<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 June 30, 1998
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 August 14, 1998, there were 282,000 shares of common stock, no par value,
issued and outstanding.
<PAGE> 2
COGENTRIX ENERGY, INC.
Page No.
--------
Part I: Financial Information
Item 1. Consolidated Condensed Financial Statements:
Consolidated Balance Sheets at June 30, 1998 (Unaudited)
and December 31, 1997 3
Consolidated Statements of Income for the Three Months
and Six Months Ended June 30, 1998 and 1997 (Unaudited) 4
Consolidated Statements of Cash Flows for the Six Months
Ended June 30, 1998 and 1997 (Unaudited) 5
Notes to Consolidated Condensed Financial Statements (Unaudited) 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 10
Part II: Other Information
Item 1. Legal Proceedings 17
Item 6. Exhibits and Reports on Form 8-K 19
Signatures 20
2
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COGENTRIX ENERGY, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
June 30, 1998 and December 31, 1997
(dollars in thousands)
<TABLE>
<CAPTION>
June December
30, 1998 31, 1997
---------- --------
(Unaudited) (Audited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 31,611 $ 71,833
Restricted cash 50,840 27,742
Marketable securities -- 42,118
Accounts receivable 62,247 49,781
Inventories 18,054 15,210
Other current assets 4,465 2,465
---------- --------
Total current assets 167,217 209,149
NET INVESTMENT IN LEASES 497,332 --
PROPERTY, PLANT AND EQUIPMENT, net of accumulated
depreciation: June 30, 1998, $206,961; December 31, 1997, $188,227 488,186 496,589
LAND AND IMPROVEMENTS 2,540 2,540
DEFERRED FINANCING AND ORGANIZATION
COSTS, net of accumulated amortization: June 30, 1998, $13,681;
December 31, 1997, $16,592 31,414 21,085
NATURAL GAS RESERVES 1,958 2,384
INVESTMENTS IN UNCONSOLIDATED AFFILIATES 77,503 79,072
OTHER ASSETS 21,555 12,155
---------- --------
$1,287,705 $822,974
========== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 84,493 $ 74,680
Accounts payable 27,734 13,755
Accrued compensation 4,290 4,923
Accrued interest payable 3,491 2,935
Accrued dividends payable -- 2,140
Other accrued liabilities 12,070 8,182
---------- --------
Total current liabilities 132,078 106,615
LONG-TERM DEBT 964,820 595,112
DEFERRED INCOME TAXES 32,064 25,872
MINORITY INTERESTS 56,752 15,131
OTHER LONG-TERM LIABILITIES 24,231 21,946
---------- --------
1,209,945 764,676
---------- --------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Common stock, no par value, 300,000 shares authorized;
282,000 shares issued and outstanding 130 130
Net unrealized gain on available for sale securities -- 26
Accumulated earnings 77,630 58,142
---------- --------
77,760 58,298
---------- --------
$1,287,705 $822,974
========== ========
</TABLE>
The accompanying notes to consolidated condensed financial statements are
an integral part of these consolidated balance sheets.
3
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COGENTRIX ENERGY, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months and Six Months Ended June 30, 1998 and 1997 (Unaudited)
(dollars in thousands, except for earnings per common share)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------------- -------------------------
1998 1997 1998 1997
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
OPERATING REVENUE:
Electric $ 72,433 $ 75,397 $ 146,368 $ 152,294
Steam 6,364 6,225 13,705 13,402
Lease revenue 11,119 -- 12,433 --
Service revenue under capital leases 11,956 -- 13,252 --
Income from unconsolidated investments in power projects 874 458 1,797 226
Other 4,891 2,838 7,301 5,735
--------- --------- --------- ---------
107,637 84,918 194,856 171,657
--------- --------- --------- ---------
OPERATING EXPENSES:
Fuel expense 19,505 31,944 38,924 60,055
Operations and maintenance 16,483 19,578 32,272 36,043
Cost of services under capital leases 13,941 -- 15,339 --
General, administrative and development expenses 9,797 16,125 19,152 23,408
Depreciation and amortization 10,441 10,777 20,615 21,345
--------- --------- --------- ---------
70,167 78,424 126,302 140,851
--------- --------- --------- ---------
OPERATING INCOME 37,470 6,494 68,554 30,806
OTHER INCOME (EXPENSE):
Interest expense (19,842) (14,801) (33,085) (28,184)
Investment and other income, net 1,489 2,771 3,865 5,455
Equity in net income (loss) of affiliates, net (529) (223) (85) 183
--------- --------- --------- ---------
INCOME (LOSS) BEFORE MINORITY INTERESTS IN INCOME,
INCOME TAXES AND EXTRAORDINARY LOSS 18,588 (5,759) 39,249 8,260
MINORITY INTERESTS IN INCOME BEFORE
EXTRAORDINARY LOSS (3,658) (1,256) (5,613) (2,399)
--------- --------- --------- ---------
INCOME (LOSS) BEFORE INCOME TAXES AND
EXTRAORDINARY LOSS 14,930 (7,015) 33,636 5,861
BENEFIT (PROVISION) FOR INCOME TAXES (6,082) 2,708 (13,405) (1,783)
--------- --------- --------- ---------
INCOME (LOSS) BEFORE EXTRAORDINARY LOSS 8,848 (4,307) 20,231 4,078
EXTRAORDINARY LOSS ON EARLY EXTINGUISHMENT
OF DEBT, net of minority interest and income tax benefit of $473 -- -- (743) --
--------- --------- --------- ---------
NET INCOME (LOSS) $ 8,848 $ (4,307) $ 19,488 $ 4,078
========= ========= ========= =========
EARNINGS (LOSS) PER COMMON SHARE:
Income (loss) before extraordinary loss $ 31.38 $ (15.27) 71.74 $ 14.46
Extraordinary loss -- -- (2.63) --
--------- --------- --------- ---------
$ 31.38 $ (15.27) $ 69.11 $ 14.46
========= ========= ========= =========
</TABLE>
The accompanying notes to consolidated condensed financial statements are an
integral part of these consolidated statements.
4
<PAGE> 5
COGENTRIX ENERGY, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 1998 and 1997 (Unaudited)
(dollars in thousands)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
---------------------------
1998 1997
--------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 19,488 $ 4,078
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 20,615 21,345
Deferred income taxes 6,192 295
Extraordinary loss on early extinguishment of debt, non-cash portion 2,145 --
Minority interests in income, net of dividends (18,909) 1,158
Equity in net loss (income) of unconsolidated affiliates, net of dividends 1,716 (409)
Minimum lease payments received 11,742 --
Amortization of unearned lease income (12,433) --
Increase in accounts receivable (2,939) (4,662)
Decrease (increase) in inventories (787) 3,041
Increase in other assets (5,001) (7,433)
Decrease in accounts payable (1,989) (1,098)
Increase (decrease) in accrued liabilities (6,348) 13,097
Increase in other 2,174 5,868
--------- --------
Net cash flows provided by operating activities 15,666 35,280
--------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Property, plant and equipment additions (1,994) (1,788)
Decrease in marketable securities 42,118 22,201
Investments in affiliates (146) (50,807)
Acquisition of facilities, net of cash acquired (155,324) --
Decrease (increase) in restricted cash 12,716 (1,614)
--------- --------
Net cash flows used in investing activities (102,630) (32,008)
--------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of debt 150,400 2,612
Repayments of debt (102,640) (32,017)
Increase in deferred financing costs (1,018) (459)
--------- --------
Net cash flows provided by (used in) financing activities 46,742 (29,864)
--------- --------
NET DECREASE IN CASH AND CASH EQUIVALENTS (40,222) (26,592)
CASH AND CASH EQUIVALENTS, beginning of period 71,833 89,188
--------- --------
CASH AND CASH EQUIVALENTS, end of period $ 31,611 $ 62,596
========= ========
</TABLE>
The accompanying notes to consolidated condensed financial statements are
an integral part of these consolidated statements.
5
<PAGE> 6
COGENTRIX ENERGY, INC. AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
UNAUDITED
1. Principles of Consolidation and Basis of Presentation
The accompanying unaudited consolidated condensed financial
statements include the accounts of Cogentrix Energy, Inc. and its subsidiary
companies (collectively, the "Company") 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 June 30, 1998 and for the three months
and six months ended June 30, 1998 and 1997 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 June 30, 1998, and the results of operations for the
three-month and six-month periods ended June 30, 1998 and 1997 and cash flows
for the six months ended June 30, 1998 and 1997. 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
United States 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. These unaudited consolidated condensed financial statements should
be read in conjunction with the audited consolidated financial statements and
the notes thereto included in the Company's most recent Report on Form 10-K for
the Six-Month Transition Period Ended December 31, 1997, which was filed with
the United States Securities and Exchange Commission on March 31, 1998.
2. Cogentrix of Pennsylvania, Inc.
In January 1998, the Company signed an agreement with Pennsylvania
Electric Company ("Penelec") to terminate the Ringgold Facility's power purchase
agreement. This termination agreement was the result of a request for proposals
to buyback or restructure power sales agreements issued to all major operating
independent power producer projects in Penelec's territory in April 1997. The
termination agreement with Penelec provides for a payment to the Company of
approximately $25 million, which will be sufficient to retire all of Cogentrix
of Pennsylvania, Inc.'s ("CPA") outstanding project debt. The buyback of the
power purchase agreement is subject to the issuance of an order (satisfactory to
Penelec) by the Pennsylvania Public Utility Commission granting Penelec the
authority to fully recover from its customers the consideration paid to CPA
under the buyout agreement. Management does not expect the termination of the
Ringgold Facility's power purchase agreement with Penelec, if it occurs, to have
an adverse impact on the Company's consolidated results of operations, cash
flows or financial position.
3. James River Cogeneration Company
Effective February 1998, James River Cogeneration Company ("JRCC"), a
joint venture owned 50% by the Company, which owns a cogeneration facility
located in Hopewell, Virginia (the "Hopewell Facility"), amended its power sales
agreement with Virginia Electric and Power Company ("Virginia Power") to provide
Virginia Power additional rights related to the dispatch of the Hopewell
Facility. In connection with the amendment of the power sales agreement, the
Company amended the terms of the existing project debt on the Hopewell Facility.
6
<PAGE> 7
The amended terms of the JRCC project debt resulted in an extension
of the final maturity of the note payable by six months to December 31, 2002 and
an increase in the amount of outstanding borrowings of $34.6 million, the
proceeds of which (net of transaction costs) were distributed to the JRCC
partners. The amended note payable accrues interest at an annual rate equal to
the applicable LIBOR rate, as chosen by the Company, plus an additional margin
of .875% through February 1999 and 1.00% thereafter. The amended credit facility
also provides for a $5 million letter of credit to secure the project's
obligation to pay debt service. Cogentrix Energy, Inc. has indemnified the
lenders of the credit facility for any cash deficits the Hopewell Facility could
experience as a result of incurring certain costs, subject to a cap of $10.6
million. An extraordinary loss of $2.4 million was recorded in the first quarter
of 1998 related to the write-off of unamortized deferred financing costs from
the original project debt and a swap termination fee on an interest rate swap
agreement hedging the original project debt.
4. Whitewater and Cottage Grove Transaction
In March 1998, the Company acquired from LS Power Corporation (the
"LS Acquisition") an approximate 74% ownership interest in two partnerships
which own and operate electric generating facilities located in Whitewater,
Wisconsin (the "Whitewater Facility") and Cottage Grove, Minnesota (the "Cottage
Grove Facility"). Each of the Cottage Grove and Whitewater Facilities is a
245-megawatt gas-fired, combined-cycle cogeneration facility. Commercial
operations of both of these facilities commenced in the last half of calendar
1997. The Cottage Grove Facility sells capacity and energy to Northern States
Power Company under a 30-year power sales contract terminating in 2027. The
Whitewater Facility sells capacity and energy to Wisconsin Electric Power
Company under a 25-year power sales contract terminating in 2022. Each of the
power sales contracts has characteristics similar to a lease in that the
agreement gives the purchasing utility the right to use specific property, plant
and equipment. As such, each of the power sales contracts is accounted for as a
"sales-type" capital lease in accordance with Statement of Financial Accounting
Standards ("SFAS") No. 13, "Accounting for Leases."
The aggregate acquisition price for the equity interests in the
Cottage Grove and Whitewater Facilities acquired by the Company was $158.0
million. In addition, the Company pre-funded a $16.7 million distribution to the
previous owners, which represented unused construction contingency and cash
flows that were accumulated by the Cottage Grove and Whitewater Facilities prior
to January 1, 1998. Cogentrix Energy, Inc. received $15.7 million of this
distribution in April 1998 and expects to receive a distribution of the
remaining $1 million in calendar 1998. The purchase price was funded with
proceeds of the Company's corporate credit facility and corporate cash balances.
The Company accounted for the LS Acquisition using the purchase
method of accounting. The accompanying consolidated balance sheet as of June 30,
1998 reflects 100% of the assets and liabilities of the acquired partnerships,
consisting primarily of net investment in leases of $497.3 million and long-term
debt of $332 million, respectively. The minority owner's share of each
partnership's net assets is included in "minority interests" on the accompanying
consolidated balance sheet as of June 30, 1998. The accompanying consolidated
statements of operations for the three months and six months ended June 30, 1998
include the results of operations of the acquired facilities since the closing
date of the LS Acquisition (March 20, 1998).
The following unaudited pro forma consolidated results for the
Company for the six months ended June 30, 1998 give effect to the LS Acquisition
as if the transaction had occurred on January 1, 1998 (in thousands, except per
share amount).
Pro Forma
Six Months Ended
June 30, 1998
----------------
Revenues $ 214,265
Net Income $ 19,752
Earnings per share $ 70.04
7
<PAGE> 8
5. Bechtel Asset Acquisition
In March 1998, the Company signed an agreement with Bechtel
Generating Company, Inc. ("BGCI") to acquire ownership interests in 12 electric
generating facilities, comprising a net equity interest of approximately 365
megawatts, and one interstate natural gas pipeline in the United States (the
"BGCI Acquisition"). The closing of the BGCI Acquisition, which is subject to
customary conditions including the obtaining of certain consents and regulatory
approvals, is currently expected to occur in calendar 1998. Management
anticipates accounting for each of these investments under the equity method.
In connection with the BGCI Acquisition, the Company plans to issue
up to $300 million of senior notes in a Rule 144A offering with a covenant to
register exchange notes with the U.S. Securities and Exchange Commission. These
senior notes will be unsecured and will rank pari passu with the Company's $100
million of outstanding Senior Notes due 2004. The Company intends to use the net
proceeds to finance the BGCI Acquisition, to repay the outstanding borrowings
under the Company's corporate credit facility and for general corporate
purposes, including equity investments in new projects or acquisitions of
existing electric generating facilities or those under development. In
connection with this anticipated debt offering, the Company executed an interest
rate agreement in March 1998 covering a notional amount of $237 million to hedge
against fluctuations in interest rates prior to the completion of the debt
offering.
6. Pending Claims and Litigation
Effective September 1996, the Company amended the power sales
agreements on its Elizabethtown, Lumberton, Kenansville, Roxboro, and Southport
Facilities. Under the amended terms of these power sales agreements, the
purchasing utility has exercised its right of economic dispatch resulting in
significant reductions in fuel requirements at each of these facilities. In
response to this reduction in fuel requirements, one of the coal suppliers for
these facilities initiated an arbitration proceeding and another filed a civil
action against certain subsidiaries of the Company. The arbitration proceeding
was completed in October 1997, with the arbitration panel denying any recovery
to the coal supplier. The coal supplier subsequently challenged the arbitration
panel's ruling on grounds of partiality by the neutral arbitrator. On April 15,
1998, the federal district court issued an order vacating the arbitration award
and directing a new arbitration be conducted. The Company has appealed this
decision to the United States Court of Appeals for the Fourth Circuit. The
Company believes that the district court action was in error, that the
arbitration award is valid and will be upheld on appeal. With respect to the
civil action filed by the other coal supplier, one count has been dismissed with
prejudice and the court has directed the remaining claim is to be resolved by
arbitration conducted in Charlotte. The Company intends to vigorously contest
the arbitration and is confident it will prevail.
Effective December 1997, the Company amended the power sales
agreement on its Portsmouth Facility. Under the amended terms, the purchasing
utility has exercised its right of economic dispatch which has led to
significant reductions in that facility's fuel requirements. In response to the
reduced fuel requirements, the coal supplier for the Portsmouth Facility filed a
civil action in federal district court against a subsidiary of the Company. Upon
motion by the Company, the court has stayed the action pending arbitration of
the claims in Charlotte. The Company intends to vigorously contest the claims in
arbitration and is confident it will prevail.
The Company has established reserves which management believes to be
adequate to cover any costs resulting from these matters. Management believes
that the resolution of these disputes will not have a material adverse effect on
the consolidated financial position, results of operations or cash flows of the
Company.
7. Recently Issued Accounting Pronouncement
In June 1998, the Financial Accounting Standards Board issued SFAS
No. 133, "Accounting for Derivative Instruments and Hedging Activities". SFAS
No. 133 establishes accounting and reporting standards requiring that every
derivative instrument (including certain derivative instruments embedded in
other contracts) be recorded in the balance sheets as either an asset or
liability measured at its fair value. SFAS No. 133 requires that changes in the
derivative's fair value be recognized in current earnings unless specified hedge
accounting criteria are met. Special accounting for qualifying hedges allows a
derivative's gains and losses to offset related results on the hedged item in
the
8
<PAGE> 9
income statement, and requires that a company must formally document, designate,
and assess the effectiveness of transactions that receive hedge accounting.
SFAS No. 133 is effective for fiscal years beginning after June 15,
1999. Early adoption is allowed. SFAS No. 133 must be applied to derivative
instruments and certain derivative instruments embedded in hybrid contracts that
were issued, acquired, or substantively modified after December 31, 1997.
The Company has not yet quantified the impacts of adopting
SFAS No. 133 on the consolidated financial statements and has not determined the
timing or method of adoption of SFAS No. 133. However, SFAS No. 133 could
increase volatility in earnings and other comprehensive income.
9
<PAGE> 10
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 9 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
The Company is engaged in the acquisition, development, ownership,
and operation of electric generating facilities and the sale of electricity and
steam in the United States and selected international markets. At December 31,
1997, the Company owned (entirely or in part) 11 electric generating facilities
having an aggregate generating capacity of 1,140 megawatts. In March 1998, the
Company acquired ownership interests in two gas-fired electric generating
facilities in the Midwest United States having an aggregate generating capacity
of 490 megawatts. In addition, the Company has a pending acquisition of BGCI's
ownership interest in 12 electric generating facilities, comprising an aggregate
generating capacity of approximately 2,400 megawatts. Upon completion of the
BGCI Acquisition, the Company will have ownership interests in a total of 25
electric generating facilities with an installed capacity of approximately 4,000
megawatts and a net equity interest in such facilities of approximately 1,690
megawatts.
Each of the Company's electric generating facilities produces
electricity, for sale to a utility, and thermal energy, for sale to an
industrial user. The electricity and thermal energy generated by these
facilities are typically sold under long-term power or steam sales agreements.
Several of the Company's electric generating facilities originally sold
electricity under long-term, "must-run" power sales agreements, which obligated
the utility to purchase all electricity generated by the electric generating
facility. Over the last two years, the Company has negotiated amendments to the
majority of these "must-run" power sales agreements to provide the utility the
ability to suspend or reduce purchases of energy from the facilities if the
utility determines it can operate its system for a designated period more
economically. These amended power sales agreements are structured so that the
Company continues to receive capacity payments during any period of economic
dispatch. Capacity payments cover project debt service and fixed operating
costs, and constitute a substantial portion of the profit component of the power
sales agreement. Energy payments, which are reduced (or possibly eliminated) as
a result of economic dispatch, primarily cover variable operating and
maintenance costs as well as fuel and fuel transportation costs. The
restructuring of a "must-run" power sales agreement to an economic dispatch
power sales agreement causes a significant reduction in electric revenues
recognized under the contract, which is offset by a corresponding reduction in
fuel and fuel transportation costs and operations and maintenance expense. In
response to the reduction in fuel requirements at certain of the facilities at
which the Company has restructured the power sales agreement, the facilities'
coal suppliers have instituted various legal proceedings against the Company
seeking to recover damages. See "Part II-Item I. - Legal Proceedings" herein.
The power sales agreements at seven of the Company's facilities
either terminate in years 2000 through 2002 or provide for a significant
reduction in capacity payments received under such agreements after 2002.
Accordingly, revenues recognized by the Company under these power sales
agreements after 2002 will be eliminated or significantly reduced. The Company
believes, however, that its project subsidiaries and unconsolidated affiliates
will generate sufficient cash flow to allow them to pay management fees and
dividends to Cogentrix Energy, Inc. ("Cogentrix Energy") periodically in
sufficient amounts to allow Cogentrix Energy to pay all
10
<PAGE> 11
required debt service on its Senior Notes, fund a significant portion of the
Company's development activities and permit the Company to meet its other
obligations.
In March 1998, the Company acquired ownership interests in two
gas-fired electric generating facilities located in the Midwest United States
having an aggregate generating capacity of 490 megawatts. The power sales
agreements for these facilities meet the criteria of a "sales-type" capital
lease as described in SFAS No. 13, "Accounting for Leases." The Company has
recorded a net investment in lease which reflects the present value of future
minimum lease payments. Future minimum lease payments represent the amount of
capacity payments due from the utilities under the power sales agreements in
excess of fixed operating costs (i.e., executory costs). The difference between
the undiscounted future minimum lease payments due from the utilities and the
net investment in lease represents unearned income. This unearned income will be
recognized as lease revenue over the term of the power sales agreements using
the effective interest rate method. The Company will also recognize service
revenue related to the reimbursement of costs incurred in operating the
facilities to generate electricity and thermal energy. The amount of service
revenue recognized by the Company will be directly related to the level of
dispatch of the facilities by the utilities and to a lesser extent the level of
thermal energy required by the steam hosts.
The activities of the Company's electric generating facilities 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. 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.
The domestic electric generating industry is currently going through
a period of significant change as many states are implementing or considering
regulatory initiatives designed to increase competition. In addition to
restructuring activities in various states, there have also been several
industry restructuring bills introduced in Congress. The Company cannot predict
the final form or timing of the proposed restructurings and the impact, if any,
that such restructurings would have on the Company's existing business or
consolidated results of operations. The Company believes that any such
restructuring would not have a material adverse effect on its power sales
agreements and, accordingly, believes that its existing business and results of
consolidated operations would not be materially adversely affected, although
there can be no assurance in this regard.
In 1996, the Company began making investments in partnerships formed
to develop, construct and operate greenhouses to produce tomatoes. These
partnerships are currently operating greenhouses with a combined total of 107
acres of production capacity. The Company has a 50% interest in each partnership
and accounts for these investments under the equity method.
Results of Operations - Three Months and Six Months Ended June 30, 1998 and 1997
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
----------------------------------- ------------------------------------
1998 1997 1998 1997
---------------- --------------- ---------------- -----------------
(dollars in thousands, unaudited)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total operating revenues $107,637 100% $84,918 100% $194,856 100% $171,657 100%
Operating costs 49,929 46 51,522 60 86,535 44 96,098 56
General, administrative
and development 9,797 9 16,125 19 19,152 10 23,408 14
Depreciation and
amortization 10,441 10 10,777 13 20,615 11 21,345 12
-------- --- ------- --- -------- --- -------- ---
Operating income $ 37,470 35% $ 6,494 8% $ 68,554 35% $ 30,806 18%
======== === ======= === ======== === ======== ===
</TABLE>
11
<PAGE> 12
Total operating revenues increased 26.8% to $107.6 million for the
second quarter of 1998 as compared to the second quarter of 1997. This increase
was primarily attributable to the $23.1 million aggregate amount of lease
revenue and service revenue earned under the power sales agreements for the
Cottage Grove and Whitewater Facilities in which the Company acquired its
interests on March 20, 1998. This increase in operating revenue was partially
offset, however, by a $5.7 million decrease in electric revenues resulting from
the restructuring of the Company's power sales agreements on the Portsmouth
Facility in December 1997 and the Hopewell Facility in February 1998 to give the
purchasing utility the right to suspend or reduce purchases of energy from the
facilities.
The Company's operating revenues for the six-month period ended June
30, 1998, which increased 13.5% to $194.9 million as compared to $171.7 million
for the six-month period ended June 30, 1997, were largely influenced by the
same factors discussed above: the acquisition of the Cottage Grove and
Whitewater Facilities and the restructuring of the Company's power sales
agreements on the Portsmouth Facility and the Hopewell Facility. To a lesser
extent, the increase in operating revenues for the six-month period ended June
30, 1998 was partially attributable to an increase in electric revenues earned
by the Richmond and Rocky Mount Facilities as a result of an increase in
megawatt hours sold to the purchasing utility.
The Company's operating costs decreased 3.1% to $49.9 million for the
second quarter of 1998 as compared to the second quarter of 1997. This decrease
resulted primarily from the significant reduction in operating costs at the
Portsmouth and Hopewell Facilities associated with the recent restructuring of
their power sales agreements. The decrease also related to decreases in
operating costs incurred by ReUse Technology, Inc., a wholly-owned subsidiary of
the Company ("ReUse"), related to third-party agreements. These decreases in
operating costs were mainly offset by $13.9 million in cost of services incurred
by the Cottage Grove and Whitewater Facilities, interests in which the Company
acquired on March 20, 1998. To a lesser extent, the decreases in operating costs
in the second quarter of 1998 were also offset by increases in fuel expense at
the Richmond and Rocky Mount Facilities associated with an increase in megawatt
hours sold and an increase in routine maintenance expense at the Rocky Mount
Facility.
The Company's operating costs for the six-month period ended June 30,
1998, which decreased 10% to $86.5 million as compared to $96.1 million for the
six-month period ended June 30, 1997 were largely influenced by the same factors
discussed above: a significant reduction in operating costs at the Hopewell and
Portsmouth Facilities as a result of the restructuring of their power sales
agreements, a reduction in ReUse's operating costs, an increase in operating
costs related to the acquisition of the Cottage Grove and Whitewater Facilities,
an increase in fuel expense at the Richmond and Rocky Mount Facilities
associated with an increase in megawatt hours sold, and an increase in routine
maintenance expense at the Rocky Mount Facility. Operating costs for the
six-month period ended June 30, 1998 were also impacted by an increase in
routine maintenance costs at the Richmond Facility.
General, administrative and development expenses decreased 39.2% to
$9.8 million for the second quarter of 1998 and 18.2% to $19.2 million for the
six-month period ended June 30, 1998 as compared to the corresponding periods of
1997. The decrease was primarily the result of $10.7 million of expense
recognized during the quarter ended June 30, 1997 related to the restructuring
or terminating of incentive compensation arrangements for certain employees as
well as expense incurred in the quarter ended June 30, 1997 related to severance
payments to certain executive officers. The decrease was also due to a general
decrease in salary expense during the six-month period ended June 30, 1998 as a
result of a restructuring completed by the Company in the prior year. These
decreases were partially offset by increases in incentive compensation expense
related to an increase in payments due under the Company's profit-sharing plan
as a result of the increase in the Company's profitability for the six-month
period ended June 30, 1998. The Company also recognized expense in the second
quarter of 1998 related to the restructuring of a retirement plan agreement with
a former executive officer.
Interest expense increased 34.1% to $19.8 million for the second
quarter of 1998 and 17.4% to $33.1 million for the six-month period ended June
30, 1998 as compared to the corresponding periods of 1997. The Company's average
long term-debt increased to $860 million, with a weighted average interest rate
of 7.70%, for the second quarter of 1998 as compared to average long-term debt
of $716 million, with an weighted average interest rate of 7.95%, for the second
quarter of 1997. The increases in interest expense and weighted average debt
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<PAGE> 13
outstanding are related to the inclusion of the project finance debt of the
Cottage Grove and Whitewater Facilities acquired on March 20, 1998 and the
increase in project finance debt outstanding at the Portsmouth Facility, which
was refinanced in December 1997, and the Hopewell Facility, which was refinanced
in February 1998. The increases also related to outstanding borrowings under the
Company's corporate credit facility at the end of the first quarter of 1998,
which were incurred to fund a portion of the LS Acquisition. The increases in
interest expense discussed above were partially offset by a decrease in interest
expense at several of the Company's project subsidiaries due to the scheduled
amortization of outstanding project finance debt. The decrease in weighted
average interest rate related primarily to the expiration of an interest rate
swap agreement on the Richmond Facility's project debt in September 1997.
The increase in minority interest in income for the three-month and
six-month periods ended June 30, 1998 as compared to the corresponding periods
of the prior year relates to the recognition of the minority partner's share of
earnings in the Cottage Grove and Whitewater Facilities, and an increase in
earnings at the Hopewell Facility as a result of that facility's restructured
power sales agreement.
The extraordinary loss on early extinguishment of debt for the
six-month period ended June 30, 1998 related to the refinancing of the Hopewell
Facility's project debt in January 1998. The loss consisted of a write-off of
the deferred financing costs on the Hopewell Facility's original project debt
and a swap termination fee on an interest rate swap agreement hedging the
original project debt.
Liquidity and Capital Resources
The principal components of operating cash flow for the six-month
period ended June 30, 1998 were generated by net income of $19.5 million,
increases due to adjustments for depreciation and amortization of $20.6 million,
deferred income taxes of $6.2 million, a write-off of deferred financing
costs of $2.1 million and equity in net income (loss) of unconsolidated
affiliates, net of dividends of $1.7 million, which were partially offset by
amortization of unearned lease income, net of minimum lease payments received of
$0.7 million, minority interests in income, net of dividends, of $18.9 million
and a net $14.8 million use of cash reflecting changes in other working capital
assets and liabilities. Cash flow provided by operating activities of $15.7
million, proceeds from borrowings of $150.4 million, proceeds from the sale of
marketable securities of $42.1 million, and $12.7 million of cash escrows
released were primarily used to acquire interests in facilities of $155.3
million, purchase property plant and equipment of $2.0 million, make investments
in affiliates of $0.1 million, repay project finance borrowings of $102.6
million, and pay deferred financing costs of $1.0 million.
Historically, the Company has financed each facility primarily under
financing arrangements and related documents which generally require the
extensions of credit to be repaid solely from the project's revenues and provide
that the repayment of the extensions of credit (and interest thereon) be secured
solely by the physical assets, agreements, cash flows and, in certain cases, the
capital stock of or partnership interest in that project subsidiary. This type
of financing is generally referred to as "project financing." The project
financing debt of the Company's subsidiaries (aggregating $917.4 million as of
June 30, 1998) is substantially non-recourse to the Company and its other
project subsidiaries, except in connection with certain transactions where
Cogentrix Energy or Cogentrix, Inc. ("Cogentrix") has agreed to certain limited
guarantees and other obligations with respect to such projects. These limited
guarantees and other obligations include agreements for the benefit of the
project lenders to three project subsidiaries to fund cash deficits the projects
may experience as a result of incurring certain costs, subject to an aggregate
cap of $51.9 million. In addition, Cogentrix has guaranteed certain project
subsidiaries' obligations to the purchasing utility under power sales
agreements. Because certain of these limited guarantees and other obligations do
not by their terms stipulate a maximum dollar amount of liability, the aggregate
amount of the Company's potential exposure under these guarantees cannot be
quantified. The aggregate contractual liability of the Company to its
subsidiaries' project lenders is, in each case, a small portion of the aggregate
project debt. If, however, the Company were required to satisfy all these
guarantees and other obligations, or even one or more of the significant ones,
such event could have a material adverse impact on the Company's financial
condition.
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 acquisition financing and the cost of such
capital are dependent on numerous
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<PAGE> 14
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, the project entity.
The ability of the Company's project subsidiaries and the project
entities in which it has an investment to pay dividends and management fees
periodically to Cogentrix Energy 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
and project entities in which the Company has an investment.
As of June 30, 1998, the Company had long-term debt (including the
current portion thereof) of approximately $1.0 billion. With the exception of
the Company's $100 million of Senior Notes issued in March 1994 and the $30
million outstanding under the Company's corporate credit facility, substantially
all of such indebtedness is project financing debt that is substantially
non-recourse to the Company. Future annual maturities of long-term debt range
from $78.3 million to $87.7 million in the five-year period ending December 31,
2002. The Company believes that its project subsidiaries and the project
entities in which it has an investment will generate sufficient cash flow to pay
all required debt service on the project financing debt and allow them to pay
management fees and/or dividends to Cogentrix Energy periodically in sufficient
amounts to allow Cogentrix Energy to pay all required debt service on the Senior
Notes, 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 May 1997, the Company entered into a credit agreement with
Australia and New Zealand Banking Group Limited, as Agent, which provides for a
$50 million revolving credit facility (the "Corporate Credit Facility") with a
term of three years (the "Revolving Term"). The Corporate Credit Facility
provides for one-year extensions of the Revolving Term, subject to lender
consent. The Company can utilize the Corporate Credit Facility in the form of
direct advances or the issuance of unsecured letters of credit. The outstanding
balance of the Corporate Credit Facility at the end of the Revolving Term is
payable over two years in four equal semiannual repayments of direct advances or
collateralization of letters of credit. As of June 30, 1998, the Company had $30
million of advances outstanding and a $20 million available balance under the
Corporate Credit Facility. The $30 million outstanding under the Corporate
Credit Facility was utilized to fund a portion of the purchase price related to
the LS Acquisition.
In December 1997, the Company substantially completed construction of
a 248-megawatt combined-cycle, gas-fired electric generating facility (the
"Clark Facility") for Public Utility District Number 1 of Clark County,
Washington ("Clark") and earned a construction management fee of $4.5 million.
In August 1998, the Company earned an additional $4.3 million, which represents
an additional construction management fee of $0.5 million and the Company's
share ($3.8 million) of cost savings in constructing the Clark Facility.
In December 1997, the Company renegotiated the project financing
arrangements for its Portsmouth Facility. The amended agreements resulted in an
extension of the final maturity date of the loan by three months and an increase
in the amount of commitment provided by the project lenders in the form of a
$40.5 million revolving credit facility. This revolving credit facility is
available to be drawn by Cogentrix Virginia Leasing Corporation, the project
subsidiary owning the Portsmouth Facility ("CVLC"), at any time for general
corporate purposes, including paying dividends to Cogentrix Energy. In March
1998, CVLC borrowed $20 million under the revolving credit facility and
distributed the entire proceeds to Cogentrix Energy for purposes of funding a
portion of the purchase price related to the LS Acquisition.
In February 1998, the Company renegotiated the project financing
arrangements for its Hopewell Facility, in which it owns a 50% interest. The
amended agreements resulted in a $34.6 million increase in outstanding
indebtedness of JRCC and extended the final maturity date of the loan by six
months. JRCC transferred substantially all of the additional funds borrowed (net
of transaction costs) to its partners. The distribution received
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<PAGE> 15
by Cogentrix Energy related to the refinancing was approximately $16.6 million,
which was used by the Company to fund a portion of the acquisition price related
to the LS Acquisition.
In March 1998, the Company acquired from LS Power Corporation an
approximate 74% ownership interest in the Whitewater Facility and the Cottage
Grove Facility. Each of the Cottage Grove and Whitewater Facilities is a
245-megawatt gas-fired, combined-cycle cogeneration facility. Commercial
operations of both facilities commenced in the last half of calendar 1997. The
aggregate acquisition price for the equity interests in the Cottage Grove and
Whitewater Facilities acquired by the Company was $158.0 million. In addition,
the Company pre-funded a $16.7 million distribution to the previous owners,
which represented unused construction contingency and cash flows that were
accumulated by the Cottage Grove and Whitewater Facilities prior to January 1,
1998. Cogentrix Energy received a distribution of $15.7 million in April 1998
and expects to receive a distribution of the remaining $1.0 million in 1998. The
purchase price was funded with borrowings under the Corporate Credit Facility
and corporate cash balances.
In March 1998, the Company signed an agreement with BGCI to acquire
BGCI's ownership interests in 12 electric generating facilities, comprising a
net equity interest of 365 megawatts, and one interstate natural gas pipeline in
the United States (the "BGCI Acquisition"). The closing of the BGCI Acquisition,
which is subject to customary conditions including the obtaining of certain
consents and regulatory approvals, is currently expected to occur in calendar
1998.
In connection with the BGCI Acquisition, the Company plans to issue
up to $300 million of additional senior notes in a Rule 144A offering with a
covenant to register exchange notes under the Securities Act of 1933, as
amended. The additional senior notes will be unsecured and will rank pari passu
with the Company's $100 million of outstanding Senior Notes due 2004. The net
proceeds will be used by the Company to finance the BGCI Acquisition and to
repay the outstanding borrowings under the Corporate Credit Facility and for
general corporate purposes, including equity investments in new projects or
acquisitions of existing electric generating facilities or those under
development. In connection with this anticipated debt offering, the Company
executed an interest rate agreement in March 1998 covering a notional amount of
$237 million to hedge against fluctuations in interest rates prior to the
completion of the debt offering.
For the fiscal year ended June 30, 1997, the Company's board of
directors declared a dividend on its outstanding common stock of $5.0 million,
which was paid in September 1997. The Company's board of directors declared a
dividend on its outstanding common stock of $2.1 million for the six-month
period ended December 31, 1997, which was paid in March 1998. The board of
directors' policy, which is subject to change at any time, provides for a
dividend payout ratio of no more than 20% of the Company's net income for the
immediately preceding fiscal year. In addition, under the terms of the indenture
for the Senior Notes and the credit agreement for the Corporate Credit Facility,
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 general economic conditions, and therefore tend to fluctuate significantly.
Through various hedging mechanisms, the Company has attempted to mitigate the
impact of 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 certain of the Company's
facilities, energy payments are indexed (subject to certain caps) to reflect the
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
15
<PAGE> 16
fuel price escalation risk, the Company attempts to hedge 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 on a portion
of its indebtedness.
Although hedged to a significant extent, the Company's financial
results will likely be affected to some degree by fluctuations in energy prices,
interest rates and inflation. The effectiveness of the hedging techniques
implemented by the Company is dependent, in part, on each counterparty's ability
to perform in accordance with the provisions of the relevant contracts. The
Company has sought to reduce the risk by entering into contracts with
creditworthy organizations.
Year 2000 Compliance
The Company is currently in the process of evaluating its information
technology infrastructure for Year 2000 compliance. The Company is in the
process of replacing the majority of its internal financial information systems
with a fully compliant new system. This new system is expected to be implemented
by January 1, 1999. The Company is also evaluating its plants' operating
systems. Based on present information, the Company believes that only minor
modifications and upgrades will be required for the operating systems to be Year
2000 compliant. As such, the Company does not anticipate that the costs incurred
to complete the necessary transition to ensure Year 2000 compliance will have a
material impact on the Company's consolidated results of operations, cash flows
or financial position. Any costs necessary to modify existing systems to ensure
Year 2000 compliance will be expensed as incurred. The Company is also
communicating with customers, suppliers, financial institutions and others to
coordinate Year 2000 conversion. In the event that any of the Company's
significant customers or suppliers do not successfully and timely achieve Year
2000 compliance, the Company's business or operations could be adversely
affected.
Change of Corporate Fiscal Year
Effective January 1, 1998, the Company changed its fiscal year to
commence on January 1 and conclude on December 31 of each year. The Company's
fiscal year previously commenced each July 1, concluding on June 30 of the
following calendar year.
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<PAGE> 17
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Under the terms of the amended power sales agreements for the
Elizabethtown, Lumberton, Kenansville (the "ELK Facilities"), 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 ELK Facilities by James River Coal
Sales, Inc. and an affiliate ("James River"). Coal was supplied to the Southport
Facility until November 1997 (when the contract term expired) by Coastal Coal
Sales, Inc. ("Coastal"). The coal sales agreements for the ELK Facilities
provide for the sale and purchase of the coal requirements of those facilities
through September 2001.
Under the amended power sales agreement for the Company's Portsmouth
Facility, Virginia Power has from time to time since December 1997 exercised its
right of economic dispatch resulting in significantly reduced fuel requirements
at the facility. Coal is supplied to the Portsmouth Facility by Arch Coal Sales
Company, Inc. ("Arch"). The coal sales agreement with Arch provides for the sale
and purchase of the coal requirements of the Portsmouth Facility through 2002.
As a result of the economic dispatch of these facilities and their
consequent reduced fuel requirements, the Company's project subsidiaries
operating these facilities are purchasing significantly less coal. James River,
Coastal and Arch are seeking to recover damages and, in some cases, are seeking
injunctive relief. A summary of each of these pending disputes is set forth
below.
James River Dispute (ELK Facilities)
In November 1996, James River instituted an action against Cogentrix
Eastern Carolina Corporation ("CECC") in the United States District Court for
the Eastern District of Kentucky claiming breach of contract and fraud in the
inducement based on the reduction in coal requirements at the ELK Facilities. In
this complaint, James River sought specific performance and, in the alternative,
an unspecified amount of damages. In April 1998, after the case was transferred
to the United States District Court for the Western District of North Carolina,
the fraud in the inducement claim was dismissed by the court with prejudice.
The contract with James River contains an arbitration provision
requiring contract disputes to be submitted to arbitration in Charlotte, North
Carolina. After the Company filed a motion to compel arbitration of the
remaining contract claim, James River consented to, and filed a demand for,
arbitration of the claim.
Coastal Dispute (Southport Facility)
In October 1996, Coastal initiated an arbitration proceeding against
Cogentrix of North Carolina, Inc. ("CNC") through the American Arbitration
Association in Charlotte, North Carolina. The notice of arbitration alleged
breach of contract based on the reduction in coal requirements at the Southport
Facility. In October 1997, a three member panel of arbitrators ruled in favor of
CNC, denying any recovery to Coastal.
ANR Coal Company, L.L.C. ("ANR"), as successor to Coastal,
subsequently challenged the ruling in CNC's favor in the United States District
Court for the Western District of North Carolina on grounds of arbitrator
partiality. In April 1998, the court issued an order vacating the ruling of the
arbitration panel and directing that a new arbitration be conducted. The
Company, which is appealing the court's decision to the United States Court of
Appeals for the Fourth Circuit, believes that the ruling of the arbitration
panel in its favor will be upheld on appeal.
Arch Dispute (Portsmouth Facility)
In February 1998, Arch filed a complaint against CVLC in the United
States District Court for the Southern District of West Virginia alleging breach
of contract and seeking a determination that CVLC is obligated to purchase
approximately 360,000 tons of coal per year, breached the coal sales agreement
by wrongfully reducing its requirements of coal, and violated a duty of good
faith and fair dealing owed to Arch. In the alternative, Arch seeks
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<PAGE> 18
damages for CVLC's failure to purchase such quantities of coal. This agreement
also contains an arbitration clause that requires any disputes between the
parties to be resolved by arbitration in Charlotte, North Carolina. In June
1998, the District Court issued an order staying the litigation proceedings
pending arbitration pursuant to the agreement of the issues in the Arch
complaint.
In view of the unambiguous provisions of the coal sales agreement
specifically providing that, notwithstanding any provision in the agreement to
the contrary, CVLC shall not be obligated to purchase more than the Portsmouth
Facility's requirements of coal, the Company is confident that the claims made
by Arch against CVLC will ultimately be resolved in favor of CVLC. CVLC will
vigorously defend the matter, seek to enforce the terms of the agreement against
Arch and otherwise continue to perform under the agreement as required.
Summary of Coal Purchase Agreement Disputes
Management believes that the ruling in CNC's favor by the panel of
arbitrators will be upheld on appeal, and, as to the James River and Arch legal
proceedings, there is no basis for certain claims and there are meritorious
defenses as to the remainder. The Company intends to vigorously contest the
claims of James River, Arch and Coastal and is confident that these issues will
be resolved in favor of the Company. The Company has established reserves which
management believes to be adequate to cover any costs which may result from
these matters. The ultimate disposition of these proceedings, in the judgment of
management, will not have a material adverse impact on the Company's
consolidated results of operations, cash flows or financial position.
Other Routine Litigation
In addition to the litigation described above, the Company
experiences routine litigation in the normal course of business. Management is
of the opinion that none of this routine litigation will have a material adverse
impact on the consolidated financial position or results of operations of the
Company.
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Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit No. Description of Exhibit
----------- ----------------------
10.1 Amended and Restated Loan and Reimbursement
Agreement, dated as of July 1, 1998, 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 First Boston, 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 Amended and Restated Security Deposit and
Intercreditor Agreement, dated as of July 1, 1998,
among Birchwood Power Partners, L.P., the Secured
Parties named therein, and Credit Suisse First
Boston, as Security Agent (Birchwood Facility).
27 Financial Data Schedule, which is submitted
electronically to the Securities and Exchange
Commission for information only and is not filed.
(b) Reports on Form 8-K
The Company filed a Current Report on Form 8-K dated April 6, 1998,
with respect to the LS Acquisition (see "Notes to Consolidated Condensed
Financial Statements - Note 4" herein).
The Company filed a Current Report on Form 8-K/A dated June 2, 1998
to amend the Current Report on Form 8-K dated April 6, 1998. This amendment
included the required financial statements and unaudited pro forma financial
information related to the LS Acquisition.
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<PAGE> 20
SIGNATURES
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)
August 14, 1998 /s/ James R. Pagano
-------------------------------------
James R. Pagano
Group Senior Vice President,
Chief Financial Officer
(Principal Financial Officer)
August 14, 1998 /s/ Thomas F. Schwartz
-------------------------------------
Thomas F. Schwartz
Senior Vice President - Finance
Treasurer
(Principal Accounting Officer)
20
<PAGE> 1
EXHIBIT 10.1
AMENDED AND RESTATED
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 First Boston
Union Bank of California,
as Co-Agents for the Banks
and
Credit Suisse First Boston,
as Issuing Bank and as Administrative Agent for the Banks
Dated as of July 1, 1998
<PAGE> 2
TABLE OF CONTENTS
-----------------
Page
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SECTION 1. DEFINITIONS 2
Section 1.1 Defined Terms 2
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 3
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 8
Section 3.6 Maximum Number of Tranches 8
Section 3.7 Interest on Bank Loans 9
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 14
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 16
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
<PAGE> 3
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 22
Section 6.6 Borrower's Obligations in Respect of VP
Letters of Credit 22
Section 6.7 Extension of VP Expiration Dates 23
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 34
Section 7.7 Certain Indemnities 36
Section 7.8 Funding into Accounts 37
Section 7.9 Funding of Letter of Credit Disbursements 37
Section 7.10 Additional Letter of Credit Provisions 39
Section 7.11 Payment with Issuing Bank Funds; Timing of
Reimbursement and Other Payments 40
SECTION 8. REPRESENTATIONS AND WARRANTIES 41
Section 8.1 Organization 41
Section 8.2 Authorization; Enforceable Obligations 41
Section 8.3 No Proceeding or Litigation 41
Section 8.4 Financial Statements 42
Section 8.5 No Legal Bar; Consents 42
Section 8.6 Full Disclosure 42
Section 8.7 Governmental Approvals 42
Section 8.8 No Liens 43
Section 8.9 Solvency 43
Section 8.10 No Default 43
Section 8.11 Business 43
Section 8.12 ERISA 43
Section 8.13 Security Documents 44
Section 8.14 Environmental Matters 44
Section 8.15 Federal Regulations 45
Section 8.16 Taxes 45
Section 8.17 Regulatory Status 45
<PAGE> 4
Section 8.18 Offer of Notes 45
Section 8.19 Sufficiency and Delivery of Project Documents 46
Section 8.20 Qualifying Facility 46
SECTION 9. CONDITIONS PRECEDENT 46
Section 9.1 Conditions to Effectiveness of Commitments 46
Section 9.2 Conditions to Each Bank Project Loan
and Institutional Loan 53
Section 9.3 Additional Conditions to Bank Project Loans 57
Section 9.4 Conditions to VP Letters of Credit Issuance 57
Section 9.5 Conditions to Bond Letters of Credit Issuance 58
Section 9.6 Conditions to Bank L/C Loans and Bank
Liquidity Loans 58
Section 9.7 Representations 59
SECTION 10. AFFIRMATIVE COVENANTS 59
Section 10.1 Use of Proceeds 59
Section 10.2 Project Reports 61
Section 10.3 Financial Statements 62
Section 10.4 Certificates; Other Information 62
Section 10.5 Accounts 63
Section 10.6 Maintenance of Existence, Properties, Etc.;
Taxes 64
Section 10.7 Books and Records; Inspection of Property;
Discussions 64
Section 10.8 Insurance 65
Section 10.9 Completion of Facility; Maintenance
of Properties 68
Section 10.10 Maintenance of Title 69
Section 10.11 "As Built" Surveys 69
Section 10.12 Maintenance of Qualifying Facility Status 69
Section 10.13 Governmental Approvals 70
Section 10.14 Compliance With Laws 70
Section 10.15 Employee Plans 70
Section 10.16 Assignments of Additional Contracts;
Maintenance of Liens of the Security
Documents; Future Project Mortgages 70
Section 10.17 Notices 71
Section 10.18 Greenhouse Adverse Change 73
Section 10.19 Ownership of the Borrower 73
Section 10.20 Performance and Enforcement of Other
Agreements 73
Section 10.21 Interest Rate Hedging Transactions 73
Section 10.22 Equity Funding Loans 73
Section 10.23 Operating Budgets 74
Section 10.24 Annual Opinion of Counsel 75
Section 10.25 Issuance of Bonds 75
Section 10.26 Coordination of Unit Reliability Test With
Virginia Power 76
Section 10.27 Environmental Matters 76
Section 10.28 Termination of Facility Operator 77
Section 10.29 Real Estate Post-Closing Matters 77
Section 10.30 Submission of Application for
Recertification of Facility 78
<PAGE> 5
Section 10.31 Bond Repurchase Covenants 78
SECTION 11. NEGATIVE COVENANTS 78
Section 11.1 Limitations on Indebtedness 79
Section 11.2 Limitations on Liens 80
Section 11.3 Limitations on Guarantee Obligations 81
Section 11.4 Limitations on Distributions 81
Section 11.5 Limitations on Investment, Loans and Advances 81
Section 11.6 Limitations on Transactions with Affiliates
and Others 81
Section 11.7 Limitations on Disposition of Assets 82
Section 11.8 Limitations on Fundamental Changes 82
Section 11.9 Limitations on Change Orders 82
Section 11.10 Limitations on Nature of Business 83
Section 11.11 Limitations on Optional Payments and
Modifications of Debt Instruments;
Limitation on Payments of Equity
Funding Loans 83
Section 11.12 Limitations on Amendment, Termination
or Extension of Project Documents;
Limitation on Exercise of Remedies
under Greenhouse Documents 83
Section 11.13 Limitations on Sale or Issuance of
Partnership Interests 84
Section 11.14 Assignment of Coal Supply Agreement 86
Section 11.15 Limitations on Leases 86
Section 11.16 Fiscal Year 86
Section 11.17 Change of Office 86
Section 11.18 Change of Name 86
Section 11.19 Tax Exempt Status of Bonds 86
SECTION 12. EVENTS OF DEFAULT 86
Section 12.1 Events of Default 86
Section 12.2 Rights and Remedies Following an Event
of Default 92
SECTION 13. THE ADMINISTRATIVE AGENT AND THE SECURITY AGENT 95
Section 13.1 The Administrative Agent 95
Section 13.2 The Security Agent 98
SECTION 14. MISCELLANEOUS 99
Section 14.1 Amendments and Waivers 99
Section 14.2 Notices 99
Section 14.3 No Waiver; Cumulative Remedies 100
Section 14.4 Survival of Representations and Warranties 100
Section 14.5 Payment of Expenses and Taxes;
Indemnification 100
Section 14.6 Successors and Assigns 102
Section 14.7 Permitted Bank Transfers and Participations 102
Section 14.8 Permitted Institution Transfers 105
Section 14.9 Set-off 107
<PAGE> 6
Section 14.10 Agreements Among Lenders 107
Section 14.11 Counterparts 110
Section 14.12 Severability 110
Section 14.13 Limitation of Recourse 110
Section 14.14 Confidentiality Undertaking 111
Section 14.15 GOVERNING LAW 112
Section 14.16 Submission To Jurisdiction; Waivers 112
Section 14.17 Acknowledgements 112
Section 14.18 Security Agent as Third Party Beneficiary 113
Section 14.19 WAIVERS OF JURY TRIAL 113
Section 14.20 Integration 113
<PAGE> 7
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)
I-10 Form of Consent to Assignment of Greenhouse Operator
J-1 Form of Facility Completion Certificate
J-2 Form of Greenhouse Completion Certificate
<PAGE> 8
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
<PAGE> 9
AMENDED AND RESTATED LOAN AND REIMBURSEMENT AGREEMENT, dated as of July
1, 1998, 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 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 party to this Agreement pursuant to Section 14.8
hereof (collectively, the "Institutions"), BANQUE PARIBAS, NEW YORK BRANCH,
BARCLAYS BANK PLC, CREDIT SUISSE FIRST BOSTON and UNION BANK OF CALIFORNIA,
as co-agents for the Banks hereunder (in such capacity, the "Co-Agents"),
CREDIT SUISSE FIRST BOSTON and CREDIT SUISSE FIRST BOSTON, 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 FIRST BOSTON,
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 entered into the Loan and Reimbursement
Agreement, dated as of May 18, 1994 (the "Original Project Loan Agreement"),
with the Lenders and certain other parties in connection with the
acquisition, construction, ownership and operation of the Project referred
to herein, consisting of a nominal 220 MW pulverized coal-fired cogeneration
facility located in King George County, Virginia subject to and upon the
terms and conditions set forth therein;
WHEREAS, the Original Project Loan Agreement heretofore has been
amended by (i) that certain First Amendment to Project Loan Agreement, dated
as of July 11, 1994, (ii) that certain Second Amendment to Project Loan
Agreement, dated as of August 12, 1994, (iii) that certain Third Amendment
and Consent to Project Loan Agreement, dated as of October 1, 1994, (iv) that
certain Fourth Amendment and Consent to Project Loan Agreement, dated as
of December 1, 1994, (v) that certain Fifth Amendment to Project Loan
Agreement, dated as of December 15, 1994, (vi) that certain Sixth Amendment
to Project Loan Agreement, dated as of September 18, 1995, (vii) that certain
Seventh Amendment and Consent to Project Loan Agreement, dated as of November
10, 1995, (viii) that certain Composite Amendment and Consent to Project Loan
Agreement and Security Deposit Agreement, dated as of April 10, 1996,
(ix) that certain First Amendment to Composite Amendment and Consent to
Project Loan Agreement and Security Deposit Agreement, dated as of December
18, 1996 and (x) that certain Greenhouse Restructure Amendment, dated as of
March 27, 1997 (together, the "Project Loan Agreement Amendments"); and
WHEREAS, the parties to the Original Project Loan Agreement as
amended, supplemented or otherwise modified by the Project Loan Agreement
Amendments have agreed to amend and restate the Project Loan Agreement and
Annex A thereto, as set forth below.
<PAGE> 10
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.
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.
<PAGE> 11
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) 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
<PAGE> 12
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
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
<PAGE> 13
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.
(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
(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 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
<PAGE> 15
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.
<PAGE> 16
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 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
<PAGE> 17
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.
(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
<PAGE> 18
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, 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
<PAGE> 19
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 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
(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
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
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
<PAGE> 22
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 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
<PAGE> 23
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.
<PAGE> 24
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 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.
<PAGE> 25
(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).
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
(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 with respect to a Bond Letter of
<PAGE> 27
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 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
<PAGE> 28
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 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).
<PAGE> 29
(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; 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.
<PAGE> 30
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.
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
<PAGE> 31
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 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.
<PAGE> 32
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.
(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
<PAGE> 33
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 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
<PAGE> 34
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-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).
<PAGE> 35
(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 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
<PAGE> 36
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:
(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,
<PAGE> 37
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 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
<PAGE> 38
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.
(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.
<PAGE> 39
(f) Prepayments Under Greenhouse Loan Agreement and New 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 or the New Greenhouse Loan Agreement, as the case may be, 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 or the New Greenhouse Loan Agreement, as the
case may be (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 or the New Greenhouse Loan Agreement, as the case
may be, 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 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 or
the New Greenhouse Loan Agreement, as the case may be, 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
<PAGE> 40
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 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. Except as otherwise provided in Section
10.31, 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
<PAGE> 41
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
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
<PAGE> 42
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 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.
<PAGE> 43
(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 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.
<PAGE> 44
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 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.
<PAGE> 45
(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 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
<PAGE> 46
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 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.
<PAGE> 47
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 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
<PAGE> 48
(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, 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 payment to be made in the
<PAGE> 49
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, 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.
<PAGE> 50
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 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
<PAGE> 51
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 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.
<PAGE> 52
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.
(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.
<PAGE> 53
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. Section 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 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
<PAGE> 54
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.
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.
<PAGE> 55
(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;
(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
<PAGE> 56
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:
(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
<PAGE> 57
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 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;
<PAGE> 58
(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;
(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
<PAGE> 59
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 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
<PAGE> 60
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.
(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
<PAGE> 61
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.
(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
<PAGE> 62
(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:
(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
<PAGE> 63
accordance with Section 4.2.1 of the Greenhouse Construction Contract),
(C) as of the date of such 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 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
<PAGE> 64
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 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 and New Greenhouse Agreements. If all or
a portion of the proceeds of such Loan are to be used by the Borrower to make
<PAGE> 65
loans under the Greenhouse Loan Agreement or New 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, New Greenhouse Loan Agreement or Greenhouse Master
Lease 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 or the New 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 and
Section 3.5 of the New 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.
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
<PAGE> 66
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.
(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
<PAGE> 67
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 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
<PAGE> 68
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;
(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
<PAGE> 69
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.
(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
prepared 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
<PAGE> 70
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 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);
<PAGE> 71
(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 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
<PAGE> 72
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) 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.
<PAGE> 73
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 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 $50,000,000, 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;
<PAGE> 74
(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 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
<PAGE> 75
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;
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)
<PAGE> 76
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 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.
<PAGE> 77
(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 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
<PAGE> 78
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 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
<PAGE> 79
the other party or parties to such Additional Contract to execute and deliver
to the Security Agent a Consent to Assignment with respect thereto;
(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, the New Greenhouse Loan Agreement or the
Greenhouse Master Lease;
(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
<PAGE> 80
(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 the Steam Sales Agreement and the Greenhouse Master Lease
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 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
(c) 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 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
<PAGE> 81
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.
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, 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
<PAGE> 82
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, 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
<PAGE> 83
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:
(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
<PAGE> 84
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 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
<PAGE> 85
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 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.
<PAGE> 86
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 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. 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.
(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:
<PAGE> 87
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;
(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
<PAGE> 88
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.
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.
<PAGE> 89
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 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 and Article 3 of the New
Greenhouse Loan Agreement.
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
and the New Greenhouse Loan Agreement) 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
<PAGE> 90
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;
(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
<PAGE> 91
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 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,
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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 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 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,
(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, and (C) consent to operating
agreements, license agreements or similar arrangements into which the
Greenhouse Owner may enter from time to time which could not reasonably be
expected to cause or result in a Greenhouse Adverse Change pursuant to
Section 10.18 of the Project Loan Agreement or otherwise have a Material
Adverse Effect on the Greenhouse Owner's ability to perform its obligations
under the Steam Sales Agreement or the Master Lease relating to the
requirement that it take a minimum amount of steam, and (D) terminate the
New Greenhouse Loan Agreement and related Security Agreement upon payment and
satisfaction in full of the Term Loan and Working Capital Loan thereunder and
in connection therewith enter into and deliver any appropriate and reasonable
landlord consents relating to the perfection of UCC collateral interests in
the Greenhouse inventory, stocks or supplies in favor of any lender which
provides working capital financing to the Greenhouse Owner or any operator or
licensee thereof; 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, 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 or the New
Greenhouse Loan Agreement, to declare loans, advances, rent and/or other
amounts owing under the Greenhouse Loan Agreement or the New Greenhouse Loan
Agreement, as the case may be, the Greenhouse Mortgage or the Greenhouse Master
Lease 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
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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);
(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
<PAGE> 94
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 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
<PAGE> 95
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 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,
<PAGE> 96
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, 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
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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 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 of the matters referred
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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 Loan Agreement or
the New Greenhouse Loan Agreement with respect to the repayment of loans
thereunder or for the payment of rent under the Greenhouse Master Lease) 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 which could reasonably be expected to have a Material Adverse
Effect (other than, in the case of the Greenhouse Loan Agreement, the New
Greenhouse Loan Agreement or the Greenhouse Master Lease, any failure by 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 substitute Project Document shall have been assigned to the Security
Agent to the same extent as the Project Document being replaced; or
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(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 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
<PAGE> 100
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 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
<PAGE> 101
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
(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,
Article 7 of the New Greenhouse Loan Agreement or the Greenhouse Master Lease
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
<PAGE> 102
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 or the New Greenhouse Loan Agreement to be
immediately terminated, and/or (ii) declare loans, advances, rent and/or other
amounts owing under the Greenhouse Loan Agreement, the New Greenhouse Loan
Agreement or the Greenhouse Master Lease 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 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.
<PAGE> 103
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 First Boston as its agent
under this Agreement and the other Loan Documents, and each Bank and the
Issuing Bank authorizes Credit Suisse First Boston, 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.
<PAGE> 104
(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 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
<PAGE> 105
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 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
<PAGE> 106
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.
(i) Successor Administrative Agent. Subject to the appointment of
a successor Administrative Agent as provided below, Credit Suisse First Boston
(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 First Boston 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
<PAGE> 107
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 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:
<PAGE> 108
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 First Boston
11 Madison Avenue
19th Floor
New York, New York 10010
Attention: Project Finance
Telecopy: 212-325-8049
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 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
<PAGE> 109
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 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
<PAGE> 110
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.
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
<PAGE> 111
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,
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
<PAGE> 112
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 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
<PAGE> 113
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, 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
<PAGE> 114
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.
<PAGE> 115
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 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:
<PAGE> 116
(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 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
<PAGE> 117
Day period to and including the date paid by the Bank. In addition, following
the expiration of such five Business Day period with 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.
(x) Interest Payable. The Borrower agrees that the
portion of the Institutional Loans purchased by any Bank pursuant to this
<PAGE> 118
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 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
<PAGE> 119
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.
(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
<PAGE> 120
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.
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
<PAGE> 121
(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> 122
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: /s/ George P. Henefeld
------------------------------
Name: George P. Henefeld
Title: Vice President
By: Cogentrix / Birchwood Two, L.P., a
General Partner
By: Cogentrix of Birchwood I, Inc., its
Sole General Partner
By: /s/ Thomas F. Schwartz
------------------------------
Name: Thomas F. Schwartz
Title: Senior Vice President - Finance
Treasurer
CREDIT SUISSE FIRST BOSTON, as
Administrative Agent, Issuing Bank and
as a Bank
By: /s/ Andrew B. Leon
-------------------------------
Name: Andrew B. Leon
Title: Vice President
By: /s/ Kevin V. Soucy
-------------------------------
Name: Kevin V. Soucy
Title: Associate
<PAGE> 123
PARIBAS, NEW YORK BRANCH as a Co-Agent
and as a Bank
By: /s/ Tim Vincent
------------------------------
Name: Tim Vincent
Title: Associate
By: /s/ Ralph Scholtz
-----------------------------
Name: Ralph Scholtz
Title: Director
BARCLAYS BANK PLC, as a Co-Agent
and as a Bank
By: /s/ Sydney G. Dennis
----------------------------
Name: Sydney G. Dennis
Title: Director
UNION BANK OF CALIFORNIA, N.A., as a
Co-Agent and as a Bank
By: /s/ Susan K. Johnson
---------------------------
Name: Susan K. Johnson
Title: Vice President
THE TORONTO-DOMINION BANK, as a Bank
By: /s/ Jeffery R. Lents
---------------------------
Name: Jeffery R. Lents
Title: Mgr. Cr. Admin.
NATIONAL WESTMINSTER BANK Plc, as a Bank
By: /s/ Maria Amaral-LeBlanc
---------------------------
Name: Maria Amaral-LeBlanc
Title: Vice President
<PAGE> 124
BANQUE NATIONALE DE PARIS, as a Bank
By: /s/ Robert Munczinski
---------------------------
Name: Robert Munczinski
Title: Senior Vice President
By: /s/ Tom Cantello
---------------------------
Name: Tom Cantello
Title: Assistant Vice President
THE FUJI BANK LTD, as a Bank
By: /s/ Takeo Kada
---------------------------
Name: Takeo Kada
Title: Senior Vice President
THE BANK OF NOVA SCOTIA, as a Bank
By: /s/ D.J. Dupont
---------------------------
Name: D.J. Dupont
Title: Sr. Relationship Manager
THE SANWA BANK, LIMITED, NEW YORK BRANCH,
as a Bank
By: /s/ David A. Leech
---------------------------
Name: David A. Leech
Title: Vice President
JOHN HANCOCK MUTUAL LIFE INSURANCE
COMPANY, as an Institution
By: /s/ Carl F. Knowlton
--------------------------
Name: Carl F. Knowlton
Title: Assistant Investment Officer
<PAGE> 125
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY,
as an Institution
By: /s/ Barry E. Welch
--------------------------
Name: Barry E. Welch
Title: Second Vice President
MELLON BANK, N.A., solely in its capacity as
Trustee for the LONG-TERM INVESTMENT TRUST
(as directed by John Hancock Mutual Life
Insurance Company), and not in its individual
capacity, as an Institution
By: /s/ Carole Bruno
---------------------------
Name: Carole Bruno
Title: Authorized Signatory
MELLON BANK, N.A., solely in its capacity as
Trustee for the NYNEX MASTER PENSION TRUST
(as directed by John Hancock Mutual Life
Insurance Company), and not in its individual
capacity, as an Institution
By: /s/ Carole Bruno
---------------------------
Name: Carole Bruno
Title: Authorized Signatory
COMMONWEALTH OF PENNSYLVANIA STATE EMPLOYES'
[sic] RETIREMENT SYSTEM, as an Institution
By: John Hancock Mutual Life Insurance
Company, as Investment Adviser
By: /s/ Barry E. Welch
-----------------------------
Name: Barry E. Welch
Title: Second Vice President
<PAGE> 126
ALLSTATE INSURANCE COMPANY, as an Institution
By: ____________________________
Name:
Title:
By: ____________________________
Name:
Title:
ALLSTATE LIFE INSURANCE COMPANY, as an
Institution
By: /s/ Patricia W. Wilson
----------------------------
Name: Patricia W. Wilson
Title:
By: /s/ Ronald G. Mendel
----------------------------
Name: Ronald G. Mendel
Title:
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK,
as an Institution
By: /s/ Patricia W. Wilson
----------------------------
Name: Patricia W. Wilson
Title:
By: /s/ Ronald G. Mendel
----------------------------
Name: Ronald G. Mendel
Title:
NEW YORK LIFE INSURANCE COMPANY, as
an Institution
By: /s/ Jamie Manson
---------------------------
Name: Jamie Manson
Title: Director
<PAGE> 127
1
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.
Certain terms not defined herein nor defined in the Project Loan Agreement shall
have the meanings assigned thereto in the Security Deposit 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, Dominion Growers of Fredericksburg, Inc. 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, 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 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
<PAGE> 128
2
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 First Boston, 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.
"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.
<PAGE> 129
3
"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.
"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.
<PAGE> 130
4
"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 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
<PAGE> 131
5
(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;
(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.
<PAGE> 132
6
"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
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.
<PAGE> 133
7
"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.
"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.
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"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 1997 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 1997, established and identified as such pursuant to Section
3.1(a) of the Security Deposit Agreement.
"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.
"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.
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"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 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 or loaned from time to time by the Borrower to the Greenhouse
Owner under the working capital loan commitment of the New Greenhouse Loan
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.
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"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 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.
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"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 First Boston 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.
"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.
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12
"Collateral": collectively, the Mortgaged Property, the
Security Deposit Collateral, the Southern Equity Contribution Collateral, the
Partner Collateral, any Bonds (and the proceeds thereof) pledged pursuant to a
Bond Pledge Agreement and the Pledged Securities.
"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 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;
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13
(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 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.
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"Construction Account": the Construction Account established
and maintained pursuant to the Security Deposit Agreement.
"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
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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 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.
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"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, 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 First Boston, 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 First Boston, 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 Contribution and any Contingent Equity
Contribution has been made to the Borrower in accordance with Section
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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 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
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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 thirteenth 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).
"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.
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21
"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.
"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
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22
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.
"Greenhouse Bill of Sale": the Bill of Sale dated May 18, 1994
from Dominion Growers of Fredericksburg, Inc., 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, the New Greenhouse Loan Agreement, or the
Greenhouse Master Lease, respectively.
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23
"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 Dominion
Growers of Fredericksburg, Inc., as assigned by Dominion Growers of
Fredericksburg, Inc. 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 Dominion Growers of Fredericksburg, Inc., 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 New Greenhouse Loan Agreement, the New
Greenhouse Loan Notes, the New Greenhouse Security Agreement and the Workout
Deeds.
"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.
"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,
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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": for historical purposes
and in connection with Section 9.1 of the Project Loan Agreement, the
Nondisturbance, Attornment and Subordination Agreement dated as of May 18, 1994
by and between the Security Agent and Dominion Growers of Fredericksburg, Inc.,
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": Greenhost, Inc., a Delaware
corporation.
"Greenhouse Operator Pledge Agreements": for historical
purposes and in connection with Section 9.1 of the Project Loan Agreement, the
collective reference to (i) the Stock Pledge Agreement made by Johannes
VanWingerden, the sole stockholder of Dominion Growers of Fredericksburg, Inc.
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 Agreements": means collectively, (i)
the Amended and Restated Stock Pledge Agreement dated November 19, 1996 between
SEI Birchwood, Inc., a Delaware corporation, as Pledgor, and Birchwood Power
Partners, L.P., a Delaware limited partnership, as Lender; and (ii) the Amended
and Restated Stock Pledge Agreement dated November 19, 1996 between
Cogentrix/Birchwood Two, L.P., a Delaware limited partnership, as Pledgor, and
Birchwood Power Partners, L.P., a Delaware limited partnership, as Lender."
"Greenhouse Pledge Agreements": for historical purposes and in
connection with Section 9.1 of the Project Loan Agreement, collectively, the
Greenhouse Owner Pledge Agreements and the Greenhouse Operator Pledge
Agreements.
"Greenhouse Prepayment Amount": as defined in Section 7.3(f)
of the Project Loan Agreement.
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25
"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 or
the New Greenhouse Loan Agreement, except, so long as an Event of Default shall
not have occurred and is continuing, a mandatory prepayment of loans under
Section 4.2(b)(ii) of the New Greenhouse Loan Agreement, 85% of the proceeds
thereof.
"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": for historical purposes and in
connection with Section 9.1 of the Project Loan Agreement, the Deed of Sublease
dated as of May 18, 1994 between the Greenhouse Owner, as sublessor, and
Dominion Growers of Fredericksburg, Inc., as sublessee, as amended, supplemented
or otherwise modified from time to time.
"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 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.
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"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, (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
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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%.
"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.
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"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.
"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.
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"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.
"Issuing Bank": Credit Suisse First Boston, or when the
context requires, Credit Suisse First Boston, 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.
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"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.
"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.
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"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.
"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".
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32
"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 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).
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33
"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 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.
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34
"New Greenhouse Loans": the working capital loan and the term
loan extended by the Borrower to the Greenhouse Owner pursuant to the New
Greenhouse Loan Agreement.
"New Greenhouse Loan Agreement": the Term Loan and Working
Capital Agreement, dated as of November 19, 1996, between the Borrower and the
Greenhouse Owner.
"New Greenhouse Loan Notes": (i) the Working Capital Note
executed by Corporation in the form of Exhibit A to the New Greenhouse Loan
Agreement, payable to the order of the Borrower, in the amount of three million
dollars ($3,000,000) and (ii) the Term Note executed by Corporation in the form
of Exhibit B to the New Greenhouse Loan Agreement payable to the order of the
Borrower, in the amount of two million five hundred thousand dollars
($2,500,000).
"New Greenhouse Security Agreement": the Security Agreement by
and between Greenhost, Inc. and Birchwood Power Partners, L.P. dated as of
November 19, 1996 and entered into pursuant to the New Greenhouse Loan
Agreement.
"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.
"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.
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35
"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 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
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36
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.
"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
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37
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 (or minus) (ii) 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 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
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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; (r) the Contingent Distribution Amount, if any,
payable on the Completion Date to Partners affiliated with Southern; and (s) the
New Greenhouse Loans; 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.
"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 (including interest) by the Borrower of
any scheduled repayment of loans or any mandatory prepayment of loans pursuant
to the Greenhouse Loan Agreement or any payments under the Greenhouse Master
Lease, (iv) all payments received (including interest) by the Borrower of any
scheduled repayment of loans or any mandatory prepayment of loans pursuant to
the New Greenhouse Loan Agreement, (v) so long as any of the Bank Project Notes,
the Greenhouse Loan Note or the New Greenhouse Loan Notes are outstanding, (1)
any and all Dividends paid by the Corporation with respect to the Pledged
Securities, (2) the net proceeds from the sale or transfer of any of the assets
of the Corporation, after payment of the Indebtedness (as defined in the New
Greenhouse Loan Agreement) under the New
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Greenhouse Loan Agreement and (3) any and all other proceeds, awards, or other
compensation received by the Corporation, less reasonable fees, expenses and
other directly related costs incurred in connection with the collection of such
funds, (vi) any General Indemnity Payment Proceeds and (vii) 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;
provided, however, that for any given month, any revenues received by the
Borrower (x) pursuant to a check dated the end of such given month which is
deposited no later than the fifth business day of the following month, or (y)
pursuant to a wire transfer which is received no later than the fifth business
day of the following month shall be deemed to be and included as revenue for
such given month.
"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
(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:
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40
(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.
"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.
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"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 fifth Business Day following
the end 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 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 First
Boston 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.
"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.
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42
"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.
ss. 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.
"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.
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43
"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 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.
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44
"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 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
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45
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 First Boston, 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.
"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.
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"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;
(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
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47
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.
"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.
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48
"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.
"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 Dominion Growers of
Fredericksburg, Inc. 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.
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49
"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.
"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
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50
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.
"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 Commitments": $51,000,000.
"Total Equity Contribution Amount": as defined in Section 1.2
of the Southern Equity Contribution Agreement.
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"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 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 1997": the Trust Indenture by and
between the Industrial Development Authority of King George County, Virginia and
Bankers Trust Company, as trustee, dated as of March 1, 1997.
"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.
<PAGE> 178
52
"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.
"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.
"Workout Deeds": the Omnibus Deed, Bill of Sale, General
Assignment and Conveyance by Dominion Growers of Fredericksburg, Inc. and
Dominion Growers, Inc. to Greenhost, Inc. dated as of November 8, 1996 and the
four (4) Deeds of Bargain and Sale from Dominion Growers of Fredericksburg, Inc.
to Greenhost, Inc. each dated as of November 8, 1996
<PAGE> 179
53
and recorded on book and page numbers 0291/723; 0291/719; 0291/711; and 0291/715
with the Clerk, Circuit Court, King George County, Virginia.
<PAGE> 1
EXHIBIT 10.2
EXECUTION COPY
==========================
AMENDED AND RESTATED
SECURITY DEPOSIT AND INTERCREDITOR AGREEMENT
among
BIRCHWOOD POWER PARTNERS, L.P.
and
THE SECURED PARTIES NAMED HEREIN
and
CREDIT SUISSE FIRST BOSTON,
as Security Agent
Dated as of July 1, 1998
==========================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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<S> <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............................................................. 9
ARTICLE II
The Security Agent.............................................................. 10
Section 2.1 Appointment of the Security Agent......................................................... 10
Section 2.2 Exculpatory Provisions.................................................................... 10
Section 2.3 Delegation of Duties...................................................................... 11
Section 2.4 Reliance by Security Agent................................................................ 11
Section 2.5 Limitations on Duties of Security Agent................................................... 12
Section 2.6 Resignation and Removal of the Security Agent............................................. 12
Section 2.7 Treatment of Registered Holder, Payee or Indorsee by Security Agent....................... 14
Section 2.8 Appointment of Separate or Co-Security Agent.............................................. 14
Section 2.9 Successor Security Agent by Merger, Consolidation, Etc. .................................. 15
Section 2.10 Eligibility of Security Agent............................................................ 15
ARTICLE III
Establishment of Accounts;
Grant of Security Interests.......................................................... 15
Section 3.1 Establishment of Accounts................................................................. 15
Section 3.2 Security Interests........................................................................ 17
ARTICLE IV
Deposits into Accounts; Investment..................................................... 18
Section 4.1 Construction Account...................................................................... 18
Section 4.2 Institutional Loan Proceeds Account....................................................... 18
Section 4.3 Required Deposits on the Completion Date.................................................. 18
Section 4.4 Project Control Account................................................................... 19
Section 4.5 Special Payment Account................................................................... 19
Section 4.6 Deleted................................................................................... 20
Section 4.7 Bond Transfer Accounts.................................................................... 20
Section 4.8 Deposit Irrevocable....................................................................... 21
Section 4.9 Statements of Amounts Held in Accounts.................................................... 21
Section 4.10 Investment............................................................................... 21
</TABLE>
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<TABLE>
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ARTICLE V
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............................................................. 28
Section 5.6 Debt Service Reserve Account.............................................................. 29
Section 5.7 Special Payment Account................................................................... 30
Section 5.8 Distributions Account..................................................................... 32
Section 5.9 Final Completion Escrow Account........................................................... 33
Section 5.10 Accrued Interest Account................................................................. 33
Section 5.11 Insurance and Property Tax 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.................................. 34
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................................................................. 40
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
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....................................................................... 47
</TABLE>
-ii-
<PAGE> 4
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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.......................................................... 48
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.................................................................... 49
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........................................................... 51
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............................................................................... 54
SECTION 9.10 GOVERNING LAW............................................................................ 55
Section 9.11 Submission To Jurisdiction; Waivers...................................................... 55
SECTION 9.12 WAIVERS OF JURY TRIAL.................................................................... 55
</TABLE>
-iii-
<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
<PAGE> 6
AMENDED AND RESTATED SECURITY DEPOSIT AND INTERCREDITOR
AGREEMENT, dated as of July 1, 1998, among (i) BIRCHWOOD POWER PARTNERS, L.P., a
Delaware limited partnership (the "Borrower"), (ii) BANQUE PARIBAS, NEW YORK
BRANCH, BARCLAYS BANK PLC, CREDIT SUISSE FIRST BOSTON and UNION BANK OF
CALIFORNIA and each other bank or financial institution party to this Agreement
as a "Bank" pursuant to 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 party to this Agreement as an "Institution" pursuant
to Section 9.4 (the "Institutions"), (iv) CREDIT SUISSE FIRST BOSTON, and, when
the context requires, CREDIT SUISSE FIRST BOSTON, NEW YORK BRANCH, as issuing
bank under the Project Loan Agreement referred to herein (in such capacity, the
"Issuing Bank"), (v) CREDIT SUISSE FIRST BOSTON, 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 party to this Agreement
as a "Secured Counterparty" pursuant to Section 9.4 (in such capacity, the
"Secured Counterparties"), (vii) any Bond Trustee (as hereinafter defined) party
to this Agreement pursuant to Section 9.4 (a "Secured Bond Trustee") and (viii)
CREDIT SUISSE FIRST BOSTON, 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 has constructed, owns and operates the
Project, consisting of a nominal 220 MW pulverized coal-fired cogeneration
facility located in King George County, Virginia;
WHEREAS, in order to obtain construction and permanent
financing for the Project, the Borrower, among other things, entered into the
Project Loan Agreement, pursuant to which the Banks and the Institutions agreed
to make loans to, and the Issuing Bank 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;
<PAGE> 7
2
WHEREAS, it was 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 the Security Deposit and Intercreditor Agreement dated
as of May 18, 1994 (the "Original Security Deposit Agreement");
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";
WHEREAS, the Original Security Deposit Agreement has been
amended by (i) that certain First Amendment to Security Deposit Agreement, dated
as of July 11, 1994, (ii) that certain Second Amendment to Security Deposit and
Intercreditor Agreement, dated as of October 1, 1994, (iii) that certain Third
Amendment to Security Deposit and Intercreditor Agreement, dated as of December
1, 1994, (iv) that certain Fourth Amendment to Security Deposit and
Intercreditor Agreement, dated as of November 10, 1995, (v) that certain
Composite Amendment and Consent to Project Loan Agreement and Security Deposit
Agreement, dated as of April 10, 1996, (vi) that certain First Amendment to
Composite Amendment and Consent to Project Loan Agreement and Security Deposit
Agreement, dated as of December 18, 1996 and (vii) that certain Greenhouse
Restructure Amendment, dated as of March 27, 1997 (together, the "Security
Deposit Agreement Amendments"); and
WHEREAS, the parties to the Original Security Deposit
Agreement as amended, restated or otherwise modified by the Security Deposit
Agreement Amendments have agreed to amend and restate the Security Deposit
Agreement as set forth below.
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:
<PAGE> 8
3
"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 ninth of Section 5.3(a) have
been made and prior to the making of any transfers on such date
pursuant to clause tenth 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 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 1997, 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.
<PAGE> 9
4
"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 1997": a
requisition, in substantially the form of the applicable Exhibit to the
Trust Indenture-Series 1997, of funds on deposit in that certain
Construction Fund established and identified as such in the Trust
Indenture-Series 1997.
"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 1997, 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.
"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 1997": that certain party identified as
"Trustee," or its successor as "Trustee," under the Trust
Indenture-Series 1997.
"Construction Account Deposits": as defined in Section 4.1.
"Corporation": Greenhost, Inc., a Delaware corporation.
"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.
<PAGE> 10
5
"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 tenth 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 Account
during such period pursuant to clause tenth 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.
"Dividends": 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.
<PAGE> 11
6
"Excess Construction Account Deposits": as defined in Section
5.2(a).
"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.
"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.
<PAGE> 12
7
"Monthly Operating Disbursement Date": the fifth Business Day
of any month occurring after the Commercial Operations Date.
"New Greenhouse Loan Agreement": the Term Loan and Working
Capital Agreement, dated as of November 19, 1996, between the
Corporation and the Borrower.
"New Greenhouse Loan Notes": (i) the Working Capital Note
executed by Corporation in the form of Exhibit A to the New Greenhouse
Loan Agreement, payable to the order of the Borrower, in the amount of
three million dollars ($3,000,000) and (ii) the Term Note executed by
Corporation in the form of Exhibit B to the New Greenhouse Loan
Agreement payable to the order of Borrower, in the amount of two
million five hundred thousand dollars ($2,500,000).
"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).
"Pledged Securities": all of the issued and outstanding shares
of stock of the Corporation.
"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.
"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.
<PAGE> 13
8
"Required Project Control Reserve Amount": $2,500,000,
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 $2,500,000).
"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.
"Series 1994A Bond Transfer Account": the Series 1994A Bond
Transfer Account established and maintained pursuant to this Security
Deposit Agreement.
"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 1997 Bond Transfer Account": the Series 1997 Bond
Transfer Account established and maintained pursuant to this Security
Deposit Agreement.
"Special Payment Account Deposits": as defined in Section 4.5.
<PAGE> 14
9
"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 1997": the Trust Indenture by and
between the Industrial Development Authority of King George County,
Virginia and Bankers Trust Company, as trustee, dated as of March 1,
1997.
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.
(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.
<PAGE> 15
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ARTICLE II
The Security Agent
Section 2.1 Appointment of the Security Agent. Each of the
Secured Parties hereby designates and appoints Credit Suisse First Boston as the
security agent for such Secured Party under this Agreement and the other
Security Documents, and authorizes Credit Suisse First Boston, 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.
(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 First Boston in
its respective capacities as a Bank, the Issuing Bank, the Administrative Agent
and a Secured Counterparty.
<PAGE> 16
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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 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
<PAGE> 17
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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 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
<PAGE> 18
13
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, 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
<PAGE> 19
14
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;
(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,
<PAGE> 20
15
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 and the Bond Transfer Accounts 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.
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 Distributions Account;
(xii) the Series 1994A Bond Transfer Account (such
account shall not be a cash collateral account);
(xiii) the Series 1994B Bond Transfer Account (such
account shall not be a cash collateral account);
<PAGE> 21
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(xiv) the Series 1995 Bond Transfer Account (such account
shall not be a cash collateral account);
(xv) the Series 1996A Bond Transfer Account (such
account shall not be a cash collateral account);
and
(xvi) the Series 1997 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 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) 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.
<PAGE> 22
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Section 3.2 (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 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.
<PAGE> 23
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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;
(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);
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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
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.
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Section 4.6 Deleted.
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)
shall be held in pledge by the Security Agent and applied solely as provided
herein.
Section 4.9 Statement 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.
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.
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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 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
<PAGE> 27
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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.
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
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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 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 such 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 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;
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fourth, if such Disbursement Date is a Monthly Operating
Disbursement Date, (a) into the Bank Accrued Interest Subaccount, the
Bank Accrued Interest Amount calculated as of such date and (b) 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) 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 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;
sixth, 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 Sections 3.4 and 10.31 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;
seventh, 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
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Bank under the Project Loan Agreement (other than those payable
pursuant to clause fifth 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;
eighth, 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 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;
ninth, 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;
tenth, 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 tenth 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;
eleventh, 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;
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twelfth, 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
thirteenth, 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 transfers required by clause third and prior to the making
of the transfers required by clause fourth and fifth 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 sixth 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 sixth 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
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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 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 fifth through seventh 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 fifth through seventh 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).
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(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.
(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 fifth through seventh 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 fifth through seventh 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
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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
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
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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 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 fifth 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 fifth through seventh 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 fifth
through seventh (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 funds on
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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 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.
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Section 5.12 Deleted.
Section 5.13 Delivery of Request Letters, Disbursement
Request. 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.
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 such 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 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
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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 Monthly Operating
Disbursement Date, (a) into the Bank Accrued Interest Subaccount, the
Bank Accrued Interest Amount calculated as of such date and (b) into
the Institutional Accrued Interest Subaccount, the Institutional
Accrued Interest Amount calculated as of such date;
fifth, 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;
sixth, 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 fifth through seventh of Section 5.3(a),
the amounts specified in such clauses in the order of priority set
forth in Section 5.3(a);
seventh, 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;
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 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
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tenth, 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 sixth 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 Bond Transfer Accounts) in such order
of priority as the Required Secured Parties may determine; provided that the
amounts payable pursuant to clauses eighth and tenth 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
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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 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 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;
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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 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).
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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.
(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.
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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, 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
<PAGE> 45
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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 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.
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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 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.
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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 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.
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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 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.
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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 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
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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 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
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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 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.
<PAGE> 52
47
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.
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
<PAGE> 53
48
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 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:
<PAGE> 54
49
(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;
(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
<PAGE> 55
50
(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 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:
<PAGE> 56
51
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 First Boston
11 Madison Avenue
19th Floor
New York, New York 10010
Attention: Project Finance
Telecopy: (212) 212-325-8049
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 Waiver 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 further act become a party
hereto, as Administrative Agent or Security Agent, as the case may be. In the
event Unsupported Bonds are
<PAGE> 57
52
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.
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.
<PAGE> 58
53
(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.
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> 59
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: /s/ George P. Henefeld
---------------------------
Name: George P. Henefeld
Title: Vice President
By: Cogentrix / Birchwood Two, L.P., a
General Partner
By: Cogentrix of Birchwood I, Inc.,
its Sole General Partner
By: /s/ Thomas F. Schwartz
---------------------------
Name: Thomas F. Schwartz
Title: Senior Vice
President-Finance
Treasurer
CREDIT SUISSE FIRST BOSTON,
as Security Agent
By: /s/ Andrew B. Leon
---------------------------
Name: Andrew B. Leon
Title: Vice President
By: /s/ Kevin V. Soucy
---------------------------
Name: Kevin V. Soucy
Title: Associate
<PAGE> 60
CREDIT SUISSE FIRST BOSTON,
as Administrative Agent, Issuing
Bank, a Bank, a Secured
Counterparty and as a Secured
Party
By: /s/ Andrew B. Leon
---------------------------
Name: Andrew B. Leon
Title: Vice President
By: /s/ Kevin V. Soucy
---------------------------
Name: Kevin V. Soucy
Title: Associate
PARIBAS, NEW YORK BRANCH
as a Bank and as a Secured Party
By: /s/ Tim Vincent
---------------------------
Name: Tim Vincent
Title: AVP
By: /s/ Ralph Scholtz
---------------------------
Name: Ralph Scholtz
Title: Director
PARIBAS, PARIS, as a Secured Party and as a
Secured Counterparty
By: /s/ Patrick Miller
---------------------------
Name: Patrick Miller
Title: Authorized Signatory
By: /s/ Dean Rock
---------------------------
Name: Dean Rock
Title: Trader
<PAGE> 61
BARCLAYS BANK PLC,
as a Bank, a Secured Counterparty
and as a Secured Party
By: /s/ Sydney G. Dennis
---------------------------
Name: Sydney G. Dennis
Title: Director
UNION BANK OF CALIFORNIA, N.A.,
as a Bank, a Secured Counterparty, and as a
Secured Party
By: /s/ Susan K. Johnson
---------------------------
Name: Susan K. Johnson
Title: Vice President
THE TORONTO-DOMINION BANK, as a Bank
and as a Secured Party
By: /s/ Jeffery R. Lents
---------------------------
Name: Jeffery R. Lents
Title: Mgr. Cr. Admin.
NATIONAL WESTMINSTER BANK Plc, as a
Bank and as a Secured Party
By: /s/ Maria Amaral-LeBlanc
---------------------------
Name: Maria Amaral-LeBlanc
Title: Vice President
<PAGE> 62
BANQUE NATIONALE DE PARIS, as a Bank and
as a Secured Party
By: /s/ Robert Munczinski
---------------------------
Name: Robert Munczinski
Title: Senior Vice President
By: /s/ Tom Cantello
---------------------------
Name: Tom Cantello
Title: Assistant Vice President
THE FUJI BANK LTD, as a Bank and as a
Secured Party
By: Takeo Kada
---------------------------
Name: Takeo Kada
Title: Senior Vice President
THE BANK OF NOVA SCOTIA, as a Bank and as
a Secured Party
By: /s/ D.J. Dupont
---------------------------
Name: D.J. Dupont
Title: Sr. Relationship Manager
THE SANWA BANK, LIMITED, NEW YORK
BRANCH, as a Bank and as a Secured Party
By: /s/ David A. Leech
---------------------------
Name: David A. Leech
Title: Vice President
<PAGE> 63
JOHN HANCOCK MUTUAL LIFE INSURANCE
COMPANY, as an Institution and as
a Secured Party
By: /s/ Carl F. Knowlton
---------------------------
Name: Carl F. Knowlton
Title: Assistant Investment Officer
JOHN HANCOCK VARIABLE LIFE INSURANCE
COMPANY, as an Institution and as a
Secured Party
By: /s/ Barry E. Welch
---------------------------
Name: Barry E. Welch
Title: Second Vice President
MELLON BANK, N.A., solely in its capacity as
Trustee for the LONG-TERM INVESTMENT TRUST
(as directed by John Hancock Mutual Life
Insurance Company), and not in its
individual capacity, as an Institution and
as a Secured Party
By: /s/ Carole Bruno
---------------------------
Name: Carole Bruno
Title: Authorized Signatory
MELLON BANK, N.A., solely in its capacity as
Trustee for the NYNEX MASTER PENSION TRUST
(as directed by John Hancock Mutual Life
Insurance Company), and not in its
individual capacity, as an Institution and
as a Secured Party
By: /s/ Carole Bruno
---------------------------
Name: Carole Bruno
Title: Authorized Signatory
<PAGE> 64
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: /s/ Barry E. Welch
---------------------------
Name: Barry E. Welch
Title: Second Vice President
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: /s/ Patricia W. Wilson
---------------------------
Name: Patricia W. Wilson
Title:
By: /s/ Ronald G. Mendel
---------------------------
Name: Ronald G. Mendel
Title:
<PAGE> 65
ALLSTATE LIFE INSURANCE COMPANY
OF NEW YORK, as an Institution and as a
Secured Party
By: /s/ Patricia W. Wilson
---------------------------
Name: Patricia W. Wilson
Title:
By: /s/ Ronald G. Mendel
---------------------------
Name: Ronald G. Mendel
Title:
NEW YORK LIFE INSURANCE COMPANY,
as an Institution and as a
Secured Party
By: /s/ Jamie N. Manson
---------------------------
Name: Jamie N. Manson
Title: Director
<PAGE> 66
1
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.
Certain terms not defined herein nor defined in the Project Loan Agreement shall
have the meanings assigned thereto in the Security Deposit 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, Dominion Growers of Fredericksburg, Inc. 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, 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 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
<PAGE> 67
2
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 First Boston, 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.
"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.
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3
"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.
"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.
<PAGE> 69
4
"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 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
<PAGE> 70
5
(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;
(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.
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"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
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.
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"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.
"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.
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"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 1997 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 1997, established and identified as such pursuant to Section
3.1(a) of the Security Deposit Agreement.
"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.
"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.
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"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 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 or loaned from time to time by the Borrower to the Greenhouse
Owner under the working capital loan commitment of the New Greenhouse Loan
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.
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"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 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.
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"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 First Boston 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.
"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.
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"Collateral": collectively, the Mortgaged Property, the
Security Deposit Collateral, the Southern Equity Contribution Collateral, the
Partner Collateral, any Bonds (and the proceeds thereof) pledged pursuant to a
Bond Pledge Agreement and the Pledged Securities.
"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 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;
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(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 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.
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14
"Construction Account": the Construction Account established
and maintained pursuant to the Security Deposit Agreement.
"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
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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 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.
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16
"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, 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 First Boston, 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 First Boston, 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 Contribution and any Contingent Equity
Contribution has been made to the Borrower in accordance with Section
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19
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 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
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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 thirteenth 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).
"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.
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21
"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.
"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
<PAGE> 87
22
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.
"Greenhouse Bill of Sale": the Bill of Sale dated May 18, 1994
from Dominion Growers of Fredericksburg, Inc., 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, the New Greenhouse Loan Agreement, or the
Greenhouse Master Lease, respectively.
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"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 Dominion
Growers of Fredericksburg, Inc., as assigned by Dominion Growers of
Fredericksburg, Inc. 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 Dominion Growers of Fredericksburg, Inc., 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 New Greenhouse Loan Agreement, the New
Greenhouse Loan Notes, the New Greenhouse Security Agreement and the Workout
Deeds.
"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.
"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,
<PAGE> 89
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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": for historical purposes
and in connection with Section 9.1 of the Project Loan Agreement, the
Nondisturbance, Attornment and Subordination Agreement dated as of May 18, 1994
by and between the Security Agent and Dominion Growers of Fredericksburg, Inc.,
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": Greenhost, Inc., a Delaware
corporation.
"Greenhouse Operator Pledge Agreements": for historical
purposes and in connection with Section 9.1 of the Project Loan Agreement, the
collective reference to (i) the Stock Pledge Agreement made by Johannes
VanWingerden, the sole stockholder of Dominion Growers of Fredericksburg, Inc.
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 Agreements": means collectively, (i)
the Amended and Restated Stock Pledge Agreement dated November 19, 1996 between
SEI Birchwood, Inc., a Delaware corporation, as Pledgor, and Birchwood Power
Partners, L.P., a Delaware limited partnership, as Lender; and (ii) the Amended
and Restated Stock Pledge Agreement dated November 19, 1996 between
Cogentrix/Birchwood Two, L.P., a Delaware limited partnership, as Pledgor, and
Birchwood Power Partners, L.P., a Delaware limited partnership, as Lender."
"Greenhouse Pledge Agreements": for historical purposes and in
connection with Section 9.1 of the Project Loan Agreement, collectively, the
Greenhouse Owner Pledge Agreements and the Greenhouse Operator Pledge
Agreements.
"Greenhouse Prepayment Amount": as defined in Section 7.3(f)
of the Project Loan Agreement.
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25
"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 or
the New Greenhouse Loan Agreement, except, so long as an Event of Default shall
not have occurred and is continuing, a mandatory prepayment of loans under
Section 4.2(b)(ii) of the New Greenhouse Loan Agreement, 85% of the proceeds
thereof.
"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": for historical purposes and in
connection with Section 9.1 of the Project Loan Agreement, the Deed of Sublease
dated as of May 18, 1994 between the Greenhouse Owner, as sublessor, and
Dominion Growers of Fredericksburg, Inc., as sublessee, as amended, supplemented
or otherwise modified from time to time.
"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 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.
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26
"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, (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
<PAGE> 92
27
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%.
"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.
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28
"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.
"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.
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29
"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.
"Issuing Bank": Credit Suisse First Boston, or when the
context requires, Credit Suisse First Boston, 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.
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30
"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.
"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.
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31
"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.
"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".
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32
"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 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).
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33
"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 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.
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34
"New Greenhouse Loans": the working capital loan and the term
loan extended by the Borrower to the Greenhouse Owner pursuant to the New
Greenhouse Loan Agreement.
"New Greenhouse Loan Agreement": the Term Loan and Working
Capital Agreement, dated as of November 19, 1996, between the Borrower and the
Greenhouse Owner.
"New Greenhouse Loan Notes": (i) the Working Capital Note
executed by Corporation in the form of Exhibit A to the New Greenhouse Loan
Agreement, payable to the order of the Borrower, in the amount of three million
dollars ($3,000,000) and (ii) the Term Note executed by Corporation in the form
of Exhibit B to the New Greenhouse Loan Agreement payable to the order of the
Borrower, in the amount of two million five hundred thousand dollars
($2,500,000).
"New Greenhouse Security Agreement": the Security Agreement by
and between Greenhost, Inc. and Birchwood Power Partners, L.P. dated as of
November 19, 1996 and entered into pursuant to the New Greenhouse Loan
Agreement.
"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.
"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.
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35
"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 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
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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.
"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
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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 (or minus) (ii) 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 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
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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; (r) the Contingent Distribution Amount, if any,
payable on the Completion Date to Partners affiliated with Southern; and (s) the
New Greenhouse Loans; 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.
"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 (including interest) by the Borrower of
any scheduled repayment of loans or any mandatory prepayment of loans pursuant
to the Greenhouse Loan Agreement or any payments under the Greenhouse Master
Lease, (iv) all payments received (including interest) by the Borrower of any
scheduled repayment of loans or any mandatory prepayment of loans pursuant to
the New Greenhouse Loan Agreement, (v) so long as any of the Bank Project Notes,
the Greenhouse Loan Note or the New Greenhouse Loan Notes are outstanding, (1)
any and all Dividends paid by the Corporation with respect to the Pledged
Securities, (2) the net proceeds from the sale or transfer of any of the assets
of the Corporation, after payment of the Indebtedness (as defined in the New
Greenhouse Loan Agreement) under the New
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39
Greenhouse Loan Agreement and (3) any and all other proceeds, awards, or other
compensation received by the Corporation, less reasonable fees, expenses and
other directly related costs incurred in connection with the collection of such
funds, (vi) any General Indemnity Payment Proceeds and (vii) 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;
provided, however, that for any given month, any revenues received by the
Borrower (x) pursuant to a check dated the end of such given month which is
deposited no later than the fifth business day of the following month, or (y)
pursuant to a wire transfer which is received no later than the fifth business
day of the following month shall be deemed to be and included as revenue for
such given month.
"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
(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:
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(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.
"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.
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41
"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 fifth Business Day following
the end 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 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 First
Boston 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.
"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.
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42
"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.
ss. 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.
"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.
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"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 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.
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"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 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
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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 First Boston, 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.
"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.
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46
"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;
(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
<PAGE> 112
47
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.
"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.
<PAGE> 113
48
"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.
"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 Dominion Growers of
Fredericksburg, Inc. 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.
<PAGE> 114
49
"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.
"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
<PAGE> 115
50
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.
"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 Commitments": $51,000,000.
"Total Equity Contribution Amount": as defined in Section 1.2
of the Southern Equity Contribution Agreement.
<PAGE> 116
51
"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 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 1997": the Trust Indenture by and
between the Industrial Development Authority of King George County, Virginia and
Bankers Trust Company, as trustee, dated as of March 1, 1997.
"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.
<PAGE> 117
52
"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.
"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.
"Workout Deeds": the Omnibus Deed, Bill of Sale, General
Assignment and Conveyance by Dominion Growers of Fredericksburg, Inc. and
Dominion Growers, Inc. to Greenhost, Inc. dated as of November 8, 1996 and the
four (4) Deeds of Bargain and Sale from Dominion Growers of Fredericksburg, Inc.
to Greenhost, Inc. each dated as of November 8, 1996
<PAGE> 118
53
and recorded on book and page numbers 0291/723; 0291/719; 0291/711; and 0291/715
with the Clerk, Circuit Court, King George County, Virginia.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM COGENTRIX
ENERGY, INC.'S CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED
JUNE 30, 1998 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> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 82,451
<SECURITIES> 0
<RECEIVABLES> 62,247
<ALLOWANCES> 0
<INVENTORY> 18,054
<CURRENT-ASSETS> 167,217
<PP&E> 490,726
<DEPRECIATION> 206,961
<TOTAL-ASSETS> 1,287,705
<CURRENT-LIABILITIES> 132,078
<BONDS> 964,820
0
0
<COMMON> 130
<OTHER-SE> 77,630
<TOTAL-LIABILITY-AND-EQUITY> 1,287,705
<SALES> 160,073
<TOTAL-REVENUES> 198,636
<CGS> 126,302
<TOTAL-COSTS> 126,302
<OTHER-EXPENSES> 5,613
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 33,085
<INCOME-PRETAX> 33,636
<INCOME-TAX> 13,405
<INCOME-CONTINUING> 20,231
<DISCONTINUED> 0
<EXTRAORDINARY> (743)
<CHANGES> 0
<NET-INCOME> 19,488
<EPS-PRIMARY> 69.11
<EPS-DILUTED> 69.11
</TABLE>
