards, an appropriate adjustment
shall be made to the affected weights and related invoices and payments. Such
adjustment shall be made retroactively to a date midway between the date on
which the weighing devices were last certified and the date on which the
out-of-tolerance condition caused by weighing methods or devices was
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first questioned and prospectively until the date on which the weighing methods
and devices were corrected.
Section 9.3.2. When Seller's Weights Not Available. In the event
Seller's actual scale weights for a Shipment are not available due to scale
breakdown or other cause, or in the event Seller otherwise fails to weigh Coal
for a Shipment as required hereunder, Transportation Company shall determine the
weight of the Coal for such Shipment. Seller shall pay or reimburse Buyer the
costs and charges of the Transportation Company for weighing the Coal in any
such Shipment. In the event Transportation Company is unable to weigh the Coal
in such Shipment, the weight of a Shipment shall be determined by determining
the average weight of Coal per railcar per size of car (e.g., 100-ton car,
90-ton car, 80-ton car, etc.) in the next prior ten (10) Shipments, or if there
are less than ten (10), then in the number of Shipments available, and
multiplying such average(s) by the number of cars of the same size cars in the
Shipment for which weights are sought.
Section 9.4 Loading.
(a) Seller shall be responsible at its own expense for
loading Coal tendered to Buyer under this Agreement. Seller shall load all
Coal tendered for delivery to Buyer in a safe and prudent manner in accordance
with ERLB's instructions and the Transportation Company's tariffs, circulars,
rules and regulations governing loading, safety, train permits and other
procedures, and in accordance with generally accepted loading practices and
procedures in the coal mining and railroad transportation
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industries. However, Seller shall have the right to reject for loading any
railcars provided by the Transportation Company which are not suitable for
loading, in which event the Transportation Company shall be responsible for
either (i) providing suitable replacement cars or (ii) adjusting minimum
charges to allow fewer than minimum unit train car loadings.
(b) Seller shall indemnify Buyer from all liability, loss
or damage, including any liability to the Transportation Company, which Buyer
suffers as a result of any claim, demand, loss or judgment against Buyer
arising out of or relating to Seller's failure to load or deliver the Coal
tendered to Buyer in a safe and prudent manner in accordance with the
Transportation Company's tariffs, circulars, instructions, rules and
regulations governing loading, safety, train permits and other procedures, and
in accordance with generally accepted loading practices and procedures in the
coal mining and railroad transportation industries.
(c) When and as directed by Buyer, Seller shall apply
freeze protection material to the Coal. The freeze protection material shall
be selected from an approved list of such materials as used by Virginia Power
for coal deliveries to Virginia Power's pulverized coal plants. Buyer shall
promptly reimburse Seller for Seller's actual purchase price of such freeze
protection material. There shall be no additional charge by Seller to Buyer
for the labor and/or administrative costs of application of such freeze
protection material.
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Section 9.5. Transportation. Seller shall coordinate the
scheduling of Shipments with the Transportation Company and shall be
responsible for any demurrage, car detention, storage or other charges assessed
by the Transportation Company which accrue at the loading point, including any
demurrage, car detention and/or storage charges at origin, charges for loading
less than the specified minimum tonnage per railroad car or per train, charges
for cancellation of orders for railroad cars, charges for shipment of less than
minimum annual tonnage (unless due to the fault of Buyer, and unless such
minimum is greater than the tonnage required under this Agreement) or other
charges or penalties assessed for failure to load railroad cars in conformity
with the requirements of the applicable rail transportation tariff or contract
governing the shipment of Coal, provided that the tariff or contract terms, as
the case may be, governing the shipments as to such charges or penalties
reasonably reflect the tariff or contract terms, as the case may be, of
Transportation Company's tariffs or contracts generally applicable to trainload
shipments of coal destined to Virginia Power. Buyer shall arrange for and pay
all costs of transportation of the Coal from the Mine to the Facility. The
Transportation Company shall be a third party beneficiary of this Section 9.5
and shall be entitled to enforce it pursuant to the terms thereof.
Section 9.6. Shipping Notice. Not more than twelve (12) hours
after the date on which Seller completes the loading of Coal into railroad cars
at the Mine for an individual Shipment, Seller
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shall send Buyer a shipping notice listing for such Shipment the amount and
weight of Coal included in the Shipment (with appropriate weight documentation),
the source or sources of the Coal included in the Shipment, the railroad origin
point and date of shipment and such other information as the Parties may agree
upon from time to time. Such shipping notice shall be accompanied by a copy of
all bills of lading, mine cards, invoices, or other shipping documents issued by
the Transportation Company at the loading point in connection with such
Shipment.
Section 9.7. Assurances of Delivery. If Seller has not made
timely deliveries of Coal in accordance with the schedules established pursuant
to Section 9.1(b) of this Agreement, Buyer may request and Seller shall provide
Buyer assurances that Seller shall provide Buyer timely tenders of delivery of
Coal meeting the requirements of this Agreement. Such assurances shall include
meeting loading schedules to meet Buyer's fuel requirements at the Facility.
If Seller fails to provide such assurances within seven (7) days after such
request, Buyer shall have the right to purchase Coal from alternative sources
for use at the Facility to replace deliveries of Coal that would have been made
in accordance with the schedules established pursuant to Section 9.1(b) of this
Agreement. In the event that Buyer exercises such right, the provisions of
Section 7.6(d) of this Agreement shall apply with regard to the cost of such
replacement Coal and Buyer's compliance with the Requirements of Section 6.2 of
this Agreement.
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ARTICLE 10 -- SAMPLING AND ANALYSIS
Section 10.1. Procedures. Sampling and analysis of Coal tendered
by Seller for delivery to Buyer under this Agreement shall be carried out in
accordance with the provisions of this Article 10.
Section 10.2. Selection and Discharge of the Lab.
(a) Prior to the commencement of the Build-Up Period, the
Parties shall by mutual agreement select an independent commercial testing
organization to serve as the Lab and Seller shall enter into a contract with
such Lab. If at any time during the term of this Agreement either Party
becomes dissatisfied with the then incumbent Lab, such incumbent Lab shall be
discharged; and the Parties shall by mutual agreement promptly select a
qualified successor Lab; provided, however, that the discharged Lab shall
continue to perform the functions of the Lab under this Agreement until the
Parties' selection of a qualified successor Lab. If the Parties are unable to
agree to the selection of a qualified successor Lab within thirty (30) days
after notice by either Party of its intention to discharge such incumbent Lab,
the Lab shall be selected by arbitration pursuant to Article 19 of this
Agreement.
(b) If the Lab (as a result of being discharged or
otherwise) ceases to perform the functions of the Lab before the Parties have
selected a successor Lab, the Parties shall mutually agree to substitute
procedures for the sampling and analysis of Coal. If the Parties are unable to
agree to such substitute procedures, Seller at its own expense shall
immediately assume the
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responsibility for sampling each Shipment of Coal tendered for delivery in
accordance with the requirements of this Article 10 and shall promptly provide
Buyer with a part of each such sample sufficient to enable Buyer to arrange for
or conduct its own analysis of such Shipment.
Section 10.3. Duties of the Lab.
(a) The Lab shall take representative samples of each
individual Shipment of Coal at the railcar loading point according to a
statistically reliable method. Based on such samples, the Lab shall as soon as
practicable after the taking of such samples perform an analysis of each
Shipment of Coal to determine the moisture content, ash content, sulphur
content, volatility matter, BTU content, delivered size and fines of the Coal
included in such Shipment. The Lab shall certify as accurate and report to the
Parties in writing the results of the Lab's analysis of each Shipment of Coal
as soon as practicable after the completion of such analysis. Buyer shall not
be required to unload railcars until it has received the Lab's analysis.
Seller shall reimburse Buyer for any additional expenses incurred by Buyer,
including, but not limited to, Transportation Company demurrage, as the result
of Buyer's inability to unload railcars of Coal caused by the Lab's analysis
not being made available to Buyer. The results of each such analysis shall be
binding on the Parties for purposes of determining whether each individual
Shipment meets the applicable Individual Specifications and whether Guaranteed
Specifications are met.
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(b) All sampling and analysis of Coal performed by the
Lab pursuant to this Article 10 shall be in accordance with standards, methods
and procedures approved by the ASTM or with such other standards, methods and
procedures mutually agreed to in writing by the Parties.
Section 10.4. Failure of Sampling or Analysis Procedures.
(a) In the event that the Lab is unable for any reason to
perform the sampling and analysis required under this Article 10, the Parties
shall mutually agree to substitute procedures to be followed by the Lab. If
the Parties cannot mutually agree to substitute procedures for the Lab to
sample and analyze Coal tendered for delivery, then deliveries may, at Buyer's
request, be suspended and such inability of the Lab shall constitute an event
of Force Majeure as defined in Article 14 of this Agreement.
(b) In the event that the Lab determines that the
sampling or analysis of Coal included in any Shipment was inaccurate or
unreliable for any reason, the Lab shall certify the weighted average for the
preceding and succeeding Shipments which the Lab determines are reliable and
accurate and use this weighted average in lieu of the data for any Shipment
determined to be unreliable or inaccurate.
Section 10.5. Rights of Buyer and Seller in Sampling and Analysis.
(a) The certified reports of sampling and analysis made
by the Lab shall be binding on the Parties for all purposes under
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this Agreement, and the performance of the Parties under this Agreement shall
be based on such reports.
(b) Each representative Shipment sample collected for
analysis shall be divided into three (3) parts, and two (2) of these parts
shall be stored in suitable air-tight containers at the Lab's testing facility
for a period of at least sixty (60) days after delivery of the Shipment of Coal
from which the sample was taken. At any time during such sixty (60) day
period, Buyer or Seller shall be entitled to receive upon request to the Lab
one (1) part of such sample for the purpose of independently analyzing the
performance or verifying the analysis of the Lab. A Party requesting any part
of such a sample shall arrange at its own expense for transportation of such
part from the Lab's testing facility.
(c) Each Party shall have the right to have a
representative present at any and all times to observe the sampling and
analysis procedures. Buyer or Seller and their representatives shall also have
the right to inspect and examine the performance of any equipment employed in
the sampling or analysis of Coal pursuant to this Article 10.
Section 10.6. Costs of the Lab. The costs of the Lab's sampling
and analyses of the Coal pursuant to this Article 10 shall be shared equally by
the Parties.
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ARTICLE 11 - PAYMENTS, ADJUSTMENTS FOR QUALITY AND DEFERRED
PAYMENTS
Section 11.1. Invoices. Not later than the thirtieth (30th) day of
every month during each Year, Seller shall submit to Buyer an invoice showing
the applicable purchase price and payment due for all Coal tendered for
delivery by Seller and accepted for delivery by Buyer during the preceding
month. Such invoice shall reflect the applicable Adjusted Base Price for such
Coal. If at the time an invoice is sent by Seller to Buyer the applicable
Adjusted Base Price for such Coal has not yet been calculated by Seller
pursuant to Sections 3.2, 3.3 and 3.4 of this Agreement, such invoice shall be
based on the then Adjusted Base Price (or in the case of the Year beginning on
the date of the first delivery of Coal pursuant to this Agreement, on the Base
Price); and Seller shall, after its calculation of the applicable Adjusted Base
Price, make appropriate adjustments in its next regular invoice to Buyer to
reflect the applicable Adjusted Base Price for such Coal. Adjustments for ash
and BTU content will be performed on a monthly basis based on the weighted
average of the Coal delivered.
Section 11.2. Payment. Buyer shall pay each invoice sent by Seller
not more than thirty (30) days after Buyer's receipt of such invoice.
Section 11.3. Disputed Invoices. Buyer shall pay each invoice
tendered by Seller in accordance with this Article 11, except those portions of
such invoice in dispute or subject to arbitration or litigation. Buyer shall
pay all undisputed portions
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of such invoice. The Parties shall use good faith to resolve all disputed items
on invoices as soon as practicable.
Section 11.4. Records. Each Party shall keep and maintain complete
and accurate books and records of all matters relating to its performance under
this Agreement. Each Party shall have the right from time to time, upon
reasonable notice to the other Party, to examine the books and records of such
other Party directly relating to this Agreement. All records of either Party
relating to any Shipment of Coal shall be kept and maintained for not less than
five (5) years after the Shipment was received and accepted at the Facility or
for such longer period of time requested by the Financing Parties.
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ARTICLE 12 -- INSURANCE
Section 12.1. Insurance. Commencing on the date of the first
delivery of Coal pursuant to this Agreement and continuing thereafter during
the term of this Agreement, Seller at its own expense shall acquire and
maintain insurance policies having the following minimum coverages:
(a) Comprehensive General Liability Insurance, including
automobile liability and contractual liability, insuring the indemnity
obligations set forth in this Agreement, with completed operations coverage,
with limits of $1,000,000 per occurrence applicable to loss of or damage to
property.
(b) Worker's Compensation Insurance, including
Occupational Disease Insurance in accordance with the laws of the state or
states where the work is to be performed, and Employer's Liability Insurance,
in the amount of $1,000,000 per occurrence.
(c) All dollar amounts expressed in this Section 12.1 of
this Agreement shall be adjusted from time to time to reflect the effects, if
any, of inflation.
Section 12.2. Coverages. The insurance policies acquired and
maintained by Seller pursuant to Section 12.1 of this Agreement shall be
endorsed naming Buyer, its employees, agents, successors and assigns as
additional insureds with respect to any and all third party bodily injury
and/or property damage claims arising from Seller's performance of this
Agreement and shall require that Buyer be provided sixty (60) days' prior
written notice of any cancellation or material change in any of such policies.
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Section 12.3. Evidence of Coverage. Not less than thirty (30) days
prior to the commencement of the Build-Up Period, Seller shall in writing
furnish Buyer with evidence satisfactory to Buyer that Seller has or will have
insurance meeting the requirements of this Article 12. During the remaining
term of this Agreement, Seller shall, upon reasonable request by Buyer, furnish
Buyer and/or the Financing Parties with certificates of insurance described in
this Article 12.
Section 12.4. Liability Notwithstanding Insurance Coverage. The
insurance coverages described in this Article 12 shall be primary to any other
coverage available to Buyer, and shall not be deemed to limit Seller's
liability under this Agreement.
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ARTICLE 13 -- INDEMNIFICATION
Section 13.1. Environmental. Seller shall indemnify, defend,
protect and hold harmless Buyer, the Facility Operator, the Financing Parties,
ERLB and the Transportation Company (and each of their respective employees,
contractors, agents, successors and assigns) from and against all liabilities,
damages, losses, costs or expenses of any kind or nature whatsoever (including
reasonable attorneys', accountants' and consultants' fees and expenses, court
costs and all other reasonable out-of-pocket expenses) suffered or paid as a
result of any and all claims, demands, suits, penalties, causes of action,
proceedings, judgments, administrative or judicial orders assessed, incurred or
sustained by or against Buyer, the Facility Operator, the Financing Parties,
ERLB or the Transportation Company (or any of their respective employees,
contractors, agents, successors and assigns) in connection with or caused by
Seller's (or its successor's or assign's) violation of any law, statute,
regulation, ordinance, permit, governmental order or common law duty relating
solely to the environmental protection aspects of the mining, production, and
loading of Coal.
Section 13.2. Notice and Legal Defense. Promptly after receipt by
a Party of any claim or notice of the commencement of any action, suit,
administrative or judicial proceeding or investigation as to which the
indemnification obligations set forth in Section 13.1 of this Agreement might
apply, the Party receiving such claim or notice shall notify the other Party in
writing of the receipt of such claim or notice. Seller shall immediately
assume
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and be responsible for the defense of such claim, action, suit, administrative
or judicial proceeding or investigation. In conducting such defense, Seller
shall select and retain counsel mutually satisfactory to Seller and Buyer;
provided, however, that if the parties in any such claim, action, suit,
administrative or judicial proceeding or investigation include both Buyer and
Seller and the Parties conclude that there may be legal claims or defenses
available to Buyer which are different from, additional to, or inconsistent
with those available to Seller, then Buyer shall have the right to select and
retain (at Buyer's expense) separate counsel to represent it in the defense of
such claim, action, suit, administrative or judicial proceeding or
investigation.
Section 13.3. Failure to Defend Action. If Buyer is entitled to
indemnification under Section 13.1 of this Agreement as a result of any claim,
action, suit, administrative or judicial proceeding or investigation, and if
Seller fails to assume and be responsible for the defense of such claim,
action, suit, administrative or judicial proceeding or investigation, then
Buyer shall have the right (without obtaining Seller's consent) to settle such
claim, action, suit, administrative or judicial proceeding or investigation if,
in the written opinion of Buyer's independent outside counsel, such claim,
action, suit, administrative or judicial proceeding or investigation is
meritorious and the terms of the settlement are reasonable. Seller shall be
responsible for all reasonable expenses actually incurred with respect to such
settlement, other than the costs of Buyer's separate counsel with
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respect to legal claims or defenses available to Buyer which are different
from, additional to, or inconsistent with those available to Seller, and such
settlement shall not affect Seller's obligation to indemnify the indemnified
Party pursuant to this Article 13. Any disputes between the Parties regarding
what is "reasonable" under the circumstances shall be subject to resolution in
accordance with the arbitration provisions of Article 19 of this Agreement.
Section 13.4. Indemnification Amount. In the event that Seller is
obligated under this Article 13 to indemnify, defend, protect and hold harmless
Buyer, the amount owing to Buyer shall be the amount of Buyer's actual,
out-of-pocket loss or payment net of (i) any insurance or other recovery
actually received by Buyer and (ii) any net reduction of taxes actually
realized by Buyer solely as a result of such loss and any recovery (whether
such recovery is derived from the indemnity payments made under this Article 13
or insurance proceeds).
Section 13.5. Survival. This Article 13 shall survive the
termination or expiration of this Agreement.
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ARTICLE 14 -- FORCE MAJEURE
Section 14.1. Definition.
(a) "Force Majeure" shall mean any cause or causes which
wholly or partly prevent or delay the performance of any obligation imposed by
this Agreement and which are not reasonably within the control of the Party
affected thereby, and shall include each of the events stated in Section
14.1(b) of this Agreement with respect to Buyer and each of the events stated
in Section 14.1(c) of this Agreement with respect to Seller.
(b) With respect to Buyer, events of Force Majeure shall
mean any events which directly impede or impair the delivery of Coal to, the
consumption of Coal at, or the generation of electricity and/or steam from, the
Facility, including but not limited to, acts of God, fires, floods, electrical
storms, windstorms, extremes of temperature, earthquakes, epidemics, or similar
cataclysmic occurrences, nuclear emergency, labor strikes, explosions,
restrictions or restraints imposed by law, rule, regulation or order of any
Federal, State or local governmental authorities, inability to obtain or
maintain necessary permits, cessation of transportation service to the Facility
(unless alternative equivalent transportation can reasonably be arranged at
similar cost and schedules), damage to equipment at the Facility, inability to
obtain parts or materials at the Facility, embargoes, acts of the public enemy
or sabotage, boycotts, blockades, wars, insurrections, riots, civil
disturbances, acts of terrorism, or inability to obtain personnel at the
Facility.
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<PAGE> 54
(c) With respect to Seller, events of Force Majeure shall
mean any events which directly impede or impair the mining, processing or
loading of Coal at the Mine, including but not limited to, acts of God, fires,
floods, earthquakes, epidemics or similar cataclysmic occurrences, nuclear
emergency, explosion, general industry-wide restrictions or restraints imposed
by law, rule, regulation or order of any Federal, State or local governmental
authorities, embargoes, acts of the public enemy, wars, insurrections and labor
strikes still occurring after Seller has used its reasonable efforts to prevent
such a strike; provided, however, that nothing contained herein shall be
construed as requiring Seller to accede to any demands of labor or any labor
unions which Seller considers unreasonable. The term Force Majeure does not
include (i) governmental action that affects the cost of Seller's supply of
Coal or any alternate supplies of Coal or the demand for Seller's Coal, (ii)
changes in market conditions that affect the cost or availability of Coal or
any alternate supplies of Coal or the demand for Coal, and (iii) unavailability
of equipment, inability to obtain or renew Permits due to Seller's actions
within its reasonable control, or slowdowns of Seller's employees.
Section 14.2. Effect of Force Majeure.
(a) If because of the occurrence of an event of Force
Majeure either Party is wholly or partly unable to perform any obligation
imposed by this Agreement (except the obligation to pay or expend money), and
if such Party provides the other Party notice
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<PAGE> 55
of such Force Majeure as provided for in Section 14.3 of this Agreement, then
the obligations of the Party claiming such event of Force Majeure shall be
suspended to the extent made necessary by such event of Force Majeure and
during its continuance; provided, however, that the Party claiming such event
of Force Majeure initiates all actions reasonably necessary to eliminate such
event of Force Majeure insofar as possible with all reasonable dispatch. The
occurrence of an event of Force Majeure shall not excuse the performance of any
obligation that arose prior to such occurrence. Only the Party suffering an
event of Force Majeure may claim Force Majeure; provided, further, however,
that performance of the other Party's obligations shall be excused if such
obligations depend on the performance of the obligations suspended by reason of
Force Majeure.
(b) If Shipments of Coal are suspended because of the
occurrence of an event of Force Majeure, Seller shall not be required to make up
any deficiency in deliveries of Coal to Buyer resulting from such occurrence,
and shall not be required to supply coal from any source other than the Mine.
Buyer shall have the right to purchase for use at the Facility replacement
coal from alternative sources during any period in which Shipments of Coal are
suspended because of the occurrence of an event of Force Majeure. For purposes
of determining Buyer's compliance with the Requirements of Section 6.2 of this
Agreement, replacement coal purchased by Buyer pursuant to this Section 14.2(b)
shall be
- 51 -
<PAGE> 56
treated as Coal delivered by Seller and accepted by Buyer pursuant to this
Agreement.
(c) If Seller's ability to mine, produce and sell coal
from the Mine is reduced as a result of the occurrence of an event of Force
Majeure, Seller shall have the right during the continuance of such event of
Force Majeure to allocate the total output of coal from the Mine among Buyer
and those customers of Seller with which Seller has a firm contract of at least
one (1) year duration and which was in effect as of the date six (6) months
prior to such allocation; provided, however, that Seller shall not reduce its
Shipments of Coal to Buyer when it is delivering coal from the Mine to any
other customer under any agreement made subsequent to this Agreement unless
Buyer shall have given its prior written consent thereto.
Section 14.3. Notice. Any Party claiming Force Majeure shall, not
more than three (3) days after the occurrence of an event of Force Majeure,
provide the other Party written notice of the occurrence of such event of Force
Majeure. Such written notice shall include a description of the nature and
cause of and circumstances surrounding the event, an estimate of the probable
duration of such event and a description of the probable impact of such event
on the ability of the Party claiming such Force Majeure to perform its
obligations under this Agreement. During the continuance of the claimed event
of Force Majeure, the Party claiming such Force Majeure shall promptly furnish
the other Party at its request written reports containing the same information
that
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<PAGE> 57
is required to be included in such notice. The Party claiming Force Majeure
shall provide the other Party notice of the cessation of such event of Force
Majeure promptly after such cessation. In the event Buyer claims Force Majeure
and estimates (i) a probable duration of such event in excess of ninety (90)
days, and (ii) a probable impact that Buyer will be unable to take deliveries
of or to burn Coal at the Facility during such period of Force Majeure, Seller
shall be entitled to sell Coal from the Mine to other parties in an amount
which is substantially equal to that which Buyer would have obtained during the
period of Force Majeure but for such event of Force Majeure. Upon written
notice from Buyer that it will be able to resume deliveries of Coal to the
Facility, Seller shall cease making such sales from the Mine to other parties.
Section 14.4. Burden of Proof. If the Parties are unable to agree
in good faith that an event of Force Majeure has occurred, or on the duration
of such Force Majeure, the matter shall be submitted to arbitration pursuant to
Article 19 of this Agreement. In any such arbitration proceeding, the burden
of proof on the issue of whether an event of Force Majeure has occurred, or the
duration of such Force Majeure, shall be on the Party claiming such Force
Majeure.
Section 14.5. Buyer's Right to Suspend or Terminate. If because of
the occurrence of an event of Force Majeure Seller is unable for more than
thirty (30) consecutive days during any period of one hundred eighty (180)
consecutive days to supply Coal meeting
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<PAGE> 58
the quantity and quality requirements of this Agreement, then Buyer shall have
the right either (i) to suspend all further performance of this Agreement for a
period not to exceed eighteen (18) months upon providing Seller not less than
seven (7) days' prior written notice of such suspension or (ii) to terminate
this Agreement upon providing Seller not less than fourteen (14) days' prior
written notice of such termination. Buyer's suspension or termination of this
Agreement pursuant to this Section 14.5 shall not constitute an Event of
Default within the meaning of Article 16 of this Agreement, and shall not
result in liability of either Party to the other except for payments due and
owing and claims in dispute on the date of such termination.
Section 14.6. Seller's Right to Suspend or Terminate. If because
of the occurrence of an event of Force Majeure following the Start Up Date,
Buyer is unable to take deliveries of or to burn Coal at the Facility, and such
disability continues for at least one hundred eighty (180) consecutive days,
then, unless Buyer is exercising due diligence in its efforts to remedy the
condition of Force Majeure, Seller shall have the right to terminate this
Agreement upon providing Buyer not less than fourteen (14) days' prior notice
of such termination; provided, however, if Buyer is unable to remedy the
condition of Force Majeure and resume deliveries of or burn Coal at the
Facility after a period of twenty-four (24) consecutive months from the
occurrence of such event of Force Majeure, Seller shall have the right to
terminate this Agreement upon giving Buyer ten (10) days written notice of
termination. Seller's termination of this Agreement pursuant to
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<PAGE> 59
this Section 14.6 shall not constitute an Event of Default within the meaning
of Article 16 of this Agreement, and shall not result in liability of either
Party to the other except for payments due and owing and claims in dispute on
the date of such termination.
Section 14.7. Extension of Term. Either Party shall have the right
to extend the term of this Agreement for a period of time equal to the sum of
all periods during which the other Party was unable, because of the occurrence
of an event of Force Majeure, to perform any of its obligations under this
Agreement; provided however, that in no event shall this Agreement be extended
beyond the term of the Power Agreement. The Party desiring to exercise such
right to extend the term of this Agreement shall notify the other Party in
writing of such exercise not less than thirty (30) days prior to the scheduled
date of termination of this Agreement. If both Parties exercise their right
under this Section 14.7 to extend the term of this Agreement, such term shall
be extended for a period of time equal to the longer of (i) the sum of all
periods during which Seller was unable, because of the occurrence of an event
of Force Majeure, to perform any of its obligations under this Agreement or
(ii) the sum of all periods during which Buyer was unable, because of the
occurrence of an event of Force Majeure, to perform any of its obligations
under this Agreement.
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<PAGE> 60
ARTICLE 15 -- BUYER'S RIGHT TO BUY OUT
Section 15.1. Payment to Seller. At any time after the Start-Up
Date, upon thirty (30) days' written notice from Buyer and served on Seller,
Buyer shall be entitled to terminate this Agreement by tendering to Seller in
readily available funds the Call Amount; provided, however, this Section 15.1
shall not apply if Buyer either (i) elects not to construct or operate the
Facility as provided in Section 5.3 of this Agreement, or (ii) exercises rights
to suspend or terminate under Section 14.5 of this Agreement. The "Call
Amount" shall be an amount equal to the product of the following factors: (a)
$[xxx] (3d Q. - 1992 dollars) escalated at the same time and by the same
percentage change, up or down, as the percentage change of the Coal Price as
provided in Sections 3.4 and/or 3.5 of this Agreement; and (b) the number of
years or fractions thereof remaining in the term of this Agreement at the time
the Call Amount is tendered.
- 56 -
- ------------
[xxx] These portions of this exhibit have been omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
<PAGE> 61
ARTICLE 16 -- EVENTS OF DEFAULT; REMEDIES
Section 16.1. Event of Default. Except as otherwise provided
herein, an Event of Default under this Agreement shall be deemed to exist upon
the occurrence of any one or more of the following events:
(a) Failure by either Party to make payment of any
amounts due the other Party under this Agreement if such failure continues for
a period of thirty (30) days after written notice by the other Party of such
non-payment;
(b) Failure by Seller to tender Coal for delivery to
Buyer in accordance with this Agreement if such failure continues for a period
of seven (7) days after written notice by Buyer of such failure;
(c) Either Party's insolvency, bankruptcy or the
appointment of a receiver for such Party's assets; and
(d) Failure by either Party to perform any other
obligation imposed by this Agreement if such failure continues for a period of
seven (7) days after notice by the other Party of such failure; provided,
however, that if the non-performing Party shall commence within such seven (7)
day period actions reasonably satisfactory to the other Party to cure such
failure to perform, such failure to perform shall not constitute an Event of
Default so long as such actions are prosecuted with reasonable diligence.
Section 16.2. Remedy for Breach. In addition to any other remedies
provided for in this Agreement, and except as otherwise provided herein, upon
the occurrence and during the continuance of
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<PAGE> 62
an Event of Default, the Party not in default shall have the right to terminate
this Agreement upon providing the other Party not less than thirty (30) days'
written notice and, in addition, shall have the right to pursue any other
remedy now or hereafter existing at law, in equity or otherwise.
Section 16.3. Specific Performance and Injunctive Relief. Each
Party shall be entitled to a decree compelling specific performance with
respect to, and shall be entitled without the necessity of filing any bond, to
the restraint by injunction of any actual or threatened breach of any material
obligation of the other Party under this Agreement. Such right to specific
performance and injunctive relief shall exist without the necessity of seeking
prior arbitration of any dispute under Article 19 of this Agreement.
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<PAGE> 63
ARTICLE 17 -- WAIVER
Section 17.1. Waiver. The failure of either Party to require
strict performance of any provision of this Agreement by the other Party, or
the forbearance by either Party to exercise any right or remedy under this
Agreement, shall not be construed as a waiver by such Party of the right to
require strict performance of any such provisions or the relinquishment by such
Party of any such right or remedy it might have with respect to any subsequent
breach of such provisions. All waivers shall be in writing, shall be designated
as a waiver pursuant to this Article 17, shall be signed by the waiving Party
and shall recite the rights waived with specificity.
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<PAGE> 64
ARTICLE 18 -- SUCCESSORS AND ASSIGNS
Section 18.1. Consent Generally Required for Assignment. Except as
otherwise provided in Sections 18.2 and 18.3 of this Agreement, neither Party
shall assign any rights, interests or obligations under this Agreement
(including, without limitation, the right to receive money) without the prior
express written consent of the other Party; provided, however, that either
Party may without such consent assign its rights to receive money for the
purpose of factoring accounts receivable. No such assignment pursuant to this
Section 18.1 shall be effective unless the assignee expressly assumes all such
assigned rights, interests or obligations in a written document entered into
with the non-assigning Party.
Section 18.2. Seller's Right to Assign. Seller shall have the
right, with the prior written consent of Buyer, to assign all of Seller's
rights, interests and obligations under this Agreement to any corporation,
partnership or other entity; provided, however, that Buyer's consent shall not
be unreasonably withheld if such corporation, partnership or entity (i) either
(A) purchases or acquires substantially all of the assets of Seller (including
the Mine and Mine Reserves), or (B) purchases or acquires all of the assets of
the Mine and Mine Reserves, or (C) is either a parent of Seller or a wholly
owned subsidiary of Seller's parent or wholly owned by Seller or a wholly owned
subsidiary of Seller and in any such case acquires substantially all of the
assets of the Mine and Mine Reserves; and (ii) has a creditworthiness and
operational
- 60 -
<PAGE> 65
ability of at least as good a quality as that of Seller on the date hereof and
is capable of performing this Agreement. No such assignment pursuant to this
Section 18.2 shall be effective unless the assignee expressly assumes all such
assigned rights of Seller and the assignment is made and becomes effective in
accordance with this Section 18.2.
Section 18.3. Buyer's Right to Assign.
(a) Buyer shall have the right, without the consent of
Seller, to assign all of Buyer's rights, interests and obligations under this
Agreement (i) to any corporation, partnership or other entity (including the
Facility Operator) that either (1) purchases or acquires substantially all of
the assets of Buyer (including the Facility), or (2) is controlling,
controlled by or under common control with Buyer, or (3) acquires or assumes
ownership or operational control of the Facility; or (ii) to the Financing
Parties as may be provided in the Financing Documents.
(b) Buyer shall have the right, without the consent of
Seller, to assign all of Buyer's rights and interests under this Agreement to
the Financing Parties as security for Buyer's obligations under the Financing
Documents and to Virginia Power as security for Buyer's obligations under the
Power Agreement. Such assignment shall be in writing and a copy of such
assignment shall be furnished by Buyer to Seller. Seller expressly
acknowledges and agrees that in the event of such an assignment pursuant to
this Section 18.3(b) and upon the occurrence of an event of default by Buyer
under the Financing Documents or the Power Agreement, the
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<PAGE> 66
Financing Parties or Virginia Power, as the case may be, shall have the right
(but not the obligation) to assume, or cause a new lessee, purchaser or
operator of the Facility to assume, all of the rights, interests and
obligations of Buyer thereafter arising under this Agreement. No such
assumption of rights, interests and obligations pursuant to this Section
18.3(b) shall be effective unless the assuming party expressly assumes all such
assumed rights, interests or obligations of Buyer. The Parties expressly agree
that, in the event that the Financing Parties or Virginia Power assume Buyer's
rights, interests and obligations under this Agreement pursuant to this Section
18.3(b), the liability of such Financing Parties or Virginia Power for
performance of this Agreement shall be limited to such obligations that
directly relate to the right, title and interest of such Financing Parties or
Virginia Power in and to the Facility and the operating contracts related to
such Facility.
(c) Seller agrees, upon request of Buyer, promptly to
execute, and deliver to Buyer, the Financing Parties and/or Virginia Power a
written consent to any such assignment of this Agreement pursuant to this
Section 18.3 and such written certificates as to the due authorization,
execution and delivery by Seller of this Agreement as Buyer, the Financing
Parties and/or Virginia Power may reasonably request.
Section 18.4. Financing Parties' Beneficiaries. The provisions of
this Article 18 are for the benefit of the Financing Parties, as well as the
Parties hereto, and shall be enforceable
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<PAGE> 67
by each. Seller hereby agrees that none of the Financing Parties, or any
bondholder or participant for whom they may act, shall be obligated to perform
any obligation or be deemed to incur any liability or obligation to Seller with
respect to this Agreement, except as provided in this Article 18.
Section 18.5 Successors and Assigns. This Agreement shall inure to the
benefit of and be binding on the Parties and each of their respective permitted
successors and assigns.
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<PAGE> 68
ARTICLE 19 - ARBITRATION
Section 19.1. Scope. Subject to Sections 3.2, 3.3, 3.4 and 16.3 of
this Agreement, any controversy or claim arising out of or relating to this
Agreement, or the breach thereof, shall be settled by arbitration in
accordance with the Virginia Uniform Arbitration Act and the rules of the
American Arbitration Association then in effect.
Section 19.2 Arbitration Panel. The location of arbitration shall be in
Richmond, Virginia, unless otherwise mutually agreed by the Parties. The method
of arbitration shall be:
(a) The Parties shall agree upon a single arbitrator with
knowledge of and experience in the matter of coal and
the procurement and use of coal in electric power
plants or the electric utility industry;
(b) If the Parties cannot agree upon a single arbitrator
as provided in Section 19.2 (a) above, then each
Party shall designate one (1) arbitrator and the two
(2) individuals so designated shall jointly select a
third arbitrator;
(c) If the selection process provided in Section 19.2 (b)
of this Agreement fails for any reason, then either
Party may request the American Arbitration
Association to appoint the arbitrator(s), who shall
be familiar to
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<PAGE> 69
the coal industry as having a background in coal.
Section 19.3 Arbitrator(s) Decision. The decision of the arbitrator(s)
on the matters presented shall be rendered within thirty (30) days following the
submissions, if any, of the Parties. The decision shall be binding on the
Parties, and shall be enforced before any court of competent jurisdiction and,
upon application to such court, shall be enforced by an appropriate judicial
order. If the arbitration is conducted by one (1) arbitrator, the Parties shall
bear the expenses of arbitration equally. If the arbitration is conducted by
three (3) arbitrators, each Party shall bear the expenses of the arbitrator
appointed by itself and the Parties shall bear the expenses of the third
arbitrator equally. All other expenses incurred by either Party shall be borne
by the Party incurring the expenses.
Section 19.4. Cofidentiality of Proceeding. Any arbitration proceeding
under this Agreement shall, unless otherwise agreed, be held in confidence and
the arbitrator(s) selected shall agree to maintain the confidentiality of all
information submitted in the arbitration, to the extent such information is not
within the public domain.
Section 19.5 Survival. This Article 19 shall survive the termination or
expiration of this Agreement.
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<PAGE> 70
ARTICLE 20 -- NOTICES
Section 20.1. Notices. All notices, including communications and
statements which are required or permitted under the provisions of this
Agreement, shall be in writing and shall be deemed properly and sufficiently
given or made if delivered in person with receipt acknowledged in writing by
the recipient, sent by registered or certified mail return receipt requested,
sent by prepaid telegram, sent by telecopier a facsimile machine with receipt
acknowledged by similar means or sent or delivered by any other method which
will assure evidence of receipt thereof, to the respective Parties at the
addresses specified below.
If to Buyer, addressed to:
Birchwood Power Partners, L.P.
c/o, SEI Birchwood, Inc.
100 Ashford Center, North
Atlanta, CA 30338
Attn: President
If to Seller, addressed to:
AgipCoal Holding USA, Inc.
c/o C T Corporation
1209 Oranqe Street
Wilmington, Delaware 19801
Attn: President and CEO
Laurel Creek Co., Inc.
Right Fork of Camp Creek
East Lynn, West Virginia 25512
Attn: President
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<PAGE> 71
Rockspring Development, Inc.
Right Fork of Camp Creek
East Lynn, West Virginia 25512
Attn: President
AgipCoal Sales USA, Inc.
401 Tenth Street, Suite 301
Huntington, West Virginia 25701
Attn: President
Section 20.2. Effectiveness. No notice shall be effective unless it is
given or made in compliance with Section 20.1 of this Agreement. Notices given
or made in compliance with Section 20.1 above are effective as of the time of
delivery to or receipt by the Party to whom the notice is addressed; provided,
however, that if a notice given or made other than in writing is confirmed by
the Party giving or making notice within forty-eight (48) hours after receipt in
compliance with Section 20.1 of this Agreement, then the effectiveness of such
notice shall relate back to the time of receipt.
Section 20.3. Changes in Persons and Addresses. The person or address
of any Party to which written notice shall be given pursuant to this Agreement
may be changed at any time pursuant to Section 20.1 of this Agreement by giving
written notice to the other Party.
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<PAGE> 72
ARTICLE 21 -- MISCELLANEOUS
Section 21.1. Independent Contractor. Seller shall at all times act as
and be deemed to be an independent contractor for all purposes of this Agreement
and will not act as or be deemed to be an employee, agent or servant of Buyer;
provided, however, that nothing in this Section 21.1 shall limit the rights
granted by Buyer to Seller in Section 3.5 Of this Agreement.
Section 21.2. Agents of Seller; Subcontractors. No designation by
Seller of any agent for purposes of submitting invoices, receiving payments or
administering this Agreement shall be given effect or recognized by Buyer Until
Seller has given Buyer written notice of such designation and Buyer has given
Seller written notice of Buyer's acknowledgment. Seller may from time to time
enter into arrangements with subcontractors, suppliers or agents to provide
Buyer services that Seller is obligated under this Agreement to provide to
Buyer. At Buyer's request, Seller shall inform Buyer of the identity of any
such subcontractors, suppliers or agents. Notwithstanding any provision in this
Agreement to the contrary, Seller shall not be excused from performing its
obligations under this Agreement as a result of the non-performance of any of
Seller's subcontractors, suppliers or agents; and seller shall indemnify and
hold harmless Buyer pursuant to Article 13 of this Agreement from any loss or
damage resulting from any acts or omissions of any such subcontractors,
suppliers or agents of Seller relating solely to
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<PAGE> 73
environmental aspects of the mining, production or loading of Coal
Section 21.3. Confidentiality. Seller and Buyer shall retain in
confidence the contents of this Agreement and any information obtained as a
result of negotiation and performance of this Agreement which either Party
identifies to the other as being proprietary in nature; provided, however, that
Seller shall have the right to disclose such information to any parties
providing (or contemplating providing) financing or refinancing for its
operations, modification, expansion or improvement of the Mine or any facilities
thereto; provided further that Buyer shall have the right to disclose such
information to any parties providing (or contemplating providing) financing or
refinancing for its purchase, construction, ownership, operation or modification
of the Facility and to Virginia Power; and provided further that the Parties
shall have the right to disclose such information when requested or required by
a court or government agency or by subpoena issued in a judicial or
administrative proceeding or by arbitration proceedings under this Agreement.
The Parties hereby acknowledge that certain cost and physical property
information related to fuel purchases are or will be routinely reported to state
regulatory agencies, the Federal Energy Regulatory Commission and the
Environmental Protection Agency and are or will be used by Buyer's consultants
to make economic forecasts.
Section 21.4. Amendments. No amendment or modification of, or
supplement to, the terms of this Agreement shall be effective
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<PAGE> 74
or binding on either Buyer or Seller unless reduced to writing and signed by
both Parties.
Section 21.5. Choice of Law. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Virginia.
Section 21.6. Severability and Renegotiation. Should any provision of
this Agreement for any reason be declared invalid or unenforceable by final and
unappealable order of any court, or regulatory agency having jurisdiction
thereover, or by any arbitration as provided in this Agreement, such decision
shall not affect the validity of the remaining portions, which remaining
portions shall remain in full force and effect as if this Agreement had been
executed with the invalid portion thereof eliminated. In the event that any such
provision of this Agreement is so declared invalid, the Parties shall promptly
renegotiate in good faith new provisions to eliminate such invalidity and to
restore this Agreement as near as possible to its original intent, purpose and
effect.
Section 21.7. Other Agreements. This Agreement supersedes any and all
oral or written agreements and understandings heretofore made relating to the
subject matters contained herein and constitutes the complete and entire
Agreement and understanding of the Parties relating to the subject matters
herein.
Section 21.8. Captions. All indices, titles, subject headings, section
titles and similar items are provided for the
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<PAGE> 75
purpose of reference and convenience only and are not intended to be inclusive,
definitive or to affect the meaning, content or scope of this Agreement.
Section 21.9. Counterparts. This Agreement may be executed in any
number of counterparts, and each counterpart shall have the same force and
effect as the original instrument.
Section 21.10. Non-Recourse Nature of Certain Obligations.
Notwithstanding any other provision of this Agreement or other document
relating thereto, except for any liability arising out of or attributable to
fraudulent acts of a Party or any partner or shareholder of a Party, and except
for the liability of a signatory to this Agreement arising out of or
attributable to this Agreement, no partner, shareholder, officer, director,
agent or employee of a Party shall have any personal liability and no parent,
subsidiary or affiliate of a Party (other than a signatory to this Agreement)
or any partner, shareholder, officer, director, agent or employee thereof shall
have any liability whatsoever, for:
(a) the payment of any indebtedness related to this Agreement
(whether in respect of principal, interest, costs or expenses); or
(b) the payment or performance of any obligation under this
Agreement.
Notwithstanding the foregoing, nothing in this Section 21.10 shall
relieve a signatory to, or assignee of, this Agreement from liability for
obligations under this Agreement.
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<PAGE> 76
Section 21.11. Construction. This Agreement has been prepared by Buyer
and its professional advisors and reviewed by Seller and its professional
advisors. Seller, Buyer and their separate advisors hereby expressly acknowledge
that this Agreement is the product of all of their efforts, that it expresses
their agreement, and that it should not be interpreted in favor of either Seller
or Buyer or against either Seller or Buyer merely because of their efforts in
preparing it.
IN WITNESS WHEREOF, the Parties hereto have caused this Coal Supply
Agreement to be signed by their respective officers thereunto duly authorized as
of the day and year first set forth above.
WITNESS: BIRCHWOOD POWER PARTNERS, L.P.
By SEI BIRCHWOOD, INC.,
a General Partner
BUYER
By: /s/ Steve Gillis By: /s/ R. S. Shepard
------------------------- -------------------------
Title: Vice President
----------------------
WITNESS: AGIPOCOAL HOLDING USA, INC.
A SELLER
By: /s/ Sarah A. Murphy By: /s/ Fabrizio Zichichi
-------------------------- -------------------------
President and CEO
WITNESS: AGIPCOAL SALES USA, INC.
A SELLER
By: /s/ Joseph F. Gergely By: /s/ Paul H. Vining
--------------------------- -------------------------
President
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<PAGE> 77
WITNESS: LAUREL CREEK CO., INC.
By: /s/ Sarah A. Murphy By: /s/ Giseppe Petropat
-------------------------- ---------------------------
President
WITNESS: ROCKSPRING DEVELOPMENT, INC.
A SELLER
By: /s/ Sarah A. Murphy By: Edward Malonis
-------------------------- ---------------------------
President
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<PAGE> 78
ATTACHMENT A
PROVISIONS OF POWER AGREEMENT FOR
REDETERMINATION OF FUEL COMPENSATION PRICE
ADJUSTMENT FACTORS
<PAGE> 79
PARTIAL EXTRACT OF ARTICLE 10 FOR USE BY SEI FOR FUEL SUPPLY NEGOTIATIONS
10.1 The Operator shall be compensated for the Net Electrical Output of
the Facility on a cents per kWh basis at a rate equal to the Energy Purchase
Price. The Energy Purchase Price is composed of the Base Fuel Compensation
Price, the Fuel Compensation Price or the discounted Fuel Compensation Price, as
applicable, as determined in Sections 10.2 - 10.13 below, multiplied by the Heat
Rate and then increased by the variable O&M Price specified in Section 10.14.
The Input/Output curve coefficients in the formula specified in Section 1.20 are
A = __________, B = __________ and C = ___________ and shall remain fixed for
the term of the Agreement.
The Facility is composed of 1 generating unit with Input/
Output curve coefficients as follows:
INPUT/OUTPUT CURVE COEFFICIENTS:
<TABLE>
<CAPTION>
Unit No. A B C
- -------- ----- ----- -----
<S> <C> <C> <C>
1
------- ------- -------
</TABLE>
10.2 The Base Fuel Compensation Price (BFCP) shall be the initial price
Virginia Power will pay the Operator for the fuel portion of the Energy Purchase
Price. The Base Fuel Compensation Price, effective ________ for energy
received from the Facility, shall be based on a delivered fuel cost of
________ /c/million Btus. The Base Fuel Compensation Price shall be subject to
adjustment only as specified herein.
10.3 For the purpose of this Section, the following terms, whether in
the singular or in the plural, shall have the meaning stated below:
(a) Base Eastern Bituminous Coal Index (BEBCI) - The Eastern
Bituminous Coal Index for the ________ Calendar Quarter of
_________. Using the definitions specified herein, it is
designated (EBCI) (_,19__) and is equal to ________ cents
per million Btu as of the Execution of this Agreement.
(b) Eastern Bituminous Coal Index (EBCI) - The average cost of
coal (including the impact of any applicable tax credit,
e.g. the Virginia Tax Credit) purchased for Virginia
Power's in-system coal fired stations (which excludes Mt.
Storm) reported in cents per million Btu for the Calendar
Quarter in question. The index is calculated using the
weighted average delivered cost of solid fuel, in
c/million Btu, reported on FERC Form 423. The EBCI shall
be abbreviated as EBCI(q,y) where q is the Calendar Quarter
and y is the year.
<PAGE> 80
PARTIAL EXTRACT OF ARTICLE 10 FOR USE BY SEI FOR FUEL SUPPLY NEGOTIATIONS
10.4 At least two (2) weeks prior to the Initial Synchronization
Date and at least two (2) weeks prior to the beginning of each subsequent
Calendar Quarter thereafter, the Fuel Compensation Price that will be
effective during that next subsequent Calendar Quarter shall be calculated as
follows:
EBCI(q-2,y)-1
Fuel Compensation Price = -------------------------- I BFCP
BEBCI-1
Thus, if the Fuel Compensation Price were being determined for the first
Calendar Quarter of 1990, the numerator of the above equation would be EBCI(3,
1989).
10.5 THIS SECTION IS NOT USED.
10.6 Operator may, with at least two (2) weeks prior written notice,
specify, revise, or revoke a discount to the Fuel Compensation Price to be used
in the following Calendar Month. This discount shall then be applied against
the Fuel Compensation Price as calculated herein, and the resultant price will
be used in lieu of the Fuel Compensation Price for the purpose of payments and
Dispatch, whereas the non-discounted Fuel Compensation Price shall continue to
be calculated in accordance with this Article 10. This discount will be
effective, in the form specified in the Operator's notice, until Operator
provides further notice as specified in this Section 10.6, except, however,
that such discount shall be effective for at least one Calendar Month.
The resultant discounted Fuel Compensation Price shall not exceed the
non-discounted Fuel Compensation Price calculated in accordance with this
Article 10.
10.7 Opportunities to redetermine the BEBCI, the EBCI, and/or the fuel
component of the Base Fuel Compensation Price shall begin on the third July 1
after the signing of this Agreement and every third July 1 thereafter
("Redetermination Date"). Either Party may submit written notice to the other
Party requesting such redetermination no less than four (4) Calendar Months
prior to the Redetermination Date. Such written notice shall include any
proposed change(s) and the basis for such change(s). The Parties shall enter
into good faith negotiations for the purpose of revising the BEBCI, the EBCI,
and/or the Base Fuel Compensation Price to reflect more accurately the prices
then prevailing in the market for prudent purchases of Solid Fuel. If such
redetermination is not complete within thirty (30) Days after the
Redetermination Date, either Party may submit the matter to binding arbitration
as discussed in Sections 10.8 through 10.13, below.
10.8 The location of arbitration shall be in Richmond, Virginia,
unless otherwise mutually agreed. The method of arbitration shall be:
(a) The Parties shall agree upon a single arbitrator with
knowledge of and experience in the matter of Solid Fuel
and the procurement and use of Solid Fuel in electric
<PAGE> 81
PARTIAL EXTRACT OF ARTICLE 10 FOR USE BY SEI FOR FUEL SUPPLY NEGOTIATIONS
power plants or the electric utility industry, or, if
the Parties cannot agree;
(b) Each Party shall designate one arbitrator and the
individuals so designated shall jointly select a third
arbitrator, or, if this arbitrator selection process
fails;
(c) Either Party may request the American Arbitration
Association to appoint the arbitrator(s), who shall be
a specialist(s) in the matter of solid fuel.
10.9 Either Party may submit a written statement of its position to the
arbitrator(s) and the other Party within thirty (30) Days of appointment. The
other Party shall then have no more than twenty (20) Days to provide the
arbitrator(s) and the other Party with a written response to such statement.
These statements shall be the sole subject of the arbitration, except, however
that the matters subject to arbitration shall be limited to:
(a) A determination of a new Base Fuel Compensation Price
based on the fair market price(s) which a prudent
purchaser would pay for Solid Fuel to be delivered
and used during the Month of the Redetermination Date;
and/or
(b) A determination of appropriate indices to adjust the
Base Fuel Compensation Price in the future so as to
track the fair market price(s) in the future for Solid
Fuel in such a facility following the Redetermination
date.
10.10 In the redetermination of the Base Fuel Compensation Price, the
arbitrators shall:
(a) Consider a fair market price for Solid Fuel delivered
to power generation facilities within Virginia Power's
certificated service area during the Month of the
Redetermination Date using both price quotes
referenced in fuel contracts and prices received on
either a contract or spot basis during the twelve (12)
Month period preceding the Redetermination Date;
<PAGE> 82
PARTIAL EXTRACT OF ARTICLE 10 FOR USE BY SEI FOR FULL SUPPLY NEGOTIATIONS
(b) Consider prices referenced pursuant to Section 10.10(a)
above only when such prices apply for volumes in excess
of 6,000 tons per Month for use in a fully Dispatchable
Facility with a generating capacity of no less than 100
MW and located within Virginia Power's service
territory;
(c) Consider prices specified for Solid Fuel only when such
Solid Fuel is of similar quality and characteristics
as Solid Fuel used in pulverized coal boilers in
Virginia Power's service territory;
and
(d) Not consider prices specified for solid fuel for which
either Party has an economic interest in the
determination of the revised Base Fuel Compensation
Price or in the consideration of the revised indices.
10.11 In the determination of indices to govern future price
adjustments, the arbitrator(s) shall:
(a) Consider indices that are similar in operation and
intent to the indices specified herein reflecting
increases and decreases in average delivered Solid
Fuel prices, and which rely on objective, average
price data for those fuels;
(b) Consider indices that take into account the delivered
cost to fully dispatchable Solid Fuel fired electric
generating facilities with capacity ratings of at
least 100 MW located in Virginia Power's service
territory;
(c) Consider indices that use data that is verifiable by
independent third parties and updated regularly;
and
C:\MISC\WP51\BIRCHWOD\EXTRACT.002
<PAGE> 83
PARTIAL EXTRACT OF ARTICLE 10 FOR USE BY SEI FOR FUEL SUPPLY NEGOTIATIONS
(c) Not consider indices that use solid fuel data when such
solid fuels are not of similar quality and characteristics
as Solid Fuel used in pulverized coal boilers in Virginia
Power's service territory.
10.12 The decisions of the arbitrator(s) on the matters presented shall
be rendered within thirty (30) Days following the submissions, if any, of the
Parties. The Base Fuel Compensation Price and/or the associated indices
established in accordance with this Article 10 shall be binding on the Parties,
and shall be enforced before any court of competent jurisdiction and, upon
application to such court, shall be enforced by an appropriate judicial order.
If the arbitration is conducted by one arbitrator, the Parties shall bear the
expenses of arbitration equally. If the arbitration is conducted by three
arbitrators, each Party shall bear the expenses of the arbitrator appointed by
itself and the Parties shall bear the expenses of the third arbitrator equally.
All other expenses incurred by either Party shall be borne by the Party
incurring the expenses.
10.13 Following the decision of the arbitrator(s), the Base Fuel
Compensation Price, the Base Solid Fuel Index, and the Solid Fuel Index as
defined herein shall be replaced in accordance with those decisions, and
adjustments to the Fuel Compensation Price shall thereafter be performed as if
such decisions had been included in this Agreement. The effective date of
changes determined by such redeterminations shall be one week after the
completion of such redetermination.
<PAGE> 1
EXHIBIT 10.7(a)
FIRST AMENDMENT TO COAL SUPPLY AGREEMENT
FOR SEI BIRCHWOOD POWER FACILITY
THIS FIRST AMENDMENT TO COAL SUPPLY AGREEMENT (the "Amendment") is made
and entered into as of the 18th day of May, 1994, by and among BIRCHWOOD POWER
PARTNERS, L.P., a Delaware limited partnership, whose principal office is
located at 900 Ashwood Parkway, Suite 500, Atlanta, Georgia 30338 (hereinafter
referred to as "Buyer"), on the one hand; and LAUREL CREEK CO., INC.
("Laurel"), a Delaware corporation, whose principal office is located at Right
Fork of Camp Creek, East Lynn, West Virginia 25512; ROCKSPRING DEVELOPMENT,
INC. ("Rockspring"), a Delaware corporation, whose principal office is located
at Right Fork of Camp Creek, East Lynn, West Virginia 25512; NEWEAGLE COAL
SALES CORP. ("NCSC"), a Virginia corporation, whose principal office is located
at 237 Main Street, P. O. Drawer 1560, Grundy, Virginia 24614; and NEWEAGLE
INDUSTRIES, INC. ("NII"), a Virginia corporation, whose principal office is
located at 237 Main Street, P. O. Drawer 1560, Grundy, Virginia 24614, on the
other (Laurel, Rockspring, NCSC and NII being collectively and jointly and
severally hereinafter referred to as "Seller").
W I T N E S S E T H:
WHEREAS, Buyer, on the one hand, and Laurel, Rockspring, AgipCoal
Holding USA, Inc. ("Holding") and AgipCoal Sales USA, Inc. ("Sales"), on the
other, entered into that certain Coal Supply Agreement dated as of July 22,
1993 (the "Coal Supply Agreement"); and
WHEREAS, pursuant to that certain Assignment and Assumption Agreement
(Birchwood) dated as of the 31st day of January 1994, by and among Holding,
Sales, NCSC
<PAGE> 2
and NII, Holding and Sales assigned and conveyed to NCSC and NII the Coal
Supply Agreement and all of Holding's and Sales' rights, benefits, entitlements
and obligations thereunder; and NCSC and NII accepted such assignment and
assumed and agreed to perform all obligations and discharge all duties of
Holding and Sales under the Coal Supply Agreement; and
WHEREAS, pursuant to the aforesaid Assignment and Assumption Agreement
and in reliance on that certain Letter Agreement dated March 29, 1994 by and
among Arch Mineral Corporation, Buyer and ER&L Birchwood, Inc. (the "Letter
Agreement"), Buyer consented to such assignment and, except as otherwise
provided in the Letter Agreement, to the release of Holding and Sales of the
obligations under the Coal Supply Agreement; and
WHEREAS, Laurel, Rockspring, NCSC, NII and Buyer now desire to amend
the Coal Supply Agreement in certain respects as hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual agreements and covenants
hereinafter set forth, and other good and valuable consideration, the receipt
of which is hereby acknowledged, Laurel, Rockspring, NCSC, NII and Buyer amend
the Coal Supply Agreement as follows:
1. The definition of "Mine" set forth in Section 1.1 of
the Coal Supply Agreement is hereby amended by deleting same in its entirety and
inserting in lieu thereof the following:
"Mine" - Seller's respective mining complex at Camp
Creek, Dingess, and Ten Mile, West Virginia, together with coal
loading facilities at Dingess, Laurel Creek, and Ten Mile, West
Virginia, including structures, equipment, excavations,
roadways, waste disposal sites, and transportation, loading,
connecting and related facilities which may be required by
Seller's
- 2 -
<PAGE> 3
performance of this Agreement. For purposes of Section 3.1 of
this Agreement, Mine shall mean the place where railroad cars
are loaded and tendered to the Transportation Company."
By virtue of the amendment to the definition of "Mine" as aforesaid,
Buyer and Seller acknowledge and agree that the definition of "Mine Reserves"
is amended to add to the "Mine Reserves" under the Coal Supply Agreement the
recoverable Coal reserves or deposits located at the Dingess Mine.
2. The definitions of "Party" and "Parties" set forth in Section
1.1 are amended to mean, with respect to Seller, Laurel, Rockspring, NII and
NCSC, as the case may be.
3. The Coal Supply Agreement is further amended to change the word
"Coal" to "coal" in the definition of "Delivered Cost" in Section 1.1, in the
first sentence of Section 3.3.2, in clause (i) of Section 4.1, in the last
sentence of Section 8.1 and on the tenth and fifteenth lines of Section 9.7 of
the Coal Supply Agreement.
4. The Coal Supply Agreement is further amended to change the
words "replacement Coal" to "replacement coal" wherever such words appear in
Section 7.6(d) and Section 14.2(b) of the Coal Supply Agreement.
5. Section 7.6(d) of the Coal Supply Agreement is amended by
changing the first sentence thereof to read as follows:
"Buyer shall have the right to purchase for use at the Facility
coal from alternative sources to replace (i) shipments of Coal that were
rejected by Buyer but not cured within seven (7) days of such rejection
by Seller pursuant to Section 7.6(a) of this Agreement, or (ii)
deliveries of Coal that would have been made during any period in which
such deliveries are suspended pursuant to Section 7.6(b) or 7.6(c) of
this Agreement, or (iii) deliveries of Coal
- 3 -
<PAGE> 4
required to have been made by Seller pursuant to this Agreement but
which Seller failed to deliver in default of its obligations under
this Agreement."
6. Section 8.2 of the Coal Supply Agreement is amended to read in
entirety as follows:
"Section 8.2. Restrictions on Transfer of Mine Reserves.
During the term of this Agreement, Seller shall not sell, lease,
encumber or otherwise transfer any of its ownership or leasehold
interests in, or any of its rights to mine and/or sell, the Mine
Reserves which are necessary pursuant to prudent mining engineering
practice to protect the requirements of this Agreement to any other
party (including any parent, subsidiary or affiliate of Seller)
unless such sale, lease, encumbrance or transfer occurs in connection
with an assignment of this Agreement by Seller in accordance with the
provisions of Article 18 of this Agreement."
7. Section 20.1 of the Coal Supply Agreement is hereby amended to
change the specified addresses of the Parties for notices to the following:
If to Buyer, addressed to
Birchwood Power Partners, L.P.
c/o SEI Birchwood, Inc.
900 Ashwood Parkway, Suite 500
Atlanta, GA 30338
Attn: President
If to Seller, addressed to
Laurel Creek Co., Inc.
Right Fork of Camp Creek
East Lynn, West Virginia 25512
Attn: President
Rockspring Development, Inc.
Right Fork of Camp Creek
East Lynn, West Virginia 25512
Attn: President
- 4 -
<PAGE> 5
Neweagle Industries, Inc.
237 Main Street
P. O. Drawer 1560
Grundy, Virginia 24614
Attn: President
Neweagle Coal Sales Corp.
237 Main Street
P. O. Drawer 1560
Grundy, Virginia 24614
Attn: President
8. The Coal Supply Agreement, as amended by this Amendment, is hereby
ratified and confirmed and shall remain in full force and effect.
9. This Amendment may be executed in any number of counterparts, and
each counterpart shall have the same force and effect as the original
instrument. Execution of this Amendment by any party may also be accomplished
by facsimile transmission of executed counterpart signature pages of this
Amendment, and such facsimile signatures may be appended or attached to any
counterpart of this Amendment.
IN WITNESS WHEREOF, Buyer, Laurel, Rockspring, NII, and NCSC have duly
executed this Amendment as of the day and year first above written.
BIRCHWOOD POWER PARTNERS, L.P.
BY: SEI BIRCHWOOD, INC.,
General Partner
By: /s/ Mark S. Lynch
-------------------------
Title: Vice President
-------------------------
[Signatures Continued on Next Page]
- 5 -
<PAGE> 6
LAUREL CREEK CO., INC.
By: /s/ F. D. Robertson
------------------------
Title: President
------------------------
ROCKSPRING DEVELOPMENT, INC.
By: /s/ F. D. Robertson
------------------------
Title: President
------------------------
NEWEAGLE COAL SALES CORP.
By: /s/ F. D. Robertson
------------------------
Title: President
------------------------
NEWEAGLE INDUSTRIES, INC.
By: /s/ F. D. Robertson
------------------------
Title: President
------------------------
Consented and Agreed to By:
ARCH MINERAL CORPORATION
By:
-------------------------
Title:
-------------------------
- 6 -
<PAGE> 1
Confidential Treatment
EXHIBIT 10.8
COAL TRANSPORTATION
AGREEMENT
Between
BIRCHWOOD POWER PARTNERS, L.P.
And
ER&L-BIRCHWOOD, INC.
For the Birchwood Cogeneration Project
SEI Birchwood Contract No. 6709-P-004
----------
<PAGE> 2
TABLE OF CONTENTS
ARTICLE 1. Definitions................................... 1
1.1. Definitions................................... 1
1.2. Other Definitions............................. 4
ARTICLE 2. TERM.......................................... 4
2.1. 25-Year Term.................................. 4
2.2. Build-Up Period............................... 4
2.3. Anticipated Commercial Operation Date......... 4
2.3.1. Power Agreement Is Terminated -
Reinstated or Renegotiated................ 4
2.3.2. Commercial Operation Date Not Met .... 5
2.4. Effect of Continuation Under Power
Agreement.................................. 5
2.5. Effect of the Termination of a Coal
Supply Agreement........................... 5
2.6. Filing with the ICC........................... 6
2.7. Effect of Termination......................... 7
ARTICLE 3. TRANSPORTATION RATES AND ESCALATION........... 7
3.1. Rates......................................... 7
3.2. Quarterly Adjustments of Rates................ 7
3.3. Notice to ERLB of Price Redetermination....... 7
3.4. Special Adjustments Agreement................. 7
ARTICLE 4. VOLUME REQUIREMENT............................ 8
4.1. 100% Requirement.............................. 8
4.2. Liquidated Damages............................ 8
4.3. Non-Hazardous Materials....................... 8
ARTICLE 5. BILLS AND PAYMENTS............................ 9
5.1. Billing and Payment........................... 9
5.2. Time of Billing and Payment................... 9
5.2.1. Coal.................................. 9
5.2.2. Late Payment.......................... 9
5.2.2.1. Undisputed
Transportation Charges........ 9
5.2.2.2. Disputed Transportation
Charges....................... 9
ARTICLE 6. TRANSPORTATION................................ 9
6.1. Tender........................................ 9
6.2. Railcars and Locomotives...................... 10
6.3. Shipment; Tariffs, Etc........................ 10
6.4. Schedules..................................... 10
6.5. Unacceptable Shipments........................ 10
6.5.1. Shipments Rejected for Failure by
Underlying Carrier..................... 10
6.5.2. Shipments Rejected for Failure to
Meet Coal Specifications............... 10
6.6. Weighing by Carrier........................... 11
6.7. Placement at the Facility..................... 11
6.8. Demurrage..................................... 11
i
<PAGE> 3
6.8.1 Unit Train Shipments................... 11
6.8.2 Straggler Cars Shipments............... 12
6.9. Loading and Unloading......................... 12
6.10. Reclassification of Track..................... 12
ARTICLE 7. FORCE MAJEURE................................. 13
7.1. Effect of Force Majeure....................... 13
7.2. Events Not Included........................... 13
7.3. No Automatic Extension........................ 14
ARTICLE 8. TERMINATION, REMEDIES......................... 14
8.1. Termination Upon Default...................... 14
8.2. Effect of Termination......................... 15
8.3. Nonwaiver..................................... 15
8.4. No Consequential, etc. Damages................ 15
ARTICLE 9. MISCELLANEOUS PROVISIONS...................... 15
9.1. Entire Agreement.............................. 15
9.2. Notices....................................... 15
9.3. Choice of Law................................. 16
9.4. Counterparts.................................. 16
9.5. Confidentiality............................... 16
9.6. Assignment.................................... 17
9.7. Arbitration................................... 17
Attachment A Other Origins
Attachment B Determination of Quarterly
Adjustments
Attachment C Rail Facilities at Site
ii
<PAGE> 4
COAL TRANSPORTATION AGREEMENT
BIRCHWOOD COGENERATION PROJECT
THIS COAL TRANSPORTATION AGREEMENT (the "Agreement"), dated as of the
22nd day of July, 1993 is between BIRCHWOOD POWER PARTNERS, L.P., a Delaware
limited partnership ("BPP"), and ER&L-BIRCHWOOD, INC., a Delaware corporation
("ERLB").
WHEREAS, BPP plans to design, finance, build, own, operate and maintain
a coal-fired cogeneration facility (the "Facility") in King George County,
Virginia (such undertaking referred to as the "Project");
WHEREAS, AgipCoal Holding USA, Inc., Laurel Creek Co., Inc., Rockspring
Development, Inc. and AgipCoal Sales USA, Inc. (collectively, the "Coal
Supplier") and BPP have entered into or shall enter into a coal purchase
contract (the "Coal Supply Agreement") to provide a supply of coal for the
Facility;
WHEREAS, BPP and ERLB desire that ERLB arrange for rail transportation
of the coal from the Coal Supplier to the Facility, and ERLB is willing to
arrange for such transportation;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
ARTICLE 1. DEFINITIONS
1.1. Definitions. The following shall have the meanings indicated:
Anticipated Commercial Operation Date - November 29, 1996.
BPP. Birchwood Power Partners, L.P., a Delaware Limited partnership,
its successors and assigns.
Buildup Period. The period of time immediately prior to the
Commercial Operation Date during which the Facility accumulates coal for test
burns and start-up testing and in anticipation of full commercial operation.
Coal. The Coal purchased for the Facility.
Coal Base Transportation Rate. The rate provided in Section 3.1.
Coal Supplier. AgipCoal Holding USA, Inc., Laurel Creek Co., Inc.,
Rockspring Development, Inc. and AgipCoal Sales USA, Inc., their successors and
assigns.
<PAGE> 5
Coal Supply Agreement. The agreement for the supplying of coal to the
Facility as previously defined in the recitals hereto.
Commercial Operation Date. The first day following the day SEI
Birchwood, Inc., or its assignee notifies Virginia Power that the Facility is
available for dispatch as provided in the Power Purchase and Operating
Agreement between SEI Birchwood, Inc. and Virginia Electric and Power Company.
Construction Contract. The contract for the engineering, procurement
and construction of the Facility, as such contract may be amended, supplemented
or replaced, from time to time.
CSXT. CSX Transportation, Inc., a Virginia corporation.
Destination Carrier. The rail carrier serving the Facility.
ERLB. ER&L-Birchwood, Inc., a Delaware corporation, its successors and
assigns.
Event of Default. A default under this Agreement as provided in
Section 8.1.
Facility. The cogeneration Facility to be located in King George
County, Virginia, which BPP intends to build and operate and which will have
the capability to generate approximately 220 net megawatts of electricity and
provide process steam to one or more industrial users.
Financing Documents. Those documents which provide for the construction
and/or permanent financing of the Project.
GDP-IPD. The second release of the quarterly gross domestic product
implicit price deflator published by the Bureau of Economic Analysis of the
U.S. Department of Commerce in the Survey of Current Business, Table 7.13, Line
# 1.
Hazardous Materials. All pollutants, contaminants, chemicals or
industrial, toxic or hazardous substances or wastes proscribed under any
applicable Federal, State, local or foreign statute, law, regulation,
ordinance, rule, judgment, order or decree including, without limitation, the
Resource Conservation and Recovery Act, as amended, 42 U.S.C. Section 6901, et.
seq., the Federal Clean Water Act, as amended, 33 U.S.C. Section 1251, et.
seq., the Federal Clean Air Act, as amended, 42 U.S.C. Section 7401, et seq.,
and the Comprehensive Environmental Response Compensation and Liability Act, as
amended, 42 U.S.C. Section 9601, et seq.
ICC. The Interstate Commerce Commission.
2
<PAGE> 6
Index Factor. The price indexing factor set forth in Article 3.
Locomotive Lease Agreement. The Locomotive Lease Agreement between
CSXT and BPP including all appendices and all amendments thereto that may be
made from time to time.
Mines. Coal Supplier's coal mines and rail car loading facilities
which shall supply the coal under the Coal Supply Agreement.
Party or Parties. BPP and/or ERLB as appropriate.
Power Agreement. The Power Purchase and Operating Agreement dated as
of July 13, 1990 between SEI Birchwood, Inc. and Virginia Electric and Power
Company, including all appendices and all amendments thereto that may be made
from time to time.
Prime Rate. The rate announced publicly from time to time by
Citibank, N.A., New York, New York as its prime rate.
Project. The planning, designing, financing, building, operation and
maintenance of the Facility.
Railcar. A railroad car suitable for loading at the Mines and
unloading at the Facility.
Senior Lenders. Those lenders providing senior debt financing for the
Project and holding a first mortgage or similar security interest in the
Project.
Special Adjustments Agreement. The Special Adjustments Agreement
dated as of even date herewith by and among Agip Coal Holdings USA, Inc.,
Laurel Creek Co., Inc., Rockspring Development, Inc., AgipCoal Sales USA, Inc.,
ER&L-Birchwood, Inc. and Birchwood Power Partners, L.P.
Straggler Car. The Railcars of a unit train of coal, but delivered
after the unit train is tendered to the Facility, due to a cause not
attributable to the Facility and subject to Section 6.8.2.
Substantial Completion. The date upon which the Facility meets the
criteria for substantial completion or similar event or act as set forth in the
Construction Contract.
Ton. A short ton or two thousand (2,000) pounds (avoirdupois).
3
<PAGE> 7
Underlying Carrier. CSXT, the Destination Carrier, or any other
carrier by rail providing transportation of Coal to the Facility.
Unit Train. A train with 90 loaded cars of Coal or such other number
of cars as required by the Underlying Carrier for unit trains.
Virginia Power. Virginia Electric and Power Company.
1.2. Other Definitions. Other terms in this Agreement whose
initial letters are capitalized and which are not otherwise defined herein
shall have the respective meanings given to such terms in the Power Agreement.
ARTICLE 2. TERM
2.1. 25-Year Term. Subject to earlier termination as hereinbelow
provided in this Agreement, the term of this Agreement shall commence on the
date of its execution and shall continue for a period of twenty-five (25) years
following the Commercial Operation Date; provided, however, that this Agreement
shall continue to apply to any shipment loaded and tendered to ERLB prior to
the end of the twenty-five (25) years, but delivered after such date. BPP
shall notify ERLB in writing of the Commercial Operation Date within thirty
(30) days of BPP becoming aware of such date.
2.2. Build-Up Period. This Agreement shall also apply to any
transportation of Coal arranged by ERLB for the Facility during the Build-Up
Period. BPP shall give ERLB not less than thirty (30) days' prior notice of
each of the dates on which any of the shipments of Coal will be tendered to
ERLB by the Coal Supplier during this Build-Up Period.
2.3. Anticipated Commercial Operation Date. The Anticipated
Commercial Operation Date under the Power Agreement is November 29, 1996,
provided, that SEI Birchwood, Inc. or its assignee under the Power Agreement is
entitled to delay the Commercial Operation Date until November 24, 1997.
2.3.1. Power Agreement Is Terminated - Reinstated or Renegotiated.
In the event the Power Agreement is terminated either before or after the
Commercial Operation Date, BPP and ERLB shall each have the right exercisable
in its discretion to terminate this Agreement upon thirty (30) days' written
notice served on the other; provided however, that if ERLB exercises such right
and within the thirty (30) day period following BPP's receipt of such
termination notice, BPP notifies ERLB in writing that BPP intends to reinstate
the Power Agreement or to negotiate
4
<PAGE> 8
a new power agreement with Virginia Power, then such termination notice from
ERLB shall be deemed withdrawn and ERLB shall not be entitled to terminate this
Agreement for a six (6) month period starting as of the date of the aforesaid
termination of the Power Agreement. If the Power Agreement is reinstated on or
before the end of the six (6) month period described in the immediately
preceding sentence, this Agreement shall remain in effect. Alternatively, if a
new power agreement is negotiated and executed with Virginia Power on or
before the end of such six (6) month period this Agreement shall remain in
effect, provided, however, if either ERLB or BPP believes, in its reasonable
discretion, that such new power agreement will have an adverse economic effect
on ERLB or BPP, as the case may be, ERLB or BPP may terminate this Agreement on
thirty (30) days' written notice to the other.
2.3.2. Commercial Operation Date Not Met. In the event the
Commercial Operation Date is not achieved by November 24, 1997, ERLB and BPP
shall each have the right, at its sole election, to terminate this Agreement
upon thirty (30) days' written notice to the other; provided, however, that if
within the thirty (30) day period following BPP's receipt of any such
termination notice from ERLB under this Section 2.3.2, BPP provides ERLB
written notice that BPP intends to achieve the Commercial Operation Date on or
before November 24, 1998, the aforesaid termination notice from ERLB shall be
deemed withdrawn and this Agreement shall remain in effect. In the event the
Commercial Operation Date is not achieved by November 24, 1998, and BPP or ERLB
reasonably believes that the Commercial Operation Date will not occur before
November 24, 1999, ERLB or BPP, at its sole election, may terminate this
Agreement by giving written notice of termination to the other.
2.4. Effect of Continuation Under Power Agreement. If BPP
continues to provide service under the Power Agreement beyond the twenty-five
(25) year term provided in Section 2.1, the following shall apply: (i) If the
continuation is voluntary or agreed to by BPP and if the Parties mutually agree
in writing, this Agreement shall continue for a similar length of time. (ii) If
the continuation is required by the Power Agreement or automatically continued
under Section 18.1(a) of the Power Agreement, this Agreement shall continue for
the same length of time as the Power Agreement and both Parties shall continue
to be bound thereby, provided that nothing in this Section 2.4 shall require
that this Agreement shall extend more than 10 years beyond the period of 25
years from the Commercial Operation Date provided in Section 2.1.
2.5. Effect of the Termination of a Coal Supply Agreement.
(a) If the Coal Supply Agreement terminates for any reason before the end
of the term of this Agreement, BPP and ERLB shall use their best efforts for a
period of six (6) months following
5
<PAGE> 9
notice from BPP to ERLB of such termination (or anticipated termination) to
secure a replacement coal supply agreement with a coal supplier(s) or
provider(s) located on the CSXT system, for the balance of the 25-year period
then remaining on this Agreement. If within such six-month period BPP does not
secure a new coal supply agreement under which the sum of (i) the price for
coal and (ii) the cost of transportation of coal under this Agreement is equal
to or less than the then applicable Fuel Compensation Price which BPP is
entitled to receive under the Power Agreement, then BPP shall be free to
arrange for an alternative coal supply and coal transportation arrangements
outside of the CSXT system and to terminate this Agreement on written notice to
ERLB; provided, however, if the sum of (x) the price of coal and (y) the cost
of transportation on such alternative system is also greater than the then
applicable Fuel Compensation Price which BPP is entitled to receive under the
Power Agreement, BPP will provide ERLB an opportunity of ten (10) business days
to match such total price prior to finalizing such alternative arrangement and
terminating this Agreement. During the period from termination of the Coal
Supply Agreement and until BPP has secured a new coal supply or terminates this
Agreement under this Section 2.5, BPP shall be free to purchase coal on the
spot market from CSXT served origination points and elect to pay the
transportation rates set forth on Attachment A hereto.
(b) In the event that the Coal Supply Agreement is
terminated before the end of the term of this Agreement and (i) BPP executes a
replacement agreement with a supplier on the CSXT system or (ii) BPP selects a
new origin on the CSXT system to supply coal to the Facility, at BPP's election
ERLB will provide transportation from the new supplier(s) or provider(s) or from
that new origin to the Facility at a rate which is consistent with the rate
schedule provided in Attachment A, provided, however, that nothing herein shall
require ERLB to provide or continue transportation service from an origin which
is on an abandoned line of railroad. Attachment A provides a schedule of rates
from origins by CSXT rate district subject, however, to the provisions of
Section 3.2. In the event that a new origin is selected, the CSXT rate district
and the corresponding transportation rate, as provided in Attachment A, will be
determined and escalated according to the provisions of Section 3.2. Such
escalated rate shall be the new coal transportation rate as provided in Section
3.1 and the new origin shall be substituted for the origin provided in Section
3.1.
2.6. Filing with the ICC. Promptly upon execution of this
Agreement, and in no event later than thirty (30) days after execution, ERLB
shall enter into a railroad transportation contract with CSXT and any other
necessary or desirable Underlying Carriers to transport Coal hereunder, shall
arrange with CSXT to file an appropriate contract summary thereof with
6
<PAGE> 10
the ICC and shall take all necessary steps to cause the contract between ERLB
and CSXT to be approved promptly by the ICC including, but not limited to,
filing any supplemental information requested by the ICC and diligently
contesting any challenge to ICC approval.
2.7. Effect of Termination. Notwithstanding anything to the
contrary contained in this Agreement, termination of this Agreement by BPP or
ERLB pursuant to the provisions of Sections 2.3.1, 2.3.2, or 2.5 shall be
without penalty or damages to either party.
ARTICLE 3. TRANSPORTATION RATES AND ESCALATION
3.1. Rates. BPP shall pay and ERLB shall receive charges for the
transportation of coal originating at Ten Mile Creek or Laurel (Baber), West
Virginia, based on a rate ("Coal Base Transportation Rate") of:
$[xxx] net Ton as of
October 1, 1989
This rate includes the use of locomotives for handling and unloading of
Railcars as provided by the Underlying Carrier pursuant to the Locomotive Lease
Agreement and the use of Railcars.
3.2. Quarterly Adjustments of Rates. The Coal Base Transportation
Rate and the transportation rates provided in Attachment A hereto shall be
adjusted, up or down, each quarter, by the same percentage and at the same time
as the percentage change of the Fuel Compensation Price provided in Sections
10.4 through 10.13 of the Power Agreement, including any adjustment resulting
from arbitration thereunder. An example of such adjustment is provided in
Attachment B.
3.3. Notice to ERLB of Price Redetermination. If a notice is
served and negotiations or arbitration undertaken under the Power Agreement to
redetermine the Fuel Compensation Price therein, BPP shall promptly advise ERLB
in writing. BPP will allow ERLB to participate in the negotiation and/or
arbitration process regarding adjustments to the Fuel Compensation Price under
the Power Agreement, to the extent permitted by Virginia Power. BPP will not
settle any negotiation or arbitration over the adjustment to the Fuel
Compensation Price under the Power Agreement without first seeking input from
ERLB and using reasonable best efforts to seek a consensus among ERLB, the Coal
Supplier and BPP as to the terms of such settlement.
3.4. Special Adjustments Agreement. The Parties agree that the
Special Adjustments Agreement may alter the amount BPP shall pay to ERLB for
transportation of Coal from the Coal Supplier to
7
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[xxx] These portions of this exhibit have been omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
<PAGE> 11
the Facility, and that BPP will have no liability under this Agreement in the
event BPP pays ERLB the amounts that may be determined under the Special
Adjustments Agreement. The Parties agree that no dispute arising under the
Special Adjustments Agreement shall relieve ERLB from performing its
obligations and duties under this Agreement.
ARTICLE 4. VOLUME REQUIREMENT
4.1. 100% Requirement. Throughout the term of this Agreement, BPP
shall ship pursuant to this Agreement one hundred percent (100%) of
the Coal used at the Facility during said period, except to the extent that
ERLB is unable to provide transportation because of a force majeure event as
provided herein or due to an event of default by ERLB.
4.2. Liquidated Damages. In the event BPP fails to ship under this
Agreement one hundred percent (100%) of the Coal used at the Facility during
the time this Agreement is in effect, except to the extent that ERLB is unable
to provide transportation because of a force majeure event as provided herein
or due to an event of default by ERLB, and except as provided in Section 4.1,
BPP shall pay ERLB [xxx] dollars ($[xxx]) a ton for the difference between the
number of tons that should have been shipped under this Agreement and the
number of tons actually shipped. Such payments shall be liquidated damages and
not a penalty. It is agreed that ERLB's actual damages would be uncertain as
to amount and difficult to ascertain. Such payments shall be due and payable
within forty-five (45) days after the end of each calendar quarter in which
BPP failed to ship one hundred percent (100%) of the Coal. After said
forty-five (45) days said amount shall bear interest at the Prime Rate plus two
percent (2%) per annum until paid. The rate provided herein for determining
liquidated damages is provided as of January 1, 1993. It shall be adjusted in
the same manner and at the same time as rates are adjusted under Section 3.2.
Within fifteen (15) days after the end of each calendar quarter
if the Facility has used any coal other than Coal transported under this
Agreement, BPP shall notify ERLB of the amount of such coal and the reason for
using it. BPP's records pertaining to all Coal received shall be retained for
three (3) years and such records and the certifications shall be subject to
audit by ERLB not more than once per year.
4.3. Non-Hazardous Materials. BPP shall endeavor to provide in its
agreement with any coal supplier supplying coal to the Facility which is
transported as provided in this Agreement that such coal supplier shall not
tender any shipment which contains any Hazardous Material and that such coal
supplier will indemnify and hold harmless ERLB and any carrier of such coal
8
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[xxx] These portions of this exhibit have been omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
<PAGE> 12
from any and all claims, damages, civil penalties, fines, expenses and fees,
including, but not limited to, attorneys' and experts' fees, which arise from
the tender of any shipment to the Facility which contains Hazardous Material.
ARTICLE 5. BILLS AND PAYMENTS
5.1. Billing and Payment. All bills for services hereunder shall
be billed by ERLB and paid by BPP by check or, at BPP's option, electronically
by wire transfer of immediately available funds.
5.2. Time of Billing and Payment.
5.2.1. Coal. On or after the date of delivery of a shipment of Coal
to the Facility, ERLB shall provide an invoice for said shipment to BPP.
Payment of invoice by BPP must be made within the fifteen (15) day period
allowed by the ICC's credit requirements, except that for a period of two (2)
years following the first delivery of coal under the Coal Supply Agreement BPP
shall be entitled to pay within thirty (30) days after invoice. BPP shall make
payment as provided in Section 5.1.
5.2.2. Late Payment. If BPP does not effect payment as required
herein, the payments due shall bear interest at the following rates through the
date of payment.
5.2.2.1. Undisputed Transportation Charges. Undisputed transportation
charges and related charges for services such as demurrage and storage charges,
extra switching, spotting or respotting, re-railing or wreck train service,
weighing or reweighing and reconsignment charges, shall bear interest at the
Prime Rate plus two percent (2%) for the first ninety (90) days after the bill
is due and the Prime Rate plus four percent (4%) thereafter.
5.2.2.2. Disputed Transportation Charges. Transportation charges and
related charges for services as listed in Section 5.2.2.1, which are the
subject of a bona fide dispute between the Parties shall bear interest at the
Prime Rate plus two percent (2%) per annum through the date of payment for a
ninety (90) day period from the date of resolution of the dispute and at the
Prime Rate plus four percent (4%) per annum thereafter.
ARTICLE 6. TRANSPORTATION
6.1. Tender. BPP shall require by contract or otherwise that Coal
suppliers will tender Coal in Railcars at loading facilities located at the
Mines or at other CSXT-served coal-loading facilities. Tender of a shipment
shall include making it
9
<PAGE> 13
available to the Underlying Carrier accompanied by proper shipping
documentation to allow transportation and delivery. Upon tender, ERLB shall be
responsible for transporting the Coal in accordance with the terms of this
Agreement.
6.2. Railcars and Locomotives. ERLB shall arrange at its sole
cost and expense for the Railcars which will transport the Coal as provided in
this Agreement. The railcars shall be of the proper type (bottom dump), in
good operating order and free of extraneous material. BPP shall require by
contract or otherwise that Coal suppliers will inspect the Railcars prior to
loading and that they shall reject any Railcar delivered which is not suitable
for loading. BPP will not incur or be charged any additional costs or expenses
in the event the Coal Supplier rejects any Railcars which are not suitable.
ERLB shall also arrange for CSXT to provide locomotives at ERLB's cost and
expense for handling and unloading of Railcars pursuant to the Locomotive Lease
Agreement.
6.3. Shipment; Tariffs, Etc. All shipments transported pursuant to
this Agreement shall be loaded and shipped in accordance with the Underlying
Carrier loading requirements and weight limitations that may be published from
time to time by the Underlying Carrier or Underlying Carriers in its or their
tariffs, circulars, rules, or similar documents.
6.4. Schedules. Prior to the twentieth (20th) day of each month,
BPP will provide ERLB with an estimated monthly schedule indicating the
anticipated quantities of Coal to be transported pursuant to this Agreement in
the next succeeding month. Actual requirements will be based primarily on
dispatch by Virginia Power, and BPP shall endeavor to provide schedules and
shipments of approximately equal amounts of Coal, as the case may be, on a
month-to-month basis, subject to prudent utility operating practices.
6.5. Unacceptable Shipments.
6.5.1. Shipments Rejected for Failure by Underlying Carrier. In
the event a shipment loaded in Railcars and not yet unloaded at the Facility is
not acceptable because of any cause directly attributable to a failure to
provide transportation as required herein, including, but not limited to, loss
or damage to a shipment, BPP may refuse to accept delivery of such Railcars,
provided the Parties shall use their best efforts to mitigate such loss or
damage.
6.5.2. Shipments Rejected for Failure to Meet Coal Specifications.
In the event a shipment loaded in Railcars and not yet unloaded at the Facility
is not acceptable because the Coal fails to meet the specifications provided in
the Coal Supply Agreement, BPP may refuse to accept delivery of such Railcars,
10
<PAGE> 14
provided that BPP shall be responsible, with or without the concurrence of the
Coal Supplier, to arrange for the disposition of the Coal. Any demurrage,
storage, rerouting, reconsignment or salvage associated with BPP's refusal
shall be subject to the Underlying Carrier's tariffs, circulars, rules and
regulations and BPP shall reimburse ERLB for any charges incurred thereby.
6.6. Weighing by Carrier. ERLB shall arrange with the
Underlying Carrier to weigh all loaded Railcars, and the weights determined by
the Underlying Carriers shall be used for billing purposes, provided if an
Underlying Carrier has an arrangement with the Coal Supplier for the use of
Mine weights, such weights shall be used. If the Underlying Carrier which
weighs the Railcars provides a separate or extra charge for weighing, BPP shall
reimburse ERLB for any such charges. If BPP requests any re-weighing of cars,
loaded or empty, or similar service, ERLB shall use its best efforts to arrange
for such service and BPP shall reimburse ERLB for its expenses incurred,
including but not limited to the railroad's re-weighing charges.
6.7. Placement at the Facility. Subject to the execution of a
Sidetrack Agreement between BPP and CSXT, ERLB shall arrange with the
Underlying Carrier(s) for the placement of trainload shipments of Coal,
including locomotives, on private industrial delivery tracks at the Facility
designated by BPP. After delivery onto BPP's private industrial track, the
trains will be manned by crews which BPP shall provide. BPP warrants that the
crews will be fully and adequately trained and thoroughly familiar with the
Destination Carrier's equipment, safety rules and practices and will fully
indemnify the carriers and ERLB for any damage arising from train operations
while a train is in BPP's control or possession.
6.8. Demurrage.
6.8.1. Unit Train Shipments. Subject to the exceptions hereafter
provided, twenty-four (24) hours' free time will be allowed for unloading all
Railcars in unit train shipments, except as to Straggler Cars. Free time will
begin at the time of actual or constructive placement of the train onto BPP's
private industrial tracks on the Facility premises, together with locomotives
provided by CSXT under the Locomotive Lease Agreement. Actual placement is
made when Railcars are placed at the private industrial track at the Facility's
premises designated by BPP as the delivery tracks. If such actual placement is
prevented due to any cause attributable to BPP, the Railcars shall be
considered constructively placed. When the Railcars are held short of the
Facility, notice shall be sent or given BPP in writing, by telephone, by
telecopy, or in a manner otherwise agreed to, that shipments are held under
constructive placement. After expiration of the free time, BPP shall be
assessed and pay detention charges of [xxx] dollars ($[xxx]) per
11
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[xxx] These portions of this exhibit have been omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
<PAGE> 15
car per day (twenty-four (24) hours), or fraction thereof, including Saturdays,
Sundays and holidays for each Railcar until the last Railcar is unloaded and
released to the Destination Carrier, provided that when at the time of actual
or constructive placement lading is frozen so as to require heating, thawing or
loosening to unload, the twenty-four (24) hours' free time for unloading will
be extended an additional twenty-four (24) hours, and provided, further,
charges shall not accrue for time when BPP is prevented from unloading due to
CSXT's act or omission. BPP shall, prior to the expiration of five (5) days
after the date on which car or cars were released, send or give the Destination
Carrier's agent a written statement stating by Railcar initial and number, the
day or days during which any time was expended in heating, thawing or loosening
the lading to unload the Railcar or Railcars, or in which BPP was unable to
unload due to CSXT's act or omission. It is understood that for operating and
cost reasons all Railcars of the unit train must be transported at one time
and, therefore, demurrage charges shall be assessed as to all Railcars in a
shipment until the last Railcar is unloaded and released, except in the case of
"bad order" Railcars, which will not be required to be unloaded and released
in order to avoid or end demurrage charges. Unloading and release requires
notice by BPP given to authorized personnel of the Destination Carrier in
writing, by telephone, telecopy or in a manner otherwise agreed to in writing,
that cars are unloaded and available to the Destination Carrier. Railcars will
be considered released on the date and time the notice is received by the
Destination Carrier. Such notice must include the identity of BPP, the person
furnishing data and the train symbol. The charges provided herein shall
escalate at the same time and by the same method as detention and/or demurrage
charges of the Underlying Carrier are escalated. It is understood that said
charges currently are published in freight tariff ICC CSXT 8200.
6.8.2 Straggler Cars Shipments. BPP shall pay ERLB any amount
arising from demurrage assessed by the Underlying Carrier for demurrages which
arise under such carrier's published charges in effect from time to time as to
shipments of coal in Straggler Cars. The charges provided herein shall
escalate at the same time and by the same method as demurrage rates of the
Underlying carrier are escalated.
6.9. Loading and Unloading. BPP shall promptly unload shipments of
Coal at the Facility pursuant to the Destination Carrier's rules and practices.
6.10. Reclassification of Track. ERLB shall use its reasonable best
efforts with CSXT to convert the rail facilities, as identified on Attachment
C hereto, to an industrial spur for use by BPP as part of BPP's coal unloading
operations prior to Financial Closing. Assuming such conversion is
accomplished, ERLB shall obtain CSXT's written agreement at the time of such
12
<PAGE> 16
conversion that CSXT shall maintain at CSXT's cost and expense such converted
industrial spur in a suitable condition during the term of this Agreement.
ARTICLE 7. FORCE MAJEURE
7.1. Effect of Force Majeure. Neither Party shall be responsible
or liable for or deemed in breach or default under this Agreement because of
any delay in the performance of, or inability to perform, its respective
obligations hereunder due solely to circumstances beyond the reasonable
control of the Party experiencing such delay, or inability to perform,
including, but not limited to, acts of God; unusually severe weather
conditions; strikes or other labor difficulties; war; riots; requirements,
actions or failures to act on the part of governmental authorities preventing
performance; inability despite due diligence to obtain required licenses,
permits and approvals; change of law; failure or faulty design of major
equipment which could not reasonably be detected by prudent industry operating
practices; or fire (such causes hereinafter called "Force Majeure"); provided
that:
(a) The non-performing Party gives the other Party, within
forty-eight (48) hours of the non-performing Party
becoming aware of the occurrence, written notice
describing the particulars of the occurrence;
(b) The suspension of performance is of no greater scope and
of no longer duration than is required by the Force
Majeure;
(c) The non-performing Party uses all reasonable efforts to
remedy its inability to perform;
(d) When the non-performing Party is able to resume
performance of its obligations under this Agreement,
that Party shall give the other Party written notice to
that effect;
(e) The Force Majeure was not caused by or connected with any
negligent or intentional acts, errors, or omissions, or
failure to comply with any law, rule, regulation, order
or ordinance or for any breach or default of this
Agreement; and
(f) The Force Majeure was not attributed to normal wear and
tear of materials and equipment.
7.2. Events Not Included. The term Force Majeure does not include
(i) governmental action that affects a Party's cost or availability of supplies
or the demand for a Party's goods or
13
<PAGE> 17
services, or (ii) changes in market conditions that affect a Party's cost or
availability of a Party's supplies or the demand for a Party's goods or
services. In addition, Force Majeure does not include unavailability of
equipment, inability to obtain or renew permits, labor strikes or slowdowns of
employees specifically following the Commercial Operations Date, or failure or
unavailability of transportation, transmission or distribution capability,
unless same is caused by an occurrence which would fit the definition of Force
Majeure in this Article 7.
7.3. No Automatic Extension. In no event will any condition of
Force Majeure extend the term of this Agreement. If any condition of Force
Majeure delays a Party's performance for a time period greater than eighteen
(18) months, the other Party may terminate this Agreement, without further
obligation, or extend such period at its sole discretion if the Party delayed
by such Force Majeure is exercising due diligence in its efforts to cure the
condition of Force Majeure.
ARTICLE 8. TERMINATION, REMEDIES
8.1 Termination Upon Default. Subject to Section 7 above, either
Party may terminate this Agreement, effective upon written notice of
termination to the other Party, upon an occurrence of an Event of Default of
the other Party. An Event of Default as to any Party shall mean the following:
(a) Failure by such Party to perform any material
obligations under this Agreement, including, but not
limited to, failure to pay transportation charges, if
such failure continues uncorrected sixty (60) days
after notice thereof from the other Party;
(b) Dissolution of such Party; or
(c) The filing of a petition for relief as to such Party as
debtor or bankrupt under the Bankruptcy Code of 1978 or
like provision of law of any jurisdiction (except if
such petition is contested by such Party and has been
dismissed within sixty (60) days); insolvency of such
Party as finally determined by a court proceeding;
filing by such Party of a petition or application to
accomplish the same or for the appointment of a
receiver or a trustee for such Party or a substantial
part of its assets; commencement of any proceedings
relating to such Party under any other reorganization,
arrangement, insolvency, adjustment of debt or
liquidation
14
<PAGE> 18
law of any jurisdiction, whether now in existence or
hereinafter in effect, either by such Party or by
another, provided that if such proceeding is
commenced by another, such Party indicates its
approval of such proceeding, consents thereto or
acquiesces therein, or such proceeding is contested
by such Party and has not been finally dismissed
within sixty (60) days.
8.2. Effect of Termination. Except as provided in Section 8.4,
upon termination of this Agreement pursuant to Section 7.1, Effect of Force
Majeure, neither Party (unless such termination was because of the occurrence
of an Event of Default relating to it) shall have any further liability or
obligation to the other Party hereunder, except that each Party shall remain
liable to the other with respect to any charges which arose prior to such
occurrence and with respect to any Event of Default as to such Party prior to
such termination, and the provisions of Section 9.7 shall survive termination.
8.3. Nonwaiver. The specifications of remedies herein shall not be
deemed to exclude the Parties from any other legal or equitable remedies they
may have with respect to this Agreement. Failure on the part of any Party to
exercise any remedies upon default hereunder for any period or periods shall
not operate as an estoppel, or as a waiver, or prevent it at any subsequent
time from electing to exercise any rights as to any subsequent default
hereunder.
8.4. No Consequential, etc. Damages. Neither Party shall be
liable for indirect, consequential, special or punitive damages as a result of
an Event of Default under Article 8.
ARTICLE 9. MISCELLANEOUS PROVISIONS
9.1. Entire Agreement. This Agreement contains the entire
agreement of the Parties relating to its subject matter, and supersedes all
prior and contemporaneous negotiations, undertakings and agreements, written or
oral, between the Parties relating to such subject matter. This Agreement
shall not be amended or modified, and no waiver of any provision hereof shall
be effective, unless set forth in a written instrument authorized and executed
by all the Parties hereto with the same formality as this Agreement.
9.2. Notices. Notices under this Agreement shall be in writing and
shall be effective when delivered to an officer of a Party, sent by mail,
postage prepaid, or sent by facsimile transmission. If to BPP, such notices
shall be addressed:
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<PAGE> 19
Birchwood Power Partners, L.P.
c/o SEI Birchwood, Inc.
Suite 400
100 Ashford Center, North
Atlanta, GA 30338
Attention: President
Facsimile No: (404) 393-9871
or at any subsequent address of which BPP may notify ERLB in writing. If to
ERLB, such notice shall be addressed to:
ER&L-Birchwood, Inc.
c/o Energy Resources & Logistics, Inc.
550 Water Street
Jacksonville, Florida 32202-4057
Facsimile No: (904) 366-5358
or at a subsequent address of which ERLB may notify BPP in writing.
9.3. Choice of Law. This Agreement shall be deemed to be a
contract made under, and for all purposes shall be construed in accordance
with, the laws and judicial decisions of the Commonwealth of Virginia. For the
purposes hereof, BPP and ERLB hereby submit to the jurisdiction of the state
and federal courts in Virginia.
9.4. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
9.5. Confidentiality. Each Party shall retain all information
obtained hereunder in strict confidence and shall not use or disclose it to any
person or entity not a party hereto, (a) except for any information which (i)
is at the time of such disclosure known to the public or thereafter becomes so
known, through no violation by such Party of this Agreement; (ii) such Party
can demonstrate that such information was in its possession prior to disclosure
hereunder, or under any prior agreements or negotiations between the Parties
hereto; or (iii) is required by law to be so disclosed; and (b) BPP may provide
a copy of this Agreement to the purchasers of electricity and steam to be
generated by the Facility, under a written confidentiality agreement as long as
all pricing information is deleted from the Agreement so provided, and (c) ERLB
may provide such information to CSXT so long as CSXT maintains the
confidentiality of such information. Notwithstanding the foregoing, if any
Party communicates information to a third party, including but not limited to
affiliates, lenders, lessors, attorneys, consultants and other representatives
the disclosing Party shall be responsible for such third party's disclosures.
The provisions of this Section 9.5 shall survive termination of this Agreement
for a period of three (3) years.
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<PAGE> 20
9.6. Assignment. Any Party may assign its benefits under this
Agreement to a corporation or other entity which is owned by the assignor or by
a corporation or other entity which owns or controls all of the capital stock
or other equity interests of the assignor, (ii) to any entities which require
such assignment in connection with the financing of the acquisition,
rehabilitation or construction of the Facility, and (iii) by BPP to any
purchaser or other successor of the Facility; provided, however, that the
assignee executes a written assumption of the obligations of the assignor
hereunder and delivers it to the nonassigning Party to this Agreement, and
provided further, that the assignor shall not thereby be released from its
obligations hereunder. Otherwise, no Party hereto may assign all or any part
of its benefits or burdens under this Agreement, in whole or in part, by
operation of law or otherwise, except with the prior written consent of the
other Party. The benefits and burdens of this Agreement shall inure to and be
binding upon the legal representatives, successors and assigns of the Parties
hereto.
9.7. Arbitration. The Parties hereto agree that any disputes
arising under this Agreement shall be resolved by arbitration, following the
procedures of the American Arbitration Association, and each shall be deemed
bound by the award. Each Party consents to the entry of judgment by any court
having jurisdiction in the matter in accordance with the decision of the
arbitrator. Any other provisions of this Agreement notwithstanding, any
arbitration award resulting from arbitration under this Section 9.7 shall bear
interest starting at the time set by the award initially at a rate of the Prime
Rate plus two percent (2%) through the date of payment. If the award does not
set such a time, interest on the award shall start on the date of the award and
shall initially be at a rate of the Prime Rate plus two percent (2%) through
the date of payment. After the first fifteen (15) days after any arbitration
award, it shall bear interest at the Prime Rate plus four percent (4%) through
the date of payment. Unless otherwise agreed by the Parties, all arbitration
proceedings shall be held in confidence and the arbitrator(s) selected shall
agree to maintain the confidentiality of all information submitted in the
arbitration.
9.8 Non-Recourse. Notwithstanding any other provision of this
Agreement, no partner, affiliate, parent corporation, shareholder, officer,
director, agent or employee of BPP or any partner of BPP shall have any
personal liability for the payment or performance of any of BPP's obligations
under this Agreement, and in furtherance thereof ERLB agrees to look solely to
BPP and BPP's assets to satisfy any and all claims of liability or damages
against BPP arising out of this Agreement or the relationship created hereby.
17
<PAGE> 21
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to
be executed by their duly authorized representatives as of the day and year
first above written.
ER&L-BIRCHWOOD, INC. BIRCHWOOD POWER PARTNERS, L.P.
by SEI BIRCHWOOD, INC.,
a General Partner
By: /s/ Derrick W. Smith By: /s/ R.S. Shepard
--------------------------- ------------------------------
Derrick W. Smith Title: Vice President
---------------------------
Title: General Manager
18
<PAGE> 22
ATTACHMENT A
RATES FOR UNIT TRAIN TRANSPORTATION OF COAL
FROM ALTERNATIVE ORIGIN DISTRICTS TO
THE BIRCHWOOD POWER FACILITY
EFFECTIVE OCTOBER 1, 1989
ORIGIN
RATE DISTRICT TRANSPORTATION RATE
- ------------- -------------------
[S] [C]
Belington $[xxx]
Clarksburg [xxx]
Cumberland-Piedmont East [xxx]
Cumberland-Piedmont West [xxx]
Fairmont [xxx]
Elk River North [xxx]
Elk River South [xxx]
Gauley Middle [xxx]
Gauley North [xxx]
Gauley South [xxx]
Grafton [xxx]
Mountain [xxx]
Big Sandy [xxx]
Kanawha [xxx]
New River [xxx]
Rates shall be adjusted as provided in Section 3.2 of the Agreement. Size of
shipment and other loading and transportation requirements shall be subject to
CSX Transportation, Inc.'s rules and regulations in effect at time of shipment.
As information, the current CSXT origins are provided in current CSXT Origin
Rate Districts. Origin Rate Districts are subject to change.
- ------------
[xxx] These portions of this exhibit have been omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
<PAGE> 23
ATTACHMENT B
EXAMPLE OF THE ADJUSTMENT TO THE BASE TRANSPORTATION
RATE DESCRIBED IN SECTION 3.2 OF THIS AGREEMENT
Base Assumptions:
EBCI = Eastern Bituminous Coal Index as used in Article 10 of the Power
Agreement
Base Transportation Rate as of 10/01/89 [xxx]
Base EBCI Value (2nd Quarter 1989) 147.7
Assumed EBCI Value (First Quarter 1997) 171.17
Therefore:
EBCI escalated Transportation Rate
for the 3rd Quarter 1997 is:
($[xxx]) X (171.17-1)/(147.7-1) [xxx]
-----
- ------------
[xxx] These portions of this exhibit have been omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
<PAGE> 24
ATTACHMENT C
DESCRIPTION OF RAIL FACILITIES
[DIAGRAM]
Approximately 2.2 miles of the railroad track facilities between Route 601 and
the Industrial Switch for serving the BPP Facility shall be the focus of
ER&LB's reclassification efforts as described in Section 6.10 of this
Agreement.
<PAGE> 1
Confidential Treatment
EXHIBIT 10.8(a)
FIRST AMENDMENT TO
COAL TRANSPORTATION AGREEMENT
BIRCHWOOD COGENERATION PROJECT
THIS FIRST AMENDMENT ("Amendment"), dated as of the 28th of April,
1994, to the Coal Transportation Agreement dated as of the 22nd day of July,
1993 (the "Agreement"), between BIRCHWOOD POWER PARTNERS, L.P., a Delaware
limited partnership ("BPP") and ER&L-BIRCHWOOD, INC., a Delaware corporation
("ERLB").
WHEREAS, BPP and ERLB have entered into the Agreement which provides,
among other things, that the rail carrier serving BPP shall provide locomotives
and BPP shall man the locomotives while Unit Trains are unloaded by BPP at the
Facility;
WHEREAS, BPP now desires to provide locomotives while unloading Unit
Trains;
WHEREAS, BPP desires to make certain changes to the confidentiality
provisions of the Agreement and ERLB is willing to do so;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Parties agree as follows:
1. Definitions. Definitions provided in the Agreement shall have
the same meaning when used in this Amendment.
2. Deletion of Definition. Section 1 is amended by deleting
therefrom the definition of "Locomotive Lease Agreement."
3. Filing with the ICC. Section 2.6 is deleted and the following
substituted therefor:
Promptly upon execution of the Amendment hereto dated
April 28, 1994 (the "Amendment"), and in no event later than
sixty (60) days after execution, ERLB shall enter into a
railroad transportation contract with CSXT and any other
necessary or desirable Underlying Carriers to transport Coal
under the Agreement and the Amendment, shall arrange with CSXT
to file an appropriate contract summary thereof with the ICC
and shall take all necessary steps to cause the contract
between ERLB and CSXT to be approved promptly by the ICC
including, but not limited to, filing any supplemental
information requested by the ICC and diligently contesting any
challenge to ICC approval. ERLB shall give to BPP a true copy
of the contract summary after it has been filed with the ICC.
<PAGE> 2
4. Rates. The last sentence of Section 3.1. is deleted and the
following substituted therefor:
This rate includes providing Railcars for transporting
Coal.
5. Railcars and Locomotives. The last sentence of Section 6.2 is
deleted.
6. Placement at the Facility. Section 6.7 is deleted and the
following substituted therefore;
Subject to the execution of a Sidetrack Agreement
between BPP and CSXT, ERLB shall arrange with the Underlying
Carrier to transport trainload shipments of Coal onto and over
the tracks at the Facility designated by BPP. Thereafter the
locomotives of the Underlying Carrier shall disconnect from the
Unit Train and BPP shall be responsible to switch and arrange
the Railcars of the Unit Train by BPP's own locomotive while
BPP unloads the Railcars at the Facility. After the Railcars
are unloaded, BPP shall reassemble the empty cars of the Unit
Train, place all Railcars in the same direction as when tendered
under load, hook up all air hoses and take all reasonable
safety and operating steps to allow the Underlying Carrier to
pull the Unit Train from the Facility. BPP warrants that its
crews will be fully and adequately trained and thoroughly
familiar with BPP's locomotive and the Railcars and will fully
indemnify the Underlying Carrier and ERLB for any damage
arising from train operations while a train is in BPP's control
or possession.
7. Demurrage. Sub-section 6.8.1 of Section 6.8 is deleted and the
following substituted therefor:
6.8.1. Unit Train Shipments. Subject to the exceptions
hereafter provided, twenty-four (24) hours' free time will be
allowed for unloading all Railcars in Unit Train shipments,
except as to Straggler Cars. Free time will begin at the time
of actual or constructive placement of the train onto BPP's
private industrial tracks on the Facility premises. Actual
placement is made when Railcars are placed at the private
industrial
- 2 -
<PAGE> 3
track at the Facility's premises designated by BPP as the delivery
tracks. If such actual placement is prevented due to any cause
attributable to BPP, the Railcars shall be considered
constructively placed. When the Railcars are held short of the
Facility, notice shall be sent or given BPP in writing, by
telephone, by telecopy, or in a manner otherwise agreed to, that
shipments are held under constructive placement. After expiration
of the free time, BPP shall be assessed and pay detention charges
of [xxx] dollars ($[xxx]) per car per day (twenty-four (24)
hours), or fraction thereof, including Saturdays, Sundays and
holidays for each Railcar until the last Railcar is unloaded and
released to the Destination Carrier, provided that when at the
time of actual or constructive placement lading is frozen so as to
require heating, thawing or loosening to unload, the twenty-four
(24) hours free time for unloading will be extended an additional
twenty-four (24) hours, and provided further charges shall not
accrue for time when BPP is prevented from unloading due to CSXT's
act or omission. BPP shall, prior to the expiration of five (5)
days after the date on which car or cars were released, send or
give the Destination Carrier's agent a written statement stating
by Railcar initial and number, the day or days during which any
time was expanded in heating, thawing or loosening the lading to
unload the Railcar or Railcars, or in which BPP was unable to
unload due to CSXT's act or omission. It is understood that for
operating and cost reasons all Railcars of the unit train must be
transported at one time, and, therefore, demurrage charges shall
be assessed as to all Railcars in a shipment until the last
Railcar is unloaded and released, except in the case of "bad
order" Railcars, which will not be required to be unloaded and
released in order to avoid or end demurrage charges. Unloading
and release requires notice by BPP given to authorized personnel
of the Destination Carrier in writing, by telephone, telecopy or
in a manner otherwise agreed to in writing, that cars are unloaded
and available to the Destination Carrier. Railcars will be
considered released on the date and time the notice is received by
the Destination Carrier. Such notice must
- 3 -
- ------------
[xxx] These portions of this exhibit have been omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
<PAGE> 4
include the identity of BPP, the person furnishing data and the
train symbol. The charges provided herein shall escalate at the same
time and by the same method as detention and/or demurrage charges of
the Underlying Carrier are escalated. It is understood that said
charges currently are published in freight tariff ICC CSXT 8200.
8. Confidentiality. Section 9.5 is deleted and the following substituted
therefor:
9.5 Confidentiality. Each Party shall retain all information
obtained hereunder in strict confidence and shall not use or disclose
it to any person or entity not a party hereto, except (a) for any
information which (i) is at the time of such disclosure known to the
public or thereafter becomes so known, through no violation by such
Party of this Agreement; (ii) such Party can demonstrate that such
information was in its possession prior to disclosure hereunder, or
under any prior agreements or negotiations between the Parties hereto;
or (iii) is required by law to be so disclosed; and (b) BPP may provide
a copy of this Agreement to the purchasers of electricity and steam to
be generated by the Facility, under a written confidentiality agreement
as long as all pricing information is deleted from the Agreement so
provided; and (c) ERLB may provide such information to CSXT so long as
CSXT maintains the confidentiality of such information; and (d) BPP
shall have the right to disclose such information (i) to any parties
providing (or contemplating providing) financing or refinancing for its
purchase, construction, operation, ownership or modification of the
Facility or otherwise loaning funds to or investing in BPP or BPP's
securities; and (ii) to any permitted assign of BPP described in
Section 9.6 of the Agreement; and provided, further, that the Parties
shall have the right to disclose such information when requested or
required by a court or government agency or by subpoena issued in a
judicial or administrative proceeding or by arbitration proceedings
under this Agreement. The Parties hereby acknowledge that certain cost
and physical property information related to fuel purchases
- 4 -
<PAGE> 5
and transportation are or may be routinely reported to state regulatory
agencies, the Federal Energy Regulatory Commission and the Environmental
Protection Agency and are or may be used by Buyer's consultants to make
economic forecasts. Notwithstanding the foregoing, if any Party
communicates information to a third party, including but not limited to
affiliates, lenders, lessors, attorneys, consultants and other
representatives the disclosing Party shall be responsible for such third
party's disclosures. The provisions of this Section 9.5 shall survive
termination of this Agreement for a period of three (3) years.
IN WITNESS WHEREOF, the Parties have caused this Amendment to be executed
by their duly authorized representatives as of the day and year first written
above.
ER&L-BIRCHWOOD, INC. BIRCHWOOD POWER PARTNERS, L.P.
by SEI BIRCHWOOD, INC.
a General Partner
By: /s/ Derrick W. Smith By: /s/ R.S. Shepard
---------------------- ---------------------------
Derrick W. Smith R.S. Shepard
General Manager Vice President
BIRCHFIRST
- 5 -
<PAGE> 1
EXHIBIT 10.9
AMENDMENT NO. 6 TO CONTRACT CSXT-C-03951
SUBJECT TO 49 USC 10709 AND 49 CFR 1313.3(c)
COGENTRIX OF ROCKY MOUNT, INC., (Industry); and CSX TRANSPORTATION,
INC. (CSXT); agree to amend the aforementioned Contract, which has been in
effect since October 27, 1989.
1. This Amendment will be effective on January 1, 1997.
2. The Contract is modified in the following manner:
(A) Industry and CSXT will use reasonable best efforts to
implement a permanent solution to the grade crossing blockage
concern at Industry's Rocky Mount Cogeneration Facility.
(B) As a temporary solution, effective on and after January 1,
1997, CSXT will permit Industry to ship seventy-five (75) car
unit trains at the ninety (90) car rate levels presently
applicable in the Contract.
(C) This Sixth Amendment will remain in effect until a more
permanent solution can be implemented, but will terminate no
later than June 30, 1997.
3. All other provisions of the Contract are ratified and
reaffirmed.
COGENTRIX OF ROCKY MOUNT, INC. CSX TRANSPORTATION, INC.
By: /s/ Ronald A. Munse By: /s/ John R. Couch
----------------------------- -------------------------------
Title: Vice President Title: Director - Industrial Coal
Fuel and Transportation and Cogeneration
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM COGENTRIX
ENERGY, INC.'S CONSOLIDATED CONDENSED FINANCIAL STATEMENTS FOR THE SIX
MONTHS ENDED DECEMBER 31, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 118,462
<SECURITIES> 0
<RECEIVABLES> 53,218
<ALLOWANCES> 0
<INVENTORY> 18,764
<CURRENT-ASSETS> 191,701
<PP&E> 704,236
<DEPRECIATION> 172,455
<TOTAL-ASSETS> 865,941
<CURRENT-LIABILITIES> 97,901
<BONDS> 664,284
0
0
<COMMON> 130
<OTHER-SE> 50,501
<TOTAL-LIABILITY-AND-EQUITY> 865,941
<SALES> 180,801
<TOTAL-REVENUES> 187,882
<CGS> 143,067
<TOTAL-COSTS> 143,067
<OTHER-EXPENSES> 67,242
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 28,144
<INCOME-PRETAX> (50,571)
<INCOME-TAX> (18,895)
<INCOME-CONTINUING> (31,676)
<DISCONTINUED> 0
<EXTRAORDINARY> 703
<CHANGES> 0
<NET-INCOME> (32,379)
<EPS-PRIMARY> (114.81)
<EPS-DILUTED> (114.81)
</TABLE>
