<PAGE> 1
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-K
------------------------
[X]
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
COMMISSION FILE NUMBER 1-13264
------------------------
TRIGEN ENERGY CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 13-3378939
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
ONE WATER STREET
WHITE PLAINS, NEW YORK 10601
ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
</TABLE>
(914) 286-6600
(REGISTRANT'S TELEPHONE NUMBER INCLUDING AREA CODE)
------------------------
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
<TABLE>
<CAPTION>
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
- --------------------------------------------- ---------------------------------------------
<S> <C>
Common Stock, Par Value $.01 Per Share New York Stock Exchange
</TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of voting stock held by non-affiliates of the
Registrant was $97,558,955.63 based upon the closing sale price quoted by the
New York Stock Exchange on March 24, 1997. There were 12,038,057 shares of the
Registrant's Common Stock outstanding on March 24, 1997.
DOCUMENTS INCORPORATED BY REFERENCE
Information called for in Part III of this Form 10-K is incorporated by
reference from the Registrant's definitive proxy statement to be filed in
connection with its 1997 annual meeting of shareholders.
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<PAGE> 2
PART I
ITEM 1. BUSINESS
GENERAL
Trigen Energy Corporation (together with its subsidiaries, the "Company" or
"Trigen"), a thermal sciences company, develops, owns and operates commercial
district energy and cogeneration systems. Trigen uses its expertise in
thermodynamic engineering and proprietary cogeneration processes to convert fuel
to various forms of thermal energy and electricity at more efficient conversion
rates than conventional processes. Trigen combines heat and power generation,
producing electricity as a by-product, for use in its facilities and for sale to
customers. The Company serves more than 1,500 customers with energy produced at
23 plants in 13 locations, including industrial plants, electric utilities,
commercial and office buildings, government buildings, colleges and
universities, hospitals, residential complexes and hotels.
A district energy system consists of a central production plant that
distributes steam, hot water or chilled water, or steam and chilled water, to
customer facilities through underground distribution pipes. Cogeneration is the
conversion of a single fuel source into two useful energy products, such as
steam and electricity, with a greater efficiency than is possible by producing
the two products separately. At six of its cogeneration facilities, the Company
has expanded cogeneration to "trigeneration", which is the generation of steam
or hot water, electricity and chilled water. Chilled water production by
Trigen's patented trigeneration machines has saved up to 71% of the fuel used in
conventional stand-alone chilled water production. In addition, Trigen
incorporates in its systems innovative applications for standardized, modular
equipment to improve productivity.
The Company's revenues have increased from approximately $1 million in 1987
(its first full year of operation) to $243.6 million in 1996 through acquisition
and internal growth. In December 1993 the Company acquired United Thermal
Corporation ("UTC"), which operated steam-only district energy systems in four
communities. This acquisition (the "UTC Acquisition") more than doubled the
Company's 1993 revenues on a pro forma basis. During 1995, the Company acquired
a waste-to-energy district energy system serving the Province of Prince Edward
Island in Canada and (through a limited partnership in which it has a 51%
managing partner interest) the energy systems of Coors' Brewing Company ("CBC")
and Coors Energy Company in Golden, Colorado. Gas transportation services are
also provided to CBC and certain related companies pursuant to the acquisition
agreements. In January 1996, the Company acquired the privately-held Ewing Power
Systems, a leading systems integrator of steam turbine cogenerator systems. In
March 1996, the Company's subsidiary, Trigen-Schuylkill Energy Corporation,
acquired a one-third interest in Grays Ferry Cogeneration Partnership, a
Pennsylvania single purpose partnership that will construct and operate a 150
megawatt ("MW") gas- or oil-fired combined cycle cogeneration facility, which
Trigen-Schuylkill will operate as managing partner. Also in March 1996, the
Company entered into a joint venture with the privately held Gentor Industrias,
S.A. de C.V. of Monterrey, Mexico to complete the installation and utilization
of 36 MW of new cogeneration capacity and develop additional cogeneration
opportunities in Mexico. At the same time, the Company entered into a strategic
alliance agreement with a U.S. subsidiary of Gentor to deploy factory built and
tested standard cogeneration units in the United States and worldwide. In July
1996 the Company introduced its first factory built and tested standard
cogeneration unit at its London, Ontario facility. In November, 1996, the
Company entered into a joint venture with Hydro-Quebec to provide a complete
package of energy commodity and energy production services throughout New
England and upstate New York. In December 1996, the Company entered into a joint
venture with Cinergy Corp. to build, own and operate cogeneration and
trigeneration facilities throughout the United States, Canada, the United
Kingdom and Ireland, subject to certain exclusions resulting from pre-existing
agreements.
BUSINESS STRATEGY
Significant opportunities for the Company's continued growth include:
expanding existing systems to serve additional customers or the expanded needs
of existing customers, acquiring systems or assuming management of additional
systems, adding new services to its systems and developing new systems to
provide district energy or independent power wherever its expertise provides a
competitive advantage.
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Key elements of the Company's growth and profitability have included the
following:
- Economies of Scale. The Company's growth is attributable in large part
to the inherent economies of scale of district energy systems (when
compared to individual customer production of heating and cooling). These
advantages include the utilization of large efficient machinery, labor
savings, the ability to serve diverse peak requirements of various
customers, and specialization in energy production and distribution. In
many locations, these advantages outweigh the limitations of district
energy systems, which often involve significant capital expenditures in
the initial stages of construction or expansion and generally require a
high density of customer buildings.
- Stable Customer Base. The Company's long-term contracts (i.e., contracts
with terms of five years or more) would provide pro forma consolidated
revenues of over $142 million per year for the five-year period 1996
through 2000 and approximately $2.4 billion cumulatively for the period
1996 through 2024 (assuming, among other things, no inflation and no
changes in consumption or prices from 1995 levels). Since customers with
short-term contracts do not operate boiler rooms and chillers, and in
most cases do not even have such equipment, customer attrition has been
low.
- Technical Innovation and Plant Optimization. The Company has developed
computerized, automated control systems, typically installed in
large-scale generating facilities, which place real-time production cost
information in the hands of its plant operators. In addition, patents
have been granted for certain of its trigeneration and chilling
technologies and the Company has developed innovative applications of
standard modular equipment.
- Natural Barriers to Entry. Once a system is in place, the Company
benefits from natural barriers to entry by anyone trying to create a
competing system and is able to add customers within reach of its
installed systems at a relatively low additional cost (although not all
potential customers can be added on a cost-effective basis).
- Expansion to Industrial Plants. While the Company continues to grow its
business of district heating and cooling, there appear to be growing
opportunities to provide combined heat and power at industrial sites.
Monopoly regulation currently impedes progress in this area, but ongoing
deregulation of the electric industry is reducing this barrier.
- Rate Structures. Because the Company's rate structures typically enable
it to pass through to its customers fuel and most other commodity prices,
changes in such prices (which constitute more than 50% of the Company's
costs) have little impact on operating income. However, the Company is
not a monopoly provider and its rates must remain cost competitive.
- Reduced Environmental Impact. The Company produces substantially less
pollutants than would result from conventional generation of the same
heat, electricity, and cooling. This is due to the fuel efficiency of
cogeneration and trigeneration, employment of refrigerants other than
CFCs wherever possible, thermal, chemical, and catalytic destruction of
exhaust contaminants, and extensive automation with continuous emission
monitoring, among other means.
- Entrepreneurial Management. The Company's senior management has
extensive experience in the development and operation of district energy
systems and cogeneration technologies, and has a track record of
technical and financial innovation. Senior management as a group hold
approximately 14% percent of the Company's common stock.
OVERVIEW OF THE COMPANY'S PRODUCTS AND SERVICES
The Company's plants have the capacity to produce 4,204 MW of energy, of
which approximately 85.1% is steam or hot water, 8.4% is electricity and 6.5% is
chilled water. These products are distributed to customers through 137.1 miles
(220.7 kilometers) of pipeline, a substantial portion of which was in place in
the systems when such systems were acquired by the Company. Separate pipelines
are used for steam, hot water and chilled water.
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The following table summarizes the Company's systems by location:
<TABLE>
<CAPTION>
1996 REVENUES
(DOLLARS IN
MILLIONS)
------------------ CAPACITY
% OF ------------------------------------------------------------
TOTAL STEAM AND HOT ELECTRICITY CHILLED WATER MILES OF
LOCATION AMOUNT REVENUES WATER ----------- -------------- PIPELINE
- ------------------------- ------ -------- ------------------ --------
(MWT) (MLBS/HR) (MWE) (MWT) (TONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Baltimore................ $ 27.6 11.3% 437 1,358 -- -- -- 16.6
Boston................... 38.4 15.8% 511 1,585 1 -- -- 22.0
Chicago(1)(2)............ .6 .3% 114 355 3 58 16,500 2.0
Golden, Colorado......... 30.2 12.4% 380 1,180 40 -- -- --
Kansas City.............. 9.0 3.7% 403 1,250 6 -- -- 9.5
London, Ontario.......... 1.9 .8% 55 170 4 5 1,500 5.5
Nassau County............ 36.3 14.9% 267 830 57 53 15,200 4.1
Oklahoma City............ 4.7 1.9% 102 316 1 51 14,600 4.0
Philadelphia(5).......... 57.1 23.4% 889 2,760 225 -- -- 33.0
Prince Edward Island..... 5.4 2.2% 33 101 2 -- -- 4.3
St. Louis................ 8.3 3.4% 184 570 -- -- -- 22.0
Trenton(3)............... 15.7 6.5% 108 335 12 37 10,390 9.5
Tulsa(4)................. 7.4 3.0% 94 291 1 71 20,150 4.6
Ewing Power Systems...... 1.0 .4% -- -- -- -- -- --
------ ---- ----- ------ --- --- ------ -----
Total.................... $243.6 100% 3,577 11,101 352 275 78,340 137.1
====== ==== ===== ====== === === ====== =====
</TABLE>
- ---------------
(1) Includes 8.5 million gallon chilled water storage tank.
(2) The Company accounts for its investment in the Chicago joint venture with
Peoples Energy Corporation under the equity method of accounting.
(3) Includes 2.6 million gallon chilled water storage tank.
(4) Includes cold storage warehouse.
(5) 170 MWe under construction in the Grays Ferry Cogeneration Project.
Where electricity is produced with diesel or gas turbines, exhaust heat is
recovered for production of additional electricity, steam or hot water and/or
chilled water. In trigeneration plants, chilled water is produced using a
compressor which is powered by the diesel or gas turbine used to produce
electricity, steam or hot water. Because demand for steam and hot water has
daily and yearly cycles, the Company cannot always use all the waste heat
generated by its plants to produce steam and hot water for immediate use.
Trigeneration plants and innovative use of standard modular equipment enable the
Company to recover and use waste heat to produce electricity or chilled water
for a longer period of time each day, during both summer and winter.
By generating two or three energy products from a single fuel source,
cogeneration and trigeneration yield more useful energy output. For example, the
average electricity plant in the United States delivered an estimated 33% of its
fuel as useful energy in 1996, releasing the remaining 67% into the environment.
The Company estimates that in the same year its systems converted approximately
50% to 92% of their fuel to useful energy.
In each system, the Company's policy is to have sufficient heating capacity
so that it can generate peak loads even without its largest production unit in
service, and to have the ability to use two or more different types of fuel in
its systems. This policy, which requires the Company to increase steam
generating capacity from time to time, has enabled it to achieve high levels of
reliability of service. During the extreme cold weather of January 1994 and
during the heat wave of the summer of 1995, when numerous electric utilities on
the east coast of the United States suffered or instituted rolling blackouts,
the Company's customers received uninterrupted service.
Steam and Hot Water. The Company produces steam and/or hot water at all of
its systems. Some of this is used internally to drive chillers; most is sold to
customers for space heating and hot water, for cooling
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(by powering on-site steam-driven chillers or absorption chillers), and for
humidification, sterilization and various industrial process uses.
Electricity. The Company produces electricity at ten of its plants. All of
the electricity produced is either sold to the local utility company or used by
the Company internally in the production of steam and hot water or to drive
mechanical chillers. Five of these electricity generating plants, located in
Colorado, Nassau County, Philadelphia, Trenton and Kansas City are qualified for
exemption from regulation ("Qualifying Facilities") under the Public Utility
Regulatory Policies Act of 1978 ("PURPA").
Chilled Water. At six of its facilities, the Company produces chilled
water, which is provided to customers to cool commercial building space and for
process chilling. Chilled water is produced by converting the energy in hot
water, steam, mechanical energy or electricity into chilled water through the
use of absorption chillers and mechanical chillers. An absorption chiller uses
heat (steam or hot water) to concentrate lithium bromide, which when mixed with
water absorbs heat and thus chills the water. A mechanical chiller, driven by a
steam turbine, electric motor, diesel engine or gas turbine, uses a compressor
to compress refrigerant gases. When such gases are expanded chilled water is
produced.
The Company adds chilling capacity to its systems in two ways: it acquires
chillers for operation in its central production facilities and it operates
chillers leased from customers (sometimes powering them with steam produced at
the Company's central plant). The use of leased equipment permits the Company to
establish cooling systems and to add new customers with reduced capital
investments. In most cases, the chilled water is distributed through the
Company's energy system. At present, the Company owns all of the chillers used
in London, Ont., Tulsa and Oklahoma City and leases all of the chillers used in
Nassau County. In Trenton and Chicago, the Company uses a combination of leased
and owned equipment. Some customers also maintain on-site chillers to serve
solely as backup for their own buildings. In these cases, the Company may
contract to operate such equipment for the customer and contract for the right
to use such capacity to back up the Company's chilled water production. The
Company has signed a contract with the City of Kansas City, Missouri, and a
letter of intent with Jackson County, Missouri, and the U.S. General Services
Administration to provide chilled water to eleven buildings in downtown Kansas
City beginning in 1998.
Energy Services. The Company also provides energy services to its
customers, consisting of operating supervision, management and maintenance of
facilities as well as advice and assistance regarding initial design,
construction and start-up, with respect to energy use as well as energy audits.
Energy services is a significant line of business for the Company's parent
company, ELYO ("ELYO" and collectively with its other subsidiaries the "ELYO
Group"), which makes its expertise available to the Company as required.
FUEL AND RAW MATERIALS
The Company is a significant purchaser of gas and oil and of chillers,
boilers, generators and other equipment used for heating, cooling and electric
generation. The Company formed a fuel management subsidiary in 1994 to
coordinate purchases of fuel to achieve savings and favorable contract terms.
Most of the Company's gas and oil requirements, as well as most of its other
supplies, are purchased from local suppliers. The Company believes that it has
adequate sources of fuel, supplies and equipment.
COMPETITION
Provision of Heating, Electricity and Cooling at Existing Systems
The provision of heating, electricity and cooling services is highly
competitive, although there are currently very few competing operators of
multiple-user district energy systems. The Company's principal competition is
from potential customers that own and operate their own boiler and chilled water
plants, who are often encouraged to install and retain their own plants by the
suppliers of raw energy (such as local oil, natural gas and electricity
companies) and by equipment suppliers that sell products and services to users
that self-generate thermal energy. In some cases utilities offer cash incentives
to install equipment that will use
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<PAGE> 6
their electricity or gas. In two of its locations, local utilities are competing
directly with the Company through unregulated subsidiaries offering steam and/or
cooling.
The Company believes that competition in each of these areas is primarily
based on customers' perceptions of cost savings and reliability of service. The
Company competes to attract and retain customers, and also competes for
contracts and other awards to develop new facilities and systems. A significant
additional factor is the high capital cost involved in constructing a district
energy system. While this factor provides a competitive advantage once the
Company is operating a completed system, high capital costs typically require
the Company to have a significant number of customers, preferably under
long-term contract, prior to undertaking construction of a new cooling or
heating system.
New Projects
The Company competes directly with a large number of well-capitalized
independent power developers for new electric generation projects. Competition
is based on technical skills, financing ability and market reputation, among
other factors.
In the past, the Company has not generally competed for single user
cogeneration power development projects, but focused on multi-customer district
energy systems. Most of the Company's cogeneration facilities are in the center
of cities and relatively smaller and more expensive to build (per unit of
electric generation) than plants built to produce the minimum heat recovery
required to be certified as a Qualifying Facility. The Company selectively
pursues generation opportunities where electricity is a by-product of efficient
heat and cooling production, providing electricity directly to industrial or
commercial customers or selling it to electric utilities.
Internationally, the Company intends to seek selected opportunities in
nations where electricity demand is high and special conditions make fuel
expensive, or where a customer's location or business favor a power project with
high efficiency, reliability and waste heat recovery.
In 1996, the Company entered into joint ventures with certain electric
utilities to be able to offer a complete package of energy commodity and energy
production services, to reach more customers, and to be in a position to
participate in the anticipated deregulated electricity market .
TECHNOLOGY
The Company's research and development efforts have focused on efficient
conversion of fuel to energy and on improved generating, monitoring, automation
and storage technologies. These efforts have resulted in the trigeneration
machine, innovations in chilled water storage and control systems, innovative
applications of standard modular equipment, and various incremental operational
improvements. Expenditures for customer-sponsored or Company-sponsored research
and development are not separately reflected in the Company's financial
statements and the Company believes that if such expenditures were so allocated,
the amounts would not be material. The Company has been granted patents for the
trigeneration machine, its freeze suppression chemical for stratified cold water
storage and a fuel blending system for emissions control. None of these patents
are believed to be material.
ENVIRONMENTAL
The Company's operations are subject to extensive federal, state,
provincial and local environmental laws and regulations that govern, among other
matters, emissions into the air, the discharge of effluents, the use of water,
fuel tank management and the storage, handling and disposal of toxic waste
material. A continuing objective of the Company is to achieve compliance with
these laws and regulations. The Company has invested substantial funds to modify
facilities to comply with applicable environmental laws and plans additional
capital expenditures for these purposes in the future. Approximately $3.1
million was spent in 1996 in connection with environmental compliance, most of
which is included in capital expenditures. The Company expects to spend
approximately $4.0 million in the aggregate for similar capital programs in 1997
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through 1999. Additional amounts to be spent for environmental control
facilities in future years will depend on new laws and regulations and other
changes in environmental concerns and legal requirements.
EMPLOYEES
As of December 31, 1996 the Company had approximately 651 employees, 581 of
whom were in the operating subsidiaries and 70 at the corporate headquarters.
The Company has collective bargaining agreements with the International Union of
Operating Engineers (Local 877 in Boston, Local 30 in Nassau County, and Local
68, 68A and 68B in Trenton) and Local 100 of the Canadian Union of Operating
Engineers in London, Ontario. These agreements cover 46, 25, 22 and 7 employees,
respectively, and expire in May 1997, April 1999, February 1997 and August 1998,
respectively. The Company believes that its relations with its employees are
good.
ITEM 2. PROPERTIES
The following table shows the material properties owned or leased by
Trigen's operating subsidiaries:
<TABLE>
<CAPTION>
LOCATION FACILITY DESCRIPTION OWNED/LEASED
- --------------------------------------- ------------------------------ ---------------------
<S> <C> <C>
Baltimore (Spring Gardens) Steam Owned
Baltimore (Saratoga) Steam Owned
Baltimore (Central Avenue) Steam Owned
Boston (Kneeland) Steam Owned
Boston (Scotia) Steam Owned
Chicago (McCormick Place)(1) Trigeneration 25-year leasehold
Colorado (Golden)(2) Cogeneration Owned
Kansas City Cogeneration Owned
London, Ontario Trigeneration Owned
Nassau County (Uniondale) Trigeneration Owned
Nassau County (Central Utility Plant) Steam and Chilled Water 25-year leasehold
Nassau County (Medical Center Plant) Steam and Chilled Water 25-year leasehold
Oklahoma City Trigeneration Owned
Philadelphia (Schuylkill) Cogeneration 50-year leasehold
Philadelphia (Edison) Steam Owned
Philadelphia (Willow Street)(3) Steam Owned
Philadelphia (Petro Site) Oil Terminal and Storage Site Owned
Prince Edward Island (Charlottetown) Cogeneration Owned
South Deerfield, Massachusetts (Ewing) Turbine Cogeneration Systems Lease month to month
St. Louis (Ashley Street)(4) Steam Owned
St. Louis (Cass Street)(4) Possible Future Facility Owned
Trenton Trigeneration 99-year leasehold
Tulsa Trigeneration Owned
Turners Falls, Massachusetts (Ewing) Under Construction Owned
</TABLE>
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(1) This facility is leased by a joint venture with Peoples Energy Corporation.
(2) This facility is owned by a joint venture with Nations Energy Corporation, a
wholly-owned subsidiary of Tucson Electric Power Company.
(3) This facility is inactive.
(4) The steam distribution system associated with this facility is leased from
the Solid Waste Management and Development Corporation, a Missouri
not-for-profit corporation organized in the City of St. Louis.
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See Footnote 11 to the consolidated financial statements of the Company
regarding assets pledged as security under the Company's financing agreements.
The Company leases approximately 16,986 square feet in White Plains, New
York which houses its executive offices, financial, engineering, marketing,
legal and data processing staffs. The term of the lease extends through March
31, 2000 and the annual rent due thereunder is approximately $333,481. The
Company believes that these facilities are adequate to meet its needs for the
foreseeable future, and that suitable replacement space is readily available.
ITEM 3. LEGAL PROCEEDINGS
Oklahoma Litigation
In August 1996, the Company's subsidiary, Trigen-Oklahoma City Energy
Corporation, commenced an antitrust action in Federal District Court in Oklahoma
City seeking injunctions and $21 million in damages from the local utility,
Oklahoma Gas and Electric Company ("OG&E"). The action was commenced following
many years of questionable anti-competitive actions against Trigen-Oklahoma City
Energy Corporation by OG&E, culminating in criminal indictments being brought
against two OG&E officials for allegedly bribing Oklahoma elected officials to
breach Trigen-Oklahoma City Energy Corporation contracts. OG&E has
counterclaimed for $5 million in damages, claiming that OG&E has been slandered
by the commencement of the action. Pretrial discovery is currently being
conducted. This case is not expected to come to trial before the end of 1997.
Legal expenses through December 31, 1996 were approximately $200,000.
Other Litigation
The Company is subject from time to time to various other claims that arise
in the normal course of business, and the Company believes that the outcome of
these matters (either individually or in the aggregate) will not have a material
adverse effect on the business results of operation or financial condition of
the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SHAREHOLDER MATTERS
The Company's Common Stock is traded on the New York Stock Exchange under
the symbol TGN. The Company's initial public offering of Common Stock occurred
on August 12, 1994 at $15.75 per share. As of March 24, 1997 there were
approximately 1,858 shareholders of record.
The following table sets forth the high and low sales prices for the
Company's Common Stock for the periods indicated:
<TABLE>
<CAPTION>
HIGH LOW
---- ---
<S> <C> <C>
1996
First Quarter.......................................................... 21 3/4 18 1/2
Second Quarter......................................................... 22 1/4 18 1/8
Third Quarter.......................................................... 22 1/2 18
Fourth Quarter......................................................... 32 1/4 21 5/8
1995
First Quarter.......................................................... 22 1/2 19 1/2
Second Quarter......................................................... 20 16 1/4
Third Quarter.......................................................... 22 3/8 17 3/8
Fourth Quarter......................................................... 21 5/8 16 3/4
</TABLE>
During 1996 and 1995, the Company declared dividends of $0.14 per share of
Common Stock.
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ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth selected consolidated financial data for the
Company and should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the consolidated
financial statements of the Company, including the notes thereto, appearing
elsewhere in this Annual Report:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------------------------
1996 1995 1994 1993(1) 1992
-------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Total revenues..................... $243,634 $198,710 $185,627 $ 90,578 $ 70,552
Operating income................... 43,138 37,038 29,718 17,100 12,767
Interest expense................... 18,840 19,890 16,657 9,448 8,135
Income before extraordinary loss... 14,051 10,564 8,561 4,325 3,248
Extraordinary loss on
extinguishment of long-term debt,
net of tax....................... 1,943 -- -- 4,500 --
Net income (loss).................. 12,108 10,564 8,561 (175) 3,248
Per common share:
Cash dividends................... .14 .14 .07 -- --
Income before extraordinary
loss.......................... 1.21 .93 .89(2) .51(2) .38(2)
Net income (loss)................ $ 1.04 $ .93 $ .89(2) $ (.02)(2) $ .38(2)
</TABLE>
- ---------------
(1) Includes operations of UTC for the period from December 1, 1993 through
December 31, 1993.
(2) Restated to reflect an approximate 26 for 1 stock split effective August 10,
1994.
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
-------------------------------------------------------------
1996 1995 1994 1993(1) 1992
-------- -------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital (deficit).......... $ (5,536) $ 282 $ 9,801 $(14,600) $ 848
Property, plant and equipment,
net.............................. 374,549 341,188 311,418 300,591 156,941
Total assets....................... 494,436 454,906 424,330 402,669 191,167
Long-term debt..................... 226,487 223,371 220,725 228,320 126,202
Other long-term liabilities........ 7,755 9,229 11,546 20,983 2,696
Stockholders' equity............... 140,534 118,830 109,354 61,846 42,521
</TABLE>
- ---------------
(1) Includes UTC balances effective December 1, 1993.
Certain statements in this Annual Report that do not reflect historical
information are forward-looking statements. These include statements about
energy markets in 1997; cost reduction targets; return on capital goals;
development, production and acceptance of new products and process technologies;
ongoing and planned capacity additions and expansions and joint ventures.
Important factors that could cause actual results to differ materially from
those discussed in such forward-looking statements include: supply/demand
balance for the corporation's products, competitive pricing pressures, weather
patterns, changes in industry laws and regulations, competitive technology
positions and failure to achieve the corporation's cost reduction targets or
complete construction projects on schedule.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion should be read in conjunction with the
consolidated financial statements of the Company, including the notes thereto,
appearing elsewhere in this Annual Report.
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GENERAL
The highlights of operations in 1996 and 1995 included the following:
- Formation of two separate independent joint ventures with Cinergy Corp.
and Hydro-Quebec.
- Acquisition of Ewing Power Systems, Inc. in 1996, for $1.0 million of
common stock.
- A wholly-owned subsidiary of the Company became a one-third partner in
the Grays Ferry Cogeneration Facility in 1996.
- Prepayment of $7.0 million of subordinated debt in 1996.
- Acquisition of two energy facilities in 1995, the energy production
assets of Coors Brewing Company and Coors Energy Company ("Coors") and
the energy production facilities and distribution assets in
Charlottetown, Prince Edward Island ("PEI").
- Completion of a $62.5 million revolving credit facility in 1995.
The following tables set forth certain historical operating data (expressed
as a percentage of total revenues) for the periods shown:
<TABLE>
<CAPTION>
1996 1995 1994
--------------------- --------------------- --------------------
REVENUE REVENUE REVENUE
------------ ------------ ------------
AMOUNT % UNITS AMOUNT % UNITS AMOUNT % UNITS
------ --- ------ ------ --- ------ ------ --- -----
(DOLLARS IN MILLIONS, UNITS IN THOUSAND MW HOURS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Thermal energy(1).............. $187.7 77 5,400 $156.2 79 4,327 149.0 80 3,836
Electricity.................... 44.7 18 860 34.3 17 693 33.2 18 574
Fees and other revenues(2)..... 11.2 5 -- 8.2 4 -- 3.4 2 --
------ --- ----- ------ --- ----- ------ --- -----
Total.......................... $243.6 100 6,260 $198.7 100 5,020 $185.6 100 4,410
====== === ===== ====== === ===== ====== === =====
</TABLE>
- ---------------
(1)Some steam is used by customers in almost all systems for production of
chilled water; such use for cooling is especially significant in Nassau,
Boston and London, Ontario.
(2) Includes development fees, energy services, cold storage warehouse revenues
and other revenues.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------
1996 1995 1994
----- ----- -----
<S> <C> <C> <C>
Total revenues.............................................. 100.0% 100.0% 100.0%
Fuel and consumables........................................ 48.6 42.6 44.7
Production and operating costs.............................. 18.0 20.2 21.4
Depreciation................................................ 3.1 5.7 5.9
----- ----- -----
Cost of sales............................................... 69.7 68.5 72.0
General and administrative.................................. 12.6 12.9 12.0
----- ----- -----
Operating income............................................ 17.7 18.6 16.0
Interest expense............................................ 7.7 10.0 9.0
Income before income tax expense and extraordinary loss..... 9.6 9.0 7.8
</TABLE>
The Company's rate structures for thermal energy generally include fixed
and variable components. The rate structures are intended to cause revenues to
match the Company's costs of providing capacity, including projected debt
service and return on equity, thermal losses in the distribution network, taxes,
labor and scheduled maintenance and repair. The capacity component, which is
independent of usage in the period, generally includes cost escalation
provisions. The rate structures also contain a charge, which varies with usage
during the period, and which is intended to cover directly variable costs, so as
to pass through to customers the Company's cost of fuel. The Company accounts
for its operating expenses based on the average cost to produce and deliver
thermal energy or electricity, on a system by system basis, over the course of
the year.
9
<PAGE> 11
The Company has been able to reduce its cost of sales as a percentage of
revenues since 1994 by achieving production and distribution efficiencies,
principally as a result of process optimization and automation of plant control
equipment.
RESULTS OF OPERATIONS -- 1996 COMPARED TO 1995
The Company's revenues and operating profit are subject to seasonal
fluctuation due to peak heating demand in the winter and peak cooling demand in
the summer. The acquisition of UTC, which sold only steam, causes greater
concentration of the Company's revenues in cold months. The Company's strategy
of adding cooling, electricity and energy services will, if successful, reduce
the concentration of revenues in cold months in the future.
Revenues
Revenues were $243.6 million in 1996, an increase of $44.9 million, from
$198.7 million in 1995, due principally to two acquisitions consummated in
September 1995, which contributed $24.7 million of the increase, a colder winter
in 1996 compared to 1995 and the increased price of fuel.
Operating Expenses
The Company's cost of sales includes fuel and consumables, production and
operating costs and depreciation expense and is affected primarily by its costs
for fuel, chemicals, water and other commodities. Because the Company's rates
typically enable it to pass changes in its fuel and most commodity costs to the
customer, such changes have little impact on operating income. The Company's
cost of sales and its operating income are affected by its efficiency in
converting fuel to steam, hot water, electricity and chilled water and its
ability to minimize costs through automation and enhanced process control. Cost
of sales as a percentage of revenues increased from 68.5% of revenues in 1995 to
69.7% of revenues in 1996 due to the increased cost of fuel, partially offset by
the reduction in depreciation expense related to a net gain of $6.4 million from
a condemnation award granted to the Company for one of its Boston, Massachusetts
facilities and labor productivity improvements.
Fuel and consumables' costs were $118.3 million, or 48.6% of revenues, in
1996, compared to $84.6 million, or 42.6% of revenues, in 1995, an increase of
$33.7 million. This increase is due to the impact of the two acquisitions ($13.5
million), and the increased price of fuel.
Production and operating costs are those costs of operating the Company's
facilities other than fuel and consumables, and include labor and supervisory
personnel, repair and maintenance costs and plant operating costs. Production
and operating costs increased to $44.0 million in 1996 from $40.1 million in
1995, and as a percentage of revenues decreased to 18.0% in 1996 compared to
20.2% in 1995. The increase of $5.1 million resulting from the two acquisitions
was offset by cost savings, labor productivity improvements and an arbitration
award of $1.0 million, net of expenses.
Depreciation expense was $7.6 million in 1996 compared to $11.4 million in
1995, a decrease of $3.8 million, due to a net gain of $6.4 million from a
condemnation award granted to the Company for one of its Boston, Massachusetts
facilities, offset by the two acquisitions ($0.8 million), increased capital
expenditures and the write-off of certain assets of $3.7 million in 1995.
General and administrative expenses represent on-site management and other
overhead costs incurred for existing operations, as well as the Company's
marketing, development and corporate management costs. General and
administrative costs increased to $30.6 million, or 12.6% of revenues, in 1996,
from $25.6 million, or 12.9% of revenues, in 1995. This is primarily due to
additional staff and development costs, legal costs and the impact of the two
acquisitions ($1.6 million).
Operating Income
Operating income was $43.1 million, or 17.7% of revenues, in 1996 compared
to $37.0 million, or 18.6% of revenues, in 1995. Increased general and
administrative expenses offset by cost savings, primarily from
10
<PAGE> 12
efficiency and labor productivity, increased revenues, lower depreciation
expense due to the condemnation award, and the impact of the two acquisitions
($3.7 million), resulted in improved operating income of $6.1 million.
Interest Expense; Other Income
Interest expense decreased to $18.8 million in 1996 from $19.9 million in
1995, primarily due to lower average interest rates.
Income Tax Expense
The Company's effective tax rate is determined primarily by the federal
statutory rate of 35%, and state and local income taxes. The effective income
tax rate of 40.4% (after the income tax benefit from the extraordinary loss) is
consistent with the rate in 1995.
Extraordinary Loss
The Company prepaid $7.0 million of subordinated debt in the third quarter
of 1996, which resulted in an extraordinary loss of $1.9 million, net of income
taxes of $1.1 million.
RESULTS OF OPERATIONS -- 1995 COMPARED TO 1994
Revenues
During 1995, a wholly owned subsidiary of the Company, in partnership with
Nations Energy Corporation, purchased the energy production assets of Coors
Brewing Company in Golden, Colorado to provide steam and electricity to Coors
under a 25 year contract. Trigen has a 51% interest in the partnership.
In 1995, the Company also acquired, through a subsidiary, the energy
production facilities and distribution assets in Charlottetown, Prince Edward
Island ("PEI"). Under a thirty-year contract, the Company will provide the
thermal energy needs of the Province of PEI, Queen Elizabeth Hospital and the
University of PEI.
Revenues were $198.7 million in 1995, an increase of $13.1 million from
$185.6 million in 1994, principally due to the impact in 1995 of the two
acquisitions, which contributed revenues of $11.0 million.
Operating Expenses
Cost of sales as a percentage of revenues decreased from 72.0% in 1994 to
68.5% in 1995, primarily due to the Company's efforts in improving fuel
efficiency and reduction of costs from enhanced automation.
Fuel and consumable costs were $84.6 million, or 42.6% of revenues in 1995,
compared to $83.0 million, or 44.7% of revenues in 1994, an increase of $1.6
million. The impact of the two acquisitions increased these costs by $5.3
million, which was offset by higher efficiency and lower average fuel costs.
Production and operating costs increased to $40.1 million in 1995 from
$39.7 million in 1994. The increase resulting from the two acquisitions of $2.4
million was offset by cost savings and labor productivity improvements.
Production and operating costs as a percentage of revenues were 20.2% in 1995
and 21.4% in 1994.
Depreciation expense was $11.4 million in 1995 compared to $10.9 million in
1994, an increase of $0.5 million due to additional capital expenditures, a full
year's depreciation of assets put in service during 1994 and the write-off of
certain assets. Included in depreciation expense is the write-off of certain
assets of $3.7 million, and a gain of $4.8 million related to a condemnation
award received for one of its Boston, MA facilities.
General and administrative costs increased to $25.6 million, or 12.9% of
revenues, in 1995, from $22.2 million in 1994, or 12.0% of revenues. This is
primarily due to additional staff and development costs and the impact of the
two acquisitions of $0.7 million.
11
<PAGE> 13
Operating Income
Operating income was $37.0 million, or 18.6% of revenues, in 1995 compared
to $29.7 million, or 16.0% of revenues in 1994. Cost savings, primarily from
efficiency and labor productivity, and the impact of the two acquisitions in
1995 of $2.3 million, resulted in improved operating income of $7.3 million.
Interest Expense; Other Income
Interest expense increased to $19.9 million in 1995 from $16.7 million in
1994, primarily due to higher average interest rates on indebtedness.
Income Tax Expense
The Company's effective tax rate is determined primarily by the federal
statutory rate of 35%, and state and local income taxes. The effective income
tax rate of 40.9% in 1995 is consistent with the rate in 1994.
LIQUIDITY AND CAPITAL RESOURCES
Cash Flow
The Company had cash and cash equivalents of $25.3 million at December 31,
1996 and $20.2 million at December 31, 1995, an increase of $5.1 million. The
Company had short-term indebtedness outstanding of $18.5 million at December 31,
1996 compared to $14.2 million at December 31, 1995, an increase of $4.3
million. These changes, in addition to the results of investing and financing
activities, were due to the use of cash on hand at December 31, 1995, and cash
generated from operations during the year.
Cash provided by operating activities was $28.0 million in 1996, compared
to $14.1 million in 1995. Net cash used in investing activities was $42.7
million in 1996, primarily due to capital expenditures of $47.6 million. Net
cash provided by financing activities was $19.8 million in 1996 principally
reflecting debt proceeds of $46.7 million to fund capital expenditures and the
issuance of common stock of $6.8 million, offset by debt repayments of $28.9
million.
The Company had cash and cash equivalents and marketable securities of
$20.2 million at December 31, 1995 and $36.2 million at December 31, 1994, a
decrease of $16.0 million. The Company had no marketable securities at December
31, 1995. The Company had short-term indebtedness outstanding of $14.2 million
at December 31, 1995 compared to $15.6 million at December 31, 1994, a reduction
of $1.4 million. These changes were primarily due to the sale of $16.4 million
of marketable securities and the two acquisitions during 1995, capital
expenditures, the use of cash on hand at December 31, 1994 and cash generated
from operations during the year.
Cash provided by operating activities was $14.1 million in 1995, compared
to $12.3 million in 1994. Net cash used in investing activities was $16.8
million in 1995 primarily due to the two acquisitions aggregating $18.5 million
and capital expenditures of $18.5 million, offset by the sale of marketable
securities of $16.4 million and proceeds from the $5.3 million condemnation
award. Net cash provided by financing activities was $3.0 million in 1995,
principally reflecting debt proceeds.
During 1996 and 1995, the Company declared dividends of $0.14 per share of
common stock at the rate of $.035 per share per quarter.
The Company believes that cash provided by operations net of debt service,
cash balances at December 31, 1996 and available credit facilities, will be
sufficient to finance its capital program, several new development projects and
continuing quarterly dividends.
12
<PAGE> 14
At December 31, 1996, the Company's long-term debt (including the current
portion) was $240.0 million or 57.7% of total capital, at a weighted average
annual interest rate of approximately 6.55% (based on three-month LIBOR of 5.66%
per year) and an average remaining maturity of 6.3 years.
On September 30, 1996, the Company prepaid $7.0 million of subordinated
debt. The prepayment was accomplished through the payment of cash and the
issuance of 200,000 shares of the Company's stock to the lender. In repaying
this debt, costs of $3.0 million ($1.9 million net of income tax benefit), were
incurred by the Company and were accounted for as an extraordinary loss. The
Company also issued 240,000 shares of stock to its parent, Cofreth American
Corporation.
At December 31, 1995, the Company's long-term debt (including the current
portion) was $230.8 million or 60.6% of total capital, at a weighted average
annual interest rate of approximately 7.24% (based on three-month LIBOR of 5.65%
per year) and an average remaining maturity of 7.0 years.
The Company has incurred most of this indebtedness at the subsidiary level
in order to finance the acquisition or construction of its energy systems.
Certain of the Company's debt is variable rate or rate capped. Based upon
the debt balances at December 31, 1996, a change in the LIBOR rate of .25% would
have a corresponding change in interest expense of approximately $400,000 per
year when three-month LIBOR is under 6.25% ranging to approximately $350,000 per
year when three-month LIBOR is over 7.50%. Three-month LIBOR at December 31,
1996 was 5.66%.
Payments to Parent Company
Certain of the Company's debt agreements restrict payments by its
subsidiaries, which are the primary obligors, to the Company, unless the
payments are for specified purposes or the subsidiary meets certain financial
covenants. Trigen's cash is derived from management fees and costs recovered
from its subsidiaries, distributions by its subsidiaries, and, at times,
repayment to Trigen from proceeds of long-term financing obtained by the
subsidiaries for funds previously advanced to subsidiaries.
Restricted cash and cash equivalents of $17.9 million at December 31, 1996
included $6.6 million for debt service and reserve funds, $2.1 million for
operations and maintenance reserves, $5.9 million available for subsidiary
operating purposes and $3.3 million for certain construction projects.
Restricted funds may be invested only in certain securities. At December 31,
1996, the Company had unused lines of credit available consisting of $0.7
million under a UTC revolving credit facility and $28.5 million under a
corporate revolving credit facility.
Environmental Expenditures
The Company's facilities are subject to governmental requirements with
respect to the discharge of materials and otherwise relating to protection of
the environment. The Company spent approximately $3.1 million and $2.5 million
in 1996 and 1995, respectively, to comply with these requirements, most of which
is included in capital expenditures, and estimates that its expenditures for
environmental compliance in 1997 through 1999 will be approximately $4.0 million
in the aggregate, most of which will be capital expenditures. These expenditures
include improvements at certain facilities for air emission control equipment as
required by the United States Clean Air Act (the "Clean Air Act"), wastewater
discharge control equipment, asbestos control and replacement of CFC
refrigerants.
Management expects that the cost of compliance with existing environmental
requirements will not have a material adverse effect on the Company's liquidity
or financial condition.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and financial statement schedules that are filed
as part of this Annual Report begin on page F-1 hereof.
13
<PAGE> 15
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not Applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
Information concerning directors and executive officers of Trigen is hereby
incorporated by reference from Trigen's definitive proxy statement which will be
filed with the Commission within 120 days after the close of the fiscal year.
ITEM 11. EXECUTIVE COMPENSATION
Information concerning executive compensation is hereby incorporated by
reference from Trigen's definitive proxy statement which will be filed with the
Commission within 120 days after the close of the fiscal year.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information concerning security ownership of certain beneficial owners and
management is hereby incorporated by reference from Trigen's definitive proxy
statement which will be filed with the Commission within 120 days after the
close of the fiscal year.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information concerning certain relationships and related transactions is
hereby incorporated by reference from Trigen's definitive proxy statement which
will be filed with the Commission within 120 days after the close of the fiscal
year.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) (1) and (2) The Financial Statements and Financial Statement Schedules
listed under "Index to Financial Statements and Financial Statement Schedules"
on page F-1 hereof are filed as part of this Annual Report.
(a) (3) The Exhibits listed under "Index of Exhibits" on pages E-1 and E-2
hereof are filed as part of this Annual Report.
(b) Reports on Form 8-K. None
14
<PAGE> 16
TRIGEN ENERGY CORPORATION AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS AND
FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
REGISTRANT'S FINANCIAL STATEMENTS
Independent Auditors' Report........................................................ F-2
Consolidated Balance Sheets as of December 31, 1996 and 1995........................ F-3
Consolidated Statements of Operations for the Years Ended December 31, 1996, 1995
and 1994......................................................................... F-4
Consolidated Statements of Cash Flows for the Years Ended December 31, 1996, 1995
and 1994......................................................................... F-5
Consolidated Statements of Stockholders' Equity for the Years Ended December 31,
1996, 1995 and 1994.............................................................. F-6
Notes to Consolidated Financial Statements.......................................... F-7
REGISTRANT'S FINANCIAL STATEMENT SCHEDULES
I Condensed Financial Information of the Registrant as of December 31, 1996 and
1995 and for the Years Ended December 31, 1996, 1995 and 1994.................... S-1
II Valuation and Qualifying Accounts for the Years Ended December 31, 1996, 1995 and
1994............................................................................. S-6
</TABLE>
All other schedules are omitted because they are not applicable or the
required information is shown in the consolidated financial statements or notes
thereto.
F-1
<PAGE> 17
TRIGEN ENERGY CORPORATION AND SUBSIDIARIES
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Trigen Energy Corporation:
We have audited the accompanying consolidated balance sheets of Trigen
Energy Corporation and subsidiaries as of December 31, 1996 and 1995, and the
related consolidated statements of operations, stockholders' equity and cash
flows for each of the years in the three-year period ended December 31, 1996. In
connection with our audits of the consolidated financial statements, we also
have audited the financial statement schedules as listed in the accompanying
index. These consolidated financial statements and financial statement schedules
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements and financial
statement schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Trigen
Energy Corporation and subsidiaries as of December 31, 1996 and 1995, and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 1996, in conformity with generally accepted
accounting principles. Also in our opinion, the related financial statement
schedules, when considered in relation to the basic consolidated financial
statements taken as a whole, present fairly, in all material respects, the
information set forth therein.
As discussed in note 2 to the consolidated financial statements, in 1995
the Company adopted the provisions of Statement of Financial Accounting
Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of".
KPMG PEAT MARWICK LLP
March 24, 1997
Stamford, Connecticut
F-2
<PAGE> 18
TRIGEN ENERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 1996 AND 1995
(ALL AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............................................ $ 14,598 $ 9,984
Accounts receivable:
Trade (less allowance for doubtful accounts of $1,128 in 1996 and
$697 in 1995).................................................... 35,436 36,275
Other............................................................. 3,479 1,922
Inventories.......................................................... 6,900 6,239
Prepaid costs and other current assets............................... 7,346 6,890
-------- --------
Total current assets......................................... 67,759 61,310
Non-current cash and cash equivalents.................................. 10,678 10,191
Property, plant and equipment, net..................................... 374,549 341,188
Investment in non-consolidated partnerships............................ 8,781 6,548
Intangible assets, net................................................. 14,390 15,088
Deferred costs and other assets, net................................... 18,279 20,581
-------- --------
Total assets................................................. $494,436 $454,906
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable..................................................... $ 7,800 $ 5,924
Accrued fuel......................................................... 14,394 16,806
Accrued expenses and other current liabilities....................... 19,102 16,718
Short-term debt...................................................... 18,500 14,165
Current portion of long-term debt.................................... 13,499 7,415
-------- --------
Total current liabilities.................................... 73,295 61,028
Long-term debt......................................................... 226,487 223,371
Other long-term liabilities............................................ 7,755 9,229
Deferred income tax liabilities........................................ 29,597 25,222
-------- --------
Total liabilities............................................ 337,134 318,850
Minority interests in consolidated entities............................ 16,768 17,226
Stockholders' equity:
Preferred stock -- $.01 par value (authorized and unissued 15,000,000
shares)........................................................... -- --
Common stock -- $.01 par value (authorized 60,000,000 shares; issued
12,010,597 shares in 1996, 11,416,418 shares in 1995)............. 120 114
Additional paid-in capital........................................... 112,836 100,788
Retained earnings.................................................... 28,538 18,070
Treasury stock, at cost (46,140 shares in 1996, 7,268 shares in
1995)............................................................. (960) (142)
-------- --------
Total stockholders' equity................................... 140,534 118,830
-------- --------
Total liabilities and stockholders' equity................... $494,436 $454,906
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE> 19
TRIGEN ENERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(ALL AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
REVENUES
Energy revenues.......................................... $232,403 $190,536 $182,266
Fees earned and other.................................... 11,231 8,174 3,361
-------- -------- --------
Total revenues................................... 243,634 198,710 185,627
OPERATING EXPENSES
Fuel and consumables..................................... 118,304 84,565 83,049
Production and operating costs........................... 43,959 40,089 39,668
Depreciation............................................. 7,595 11,429 10,948
General and administrative............................... 30,638 25,589 22,244
-------- -------- --------
Total operating expenses......................... 200,496 161,672 155,909
OPERATING INCOME........................................... 43,138 37,038 29,718
Other income (expense):
Interest expense......................................... (18,840) (19,890) (16,657)
Other income, net........................................ 1,603 1,816 1,612
-------- -------- --------
Income before minority interests, income tax expense and
extraordinary loss....................................... 25,901 18,964 14,673
Minority interests in earnings of consolidated entities.... (2,598) (1,076) (163)
-------- -------- --------
Income before income tax expense and extraordinary loss.... 23,303 17,888 14,510
Income tax expense......................................... 9,252 7,324 5,949
-------- -------- --------
INCOME BEFORE EXTRAORDINARY LOSS........................... 14,051 10,564 8,561
Extraordinary loss on extinguishment of long-term debt, net
of income tax benefits................................... 1,943 -- --
-------- -------- --------
NET INCOME................................................. $ 12,108 $ 10,564 $ 8,561
======== ======== ========
Net income per share:
Income before extraordinary loss......................... $ 1.21 $ .93 $ .89
Extraordinary loss....................................... (0.17) -- --
-------- -------- --------
Net income............................................... $ 1.04 $ .93 $ .89
======== ======== ========
Average shares outstanding................................. 11,612 11,390 9,619
======== ======== ========
Dividends per share........................................ $ .14 $ .14 $ .07
======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE> 20
TRIGEN ENERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(ALL AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS:
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.................................................. $12,108 $10,564 $ 8,561
Reconciliation of net income to cash provided by operating
activities:
Depreciation expense..................................... 7,595 11,429 10,948
Amortization expense..................................... 2,738 2,641 2,060
Deferred income tax provision............................ 4,871 4,437 4,933
Provision for doubtful accounts.......................... 664 208 448
Minority interests.......................................... 2,598 1,076 163
Changes in assets and liabilities, net of effects of
acquisitions:
Accounts receivable...................................... (984) (12,532) 3,705
Inventories and other current assets..................... (1,613) (1,286) (1,271)
Accounts payable and other current liabilities........... 1,848 3,138 (6,198)
Non-current operating assets and liabilities............. (1,786) (5,550) (11,039)
------- ------- -------
Net cash provided by operating activities........... 28,039 14,125 12,310
------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Sale (purchase) of marketable securities.................... -- 16,361 (16,301)
Proceeds of condemnation award.............................. 6,821 5,265 --
Acquisition of energy facilities............................ -- (18,549) --
Capital expenditures........................................ (47,641) (18,454) (22,920)
Investment in non-consolidated partnerships, net............ (1,911) (1,460) 350
------- ------- -------
Net cash used in investing activities............... (42,731) (16,837) (38,871)
------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds of Initial Public Offering......................... -- -- 39,892
Short-term debt, net........................................ 4,335 (1,435) (16,546)
Proceeds of long-term borrowings............................ 42,384 16,000 --
Payments of long-term borrowings............................ (28,934) (10,197) (7,548)
Sale of interest rate caps.................................. 1,003 -- --
Dividends................................................... (1,640) (1,594) (797)
Issuance of common stock.................................... 6,767 506 --
Repurchase of common stock.................................. (818) -- (148)
Distribution to minority interests.......................... (2,884) -- --
Deferred financing costs.................................... (420) (230) --
------- ------- -------
Net cash provided by financing activities........... 19,793 3,050 14,853
------- ------- -------
Net increase (decrease) in cash and cash equivalents.......... 5,101 338 (11,708)
Cash and cash equivalents at beginning of period.............. 20,175 19,837 31,545
------- ------- -------
Cash and cash equivalents at end of period.................... $25,276 $20,175 $19,837
======= ======= =======
Cash and cash equivalents at end of period:
Current cash and cash equivalents............................. $14,598 $ 9,984 $11,455
Non-current cash and cash equivalents......................... 10,678 10,191 8,382
------- ------- -------
Cash and cash equivalents at end of period.................... $25,276 $20,175 $19,837
======= ======= =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
NON-CASH INVESTING ACTIVITY:
Acquisition of subsidiary................................ $ 1,037 -- --
======= ======= =======
NON-CASH FINANCING ACTIVITY:
Issuance of common stock for acquisition of subsidiary... $ 1,037 -- --
======= ======= =======
Issuance of common stock for extinguishment of long-term
debt.................................................. $ 4,250 -- --
======= ======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE> 21
TRIGEN ENERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(ALL AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
PREFERRED COMMON COMMON ADDITIONAL TREASURY
STOCK STOCK STOCK PAID-IN STOCK TREASURY RETAINED
SHARES SHARES PAR VALUE CAPITAL SHARES STOCK EARNINGS TOTAL
--------- ---------- --------- ---------- -------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balances at December 31,
1993..................... -- 8,500,000 $ 85 $ 60,425 -- $ -- $ 1,336 $ 61,846
Initial public
offering............... -- 2,880,000 29 39,863 -- -- -- 39,892
Dividends................ -- -- -- -- -- -- (797) (797)
Repurchase of common
stock.................. -- -- -- -- 7,570 (148) -- (148)
Net income............... -- -- -- -- -- -- 8,561 8,561
--
---------- ---- -------- ------ ----- ------- --------
Balances at December 31,
1994..................... -- 11,380,000 114 100,288 7,570 (148) 9,100 109,354
Issuance of common
stock.................. -- 36,418 -- 500 (302) 6 -- 506
Dividends................ -- -- -- -- -- -- (1,594) (1,594)
Net income............... -- -- -- -- -- -- 10,564 10,564
--
---------- ---- -------- ------ ----- ------- --------
Balances at December 31,
1995..................... -- 11,416,418 114 100,788 7,268 (142) 18,070 118,830
Issuance of common
stock.................. -- 594,179 6 12,048 -- -- -- 12,054
Repurchase of common
stock.................. -- -- -- -- 38,872 (818) -- (818)
Dividends................ -- -- -- -- -- -- (1,640) (1,640)
Net income............... -- -- -- -- -- -- 12,108 12,108
--
---------- ---- -------- ------ ----- ------- --------
Balances at December 31,
1996..................... -- 12,010,597 $ 120 $ 112,836 46,140 $ (960) $ 28,538 $140,534
== ========== ==== ======== ====== ===== ======= ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE> 22
TRIGEN ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION
Trigen Energy Corporation (together with its subsidiaries, the "Company")
develops, owns and operates district energy systems in the United States and
Canada. A district energy system ("DES") consists of one or more central
production facilities that generate energy in the form of steam and hot water,
chilled water and/ or by-product electricity for distribution to customers. The
Company currently has ownership interests in and operates 13 district energy
systems.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Changes
In October, 1995, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting for
Stock-Based Compensation". As allowable by SFAS No. 123, the Company elected to
continue following the recognition provisions of Accounting Principles Board
(APB) Opinion No. 25, "Accounting for Stock Issued to Employees" (note 13).
In 1995, the Company adopted Statement of Financial Accounting Standards
(SFAS) No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of" (note 7).
Principles of Consolidation
The consolidated financial statements include the accounts of Trigen Energy
Corporation ("Trigen" or the "parent company") and all subsidiaries. Significant
intercompany transactions and balances are eliminated. Minority interests are
separately identified in the consolidated financial statements.
Basis of Presentation
Certain reclassifications have been made to the prior years' financial
statements to conform to the 1996 presentation.
Use of Estimates
The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenue and expenses during the
reporting period. Actual results could differ from those estimates.
Revenue and Cost Recognition
Revenue for energy sold includes both fixed charges and amounts based on
energy delivered. Contract rates are either directly negotiated with the
customer or approved by the applicable regulatory authority. Sales not billed by
month-end are accrued based upon estimated usage. Fees earned are recognized as
services are performed.
Cost of energy sold for each energy system is based on average costs to
produce and deliver either heating, electricity or cooling during the year.
The Company has one customer (Long Island Lighting Company) in Nassau
County, New York which accounted for 12.0%, 13.0% and 14.4% of energy revenues
in 1996, 1995 and 1994, respectively.
F-7
<PAGE> 23
TRIGEN ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Cash and Cash Equivalents
Cash and cash equivalents include demand deposits and temporary investments
in high-grade instruments readily convertible to cash.
Fuel Expense and Deferred Fuel
The Company's subsidiaries, either as a result of regulation or contractual
agreements with their customers, are allowed to recover all or substantially all
of their fuel costs, which is the Company's largest expense. Certain of these
subsidiaries estimate the future cost of fuel in current contract rates.
Differences between the estimated fuel costs and actual fuel costs are deferred
and subsequently charged to or rebated to the customer through future rate
adjustments.
Inventories
Inventories are comprised principally of fuel, operating supplies and spare
parts. Fuel inventories are stated at cost determined on a first-in, first-out
basis and materials and supplies are stated at average cost.
Property, Plant and Equipment
Property, plant and equipment is recorded at cost. Depreciation is computed
by the straight-line method over the estimated useful lives commencing when
assets, or major components thereof, are placed in service. Significant renewals
or betterments are capitalized. Maintenance and repair costs are expensed as
incurred.
Construction in Process
Expenditures during the construction period of major assets are
capitalized. Interest costs incurred to fund construction are capitalized
commencing with the first expenditure of funds for an asset and until the asset
is placed in service, or until construction is completed if sooner. For
tax-exempt debt designated for construction costs, interest cost is capitalized
net of interest earned. Capitalized interest was $328,000, $129,000 and $657,000
during the years ended December 31, 1996, 1995 and 1994, respectively.
Deferred Costs and Other Assets
Included in deferred costs and other assets are capitalized costs
associated with debt issuances, development projects and other non-current
assets. Costs incurred to issue debt are capitalized and amortized over the debt
term using methods that approximate the interest method. Costs incurred in
developing energy generation facilities prior to the execution of binding
contracts are accumulated by project and included in the acquisition cost or as
construction in process for that project.
Intangible Assets
Included in intangible assets are the excess of the cost of the Company's
investment in Trigen-Trenton Energy Company, L.P. ("TEC") over the fair value of
acquired assets, a non-compete agreement with the former majority owner of
United Thermal Corporation ("UTC") and certain affiliated companies, and certain
organization costs. The excess of cost of the investment in TEC over the fair
value of acquired assets is being amortized over the partnership term. The
non-compete agreement is being amortized on a straight line basis over the
fifteen year term of the agreement. The Company continuously assesses the
recoverability of these intangible assets by evaluating whether the amortization
of the intangible asset balances over the remaining lives can be recovered
through expected future results. Expected future results are based on projected
undiscounted operating results before the effects of intangible amortization.
The amount of impairment, if any, is measured based on projected discounted
future results, using a discount rate reflecting the Company's average cost of
funds. Organization costs are capitalized and amortized over 5 years.
F-8
<PAGE> 24
TRIGEN ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Foreign Currency Translation
Income and expenses of Canadian subsidiaries are translated to U. S.
dollars at rates in effect during the year, and assets and liabilities at year
end exchange rates. The impact of the difference between rates at year end and
during the year was not significant.
Financial Instruments
Financial instruments are used by the Company to hedge financial risk
caused by fluctuating interest rates and foreign currency exchange rates. The
net amounts due or receivable under interest rate swap and cap agreements that
hedge interest rates are charged to interest expense over the terms of the
agreements. Gains and losses on foreign currency forward exchange contracts used
to hedge firm commitments are deferred and recognized as part of the related
foreign currency transactions.
Income Taxes
The Company uses the asset and liability method of accounting for income
taxes. Under this method, deferred tax assets and liabilities are recognized for
the future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities, and their
respective tax bases. Deferred income tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled.
Other Income, Net
Other income, net consists of interest income and other non-operating
income.
Net Income Per Share
Net income per share is calculated using the weighted average number of
shares of Common Stock outstanding each year. The calculations did not include
shares from the assumed conversion of Subordinated Debt because the effect was
antidilutive, or shares from the assumed exercise of outstanding stock options
because the effect is not significant.
3. ACQUISITIONS
Trigen-Colorado
Trigen-Colorado, a wholly owned subsidiary of the Company, and a subsidiary
of Nations Energy Corporation ("Nations") of Orlando, Florida formed a
partnership to purchase the energy production assets of Coors Brewing Company
and Coors Energy Company ("Coors") and to provide steam and electricity to Coors
over a 25 year contract period. On September 14, 1995, the partnership purchased
the assets for $22 million. The acquisition was accounted for under the purchase
method. Trigen-Colorado has a 51% interest in and has consolidated the results
of operations of this partnership since the date of acquisition.
Prince Edward Island
On August 31, 1995, the Company purchased for $7.3 million the energy
production facilities and distribution assets in Charlottetown, Prince Edward
Island ("PEI") from the PEI Energy Corporation and the government of PEI. In
addition, the Company has committed to invest approximately $23 million to
integrate and upgrade the facilities. In exchange, the Province of PEI, Queen
Elizabeth Hospital and the University of PEI will purchase their thermal energy
needs under thirty year contracts. The acquisition was accounted for under the
purchase method and the results of operations of PEI have been included in the
accompanying consolidated statement of operations since the date of acquisition.
F-9
<PAGE> 25
TRIGEN ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
4. PARTNERSHIPS
Trigen-Trenton Energy Company, L.P. ("TEC")
TEC is a limited partnership which built and operates a district energy
system in Trenton, New Jersey. A wholly-owned subsidiary of the Company is the
managing general partner. The partnership term expires January 2017.
Partnership income or loss, as well as cash distributions, are allocated
pursuant to the partnership agreement. One limited partner is entitled to
distributions prior to any other partner. At December 31, 1996, this partner's
cumulative priority claim on cash was $847,000. Remaining annual preferential
payments are between $202,000 and $292,000 through 2002, then $233,000 per year
through 2017.
TEC has long-term contracts, generally expiring in 2007 and beyond, to sell
the electric, heat and chilled water output of the facility. The land on which
the facility is located is leased through December 2081 with an option to extend
through 2180. Minimum annual rent is $180,000.
Trigen-Peoples District Energy Company ("T-P")
T-P is a general partnership formed in December 1992 to construct, own and
operate a district energy system (the "Chicago System") serving McCormick Place
Exposition Center in Chicago. The partners are wholly owned subsidiaries of
Peoples Energy Corporation ("Peoples") and Trigen. Each partner has a 50%
interest in profits and losses and an equal vote on partnership matters, and is
required to make capital contributions in cash to meet T-P's needs. The
partnership term expires December 2042. The partnership commenced operations
November 1993, generating results of operations and cash flow of which the
Company is entitled to a 50% share. The Company's investment in T-P is accounted
for using the equity method and its share of the earnings of the partnership and
its management fee for services provided to the partnership were $569,000,
$575,000 and $473,000 in 1996, 1995, and 1994, respectively, and are included in
fees earned and other revenues.
T-P is constructing the Chicago System, and will own and operate it,
pursuant to an agreement with the Metropolitan Pier and Exposition Authority,
Chicago ("MPEA"). Certain components of the Chicago System have been purchased
by the MPEA and leased back to T-P. Each partner provided an $18 million letter
of credit in favor of T-P, which drew equally on the letters of credit to
provide construction funds, such that the balance of each letter of credit at
December 31, 1996 was $5.0 million. T-P obtained long-term financing for the
Chicago System in August 1995. Each partner is also maintaining a $2 million
letter of credit in favor of the MPEA to cover the costs, if any, to cure
defaults by the partnership under its heating and cooling service contract with
the MPEA.
Trigen-Nations District Energy Company ("T-N")
T-N is a general partnership formed in September 1995 to operate, own and
upgrade the Coors' plant in Golden, Colorado. The partners are wholly-owned
subsidiaries of Nations and Trigen. The Trigen subsidiary has a 51% interest in
the partnership. The partnership owns all of the existing electric and steam
generating facilities and support facilities, including a 25 mile gas pipeline
to Coors Brewing Company in Jefferson County, Colorado. The partnership term
expires September 14, 2020.
Trigen-Schuylkill Energy Corporation ("Trigen-Schuylkill")
On March 11, 1996, a wholly-owned subsidiary of the Company,
Trigen-Schuylkill, became a one-third partner in the Grays Ferry Cogeneration
Facility. Under the terms of the Partnership Agreement, in addition
F-10
<PAGE> 26
TRIGEN ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
to its initial equity investment, the Company is required to contribute $10
million when construction is completed, which is expected in the fourth quarter
of 1997.
5. RESTRICTED FUNDS
Restricted funds at December 31 were (all amounts in thousands):
<TABLE>
<CAPTION>
1996 1995
--------------------- ---------------------
CURRENT NON-CURRENT CURRENT NON-CURRENT
------- ----------- ------- -----------
<S> <C> <C> <C> <C>
Restricted.................................... $ 7,180 $10,678 $ 4,399 $10,191
Unrestricted.................................. 7,418 -- 5,585 --
------- ------- ------ -------
Cash and cash equivalents..................... $14,598 $10,678 $ 9,984 $10,191
======= ======= ====== =======
</TABLE>
Under the terms of the Company's debt agreements, a substantial portion of
the cash of operating subsidiaries is restricted in use, first to paying the
operating costs of the respective subsidiary, then its debt service obligations,
in the priority stipulated in the respective debt agreements.
Under the terms of the debt agreements, payments from the subsidiaries to
affiliated companies, including the parent company, are permitted, provided no
default exists or would be created by the payment and either (a) the payment is
to reimburse the parent company for management costs as permitted by the
respective debt agreement or (b) the subsidiary meets financial tests, which may
include debt coverage, working capital or equity tests, as specified in the
respective agreement. Cash available to the parent company without restriction
as to use was $7.4 million at December 31, 1996 and $5.6 million at December 31,
1995.
The remaining restricted cash and cash equivalents at December 31, 1996
included $6.6 million for debt service and reserve funds, $2.1 million for
operations and maintenance reserves, $5.9 million available for subsidiary
operating purposes, and $3.3 million for certain construction projects.
Restricted funds may be invested only in certain securities.
6. INVENTORIES
Inventories at December 31 were (all amounts in thousands):
<TABLE>
<CAPTION>
1996 1995
------- -----------
<S> <C> <C> <C> <C>
Fuel................................................................. $ 2,370 $ 2,590
Operating supplies and spare parts................................... 4,530 3,649
------ ------
Total........................................................... $ 6,900 $ 6,239
====== ======
</TABLE>
At December 31, 1996, the Company had purchase commitments for fuel at
prices discounted from the spot market and at fixed prices. The aggregate value
of these contracts is estimated to be $14.8 million based on current spot
prices. These contracts expire at varying dates from May 1997 through July 1999.
The Company has fuel cost pass-through clauses in its rates with customers
for all of these commitments.
F-11
<PAGE> 27
TRIGEN ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
7. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment at December 31 was (all amounts in
thousands):
<TABLE>
<CAPTION>
ESTIMATED USEFUL
LIVES (YEARS) 1996 1995
---------------- -------- --------
<S> <C> <C> <C>
Land........................................... -- $ 10,448 $ 10,448
Plant, machinery and equipment................. 15-35 365,887 330,893
Buildings...................................... 40 31,216 32,490
Furniture, fixtures and leasehold
improvements................................. 3-5 7,488 5,993
Construction in process........................ -- 21,506 9,080
-------- --------
436,545 388,904
Less: Accumulated depreciation................. (61,996) (47,716)
-------- --------
$374,549 $341,188
======== ========
</TABLE>
Substantially all of the Company's assets are pledged as collateral under
the Company's debt agreements (note 11).
In 1996 and 1995, the Company received condemnation awards related to one
of its facilities in Boston, Massachusetts and recognized gains of $6.4 million
and $4.8 million, respectively, based on the excess of condemnation proceeds
received, net of expenses, over the net book value of the condemned assets. In
1995, the Company also recognized an asset impairment loss of $2.7 million ($1.6
million net of tax). This loss is the difference between the carrying value of
one of its Canadian subsidiaries long-lived assets and the fair value of these
assets based on discounted estimated future cash flows. In 1995, the Company
also wrote-off certain other assets at a loss of $1.0 million. The respective
gains and losses are included in depreciation expense.
8. INTANGIBLE ASSETS
Intangible assets at December 31 were (all amounts in thousands):
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Excess of cost of investment in TEC over fair value of acquired
assets....................................................... $ 4,790 $ 4,790
Excess of cost of investment in Ewing Power Systems over fair
value of acquired assets..................................... 583 --
Non-compete agreement.......................................... 10,000 10,000
Organization costs............................................. 3,507 3,373
-------- --------
18,880 18,163
Less: Accumulated amortization................................. (4,490) (3,075)
-------- --------
$ 14,390 $ 15,088
======== ========
</TABLE>
Amortization expense for the years ended December 31, 1996, 1995 and 1994
was $1,415,000, $1,053,000 and $848,000, respectively.
F-12
<PAGE> 28
TRIGEN ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
9. DEFERRED COSTS AND OTHER ASSETS
Deferred costs and other assets at December 31 were (all amounts in
thousands):
<TABLE>
<CAPTION>
1996 1995
------- -------
<S> <C> <C>
Deferred debt costs.............................................. $17,088 $18,431
Less: Accumulated amortization................................... (6,098) (4,722)
------- -------
10,990 13,709
Project development costs........................................ 1,516 1,315
Other............................................................ 5,773 5,557
------- -------
$18,279 $20,581
======= =======
</TABLE>
Amortization expense for the years ended December 31, 1996, 1995 and 1994
was $1,323,000, $1,588,000 and $1,212,000, respectively.
10. SHORT-TERM DEBT
Corporate Facilities
The Company has bank credit facilities of $22.5 million (note 11a) for
general corporate purposes. These committed facilities bear interest at rates
based on the London Interbank Offered Rate (LIBOR). The balance outstanding
under this facility at December 31, 1996 was $5.0 million. The effective rate at
December 31, 1996 was 5.9%. The credit facilities were unused at December 31,
1995. The average rate on borrowings under these facilities was 5.8% in 1996 and
6.5% in 1995.
UTC Revolver
The UTC companies have a $14.2 million revolving credit facility available
(the "UTC Revolver") through December 16, 1997, and, upon approval of the
lender, for additional one year periods thereafter. The UTC Revolver is secured
pro rata with the UTC Term Loan (note 11b). UTC is required to have 60
consecutive days each year with no outstanding borrowings under the UTC
Revolver. UTC has several interest rate options under the UTC Revolver including
LIBOR. The balances outstanding under this facility at December 31, 1996 and
1995 were $13.5 million and $14.2 million, respectively, and the average rates
on these borrowings were 6.4% in 1996, 7.1% in 1995 and 6.6% in 1994. The
effective rate at December 31, 1996 was 6.5%.
F-13
<PAGE> 29
TRIGEN ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
11. LONG-TERM DEBT
Long-term debt outstanding at December 31 was (all amounts in thousands):
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Corporate facility (a)......................................... $ 29,000 $ 16,000
UTC term loan (b).............................................. 66,440 75,154
Nassau term loan (c)........................................... 47,789 50,482
Nassau bonds (d)............................................... 14,350 14,350
Trenton bonds (e).............................................. 37,280 38,470
Oklahoma term loan (f)......................................... 18,743 19,809
Oklahoma bonds (g)............................................. 9,000 9,000
Subordinated debt (h).......................................... -- 7,521
PEI Construction loan (i)...................................... 17,384 --
-------- --------
239,986 230,786
Less: Current portion included above........................... (13,499) (7,415)
-------- --------
$226,487 $223,371
======== ========
</TABLE>
- ---------------
(a) On May 24, 1995, a $62.5 million corporate revolving credit facility was
completed with a group of banks with Societe Generale as agent. The facility
extends through March 1997 with interest at rates based on LIBOR. The
agreement requires the Company to meet financial tests and contains certain
restrictions as to the payment of dividends.
The facility is composed of a $22.5 million revolver committed for two years
which is available for general corporate purposes and a $40.0 million
revolver committed through March 1997 which is available for acquisitions,
construction and development projects. Amounts outstanding at March 31,
1997, under the $40 million revolver portion of this facility can be
converted to a three-year loan. The balance outstanding under this portion
of the facility was $29.0 million at December 31, 1996 and $16.0 million at
December 31, 1995. The effective rate at December 31, 1996 was 6.1%. The
weighted average rate on borrowings under these facilities was 6.0% in 1996
and 7.0% in 1995. The expected sources of repayment are cash flow from
existing operations and permanent project financing. The loan agreement
permits additional debt on a pari passu basis and permits subordinated debt.
A new, increased revolving credit agreement is in the final stages of
negotiation with the four banks in the current revolver and four additional
banks. In the event that the new agreement is not executed on or prior to
March 31, 1997, the expiration date on the current revolver will be amended
by the four current banks and extended as necessary until consummation of
the new agreement.
(b) The UTC Term Loan is secured by all the assets and revenues of the acquired
UTC companies, on a pro rata basis with the UTC Revolver (see note 10)
(together with the UTC Term Loan, the "UTC Debt"). The parent company has
guaranteed the UTC Debt in an amount which is limited, except for
liabilities of UTC arising from environmental matters, to the lesser of
$31.7 million and one-third of the UTC Debt outstanding. The debt agreements
require UTC to meet certain financial tests, and contain restrictions on
payments to Trigen and other affiliated companies and on incurrence of new
debt.
Interest on the term loan is at variable rates based on LIBOR. The average
effective rate was 7.6% in 1996, 7.7% in 1995, and 6.0% in 1994. The rate at
December 31, 1996 was 7.3%. UTC has purchased from the Term Loan lenders
interest rate protection agreements. Quarterly term loan principal
repayments commenced in June 1994, with final maturity in September 2004.
F-14
<PAGE> 30
TRIGEN ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(c) The cost to construct the Nassau plant was financed with the Nassau Term
Loan, the Nassau Bonds (note 11d) and capital contributions. The Nassau Term
Loan and the Nassau Bonds are without recourse to the parent company.
Interest on the term loan is at variable rates based on LIBOR. The average
effective rate was 6.8% in 1996, 7.2% in 1995 and 5.2% in 1994. At December
31, 1996, the effective rate was 6.5%. Quarterly term loan principal
repayments commenced in June 1992, with final maturity in December 2003.
Upon certain events, Trigen-Nassau will be required to fix the rate on up to
fifty percent of the aggregate outstanding principal amount of the term loan
and the bonds for a minimum five year period.
All Trigen-Nassau assets and revenues are pledged to secure, pro rata, the
term loan and bonds. The agreements require Trigen-Nassau to meet financial
and operating tests, and contain certain restrictions on payments to the
parent company and other affiliated companies (note 11h) and on incurrence
of new debt.
(d) In September 1990 the Town of Hempstead Industrial Development Authority
issued Revenue Bonds on behalf of Trigen-Nassau. Interest at 7.75% per year
is due semi-annually. Annual principal payments are due from 2012 through
2015. A bank has issued a letter of credit in favor of the bondholders in
the event of default by Trigen-Nassau, which must reimburse the bank for
amounts drawn thereunder. Trigen-Nassau pays the bank an annual fee for the
letter of credit.
(e) The Trenton Bonds were issued by, and are limited obligations of, the New
Jersey Economic Development Authority, and are payable solely from revenues
and other funds pledged by Trigen-Trenton Energy Company.
The bonds require annual sinking fund payments beginning December 1993 with
final maturity in December 2010.
The interest rates on the bonds were fixed to maturity at 6.1% - 6.2% on
$35.2 million of the bonds (the tax-exempt portion), and 7.3% on the balance
(the taxable portion). Interest on the bonds is paid semi-annually.
(f) In September 1992, the Company's Oklahoma subsidiary ("Trigen-Oklahoma")
obtained long-term financing consisting of a $21.0 million term loan and
$9.0 million of tax-exempt bonds (note 11g). The parent company has
guaranteed the obligations of Trigen-Oklahoma pursuant to the debt
agreements until the date certain conditions were fulfilled. The guarantee
was released on March 21, 1997.
Interest on the term loan is at variable rates based on LIBOR. The average
effective rate was 6.9% in 1996, 7.5% in 1995 and 6.3% in 1994. At December
31, 1996, the rate was 6.8%. Quarterly term loan principal repayments
commenced in December 1994. Final maturity is September 2007. Upon certain
events, Trigen-Oklahoma will be required to fix the rate on a portion of the
outstanding term loan so that the interest rates applicable to seventy five
percent of the sum of the outstanding term loan and the outstanding bonds
are fixed for an average life of seven years.
All Trigen-Oklahoma assets are pledged under the Trigen-Oklahoma debt
agreements. The debt agreements require Trigen-Oklahoma to meet certain
financial tests, and contain restrictions on payments to the parent and
other affiliated companies and on incurrence of new debt.
(g) In September 1992, the Oklahoma City Industrial and Cultural Facilities
Trust issued Revenue Bonds on behalf of Trigen-Oklahoma. Interest at 6.75%
per year is payable semi-annually. Annual principal payments are due from
2008 through 2017. A bank has issued a letter of credit in favor of the
bondholders in the event of default by Trigen-Oklahoma, which must reimburse
the bank for amounts drawn thereunder. Trigen-Oklahoma pays the bank an
annual fee for the letter of credit.
(h) In November 1993, Trigen-Lindbergh, a wholly-owned subsidiary of the Company
and the 100% owner of Trigen-Nassau, issued $12 million Subordinated Debt
bearing base interest at 10% and deferrable interest at 5%. On September 30,
1996, Trigen-Lindbergh prepaid the remaining $7.0 million of
F-15
<PAGE> 31
TRIGEN ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
subordinated debt. The prepayment was accomplished through the payment of
cash and the issuance of 200,000 shares of the Company's stock to the
lender. In repaying this debt, costs of $3.0 million ($1.9 million net of
income tax benefit) were incurred by the Company and were accounted for as
an extraordinary loss.
(i) The cost to purchase, refurbish, expand and integrate an approximately
350,000 mmBtu per annum waste processing facility with two district energy
systems in Charlottetown, Prince Edward Island was financed with a $23
million construction loan. The debt is secured by the assets of the project,
with limited recourse to Trigen Energy Corporation in the event of any
shortfalls in debt service payments of Trigen Energy Canada Inc. on a
quarter-by-quarter basis.
Interest on the construction loan is at variable rates based on Canadian
bankers' acceptances. The average effective rate was 4.7% in 1996. At
December 31, 1996, the rate was 4.1%.
Maturities of long-term debt at December 31, 1996 were (all amounts in
thousands):
<TABLE>
<S> <C>
1997...................................................................... $ 13,499
1998...................................................................... 14,745
1999...................................................................... 16,509
2000...................................................................... 46,427
2001...................................................................... 18,573
Thereafter................................................................ 130,233
--------
Total long-term debt...................................................... $239,986
========
</TABLE>
Based upon the debt balances at December 31, 1996, a change in the LIBOR
rate of .25% would have a corresponding change in interest expense of
approximately $400,000 per year when three-month LIBOR is under 6.25% ranging to
approximately $350,000 per year when three-month LIBOR is over 7.50%. Three-
month LIBOR at December 31, 1996 was 5.66%.
Cash paid for interest (net of amounts capitalized) was $17.5 million,
$18.1 million and $16.1 million in 1996, 1995 and 1994, respectively.
12. LEASES
The Company has entered into various leasing arrangements for office space,
land and equipment. These arrangements are accounted for as operating leases.
Future minimum rental payments under leases with remaining noncancelable
terms in excess of one year at December 31, 1996 are (all amounts in thousands):
<TABLE>
<S> <C>
1997....................................................................... $ 2,693
1998....................................................................... 2,702
1999....................................................................... 2,565
2000....................................................................... 2,585
2001....................................................................... 2,485
Thereafter................................................................. 13,259
-------
Total minimum payments..................................................... $26,289
=======
</TABLE>
Excluded from the above are TEC's commitment of $180,000 per year under its
99 year operating lease for the land on which the Trenton facility is located
(note 4) and Trigen-Nassau's commitment of $680,000 per year under its 25 year
operating lease for the land on which the Nassau facility is located. The total
remaining commitments under these leases at December 31, 1996 are estimated to
be $15.3 million and $13.3 million, respectively.
F-16
<PAGE> 32
TRIGEN ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Rental expense was $2.9 million in 1996, $2.1 million in 1995 and $2.6
million in 1994.
13. STOCK OPTIONS
The Company adopted the 1994 Stock Incentive Plan for officers, directors
and key employees (the "1994 Stock Plan"). The purpose of the 1994 Stock Plan is
to help further the growth, development and financial success of the Company by
providing additional incentives to non-employee Directors and selected key
management personnel. A total of 1,050,000 shares of Common Stock has been
authorized for issuance pursuant to options, stock appreciation rights,
performance shares, restricted stock and other stock awards under the 1994 Stock
Plan, subject to adjustment in the event of stock dividends, stock splits or
other subdivisions, combinations or reclassifications of shares. The 1994 Stock
Plan is administered by the Compensation Committee and will expire ten years
from the date of adoption, unless sooner terminated by the Board of Directors.
Stock options granted to the Board of Directors of the Company are exercisable
six months from the date of grant, and are exercisable until the earlier of the
tenth anniversary of the date of grant, or the first anniversary of leaving the
Board of Directors. All other employees' stock options vest at the rate of 20%
per year, starting on the first anniversary of the grant date and are
exercisable over a period of ten years from the date of grant.
Options granted under the 1994 Stock Plan have a maximum term of ten years
from the date of grant. The exercise price of options granted under the 1994
Stock Plan is at least equal to 100% of the fair market value of the Common
Stock on the date of the grant. Options granted become exercisable at such time
or times as the committee deems appropriate, and options granted at different
times or at different prices may have different vesting periods. The committee
may award restricted stock at a purchase price which is less than fair market
value.
In addition, options to purchase 43,584 shares of common stock, which
satisfied a contingent condition of an individual's employment with the Company
in 1992, were outstanding as of December 31, 1995. The exercise price of these
options ranged from $1 to $1.22 per share. Options were exercisable over a
period of ten years from the date of grant. Thirty percent of the options vested
on the date of grant and were exercised in 1996. An additional twenty percent of
the options vested on the next anniversary date of the grant and were exercised
in 1996, and the remaining options were forfeited in 1996.
F-17
<PAGE> 33
TRIGEN ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Information relating to stock options granted under the 1994 Stock Plan
during 1996, 1995 and 1994 is summarized as follows:
<TABLE>
<CAPTION>
WEIGHTED-AVERAGE
RANGE OF EXERCISE PRICE
EXERCISE PRICES NUMBER OF SHARES PER SHARE
----------------- ---------------- ----------------
<S> <C> <C> <C>
Shares under option at December 31, 1993....... -- -- --
Granted........................................ $15.75 to $19.00 491,000 $15.92
Exercised...................................... -- -- --
Expired........................................ -- -- --
Forfeited...................................... -- -- --
Shares under option at December 31, 1994....... $15.75 to $19.00 491,000 15.92
Granted........................................ $17.25 to $22.13 90,500 19.82
Exercised...................................... -- -- --
Expired........................................ -- -- --
Forfeited...................................... $15.75 to $15.75 14,200 15.75
Shares under option at December 31, 1995....... $15.75 to $22.13 567,300 16.54
Granted........................................ $18.88 to $21.75 67,200 20.05
Exercised...................................... $15.75 to $19.75 38,500 16.05
Expired........................................ -- -- --
Forfeited...................................... $15.75 to $22.00 31,940 16.95
Shares under option at December 31, 1996....... $15.75 to $22.13 564,060 17.05
Shares exercisable at December 31, 1996........ $15.75 to $22.13 237,984 16.62
</TABLE>
As of December 31, 1996, stock options granted under the 1994 Stock Plan
have a weighted average contractual life of 7.9 years.
Had compensation cost for this plan been recorded at fair value on the date
of grant in accordance with SFAS No. 123, the effect on the Company's net income
and net income per share amounts would have been immaterial at December 31, 1996
and December 31, 1995.
In 1994, the Company adopted an employee stock purchase plan and has
allocated 200,000 shares of Common Stock for purchases pursuant to such plan.
Stock purchased in 1996 and 1995 pursuant to the employee stock purchase plan
was 28,325 and 25,768 shares, respectively. The acquisition price of the stock
is 85% of the lower of the closing market price on the first and last day of the
six month purchase period. On March 31, 1996, 14,404 shares were purchased at
$18.27 per share. On September 30, 1996, 13,921 shares were purchased at $18.49
per share.
14. RETIREMENT PLANS
Effective January 1, 1995, the Company consolidated its retirement plans by
offering a 401(k) retirement savings plan ("401(k) Plan") to certain employees
as stated below. Previously, a cash balance defined benefit pension plan
("defined benefit plan") covered certain full-time employees while a 401(k) plan
covered employees who were previously employees of UTC.
401(k) Plan
The 401(k) Plan allows participants to make contributions pursuant to
Section 401(k) of the Internal Revenue Code. The Company matches employee
contributions in varying percentages according to a schedule
F-18
<PAGE> 34
TRIGEN ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
up to an annual maximum Company contribution of approximately $1,260 per
employee. Employees vest immediately in both employee and Company contributions
to the 401(k) Plan. The Company's contributions to the 401(k) Plan were
approximately $1,375,000 (including the cost of 27,460 shares of Company stock),
$1,064,000 (including the cost of 26,253 shares of Company stock) and $320,000,
for the years ended December 31, 1996, 1995 and 1994, respectively. Effective
January 1, 1995, the 401(k) Plan was open to all Company employees excluding
certain employees covered by other retirement plans.
Defined Benefit Plan
Benefits payable under the plan were frozen as of December 31, 1994 pending
vesting and distribution to participants. Benefits under the plan are based
primarily on salary during the term of employment and length of service. Pension
expense was $122,000, $75,000 and $485,000 in 1996, 1995 and 1994, respectively.
The Company's net obligation under the plan at December 31, 1996 was not
significant.
15. RELATED PARTY TRANSACTIONS
Cofreth American Corporation ("CAC") is owned by ELYO (formerly
Ufiner-Cofreth), a leading energy services company. ELYO operates approximately
70 district energy systems, as well as chilled water systems, around the world.
ELYO is controlled by Lyonnaise des Eaux Dumez, a French Company with 1995
revenues of approximately $20 billion. Compagnie Parisienne de Chauffage Urbain
("CPCU"), a direct subsidiary of ELYO, owns and operates the Paris district
heating system.
ELYO, CAC and CPCU, collectively the "ELYO Group," provide to the Company
licenses and technical support. The parties have agreed to provide licenses to
each other for any patents relating to electric and/or thermal energy generation
any of them own or acquire. The Company was charged a management fee of $250,000
by ELYO in 1996 and 1995, and $90,000 in 1994. The Company was charged by CAC
for the services of an executive officer and other professionals, and for
out-of-pocket costs, $578,000 in 1996, $598,000 in 1995 and $221,000 in 1994.
The Company owed the ELYO Group $72,000, $142,000 and $171,000 at December 31,
1996, 1995 and 1994, respectively.
16. FINANCIAL INSTRUMENTS
Long-Term Debt
The fair value of the Company's long-term debt, including the current
portions and interest rate cap and collar agreements, was estimated based on the
future cash flows associated with each instrument discounted using the Company's
current borrowing rate for similar instruments of comparable maturity. The
estimated fair value of the Company's long term debt and related financial
instruments approximates carrying value at December 31, 1996.
Short-Term Debt and Other Financial Instruments
The carrying amount approximates fair value because of the short maturity
of these instruments.
17. INCOME TAXES
Income tax provisions for the years ended December 31 were (all amounts in
thousands):
<TABLE>
<CAPTION>
1996 1995 1994
--------------------------- --------------------------- ---------------------------
CURRENT DEFERRED TOTAL CURRENT DEFERRED TOTAL CURRENT DEFERRED TOTAL
------- -------- ------ ------- -------- ------ ------- -------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
State/Local............ $ 1,081 $ 492 $1,573 $ 1,395 $ 703 $2,098 $ 453 $1,083 $1,536
U.S. Federal........... 3,300 4,379 7,679 1,492 3,734 5,226 563 3,850 4,413
------ ------ ------ ------ ------ ------ ------ ------ ------
Total............. $ 4,381 $4,871 $9,252 $ 2,887 $4,437 $7,324 $ 1,016 $4,933 $5,949
====== ====== ====== ====== ====== ====== ====== ====== ======
</TABLE>
F-19
<PAGE> 35
TRIGEN ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The tax effects of temporary differences that give rise to deferred tax
liabilities and assets at December 31 are (all amounts in thousands):
<TABLE>
<CAPTION>
1996 1995
------- -------
<S> <C> <C>
Deferred income tax liabilities:
Property, plant and equipment.................................. $34,790 $31,931
------- -------
Deferred income tax assets:
AMT credit carryforwards....................................... 3,060 2,053
Tax loss carryforwards......................................... 1,209 1,959
Environmental costs............................................ 1,663 1,811
Revenue and receivable allowances.............................. 358 520
Other, net..................................................... 2,816 5,605
------- -------
Gross deferred income tax assets............................... 9,106 11,948
Valuation allowances........................................... (273) (1,103)
------- -------
Net deferred income tax assets................................. 8,833 10,845
------- -------
Net deferred income tax liability.............................. $25,957 $21,086
======= =======
</TABLE>
Net current deferred income tax assets of $3.6 million and $4.1 million at
December 31, 1996 and 1995, respectively are included in prepaid costs and other
current assets.
At December 31, 1996 a loss carryforward of $1.8 million was available to
offset Canadian taxable income expiring $.2 million in 1999, $.4 million in
2000, $.1 million in 2001 and $1.1 million in 2003. At December 31, 1996 an
alternative minimum tax credit carryforward of $3.0 million was available to
offset future U.S. regular income taxes, if any, over an indefinite period.
Valuation allowances were primarily for tax loss carryforwards in state, local
and Canadian jurisdictions that may expire before being used.
A reconciliation from the U.S. Federal statutory rate to income tax expense
follows:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Income tax expense at statutory rates........................ 35.0% 35.0% 35.0%
State/local income taxes, net of Federal benefit............. 5.7 7.6 6.9
Taxes related to foreign operations.......................... (.1) (1.2) (.2)
(Decrease)/increase in valuation allowances.................. (3.6) (1.4) 1.6
Other items, net............................................. 2.7 .9 (2.3)
---- ---- ----
- - -
Income tax expense........................................... 39.7% 40.9% 41.0%
===== ===== =====
</TABLE>
The Company made income tax payments of $2.3 million, $3.1 million and $.7
million in 1996, 1995 and 1994 respectively.
Taxes on receipts (as defined) or capital, imposed by some jurisdictions in
lieu of taxes on income are included in general and administrative expenses.
These were $.8 million, $.7 million and $2.0 million in 1996, 1995 and 1994
respectively.
In 1996, the Company received IRS approval to change its tax year-end from
September 30 to December 31, effective December 31, 1995.
F-20
<PAGE> 36
TRIGEN ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
18. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
FOR THE QUARTER
---------------------------------------------
MARCH 31 JUNE 30 SEPT. 30 DEC. 31
-------- ------- -------- -------
(ALL AMOUNTS IN THOUSANDS, EXCEPT PER SHARE
DATA)
<S> <C> <C> <C> <C>
1996:
Revenues......................................... $86,219 $48,685 $ 41,646 $67,084
Operating income................................. 12,143 9,322 12,762 8,911
Income before extraordinary loss................. 4,181 2,498 4,757 2,615
Extraordinary loss, net of income tax benefit.... -- -- 1,943 --
Net income....................................... 4,181 2,498 2,814 2,615
Income before extraordinary loss per share....... $ .36 $ .22 $ .41 $ .22
Extraordinary loss per share..................... -- -- (.17) --
------- ------- ------- -------
Net income per share............................. $ .36 $ .22 $ .24 $ .22
======= ======= ======= =======
Weighted average shares outstanding.............. 11,470 11,507 11,510 11,959
======= ======= ======= =======
1995:
Revenues......................................... $65,176 $35,775 $ 30,998 $66,761
Operating income................................. 10,002 7,975 7,507 11,554
Net income....................................... 3,258 2,140 1,594 3,572
Net income per share............................. $ .29 $ .19 $ .14 $ .31
======= ======= ======= =======
Weighted average shares outstanding.............. 11,373 11,386 11,393 11,408
======= ======= ======= =======
</TABLE>
F-21
<PAGE> 37
SCHEDULE I
TRIGEN ENERGY CORPORATION (PARENT COMPANY)
CONDENSED BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
(ALL AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
ASSETS
Cash and cash equivalents............................................ $ 5,853 $ 4,010
Other current assets................................................. 588 639
Property, plant and equipment, net................................... 12,287 689
Other assets......................................................... 4,116 2,017
Investments in and amounts due from subsidiaries, net................ 156,298 130,502
-------- --------
Total assets................................................. $179,142 $137,857
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Short-term debt...................................................... $ 5,000 $ --
Long-term debt....................................................... 29,000 16,000
Other liabilities.................................................... 4,608 3,027
-------- --------
Total liabilities............................................ 38,608 19,027
Stockholders' equity:
Preferred stock...................................................... -- --
Common stock......................................................... 120 114
Additional paid-in capital........................................... 112,836 100,788
Retained earnings.................................................... 28,538 18,070
Treasury stock, at cost.............................................. (960) (142)
-------- --------
Total stockholders' equity................................... 140,534 118,830
-------- --------
Total liabilities and stockholders' equity................... $179,142 $137,857
======== ========
</TABLE>
See accompanying notes to condensed financial statements.
S-1
<PAGE> 38
SCHEDULE I -- (CONTINUED)
TRIGEN ENERGY CORPORATION (PARENT COMPANY)
CONDENSED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(ALL AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
REVENUES
Management fees and costs recovered from subsidiaries....... $11,156 $ 4,918 $ 4,341
Interest income from subsidiaries........................... 2,015 706 805
------- ------- -------
Total revenues...................................... 13,171 5,624 5,146
COSTS AND EXPENSES
General and administrative.................................. 14,262 9,544 7,321
Interest expense............................................ 1,689 426 464
Other (income) expense, net................................. (436) 75 106
------- ------- -------
Total costs and expenses............................ 15,515 10,045 7,891
Loss before income tax expense, equity in earnings of
subsidiaries and extraordinary loss......................... (2,344) (4,421) (2,745)
Income tax benefit............................................ 820 1,547 961
Equity in earnings of subsidiaries, net....................... 15,575 13,438 10,345
------- ------- -------
Income before extraordinary loss.............................. 14,051 10,564 8,561
Extraordinary loss on extinguishment of subsidiaries'
long-term debt, net of subsidiaries income tax benefits..... (1,943) -- --
------- ------- -------
NET INCOME.......................................... $12,108 $10,564 $ 8,561
======= ======= =======
</TABLE>
See accompanying notes to condensed financial statements.
S-2
<PAGE> 39
SCHEDULE I -- (CONTINUED)
TRIGEN ENERGY CORPORATION (PARENT COMPANY)
CONDENSED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(ALL AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS:
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income............................................... $ 12,108 $ 10,564 $ 8,561
Reconciliation of net income to cash provided by
operating activities:
Equity in earnings of subsidiaries.................... (15,575) (13,438) (10,345)
Dividends received from subsidiaries.................. -- 7,000 1,693
Other, net............................................ (1,266) 2,110 156
--------- --------- ---------
Net cash (used in) provided by operating
activities..................................... (4,733) 6,236 65
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures..................................... (10,800) -- --
Acquisition of energy facilities, net of cash acquired... -- (18,549) --
Investments in and amounts due from subsidiaries, net.... (9,183) 4,167 (29,575)
--------- --------- ---------
Net cash used in investing activities............ (19,983) (14,382) (29,575)
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Short-term debt, net..................................... 5,000 (7,500) (5,031)
Proceeds of Initial Public Offering...................... -- -- 39,892
Proceeds of long-term borrowings......................... 17,250 16,000 --
Dividends................................................ (1,640) (1,594) (797)
Issuance (Repurchase) of common stock.................... 5,949 506 (148)
--------- --------- ---------
Net cash provided by financing activities........ 26,559 7,412 33,916
--------- --------- ---------
Net increase/(decrease) in cash and cash equivalents....... 1,843 (734) 4,406
Cash and cash equivalents at beginning of year............. 4,010 4,744 338
--------- --------- ---------
Cash and cash equivalents at end of year................... $ 5,853 $ 4,010 $ 4,744
========= ========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
NON-CASH INVESTING ACTIVITY:
Acquisition of subsidiary............................. $ 1,037 -- --
========= ========= =========
NON-CASH FINANCING ACTIVITY:
Issuance of common stock for acquisition of
subsidiary.......................................... $ 1,037 -- --
========= ========= =========
Issuance of common stock for extinguishment of
long-term debt...................................... $ 4,250 -- --
========= ========= =========
</TABLE>
See accompanying notes to condensed financial statements.
S-3
<PAGE> 40
SCHEDULE I -- (CONTINUED)
TRIGEN ENERGY CORPORATION (PARENT COMPANY)
NOTES TO CONDENSED FINANCIAL INFORMATION OF REGISTRANT
(1) TRIGEN ENERGY CORPORATION (PARENT COMPANY) FINANCIAL STATEMENTS
The accompanying condensed financial information has been prepared in
accordance with Regulation S-X of the Securities Act of 1933 and does not
include all information and notes necessary for a fair presentation of financial
position, results of operations and cash flows in conformity with generally
accepted accounting principles since the user of these statements is assumed to
read them in conjunction with Trigen Energy Corporation's consolidated financial
statements and the notes thereto for the year ended December 31, 1996 included
elsewhere in this document.
Certain reclassifications have been made to the prior years' financial
statements to conform to the 1996 presentation.
(2) TRANSACTIONS WITH SUBSIDIARIES
The Parent Company derives cash from management fees and costs recovered
from its subsidiaries, distributions by its subsidiaries and, at times,
repayment to the Parent Company from proceeds of long-term financing obtained by
the subsidiaries for funds previously advanced to subsidiaries for construction
in advance of obtaining permanent financing. Certain subsidiaries have
restrictive debt agreements which generally permit distributions to the Parent
Company only when certain ratios and other financial covenants are satisfied.
Cash available to the Parent Company without restrictions as to use, including
amounts distributable by subsidiaries was $7.4 million at December 31, 1996 and
$5.6 million at December 31, 1995.
(3) ACQUISITIONS
Trigen-Colorado
Trigen-Colorado, a wholly owned subsidiary of the Parent Company, and
Nations Energy Corporation ("Nations") of Orlando, Florida formed a partnership
to purchase the energy production assets of Coors Brewing Company and Coors
Energy Company ("Coors") and to provide steam and electricity to Coors over a 25
year period. On September 14, 1995, the partnership purchased the assets for $22
million, $12 million of which was funded by Trigen-Colorado. The acquisition was
accounted for under the purchase method. Trigen-Colorado has a 51% interest in
and has consolidated the results of operations of this partnership since the
date of acquisition.
Prince Edward Island
On August 31, 1995, the Parent Company purchased for $7.3 million the
energy production facilities and distribution assets in Charlottetown, Prince
Edward Island ("PEI") from the PEI Energy Corporation and the government of PEI.
In addition, the Parent Company has committed to invest approximately $23
million to integrate and upgrade the facilities. In exchange, the Province of
PEI, Queen Elizabeth Hospital and the University of PEI will purchase their
thermal energy needs under thirty year contracts. The acquisition was accounted
for under the purchase method and the results of operations of PEI have been
included in the accompanying consolidated statement of operations since the date
of acquisition.
(4) DEBT
The Parent Company has bank credit facilities of $22.5 million for general
corporate purposes. These committed facilities bear interest at rates based on
LIBOR. The balance outstanding under this facility at December 31, 1996 was $5.0
million. The effective rate at December 31, 1996 was 5.9%. The credit facilities
were unused at December 31, 1995. The average rate on borrowing under these
facilities were 5.8% and 6.5% in 1996 and 1995, respectively.
S-4
<PAGE> 41
On May 24, 1995, a $62.5 million corporate revolving credit facility was
completed with a group of banks with Societe Generale as agent. The facility
extends through March 1997 with interest at rates based upon the London
Interbank Offered Rate (LIBOR). The agreement requires the Parent Company to
meet financial tests and contains certain restrictions as to the payment of
dividends. The effective interest rate on the borrowings at December 31, 1996
was 6.1%.
The facility is composed of a $22.5 million revolver committed for two
years which is available for general corporate purposes and a $40.0 million
revolver committed through March 1997 which is available for acquisitions,
construction and development projects. Amounts outstanding at March 31, 1997,
under the $40 million revolver portion of this facility can be converted to a
three-year loan. The expected sources of repayment are cash flow from existing
operations and permanent project financing. The loan agreement permits
additional debt on a pari passu basis and permits subordinated debt.
A new, increased revolving credit agreement is in the final stages of
negotiation with the four banks in the current revolver and four additional
banks. In the event that the new agreement is not executed on or prior to March
31, 1997, the expiration date on the current revolver will be amended by the
four current banks and extended as necessary until consummation of the new
agreement.
The Parent Company has issued certain guarantees relating to the debt of
UTC and Trigen-Oklahoma. The Parent Company's guarantee of the UTC debt is
limited, except for liabilities of UTC arising from indemnities for
environmental matters, to the lesser of $31.7 million or one-third of the amount
outstanding ($79.9 million outstanding at December 31, 1996). The Parent
Company's guarantee of the Oklahoma term loan ($18.7 million at December 31,
1996) and bonds ($9.0 million at December 31, 1996) remains in place until the
later of September, 2017 and the date certain conditions were fulfilled. The
guarantee was released on March 21, 1997.
(5) INCOME TAXES
The Parent Company and its domestic subsidiaries file a consolidated U.S.
Federal income tax return. The Parent Company's state income taxes are filed on
a separate return basis. A valuation allowance for state tax loss carryforwards
has been provided because there are carryforwards which may expire before being
used.
S-5
<PAGE> 42
SCHEDULE II
TRIGEN ENERGY CORPORATION
VALUATION AND QUALIFYING ACCOUNTS
(ALL AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
BALANCE AT CHARGED TO
BEGINNING OF COSTS AND BALANCE AT
DESCRIPTIONS YEAR EXPENSES DEDUCTIONS END OF YEAR
- --------------------------------------------- ------------ ---------- ---------- -----------
<S> <C> <C> <C> <C>
Year ended December 31, 1994:
Allowance for doubtful accounts:........... $249 448 (129) $ 568
Year ended December 31, 1995:
Allowance for doubtful accounts:........... $568 208 (79) $ 697
Year ended December 31, 1996:
Allowance for doubtful accounts:........... $697 664 (233) $ 1,128
</TABLE>
S-6
<PAGE> 43
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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 in the City of New
York, State of New York on March 27, 1997.
TRIGEN ENERGY CORPORATION
By /s/ THOMAS R. CASTEN
------------------------------------
Thomas R. Casten
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated on March 27, 1997.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- --------------------------------------------- --------------------------------------------
<C> <S>
/s/ THOMAS R. CASTEN Director, President and Chief Executive
- --------------------------------------------- Officer
Thomas R. Casten (Principal Executive Officer)
/s/ DAVID H. KELLY Vice President -- Finance, Chief Financial
- --------------------------------------------- Officer
David H. Kelly
/s/ DANIEL J. SAMELA Controller (Principal Accounting Officer)
- ---------------------------------------------
Daniel J. Samela
/s/ RICHARD E. KESSEL Director, Executive Vice President, Chief
- --------------------------------------------- Operating Officer
Richard E. Kessel
/s/ GEORGE F. KEANE Director and Chairman of the Board
- ---------------------------------------------
George F. Keane
Director
- ---------------------------------------------
Philippe Brongniart
/s/ DOMINIQUE MANGIN D'OUINCE Director
- ---------------------------------------------
Dominique Mangin d'Ouince
/s/ PATRICK DESNOS Director
- ---------------------------------------------
Patrick Desnos
/s/ MICHEL BLEITRACH Director
- ---------------------------------------------
Michel Bleitrach
/s/ FRANCOIS FAESSEL Director
- ---------------------------------------------
Francois Faessel
/s/ MICHEL CASSOU Director
- ---------------------------------------------
Michel Cassou
/s/ CHARLES E. BAYLESS Director
- ---------------------------------------------
Charles E. Bayless
/s/ JONATHAN O'HERRON Director
- ---------------------------------------------
Jonathan O'Herron
</TABLE>
<PAGE> 44
TRIGEN ENERGY CORPORATION
INDEX OF EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------- ---------------------------------------------------------------------------------
<S> <C> <C>
2.1** -- Stock Purchase Agreement, dated December 3, 1993, among Catalyst Energy
Corporation, Trigen, and Trigen Acquisition, Inc.
2.2** -- Agreement and Plan of Merger, dated as of October 18, 1993, among Trigen, Trigen
Acquisition, Inc. and United Thermal Corporation.
3.1** -- Restated Certificate of Incorporation of Trigen (Registration Statement No.
33-80410)
3.2** -- Restated and Amended By-Laws of Trigen (Registration Statement No. 33-80410)
4.1** -- Credit Agreement, dated as of December 2, 1993, among Trigen Acquisition Inc.,
Trigen, the Lenders named therein, and Toronto Dominion (Texas), Inc., as Agent
(Registration Statement No. 33-80410).
4.2** -- Loan Agreement, dated as of June 1, 1993, between Trigen-Trenton District Energy
Company, L.P. and the New Jersey Economic Development Authority (District Heating
and Cooling Revenue Bonds) (Registration Statement No. 33-80410).
4.3** -- Construction, Term Loan and Reimbursement Agreement, dated as of August 21, 1990,
among Nassau District Energy Corporation, Toronto Dominion Bank, Chicago Branch,
as Letter of Credit Issuing Bank, the Banks named therein and Toronto Dominion
Bank Trust Company, as Agent and Security Representative (Registration Statement
No. 33-80410).
4.4** -- See Exhibits 3.1 and 3.2 (Registration Statement No. 33-80410).
4.5** -- Credit Agreement dated as of May 24, 1995 between Trigen Energy Corporation and
Societe Generale, New York Branch, as Administrative Agent.
4.6** -- Construction and Term Loan Agreement dated as of August 11, 1995 between
Trigen-Peoples District Energy Company and The Prudential Insurance Company of
America.
4.7* -- Amended and Restated Credit and Acceptance Agreement dated as of December 20,
1996 among Trigen Energy Canada Inc., Certain Commercial Lending Institutions as
the Lenders, Societe Generale, New York Branch, as the Administrative Agent for
the Lenders and Societe Generale (Canada) as the Collateral Agent for the
Lenders.
9.1** -- Stockholders' Agreement, dated August 10, 1994 by and among Trigen, Thomas R.
Casten, Michael Weiser, Eugene E. Murphy, Richard E. Kessel, John J. Ludwig,
Cofreth American Corporation and Compagnie Parisienne de Chauffage Urbain, S.A.
(Registration Statement No. 33-80410).
9.2** -- Stockholder's Agreement dated as of January 17, 1996 by and between Thomas Ewing
and Trigen Energy Corporation.
10.1** -- Securities Purchase Agreement, dated as of November 18, 1993 between Trigen
Lindbergh Corporation and Trust Company of the West, as Agent (Registration
Statement No. 33-80410).
10.2** -- Reimbursement and Credit Agreement, dated as of September 1, 1992, among Trigen-
Oklahoma District Energy Corporation, the Banks named therein, and Societe
Generale, Southwest Agency, as Agent and Collateral Agent (Registration Statement
No. 33-80410).
10.3** -- Loan Agreement, dated as of September 1, 1992, between Oklahoma City Industrial
and Cultural Facilities Trust, as Lender and Trigen-Oklahoma District Energy
Corporation, as Borrower (District Heating and Cooling Revenue Bonds, Series
1992) (Registration Statement No. 33-80410).
10.4** -- Lease Agreement, dated as of August 1, 1990, between Town of Hempstead Industrial
Development Agency and Nassau District Energy Corporation (Industrial Development
Revenue Bonds) (Registration Statement No. 33-80410).
10.7** -- Letter Agreement, dated February 24, 1994, between Trigen and Credit Commerciale
de France, New York Branch, (Registration Statement No. 33-80410).
10.8** -- Standby Letter of Credit Agreement, dated November 16, 1993, between Trigen and
Societe Generale, New York Branch (Registration Statement No. 33-80410).
10.9** -- Application and Agreement for Irrevocable Standby Letter of Credit, dated
December 14, 1992, between Societe Generale, New York Branch, and Trigen-Chicago
District Energy Corporation (Registration Statement No. 33-80410).
</TABLE>
E-1
<PAGE> 45
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------- ---------------------------------------------------------------------------------
<S> <C> <C>
10.11** -- Noncompetition Agreement, dated December 3, 1993, among Catalyst Energy
Corporation, Great Lakes Power Limited, Century Power Corporation, Trigen
Acquisition, Inc. and Trigen (Registration Statement No. 33-80410).
10.12** -- Site Lease Agreement, dated as of December 16, 1992, between Metropolitan Pier
and Exposition Authority and Trigen-Peoples District Energy Company (Registration
Statement No. 33-80410).
10.13** -- Lease Agreement, dated as of November 30, 1993, between Housing Authority of
Baltimore City and Baltimore Thermal Energy Corporation (Registration Statement
No. 33-80410).
10.14** -- Spring Gardens Land Lease, dated February 28, 1985, between Baltimore Gas and
Electric Company and Baltimore Steam Company (Registration Statement No.
33-80410).
10.15** -- Lease Agreement, dated as of June 26, 1991, between King Real Estate Corporation,
Trustee of King Terminal Trust and Boston Thermal Energy Corporation, as amended
by the First Amendment to Lease, dated July 5, 1991, and by the Second Amendment
to Lease, dated June 23, 1992. (Registration Statement No. 33-80410).
10.16** -- Lease Agreement, dated as of April 1, 1991, between Aetna Life Insurance Company
and Boston Thermal Energy Corporation (Registration Statement No. 33-80410).
10.17** -- Lease Agreement, dated March 29, 1990, between Kansas City Power & Light Company
and Trigen-Kansas City District Energy Corporation (Registration Statement No.
33-80410).
10.18** -- Indenture, dated September 14, 1993, between George Chioros Holdings Ltd., as
Lessor, and Trigen-London District Energy Corporation, as Lessee (Registration
Statement No. 33-80410).
10.19** -- Standard Lease, dated as of August 7, 1990, between the United States Postal
Service and Trigen-Oklahoma District Energy Corporation (Registration Statement
No. 33-80410).
10.20** -- Schuylkill Station Lease Agreement, dated January 30, 1987, between Philadelphia
Electric Company and Philadelphia Thermal Corporation (Registration Statement No.
33-80410).
10.21** -- Amended and Restated Site Lease, dated September 17, 1993, between Philadelphia
Thermal Energy Corporation and Grays Ferry Cogeneration Partnership (Registration
Statement No. 33-80410).
10.22** -- Lease Agreement, dated as of March 5, 1975, between the City of St. Louis and
Union Electric Company (Registration Statement No. 33-80410).
10.23** -- Ground Lease, dated as of December 1, 1982, between the City of Trenton and
Trenton District Energy Company (Registration Statement No. 33-80410).
10.24** -- Thermal Energy Agreement, dated July 22, 1981, between Mercer Medical Center and
Trenton District Energy Company, as amended September 1981, as amended August 22,
1984, and as further amended May 27, 1986 (Registration Statement No. 33-80410).
10.27** -- See Exhibits 4.1, 4.2 and 4.3 (Registration Statement No. 33-80410).
10.28** -- Trigen Energy Corporation 1994 Director Stock Plan (Registration Statement No.
33-80410).
10.29** -- Trigen Energy Corporation 1994 Stock Incentive Plan (Registration Statement No.
33-80410).
10.30** -- Intercompany Services and License Agreement, dated August 10, 1994, between
Ufiner-Cofreth, S.A. and Trigen (Registration Statement No. 33-80410).
10.31** -- Form of Employment Agreement, dated as of August 12, 1994 between Trigen and
Thomas R. Casten (Form 10-K Annual Report for 1994).
10.32** -- Form of Employment Agreement, dated as of August 12, 1994, between Trigen and
Richard E. Kessel (Form 10-K Annual Report for 1994).
10.33** -- Form of Employment Agreement, dated as of August 12, 1994, between Trigen and
John J. Ludwig (Form 10-K Annual Report for 1994).
10.34** -- Form of Employment Agreement, dated as of August 12, 1994, between Trigen and
Eugene E. Murphy (Form 10-K Annual Report for 1994).
10.35** -- Form of Employment Agreement, dated as of August 12, 1994, between Trigen and
Michael Weiser (Form 10-K Annual Report for 1994).
10.36** -- Acquisition Agreement dated March 1, 1996 among Adwin (Schuylkill) Cogeneration,
Inc., O'Brien (Schuylkill) Cogeneration, Inc. and Trigen -- Schuylkill
Cogeneration, Inc.
10.37** -- Amended and Restated Partnership Agreement dated March 1, 1996 among Adwin
(Schuylkill) Cogeneration, Inc., O'Brien (Schuylkill) Cogeneration, Inc. and
Trigen -- Schuylkill Cogeneration, Inc.
</TABLE>
E-2
<PAGE> 46
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------- ---------------------------------------------------------------------------------
<S> <C> <C>
11* -- Computation of Earnings Per Share.
21* -- Subsidiaries of Trigen.
23.1* -- Consent of KPMG Peat Marwick LLP.
27 -- Financial Data Schedule (for electronic filing only)
</TABLE>
- ---------------
* Filed herewith.
** Incorporated by reference to the corresponding exhibit to the indicated prior
filing.
E-3
<PAGE> 1
EXHIBIT 4.7
[CONFORMED COPY]
C$32,000,000
AMENDED AND RESTATED CREDIT AND ACCEPTANCE AGREEMENT,
dated as of December 20, 1996,
among
TRIGEN ENERGY CANADA INC.,
as the Borrower,
and
CERTAIN COMMERCIAL LENDING INSTITUTIONS,
as the Lenders,
and
SOCIETE GENERALE, NEW YORK BRANCH
as the Administrative Agent
for the Lenders,
and
SOCIETE GENERALE (CANADA),
as the Collateral Agent
for the Lenders
<PAGE> 2
TABLE OF CONTENTS
-----------------
SECTION PAGE
- ------- ----
ARTICLE I
DEFINITIONS
1.1. Certain Defined Terms ............................................. 2
1.2. Cross-References; Other References ................................ 32
1.3. Accounting and Financial Determinations ........................... 33
ARTICLE II
COMMITMENTS, BORROWING PROCEDURES AND NOTES
2.1. Commitments ....................................................... 33
2.1.1. Construction Loan Commitment ...................................... 33
2.1.2. Term Loan Commitment .............................................. 33
2.1.3. Lenders Not Permitted or Required To Make the Loans ............... 34
2.2. Reduction of the Commitment Amounts ............................... 34
2.3. Borrowing Procedure ............................................... 35
2.4. Continuation/Conversion Elections ................................. 36
2.5. Term Loan Conversion Election ..................................... 37
2.6. Funding ........................................................... 37
2.7. Notes ............................................................. 37
ARTICLE III
BANKERS' ACCEPTANCES
3.1. Power of Attorney for the Execution of Bankers'
Acceptances ....................................................... 38
3.2. Execution of Bankers' Acceptances ................................. 39
3.3. Issuance of Bankers' Acceptances .................................. 39
3.4. Purchase of Bankers' Acceptances and Payment of the
Acceptance Fee .................................................... 39
3.5. Sale of Bankers' Acceptances ...................................... 40
3.6. Maturing Bankers' Acceptances ..................................... 40
3.7. Waiver of Presentment and Other Conditions ........................ 41
3.8. Authority Given to the Collateral Agent To Debit
Borrower's Accounts ............................................... 41
3.9. Payment at Maturity ............................................... 42
3.10. Payment before Maturity ........................................... 42
3.11. Lenders To Be Indemnified if Maturity of Bankers'
Acceptances Do Not Coincide with Principal
Reductions ........................................................ 42
3.12. Cash Collateral Accounts .......................................... 43
ARTICLE IV
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES
4.1. Repayments and Prepayments ........................................ 43
<PAGE> 3
SECTION TABLE OF CONTENTS PAGE
- ------- ----------------- ----
(CONTINUED)
4.1.1. Voluntary Prepayments ............................................. 43
4.1.2. Mandatory Prepayments ............................................. 44
4.1.3. Scheduled Amortization of Term Loans .............................. 45
4.1.4. Application of Prepayments ........................................ 46
4.2. Interest Provisions ............................................... 46
4.2.1. Rates ............................................................. 46
4.2.2. Post-Maturity Rates ............................................... 46
4.2.3. Payment Dates ..................................................... 46
4.3. Fees .............................................................. 47
4.3.1. Commitment Fee .................................................... 47
ARTICLE V
CERTAIN CANADIAN FUNDS RATE AND OTHER PROVISIONS
5.1. Fixed Rate Lending Unlawful ...................................... 47
5.2. Increased Costs, etc ............................................. 48
5.3. Funding Losses ................................................... 48
5.4. Increased Capital Costs .......................................... 49
5.5. Taxes ............................................................ 50
5.6. Payments, Computations, etc ...................................... 51
5.7. Sharing of Payments .............................................. 51
5.8. Setoff ........................................................... 52
5.9. Use of and Application of Proceeds ............................... 53
5.10. Change of Lending Office ......................................... 53
5.11. Replacement of Lenders ........................................... 53
ARTICLE VI
CONDITIONS TO ALL LOANS, CONTINUATION
AND CONVERSION OF LOANS
6.1. Conditions Precedent to Obligations of the Lenders ............... 54
6.1.1. Authorization Documents .......................................... 55
6.1.2. Credit Documents; Project Documents; Notes ....................... 55
6.1.3. Security Matters ................................................. 56
6.1.4. Compliance with Warranties, No Default, etc ...................... 57
6.1.5. Closing Date Certificate ......................................... 57
6.1.6. Independent Engineer's Reports ................................... 58
6.1.7. Environmental Report ............................................. 58
6.1.8. Financial Condition .............................................. 58
6.1.9. Insurance ........................................................ 59
6.1.10. Governmental Approvals; Compliance With Governmental
Rules, etc ....................................................... 59
6.1.11. Process Agent .................................................... 60
6.1.12. Debt Service and Support Agreement ............................... 60
6.1.13. Closing Fees, etc ................................................ 60
-ii-
<PAGE> 4
SECTION TABLE OF CONTENTS PAGE
- ------- ----------------- ----
(CONTINUED)
6.1.14. Construction Milestone Schedule .................................. 60
6.1.15. Legal Opinion of the Counsel to the Borrower ..................... 60
6.1.16. Pending Litigation ............................................... 61
6.1.17. Consents; Waivers ................................................ 61
6.1.18. Other Documents .................................................. 61
6.2. Loans Subsequent to the Initial Drawdown ......................... 61
6.2.1. Compliance with Warranties, No Default, etc ...................... 61
6.2.2. Borrowing Request ................................................ 62
6.2.3. Waiver of Liens .................................................. 62
6.2.4. Borrower Construction Certificates ............................... 62
6.2.5. Insurance Matters ................................................ 63
6.2.6. No Material Adverse Effect ....................................... 63
6.2.7. Satisfactory Legal Form .......................................... 63
6.3. Term Loan Closing Date and Refinancing of
Construction Loans With Term Loans ............................... 63
6.3.1. Compliance with Warranties, No Default, etc ...................... 63
6.3.2. Term Loan Closing Date Notice .................................... 64
6.3.3. Completion Certificates .......................................... 64
6.3.4. Prepayment of Loans .............................................. 64
6.3.5. Equity Contribution .............................................. 64
6.3.6. Insurance ........................................................ 64
6.3.7. No Material Adverse Effect ....................................... 65
6.3.8. Project Completion Date .......................................... 65
6.3.9. Governmental Approvals; Compliance With Governmental
Rules, etc ....................................................... 65
6.3.10. Legal Opinions ................................................... 65
6.3.11. Satisfactory Legal Form .......................................... 65
6.3.12. Notes ............................................................ 66
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF THE BORROWER
7.1. Representations and Warranties of the Borrower ................... 66
7.1.1. Project Participant Organization, etc ............................ 66
7.1.2. Due Authorization, Non-Contravention, Compliance with
Laws, etc ........................................................ 67
7.1.3. Status as a Regulated Facility ................................... 68
7.1.4. Governmental Approvals and Compliance with
Governmental Approvals and Governmental Rules .................... 68
7.1.5. Validity, etc .................................................... 69
7.1.6. Financial Information ............................................ 70
7.1.7. Litigation, Labor Controversies, etc ............................. 70
7.1.8. No Material Adverse Change ....................................... 71
7.1.9. Title to Project; Ownership and Condition of
Properties, etc .................................................. 71
7.1.10. Security Documents ............................................... 72
-iii-
<PAGE> 5
SECTION TABLE OF CONTENTS PAGE
- ------- ----------------- ----
(CONTINUED)
7.1.11. Taxes ........................................................... 72
7.1.12. Pension and Welfare Plans ....................................... 73
7.1.13. Insurance ....................................................... 73
7.1.14. Liens ........................................................... 73
7.1.15. Use of Proceeds ................................................. 73
7.1.16. Business Activities ............................................. 73
7.1.17. Material Agreements; Delivery of Project Documents .............. 73
7.1.18. Projections of Operating Results ................................ 74
7.1.19. Restrictive Agreements; Borrower's Ability to
Complete the Project ............................................ 74
7.1.20. Environmental Warranties ........................................ 74
7.1.21. Operation of the Project ........................................ 76
7.1.22. No Default ...................................................... 76
7.1.23. Utilities, etc .................................................. 76
7.1.24. Accuracy of Information ......................................... 76
7.1.25. Regulations G, T, U and X ....................................... 77
7.1.26. Financial Advisors .............................................. 77
ARTICLE VIII
COVENANTS AND AGREEMENTS
8.1. Affirmative Covenants and Agreements of the Borrower ............ 78
8.1.1. Financial Information, Reports, Notices, etc .................... 78
8.1.2. Compliance with Governmental Rules, etc ......................... 82
8.1.3. Operation and Maintenance of the Project ........................ 83
8.1.4. Insurance ....................................................... 84
8.1.5. Books and Records ............................................... 95
8.1.7. Taxes ........................................................... 96
8.1.8. Essential Technical Information ................................. 97
8.1.9. Operating Logs, etc ............................................. 98
8.1.10. Operating Budgets ............................................... 98
8.1.11. Accounts Agreement .............................................. 98
8.1.12. Maintenance of Lien ............................................. 98
8.1.13. Performance of Project Documents; Operation ..................... 99
8.1.14. Construction of the Project; Performance Tests .................. 100
8.1.15. Use of Proceeds ................................................. 100
8.1.16. Payment of Project Costs ........................................ 100
8.1.17. Hedging Agreements .............................................. 100
8.1.18. Assignment of Principal Contracts ............................... 100
8.1.19. Financial Statements of Material Project
Participants .................................................... 101
8.1.20. Steen Construction Contract ..................................... 101
8.1.21. Exhibit to Equipment Lease Agreement ............................ 101
8.1.22. Revenues of Borrower ............................................ 101
-iv-
<PAGE> 6
SECTION TABLE OF CONTENTS PAGE
- ------- ----------------- ----
(CONTINUED)
8.1.23. Notice of Default ............................................... 101
8.2. Negative Covenants .............................................. 101
8.2.1. Business Activities ............................................. 101
8.2.2. Indebtedness .................................................... 102
8.2.3. Liens ........................................................... 102
8.2.4. Investments ..................................................... 103
8.2.5. Restricted Payments; Distributions .............................. 103
8.2.6. Capital Expenditures, etc ....................................... 104
8.2.7. Issuance of Capital Stock ....................................... 104
8.2.8. Take or Pay Contracts ........................................... 104
8.2.9. Consolidation, Merger, etc ...................................... 104
8.2.10. Asset Dispositions, etc ......................................... 104
8.2.11. Certain Agreements and Other Documents .......................... 104
8.2.12. Transactions with Affiliates .................................... 106
8.2.13. Negative Pledges, Restrictive Agreements, etc ................... 106
8.2.14. Bonus Payments .................................................. 107
8.2.15. Certain Matters Related to Project Documents .................... 107
8.2.16. Management Fees ................................................. 107
ARTICLE IX
EVENTS OF DEFAULT
9.1. Listing of Events of Default .................................... 107
9.1.1. Condemnation .................................................... 107
9.1.2. Non-Payment of Obligations ...................................... 107
9.1.3. Breach of Warranty .............................................. 108
9.1.4. Non-Performance of Certain Covenants and Obligations ............ 108
9.1.5. Non-Performance of Other Covenants and Obligations .............. 108
9.1.6. Default on Other Indebtedness ................................... 109
9.1.7. Judgments ....................................................... 109
9.1.8. Change in Control ............................................... 109
9.1.9. Bankruptcy, Insolvency, etc ..................................... 109
9.1.10. Governmental Approvals and Governmental Rules ................... 110
9.1.11. Impairment of Security, etc ..................................... 111
9.1.12. Title to Properties ............................................. 111
9.1.13. Final Completion Date ........................................... 111
9.1.14. Trigen Debt Service and Support Agreement ....................... 111
9.1.15. Abandonment of Project .......................................... 111
9.1.16. Accounts Agreement .............................................. 111
9.1.17. Closing Date .................................................... 111
9.2. Action if Bankruptcy ............................................ 111
9.3. Action if Other Event of Default ................................ 112
9.4. Additional Remedies ............................................. 112
9.5. Distribution of Proceeds of Collateral .......................... 114
-v-
<PAGE> 7
SECTION TABLE OF CONTENTS PAGE
- ------- ----------------- ----
(CONTINUED)
ARTICLE X
THE AGENTS
10.1. Actions ........................................................ 115
10.2. Funding Reliance, etc .......................................... 116
10.3. Exculpation .................................................... 116
10.4. Successors ..................................................... 117
10.5. Loans by Agents ................................................ 118
10.6. Credit Decisions ............................................... 118
10.7. Copies, etc .................................................... 118
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1. Waivers, Amendments, etc ....................................... 118
11.2. Notices ........................................................ 119
11.3. Payment of Costs and Expenses .................................. 120
11.4. Indemnification ................................................ 121
11.5. Survival ....................................................... 122
11.6. Severability ................................................... 123
11.7. Headings ....................................................... 123
11.8. Execution in Counterparts, Effectiveness, etc .................. 123
11.9. Governing Law; Entire Agreement ................................ 123
11.10. Successors and Assigns ......................................... 123
11.11. Sale and Transfer of Loans and Notes;
Participation in Loans and Notes ............................... 124
11.11.1. Assignments .................................................... 124
11.11.2. Participation .................................................. 125
11.12. Other Transactions ............................................. 126
11.13. Non-Recourse Parties ........................................... 126
11.14. Forum Selection and Consent to Jurisdiction .................... 128
11.15. Waiver of Jury Trial ........................................... 128
-vi-
<PAGE> 8
SCHEDULE I - Disclosure Schedule
SCHEDULE II - Principal Reduction Dates - Term Loans
SCHEDULE III - [RESERVED]
SCHEDULE IV - Filing Offices
SCHEDULE V - Description of the Project
EXHIBIT A - Form of Construction Note
EXHIBIT B - [RESERVED]
EXHIBIT C - Form of Term Note
EXHIBIT D-1 - Form of Borrowing Request
EXHIBIT D-2 - Form of Acceptance Request
EXHIBIT E-1 - Form of Borrower Construction Certificate
EXHIBIT E-2 - Form of Independent Engineer Construction
Certificate
EXHIBIT F - Form of Continuation/Conversion Notice
EXHIBIT G - Form of Term Loan Conversion Notice
EXHIBIT H - Form of Term Loan Closing Date Notice
EXHIBIT I - Form of Security Agreement
EXHIBIT J-1 - Form of Debenture
EXHIBIT J-2 - Form of Assignment of Book Debts
EXHIBIT J-3 - Form of Assignment of Principal Contracts
EXHIBIT K-1 - Form of Pledge Agreement
EXHIBIT K-2 - Form of Accounts Agreement
EXHIBIT L - Form of Debt Service and Support Agreement
EXHIBIT M - Form of Assignment Agreement
EXHIBIT N - Form of Closing Date Certificate
EXHIBIT O - Form of Certificate of Operational Results
EXHIBIT P-1 - Form of Borrower Completion Date Certificate
EXHIBIT P-2 - Form of Independent Engineer Completion
Certificate
EXHIBIT Q - Form of Environmental Certificate
EXHIBIT R - [RESERVED]
EXHIBIT S-1 - Form of Opinion of General Counsel to the
Borrower
EXHIBIT S-2 - Form of Opinion of Canadian Counsel to the
Borrower
EXHIBIT S-3 - Form of Opinion of General Counsel to Trigen
-vii-
<PAGE> 9
AMENDED AND RESTATED CREDIT AND ACCEPTANCE AGREEMENT
THIS AMENDED AND RESTATED CREDIT AND ACCEPTANCE AGREEMENT, dated as of
December 20, 1996, among TRIGEN ENERGY CANADA INC., a wholly owned subsidiary of
Trigen, organized under the laws of Ontario, Canada (the "Borrower"), the
various lending institutions listed on the signature pages hereof under the
caption "Lenders" (individually a "Lender" and collectively, together with any
Person which becomes a Lender pursuant to Section 11.11, the "Lenders"), SOCIETE
GENERALE, NEW YORK BRANCH, as administrative agent (the "Administrative Agent")
and SOCIETE GENERALE (CANADA), as collateral agent (the "Collateral Agent") for
the Lenders.
W I T N E S S E T H:
WHEREAS, pursuant to the Credit Agreement, dated as of August 23, 1996 (as
amended or otherwise modified prior to the date hereof (such capitalized term,
and other capitalized terms used in these recitals, to have the meanings
provided in Section 1.1), the "Existing Credit Agreement"), among the Borrower,
the financial institutions parties thereto on the date hereof (the "Existing
Lenders"), Societe Generale, New York Branch, as administrative agent for the
Existing Lenders and Societe Generale (Canada), as collateral agent for the
Existing Lenders,
(i) Societe Generale (Canada) (in its capacity as Lender) made loans
(the "Existing Construction Loans") to the Borrower, with the outstanding
principal amount of Existing Loans on the date set forth in Schedule VI
hereto; and
WHEREAS, pursuant to the Facility Purchase Agreement, the Borrower
acquired an energy from waste plant, heat distribution assets and other related
assets located in the area in and around Charlottetown on Prince Edward Island
from PEIEC and the Government of Prince Edward Island; and
WHEREAS, the Borrower will refurbish, expand and operate an approximately
350,000 mm Btu per annum waste processing facility which is located in and
around Charlottetown on Prince Edward Island; and
WHEREAS, thermal energy is to be sold to the Government of Prince Edward
Island, UPEI and Queens Region Health & Community Services pursuant to the
Thermal Energy Services Agreements; and
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WHEREAS, in order to pay the Project Costs to be incurred by the
Borrower in connection with the development, refurbishment, expansion,
construction and acquisition of the Project, the Borrower desires to obtain
Commitments from the Lenders pursuant to which Construction Loans in a maximum
aggregate principal amount not to exceed C$32,000,000 and Term Loans in a
maximum aggregate amount not to exceed C$28,800,000, will be made to the
Borrower on or prior to the applicable Commitment Termination Date for such
Commitments; and
WHEREAS, the Lenders are willing, on the terms and conditions hereinafter
set forth (including Article VI), to extend such Commitments to the Borrower;
WHEREAS, the Full Availability Date occurred as of November 30, 1996; and
WHEREAS, the proceeds of such Loans will be used
(a) in the case of the Construction Loans to pay acquisition costs
and Project Costs during the construction, refurbishment, expansion and
interconnection of the Project and to fund certain other obligations of
the Borrower as more fully set forth in Section 5.9; and
(b) in the case of Term Loans to repay Construction Loans on the
Construction Loan Maturity Date; and
WHEREAS, the Lenders are willing, on the terms and subject to the
conditions hereinafter set forth, to (i) amend and restate in its entirety the
Existing Credit Agreement in accordance with the terms hereof, (ii) continue as
Construction Loans hereunder the Existing Construction Loans, and (iii) extend
such Commitments and make Loans to the Borrower and issue Bankers' Acceptances
pursuant to such Commitments;
NOW, THEREFORE, the parties hereto agree as set forth above and as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Certain Defined Terms. The following terms shall, except
where the context otherwise requires, have the following meanings (such meanings
to be equally applicable to the singular and plural forms thereof). Any
agreement, document or instrument defined or referred to in this Section 1.1
shall include each amendment, modification, restatement, amendment and
restatement and supplement thereto, including each waiver or
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consent, that may be effective from time to time, except as otherwise expressly
indicated.
"Acceptance Fee" means, with respect to any Bankers' Acceptance, the
amount equal to the Applicable Margin multiplied by the face amount of such
Bankers' Acceptance.
"Accounts Agreement" means the accounts agreement between the Borrower and
the Administrative Agent, substantially in the form of Exhibit K-2 hereto,
pursuant to which (i) the Project Accounts are established and (ii) the Borrower
grants a first priority security interest in the Project Accounts to the Agents
and the Lenders.
"Additional Project Document" means any material contract or agreement
relating to the construction, testing, maintenance, repair, operation, financing
or use of the Project or relating to the contribution of capital to the Borrower
entered into by the Borrower and any other Person subsequent to the Closing
Date.
"Administrative Agent" is defined in the preamble and includes each other
Person as shall have subsequently been appointed as a successor Administrative
Agent pursuant to Section 10.4.
"Administrative Agent Fee Letter" means the letter dated as of May 21,
1996, among the Borrower, Trigen and the Administrative Agent, collectively.
"Advisors to Lenders" means, collectively, the Independent Engineer, the
Insurance Consultant, the Environmental Consultant, legal counsel and such other
advisors as the Administrative Agent in its reasonable judgment, shall have
found necessary to obtain and, so long as no Event of Default has occurred and
is continuing, to which the Borrower shall have consented, provided, however,
such consent shall not be unreasonably withheld or delayed.
"Affiliate" of any Person means any other Person which, directly or
indirectly, controls, is controlled by or is under common control with such
Person. A Person shall be deemed to be "controlled by" any other Person if such
other Person possesses, directly or indirectly, power
(a) to vote 10% or more (or, with respect to Trigen, to vote 25% or
more) of the securities or beneficial ownership interests (in each case,
on a fully diluted basis) having ordinary voting power for the election of
directors or managing general partners; or
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(b) to direct or cause the direction of the management and policies
of such Person whether by contract or otherwise.
"Affiliated Project Participant" means the Borrower, Trigen and each
Affiliate thereof party to a Project Document.
"Agents" means the Administrative Agent and the Collateral
Agent, collectively.
"Agreement" means this Amended and Restated Credit and
Acceptance Agreement.
"Applicable Margin" means with respect to any Loan of any type and at any
time of determination, a margin above the interest rate for such type of Loan
determined by reference to the number of years that have lapsed since the
Closing Date, as follows:
(a) with respect to Construction Loans for the period from the
Closing Date until the Construction Loan Maturity Date, 85 basis points
(bp) per annum;
(b) with respect to Term Loans for the period commencing on the Term
Loan Closing Date and ending on the fifth anniversary thereof, 95 basis
points (bp) per annum;
(c) with respect to Term Loans for the period commencing on the date
after the fifth anniversary of the Term Loan Closing Date and ending on
the Term Loan Maturity Date, 120 basis points (bp) per annum; and
(d) with respect to Term Loans to the extent Loans remain
outstanding for the period commencing on the Term Loan Maturity Date and
ending on the Final Maturity Date, 320 basis points (bp) per annum.
"Arrangement Fee" is defined in Section 11.3.
"Articles of Incorporation" means the Articles of Incorporation of the
Borrower dated as of March 17, 1989, in the form of Exhibit J to the Closing
Date Certificate.
"Assignee Lender" is defined in Section 11.11.1.
"Assignment Agreement" means an Assignment Agreement substantially in the
form of Exhibit M hereto.
"Assignment of Book Debts" means the assignment of book debts, executed
and delivered by the Borrower, substantially in the form of Exhibit J-2 hereto.
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"Assignment of Book Debts Act" means the Assignment of Book Debts Act,
R.S.P.E.I. 1988 Cap. A-22, as amended, reformed or otherwise modified from time
to time.
"Assignment of Principal Contracts" means the agreement executed and
delivered by the Borrower, among the Borrower, the Collateral Agent, the
Government of the Province of Prince Edward Island, UPEI, Queens Region Health
and Community Services and Georgetown Timber Ltd., substantially in the form of
Exhibit J-3 hereto.
"Authorized Officer" means, relative to any Project Participant, those of
its officers or other authorized representatives whose signatures and incumbency
shall have been certified to the Lenders pursuant to Section 6.1.1.
"Bankers' Acceptance" and "B/A" means a term bill of exchange denominated
in Canadian Dollars drawn by the Borrower on the standard form of the Lender
accepting it at its Domestic Office; for purposes of clarity, the term
"principal" shall mean, with respect to any outstanding Loan in the form of a
Bankers' Acceptance, the face amount of such Bankers' Acceptance.
"Bank of Canada Discount Rate" means, for any period, a fluctuating
interest rate per annum (rounded to the nearest 1/100th) equal for each day
during such period to the weighted average of the rates on transactions with
members of the Bank of Canada as published for such day (or, if such day is not
a Business Day in Canada, for the next preceding Business Day in Canada) by the
Bank of Canada; provided, however, that if such rates are not so published for
any day which is a Business Day in Canada, the rate for such day shall be the
average of the quotations for such transactions received by Societe Generale
(Canada) (rounded to the nearest 1/100th) on such day from three discount rate
brokers of recognized standing selected by it.
"Board of Governors" means the Board of Governors of the Bank of Canada or
any successor thereto.
"Boiler Plant Operating Agreements" means, collectively, the boiler plant
operating agreement, dated August 8, 1995, between the Government of Prince
Edward Island and the Borrower and the boiler plant operating agreement, dated
August 8, 1995 between the Borrower and UPEI, pursuant to which the boiler
plants currently servicing the Thermal System will continue to be operated by
their respective present operators.
"Borrower" is defined in the preamble.
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"Borrower Completion Certificate" means the certificate, in the form of
Exhibit P-1 hereto and duly completed and executed by the Borrower.
"Borrower Construction Certificate" means a Construction Certificate, in
the form of Exhibit E-1 hereto and duly completed and executed by the Borrower.
"Borrowing" means the Loans of the same type and, in the case of Bankers'
Acceptances and Canadian Funds Rate Loans, having the same Interest Period made
by all Lenders on the same Business Day and pursuant to the same Borrowing
Request in accordance with Section 2.3.
"Borrowing Request" means (i) with respect to Loans other than Bankers'
Acceptances, a borrowing request and certificate duly executed by an Authorized
Officer of the Borrower, substantially in the form of Exhibit D-1 hereto and
(ii) with respect to Bankers' Acceptances, a request for the creation of
Bankers' Acceptances and certificate duly executed by an Authorized Officer of
the Borrower substantially in the form of Exhibit D-2 hereto.
"Business Day" means any day which is neither a Saturday or Sunday nor a
legal holiday on which banks are authorized or required to be closed in New
York, New York, Prince Edward Island, Canada or Montreal, Canada.
"Canadian Code" means the Canadian Income Tax Act, as amended, reformed,
or otherwise modified from time to time.
"Canadian Dollar" and the sign "C$" mean lawful money of Canada.
"Canadian Funds Rate" means, with respect to one or more Loans to be
created on any date, for a specified Interest Period, the annual percentage rate
of interest (rounded to the nearest 1/100th) determined at such time by Societe
Generale (Canada) as the reference rate of interest for fixed-rate Canadian
Dollar commercial loans made by it in Canada for a term equal or approximately
equal to such Interest Period and in an amount equal or approximately equal to
such Loan or Loans, in respect of which the interest is to be calculated based
upon Societe Generale (Canada)'s cost of funds; Societe Generale (Canada)'s
Canadian Funds Rate shall be established from time to time by it taking into
account such factors (including, without limitation, reserves to the Bank of
Canada), which may vary from time to time, as Societe Generale (Canada) shall
deem appropriate to the establishment thereof.
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<PAGE> 15
"Canadian Funds Rate Loan" means any Loan bearing interest at the Canadian
Funds Rate.
"Canadian Security Acts" means the Registry Act, the Assignment of Book
Debts Act and the Corporation Securities Registration Act, collectively.
"Capital Expenditures" means, for any period, the sum of the aggregate
amount of all expenditures or monetary obligations of the Borrower for fixed or
capital assets made during such period which, in accordance with GAAP, would be
classified as capital expenditures.
"Cash Equivalent Investment" means
(a) with respect to investments denominated in U.S. Dollars (i)
direct obligations of the United States of America or any agency thereof
or obligations guaranteed by the United States of America or any agency
thereof; (ii) time deposit accounts, certificates of deposit and money
market deposits maturing within 180 days of the date of acquisition
thereof issued by a bank or trust company which is organized under the
laws of the United States of America, Canada, any state or province
thereof or any foreign country recognized by the United States of America
or Canada having capital, surplus and undivided profits aggregating in
excess of US$250,000,000 (or the foreign currency equivalent thereof) and
whose long-term debt, or whose parent holding company's long-term debt, is
rated A (or such similar equivalent rating or higher by at least one
nationally recognized statistical rating organization (as defined in Rule
436 under the Securities Act of 1933, as amended)); (iii) repurchase
obligations with a term of not more than 30 days for underlying securities
of the types described in clause (i) above entered into with a bank
meeting the qualifications described in clause (ii) above; (iv) commercial
paper, maturing not more than 180 days after the date of acquisition,
issued by a corporation (other than any Affiliated Project Participant)
organized and in existence under the laws of the United States of America,
Canada or any foreign country recognized by the United States of America
or Canada with a rating at the time as of which any investment therein is
made of P-1 (or higher) according to Moody's Investors Service, or A-1 (or
higher) according to Standard & Poor's Corporation; (v) securities with
maturities of six months or less from the date of acquisition issued or
fully guaranteed by any state, commonwealth or territory of the United
States of America or by any political subdivision or taxing authority
thereof, and rated at least A by Standard & Poor's Corporation or A by
Moody's Investors Service; (vi) mutual funds whose
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<PAGE> 16
investment guidelines restrict such funds' investments to those satisfying
the provisions of clauses (i) through (v) above; and (vi) time deposit
accounts, certificates of deposit and money market deposits in aggregate
face amount not in excess of 1/2 of 1% of total assets of the Borrower and
its Subsidiaries, on a combined basis, as of the end of the Borrower's
most recently completed Fiscal Year; and
(b) with respect to investments denominated in Canadian Dollars, (i)
direct obligations of Canada or any agency thereof or obligations
guaranteed by Canada or any agency thereof; (ii) time deposit accounts,
certificates of deposit and money market deposits maturing within 180 days
of the date of acquisition thereof issued by (A) any bank described in
clause (a)(ii) above, (B) any bank listed under Schedule I to the Bank Act
(Canada) or (C) any other bank which is organized under the laws of Canada
or any province thereof whose long-term debt, or whose parent holding
company's long-term debt is rated at least A by Canadian Bond Rating
Service, Inc. and the Dominion Bond Rating Service Limited; and (iii)
commercial paper, maturing not more than 180 days after the date of
acquisition, issued by a corporation (other than any Affiliated Project
Participant) organized and in existence under the laws of the United
States of America, Canada, any state or province thereof or any foreign
country recognized by the United States of America or Canada with a rating
at the time as of which an investment therein is made of A1 (or higher)
according to Canadian Bond Rating Service, Inc. and R1 (high) according to
Dominion Bond Rating Service Limited.
"Casualty Event" means any of the following events:
(a) the total loss (whether constructive or actual) of the Project,
the Energy Facility or the Thermal System, the total loss of use thereof
due to destruction, damage beyond repair of or rendering the Project, the
Energy Facility or the Thermal System permanently unfit for normal use for
any reason whatsoever; or
(b) any damage to the Project, the Energy Facility or the Thermal
System which results in an insurance settlement with respect to the
Project, the Energy Facility or the Thermal System on the basis of an
actual or constructive total loss.
"Casualty/Taking Proceeds" means all compensation, awards and insurance
proceeds paid, and other payments made, by any Regulatory Authority or other
Person as a result of a Casualty Event, a Partial Casualty Event, a Taking or a
Partial Taking (including all proceeds of property insurance, boiler and
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<PAGE> 17
machinery insurance, builder's risk insurance, and business interruption
insurance paid under any insurance policy of the Borrower including those
required to be maintained under Section 8.1.4).
"Change in Control" means
(a) the failure of Trigen to own, free and clear of all Liens,
directly or indirectly, all of the issued outstanding capital stock of the
Borrower;
(b) the creation or imposition of any Lien on any interest in the
Borrower (other than pursuant to the Security Documents); or
(c) the failure of Trigen to remain and function as the sole
shareholder of the Borrower, having exclusive control of the Borrower's
business and having the right, power and exclusive authority to manage the
Borrower's business and take any action necessary to carry out the
purposes and business of the Borrower.
"Change Order" means any order for a material change under, a waiver of or
other modification of the work to be performed pursuant to the applicable
Construction Contract.
"Closing Date" means the date on which all conditions precedent, with the
exception of (i) the due execution and delivery of the Steen Construction
Contract pursuant to Section 6.1.2, (ii) the due execution and delivery of the
Assignment of Principal Contracts by each of the Project Participants made a
party thereto pursuant to Sections 6.1.2 and 6.1.3, and (iii) the delivery to
each of the Lenders and the Agents of the opinion set forth in Section
6.1.15(e), which are set forth in Section 6.1 shall have been satisfied or
waived by the Lenders.
"Closing Date Certificate" means a certificate of an Authorized Officer of
the Borrower, substantially in the form of Exhibit N hereto.
"Collateral" means, collectively, (a) the "Collateral" as defined in each
of the Security Agreement, the Accounts Agreement, the Pledge Agreement and the
Assignment of Book Debts; (b) the "Mortgaged Property" as defined in the
Debenture; (c) the "Principal Contracts" as defined in the Assignment of
Principal Contracts; (d) the "Receivables" as defined in the Assignment of Book
Debts, (e) the Operating Account and (f) all other collateral of whatever nature
purported to be subject to the Lien of the Security Documents.
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"Collateral Agent" means Societe Generale (Canada) in its capacity as
Collateral Agent and its designated subagent under the Security Documents, or
such other Person as shall be a successor Collateral Agent or subagent
thereunder.
"Commitment" means, as the context may require, a Lender's Construction
Loan Commitment or Term Loan Commitment.
"Commitment Amount" means, as the context may require, the Construction
Loan Commitment Amount or the Term Loan Commitment Amount.
"Commitment Termination Date" means, as the context may require, the
Construction Loan Commitment Termination Date or the Term Loan Commitment
Termination Date.
"Commitment Termination Event" means
(a) the occurrence of any Default with respect to the Borrower
described in clauses (a) through (d) of Section 9.1.9; or
(b) the occurrence and continuance of any other Event of Default and
either
(i) the declaration of the Loans to be due and payable
pursuant to Section 9.3, or
(ii) in the absence of such declaration, the giving of notice
by the Administrative Agent, acting at the direction of the Majority
Lenders, to the Borrower that the Commitments have been terminated.
"Construction Budget" means a budget, prepared and certified by the
Borrower of Project Costs expected to be incurred by the Borrower prior to
Project Completion in the form attached as Exhibit O to the Closing Date
Certificate, as the same may be amended from time to time as provided herein.
"Construction Contract" means each of the construction contracts listed in
Item 1.1(a) of the Disclosure Schedule (collectively, the "Construction
Contracts").
"Construction Leverage Ratio" means, with respect to the Borrower on any
date of determination, the ratio of (a) all Project Costs to (b) the
Construction Loan Commitment on such date plus the Equity Contribution made as
of such date (if any).
"Construction Loan Commitment" means, relative to any Lender, such
Lender's obligation to make Construction Loans pursuant to Section 2.1.1.
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"Construction Loan Commitment Amount" means, on any date, C$32,000,000, as
such amount may be reduced from time to time pursuant to Section 2.2.
"Construction Loan Commitment Termination Date" means the
earliest to occur of
(a) the Project Completion Date;
(b) the date on which the Construction Loan Commitment Amount is
terminated in full or reduced to zero pursuant to Section 2.2;
(c) the date on which any Commitment Termination Event occurs;
(d) the Date Certain; or
(e) the failure of the Full Availability Date to occur.
Upon the occurrence of any event described in clause (c), the Construction Loan
Commitments shall terminate automatically and without any further action.
"Construction Loan Maturity Date" means the first to occur of (i) the
Project Completion Date or (ii) the Date Certain.
"Construction Loans" is defined in Section 2.1.1.
"Construction Milestone Schedule" means the milestone schedule, in a form
reasonably acceptable to the Administrative Agent, attached as an exhibit to the
Steen Construction Contract.
"Construction Note" means a promissory note of the Borrower payable to any
Lender, in the form of Exhibit A hereto, evidencing the aggregate Indebtedness
of the Borrower to such Lender resulting from outstanding Construction Loans,
and also means all other promissory notes accepted from time to time in
substitution therefor or renewal thereof.
"Construction Schedule" means the construction schedule for the completion
of the Project in the form delivered to the Lenders on the Closing Date and
approved by the Lenders in consultation with the Independent Engineer, which
schedule shall set forth in reasonable detail all engineering, procurement,
construction and start up milestones, the projected dates of commencement and
completion of material construction phases or projects, the projected dates of
delivery and installation of material equipment and fixtures and the
commencement and projected completion times for performance testing.
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"Contingent Liability" means any agreement, undertaking or arrangement by
which any Person guarantees, endorses or otherwise becomes or is contingently
liable upon (by direct or indirect agreement, contingent or otherwise, to
provide funds for payment, to supply funds to, or otherwise to invest in, a
debtor, or otherwise to assure a creditor against loss) the indebtedness,
obligation or any other liability of any other Person (other than by
endorsements of instruments in the course of collection), or guarantees the
payment of dividends or other distributions upon the shares of any other Person.
The amount of any Person's obligation under any Contingent Liability shall
(subject to any limitation set forth therein) be deemed to be the outstanding
principal amount (or maximum principal amount, if larger) of the debt,
obligation or other liability guaranteed thereby.
"Continuation/Conversion Notice" means a notice of continuation/conversion
and certificate duly executed by an Authorized Officer of the Borrower,
substantially in the form of Exhibit F, hereto.
"Contract Price" means the total amount to be paid to a Contractor (before
penalties and bonuses and indemnities) pursuant to the relevant Construction
Contract as set forth therein.
"Contractor" means each of the Minor Contractors and the Major Contractor,
and "Contractors" means the Minor Contractors, together with the Major
Contractor, collectively.
"Corporation Securities Registration Act" means the Corporation Securities
Registration Act, R.S.P.E.I. 1988, Cap. C-26, as amended, reformed or modified
from time to time.
"Cost" means, in respect of any Change Order or Work, all costs incurred
or to be incurred by the Borrower in respect thereof, including, without
limitation, any increase in the Contract Price, any Scheduled Obligations or
other costs attributable to a delay in the Construction Schedule or any other
cost incurred by the Borrower directly or indirectly as a result of such Change
Order or Work.
"Credit Documents" means this Agreement, the Debt Service and Support
Agreement, the Notes, the Pledge Agreement, the Security Documents, the Accounts
Agreement, the Option Agreement, all Hedging Agreements entered into with a
Lender and all other documents, agreements and instruments supporting, securing
or otherwise related to this Agreement and the financing of the Project,
including, without limitation, all other mortgages, debentures, assignment
agreements, security agreements, depository agreements, pledge agreements,
support agreements, guarantees, notes and related instruments and certificates;
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<PAGE> 21
provided, however, "Credit Documents" shall not include those Project Documents
related solely to the construction or operation of the Project.
"Date Certain" means December 31, 1997.
"Debenture" means the debenture between the Borrower and the Collateral
Agent, or its designee, executed and delivered by the Borrower substantially in
the form of Exhibit J-1 hereto.
"Debt" means (i) the outstanding and stated principal amount of the
indebtedness of the Borrower of the nature referred to in clauses (a), (b) and
(c) of the definition of Indebtedness and (ii) any Contingent Liabilities of the
Borrower in respect of any types of Indebtedness described in clause (i).
"Debt Service and Support Agreement" means the debt service and support
agreement among Trigen, the Borrower and the Administrative Agent, dated as of
the date hereof, substantially in the form of Exhibit L hereto.
"Default" means any Event of Default or any condition, occurrence or event
which, after notice or lapse of time or both, would constitute an Event of
Default.
"Deficiency Amount" means with respect to any Loan, an amount equal to the
difference between the aggregate amount of the Loan outstanding and the Discount
Proceeds (as reduced by the Acceptance Fee with respect to such Loan) received
by the Borrower in connection with the conversion or continuation of such Loan.
"Disclosure Schedule" means the Disclosure Schedule attached as Schedule I
hereto.
"Discount Proceeds" means, for any Bankers' Acceptance to be accepted by a
Lender, an amount (rounded upwards, if necessary, to the nearest 0.01%)
calculated on the date on which such Bankers' Acceptance is made by multiplying:
(a) the face amount of the Bankers' Acceptance; by
(b) the quotient of one divided by the sum of one plus the product of:
(i) the Discount Rate (expressed as a decimal); and
(ii) a fraction, the numerator of which is the number of days
comprised in the term of such Bankers' Acceptance and the denominator of
which is 365 or 366, being the number of days in the applicable year;
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with such quotient being rounded up or down to the fifth decimal place and
.000005 being rounded up.
"Discount Rate" means, on any date, with respect to any of the Bankers'
Acceptances issued and accepted by a Lender on such date and with the same
maturity date, the average (as determined by the Societe Generale (Canada)) of
the respective discount rates (expressed to two decimal places and rounded
upwards, if necessary, to the nearest 0.01%) quoted to Societe Generale (Canada)
by each Schedule I Reference Lender as the discount rate at which such Schedule
I Reference Lender would, in accordance with its normal practices, at or about
10:00 A.M. (Montreal time), on such day, be prepared to purchase Canadian
Dollars bankers' acceptances accepted by such Schedule I Reference Lender having
a face amount and term comparable to the face amount and term of such Bankers'
Acceptances.
"Disputed Item" is defined in clause (b) of Section 2.3.
"Dollar" and the sign "US$" mean the lawful money of the United States.
"Domestic Office" means, relative to any Lender, the office of such Lender
designated as such below its signature to this Agreement or designated in its
Assignment Agreement or such other office of a Lender (or any successor or
assign of such Lender) within the United States or Canada as may be designated
from time to time by notice from such Lender, as the case may be, to each other
Person which is a party hereto. A Lender may have separate Domestic Offices for
purposes of making, maintaining or continuing, as the case may be, Bankers'
Acceptances, Canadian Funds Rate Loans and Fixed Rate Term Loans.
"Energy Facility" means the existing energy from waste plant together with
remote facilities and all assets connected therewith, described in Part A of
Schedule V hereto which provide a total capacity of 350,000 mm Btu per annum.
"Energy Facility Site" means the site of the Energy Facility located in
Prince Edward Island, Canada, in and around Charlottetown.
"Environmental Certificate" means a certificate of an Authorized Officer
of the Borrower, appropriately completed, substantially in the form of Exhibit Q
hereto.
"Environmental Consultant" means R.W. Beck or such other consultant as the
Administrative Agent may engage on behalf of the Lenders in connection with the
transactions contemplated hereby, including without limitation to examine the
plans and specifications of the Project, to make periodic inspections of
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the Project and to advise and render reports on the Project with respect to
compliance with all Environmental Laws.
"Environmental Laws" means any federal, provincial, municipal and local
laws, statutes, by-laws, regulations, orders- in-council, decrees, policies,
guidelines and directives applicable in the Province of Prince Edward Island,
including, without limitation, the following acts and regulations as they may be
amended from time to time: the Canadian Environmental Protection Act, R.S.C.
1985, c. 16 (4th Supp.), the Canadian Environmental Assessment Act, S.C. 1992,
c.37, the Environmental Protection Act, R.S.P.E.I. 1988, c. E-9, and the Air
Quality Regulations, P.E.I.Reg. EC377/92.
"EPA" means the Environmental Protection Act, R.S.P.E.I. 1988, Cap. E-9,
as amended, and the rules and regulations issued in respect thereto.
"EPA (Canada)" means the Environmental Protection Act (Canada), as
amended, and the rules and regulations issued in respect thereto.
"Equipment Lease Agreements" means the equipment lease agreement, dated
August 8, 1995, between the Government of Prince Edward Island, as represented
by the Minister of Transportation and Public Works and the Borrower pursuant to
which the Borrower leases certain production equipment, together with the
equipment lease agreement, dated August 8, 1995, between UPEI and the Borrower
pursuant to which the Borrower leases certain production equipment.
"Equity Contribution" means, as the context requires, the contribution of
equity funds by Trigen to the Borrower pursuant to the Debt Service and Support
Agreement (i) on or prior to the Term Loan Closing Date in the amount that will
provide the Borrower with funds sufficient to repay 10% of the outstanding
principal balance of the Construction Loans on the Construction Loan Commitment
Termination Date or (ii) prior to the Term Loan Closing Date in an amount, if
any, necessary to achieve Project Completion.
"Essential Technical Information" is defined in clause (d) of Section
7.1.9.
"Event of Default" is defined in Section 9.1.
"Excess Cash Flow" means the amount by which Project Cash Flow exceeds
Scheduled Obligations.
"Existing Construction Loans" is defined in the first recital.
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"Existing Credit Agreement" is defined in the first recital.
"Existing Lenders" is defined in the first recital.
"Expansion" means the second phase of refurbishment and expansion of the
Energy Facility and the interconnection and integration of equipment, assets and
facilities with the Thermal System as described in Part B of Schedule V hereto.
"Expansion Site" means the site of the Expansion in Prince Edward Island,
in and around Charlottetown.
"Facility Purchase Agreement" means the facility purchase agreement, dated
August 8, 1995, among the Borrower, PEIEC and the Government of Prince Edward
Island, pursuant to which the Borrower purchased the Energy Facility and the
Thermal System.
"Fee Cap" is defined in Section 11.3.
"Final Completion Date" means, with respect to each Construction Contract,
the date upon which the obligations of the Contractor for such Construction
Contract have been complied with in all material respects.
"Final Maturity Date" means the fifth anniversary of the Term Loan
Maturity Date.
"Fiscal Quarter" means any quarter of a Fiscal Year.
"Fiscal Year" means any period of twelve consecutive calendar months
ending on December 31; references to a Fiscal Year with a number corresponding
to any calendar year (e.g., the "1996 Fiscal Year") refer to the Fiscal Year
ending on the December 31 occurring during such calendar year.
"Fixed Charge Coverage Ratio" means the ratio, with respect to any Person,
for the period twelve months prior to the last day of the Fiscal Quarter, or,
for purposes of the Debt Service and Support Agreement, for the period three
months prior to the date of determination, of (a) all revenues of such person
less operating expenses of such Person to (b) all scheduled principal, interest,
fees in respect of Indebtedness or other amounts payable by such Person which
are characterized as indebtedness for purposes of GAAP, excluding indebtedness
described in Section 8.2.2(b) but including Hedging Agreements and, for purposes
of the Debt Service and Support Agreement, which excludes all capitalized
interest.
"Fixed Rate Term Loan" means any Term Loan which, at the election of the
Borrower pursuant to the provisions of
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Section 2.5, bears interest at a rate quoted by Societe Generale (Canada) and
agreed to by the Borrower.
"F.R.S. Board" means the Board of Governors of the Federal Reserve System
of the United States or any successor thereto.
"Fuel Agreements" means, collectively, the fuel supply agreement between
Georgetown Timber Ltd. and the Borrower for the supply of acceptable wood
biomass fuel for an initial term of 30 years and all other fuel agreements,
including, without limitation, all fuel agreements for the supply of oil.
"Full Availability Date" means the date on which (i) all of the conditions
precedent set forth in Section 6.1 shall have been satisfied or waived by the
Lenders and (ii) the covenants set forth in Sections 8.1.18, 8.1.20 and 8.1.21
shall have been satisfied or waived by the Lenders.
"GAAP" means generally accepted accounting principles consistently applied
in Canada, as in effect from time to time.
"Governmental Approval" means any action, authorization, consent,
approval, license, lease, ruling, permit, tariff, rate, certification,
exemption, filing, variance, claim, order, judgment, decree, publication,
notices to, declarations of or with or registration by or with any Regulatory
Authority.
"Governmental Rule" means any statute, law, regulation, ordinance, rule,
judgment, order, decree, permit, concession, grant, franchise, license,
agreement, directive, guideline, policy, requirement, or other governmental
authorization including any conditions thereof, restriction or any similar form
of published or otherwise known decision of or determination by, or any
interpretation or administration of any of the foregoing by, any Regulatory
Authority, whether now or hereafter in effect (including, without limitation,
any Environmental Law).
"Guarantee Agreement" means the guarantee agreement, dated August 8, 1995,
among Trigen, The Province of Prince Edward Island and PEIEC, pursuant to which
Trigen guarantees the
Borrower's completion of the Expansion.
"Hazardous Material" means
(a) any petroleum or petroleum products, radioactive materials,
asbestos in any form that is friable, urea formaldehyde foam insulation,
and transformers or other equipment that contain dielectric fluid
containing polychlorinated biphenyls;
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(b) any chemicals, materials or substances which are now or
hereafter become defined as or included in the definition of "hazardous
substances", "hazardous air pollutants", "hazardous wastes", "hazardous
materials", "extremely hazardous wastes", "restricted hazardous wastes",
"toxic substances", "toxic pollutants", "pollution", "pollutants",
"regulated substances", or words of similar import, under Environmental
Laws, including, but not limited to the EPA and the EPA (Canada) and the
City of Charlottetown By-laws Respecting Materials Transported in Sewer
Lines (formerly the Water and Sewage Act); or in the regulations
promulgated pursuant to said laws; or in the laws or regulations of the
Province of Prince Edward Island or political subdivisions thereof that
are the counterparts to the federal laws and regulations; and
(c) any other chemical, material, substance or waste declared to be
a hazardous, toxic or polluting material by any Regulatory Authority, the
release, emission, discharge, treatment of, storage, application of, use,
exposure to which is now or hereafter prohibited, limited or regulated by
any governmental authority.
"Hedging Agreements" means, with respect to any Person, all interest rate
swap agreements, interest rate cap agreements and interest rate collar
agreements, and all other agreements or arrangements designed to protect such
Person against fluctuations in interest rates or currency exchange rates.
"Hedging Breakage Fees" means any settlement amounts or other breakage or
termination fees payable by the Borrower under any Hedging Agreement in
connection with any unwinding, breach or termination thereunder.
"Hedging Obligations" means, with respect to any Person, all liabilities
of such Person under Hedging Agreements.
"herein", "hereof", "hereto", "hereunder" and similar terms contained in
any Project Document refer to such Project Document as a whole and not to any
particular Section, paragraph or provision of such Project Document.
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"Impermissible Qualification" means, relative to the opinion or
certification of any independent public accountant as to any financial statement
of any Project Participant, any qualification or exception to such opinion or
certification
(a) which is of a "going concern" or similar nature;
or
(b) which relates to the limited scope of examination of matters
relevant to such financial statement.
"including" means including without limiting the generality of any
description preceding such term, and, for purposes of each Project Document, the
rule of ejusdem generis shall not be applicable to limit a general statement,
which is followed by or referable to an enumeration of specific matters, to
matters similar to the matters specifically mentioned.
"Indemnification Agreement" means the indemnification agreement between
PEIEC and the Borrower, dated August 8, 1995, pursuant to which the Borrower
agreed to indemnify PEIEC with respect to any losses PEIEC may suffer in
connection with the termination of employment or laying off of employees
employed by UPEI.
"Indebtedness" of any Person means, without duplication:
(a) all obligations of such Person for borrowed money and all
obligations of such Person evidenced by bonds, debentures, notes or other
similar instruments;
(b) all obligations, contingent or otherwise, relative to the face
amount of all letters of credit, whether or not drawn, and banker's
acceptances issued for the account of such Person;
(c) all obligations of such Person as lessee under leases which have
been or should be, in accordance with GAAP, recorded as indebtedness;
(d) all other items which, in accordance with GAAP, would be
included as liabilities on the liability side of the balance sheet of such
Person as of the date at which Indebtedness is to be determined;
(e) net liabilities of such Person under all Hedging Agreements;
(f) whether or not so included as liabilities in accordance with
GAAP, all obligations of such Person to pay the deferred purchase price of
property or services, and
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indebtedness (excluding prepaid interest thereon) secured by a Lien on
property owned or being purchased by such Person (including indebtedness
arising under conditional sales or other title retention agreements or
under other agreements which, for federal tax purposes, are characterized
as indebtedness), whether or not such indebtedness shall have been assumed
by such Person or is limited in recourse; and
(g) all Contingent Liabilities of such Person in respect of any of
the foregoing.
For all purposes of the Project Documents, the Indebtedness of any Person shall
include the Indebtedness of any partnership or joint venture in which such
Person is a general partner or a joint venturer.
"Indemnified Liabilities" is defined in Section 11.4.
"Indemnified Parties" is defined in Section 11.4.
"Independent Engineer" means R.W. Beck, or such other consultant as the
Administrative Agent may engage on behalf of the Lenders in connection with the
transactions contemplated hereby, including without limitation to examine the
plans and specifications of the Project, proposed changes in such plans and
specifications and cost breakdowns and estimates, to make periodic inspections
of the work on and operation of the Project on behalf of the Lenders, to confirm
compliance with Environmental Laws, to monitor the operation and maintenance of
the Project and to advise and render reports to the Lenders concerning the same
and to perform other tasks set forth in the Project Documents.
"Independent Engineer Completion Certificate" means the certificate,
substantially in the form of Exhibit P-2 hereto and duly completed and executed
by the Independent Engineer.
"Independent Engineer Construction Certificate" means a Construction
Certificate, in substantially the form of Exhibit E-2 hereto and duly completed
and executed by the Independent Engineer.
"Initial Construction Loan Commitment" is defined in Section 2.1.3(a).
"Insurance" means the insurance held by the Borrower in accordance with
Section 8.1.4.
"Insurance Consultant" means Alexander & Alexander of California, Inc. or
any other Person from time to time appointed
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by the Administrative Agent to act as Insurance Consultant to the Lenders for
the purposes of this Agreement.
"Interest Period" means, relative to any Loan, the period beginning on
(and including) the date on which such Loan is made pursuant to Section 2.3 or
Section 3.3, as applicable or converted or continued pursuant to Section 2.4 and
shall end on (but exclude) the day which is 30, 60, 90 or 180 days thereafter,
as the Borrower may select in its relevant notice pursuant to Section 2.3, 2.4
or 3.3; provided, however,
(a) the Borrower shall not have in effect more than three Interest
Periods at any one time;
(b) if such Interest Period would otherwise end on a day which is
not a Business Day, such Interest Period shall end on the next following
Business Day; and
(c) no Interest Period may end later than the Construction Loan
Maturity Date in the case of Interest Periods for Construction Loans, or
the final scheduled maturity thereof, in the case of Interest Periods for
Term Loans.
"Investment" means, relative to any Person,
(a) any loan or advance made by such Person to any other Person
(excluding commission, travel and similar advances to officers and
employees made in the ordinary course of business); and
(b) any ownership or similar interest held by such Person in any
other Person.
The amount of any Investment shall be the original principal or capital amount
thereof less all returns of principal or equity thereon (and without adjustment
by reason of the financial condition of such other Person) and shall, if made by
the transfer or exchange of property other than cash, be deemed to have been
made in an original principal or capital amount equal to the fair market value
of such property.
"Lender" means any of the Lenders listed on the signature pages hereof,
subject to the provision of Section 11.11.1 with respect to which any Person may
become or cease to be a Lender, and "Lenders" means all such Lenders.
"Lien" means any security interest, mortgage, debenture, pledge,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
otherwise), charge against or interest in property to secure payment of a debt
or performance
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of an obligation or other priority or preferential arrangement of any kind or
nature whatsoever.
"Loans" means, as the context may require, either a Construction Loan or a
Term Loan, of any type.
"Maintenance Logs" is defined in Section 8.1.9.
"Maintenance Schedule" has the meaning assigned to that term in the
Closing Date Certificate, as the same may be amended from time to time with the
consent of the Majority Lenders.
"Major Contractor" means Steen Contractors Limited.
"Major Maintenance" means those items of major maintenance or overhaul set
forth in the Maintenance Schedule.
"Majority Lenders" means, at any time, Lenders holding at least 662/3% of
the then aggregate principal amount of Loans outstanding under the Project
Credit Facility, or if no such principal amount is outstanding, Lenders having
at least 662/3% of the Project Credit Facility Commitments.
"Management Fees" means all fees payable by the Borrower to Trigen;
provided, that such fees are of the nature of the management fees disclosed in
the projections delivered to the Agents on the Closing Date pursuant to the
Closing Date Certificate.
"Material Adverse Effect" with respect to any Person means a
material adverse effect on
(a) the Energy Facility, the Thermal System, the Expansion or the
Project;
(b) the business, operations, prospects, condition (financial or
otherwise) or Property of the Borrower and Trigen;
(c) the ability of such Person to perform its obligations under any
material Project Document to which it is a party;
(d) the validity or enforceability of any material Project Document;
(e) the rights and remedies of the Lenders and the Agents under any
of the Project Documents; or
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(f) the security provided to the Collateral Agent, for the benefit
of the Secured Parties, under the Security Documents.
"Material Compliance" and "Comply, Complied, Complied with in All Material
Respects" or "Compliance in All Material Respects" means general compliance with
applicable Governmental Approvals, Governmental Rules or Permits, as the case
may be, and for which any noncompliance is not significant and in any event does
not result in a Material Adverse Effect.
"Material Project Participant" shall mean each of (a) the Borrower, (b)
Trigen, (c) the Major Contractor, (d) PEIEC, (e) Georgetown Timber Ltd., (f) The
Government of Prince Edward Island, (g) Queens Region Health & Community
Services, (h) UPEI and (i) Prince Edward Home; provided, however, that, except
with respect to the Borrower, any Material Project Participant which has fully
discharged its duties under a Project Document (whether through performance or
replacement as permitted therein), if such Project Document has terminated by
its terms (other than as a result of a default by such Material Project
Participant thereunder), such Project Participant shall thereafter not be deemed
to be a Material Project Participant.
"Minor Contractors" means, collectively, each of the Contractors set forth
on Item 1.1(b) of the Disclosure Schedule.
"Minor Costs" means individual costs incurred by the Borrower with respect
to the Project in an amount less than C$100,000.
"Minor Expenses" means individual budgeted expenses in an amount less than
C$100,000.
"Net Disposition Proceeds" means, with respect to any disposition of
assets of the Borrower, the excess of
(a) the gross proceeds (with any non-cash consideration being valued
at the fair market value thereof) received by the Borrower from such
disposition
over
(b) the sum of all fees and expenses incurred (or reasonably
expected to be incurred) in connection with such disposition.
"Non-Affiliated Project Participant" means any Project Participant other
than an Affiliated Project Participant.
"Non-Recourse Parties" is defined in Section 11.13.
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"Note" means, as the context may require, a Construction Note or a Term
Note, and "Notes" means all such Notes.
"Obligations" means all obligations (monetary or otherwise) of the
Borrower to the Secured Parties arising under or in connection with each Project
Document; for purposes of clarity, the term "principal" shall mean, with respect
to any outstanding Loan in the form of Bankers' Acceptances, the face amount of
such Bankers' Acceptance.
"Operating Account" means the cash account established pursuant to the
Accounts Agreement to receive all Project Revenues and to pay Project Costs and
Project Expenses.
"Operating Budget" is defined in Section 8.1.10.
"Operating Logs" is defined in Section 8.1.9.
"Operating Revenues" means, for any period, the sum for such period of the
amounts described in clauses (a), (b), (c) and (g) of the definition of "Project
Revenues" set forth in the Accounts Agreement, plus all revenues of the Borrower
during such period received or in respect of the Project or the Project
Documents.
"Option Agreement" means the option agreement between Trigen and the
Borrower, substantially in the form of Exhibit A to the Security Agreement.
"Organizational Document" means, relative to any Project Participant, its
partnership agreement, certificate of limited partnership, its certificate of
incorporation, its charter, letters patent or organizational documents, its
by-laws and all shareholder agreements, voting trusts and similar arrangements
applicable to any of its authorized shares of capital stock or other beneficial
interests therein.
"Partial Casualty Event" means any loss, damage to or loss of use of the
Project, the Thermal System, the Expansion or the Energy Facility (or any
portion thereof), which is not a Casualty Event.
"Partial Taking" means any condemnation, confiscation, seizure or
requisition of title to or use of the Project, the Thermal System, the Expansion
or the Energy Facility by any governmental authority under power of eminent
domain or otherwise, which is not a Taking.
"Participant" is defined in Section 11.11.2.
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"PEIEC" means Prince Edward Island Energy Corporation, a corporate body
incorporated by a special act of the legislative assembly of the Province of
Prince Edward Island.
"Percentage" means, relative to any Lender, the percentage set forth
opposite its signature hereto or set forth in the Assignment Agreement, as such
percentage may be adjusted from time to time pursuant to Assignment Agreement(s)
executed by such Lender and its Assignee Lender(s) and delivered pursuant to
Section 11.11.
"Performance Liquidated Damages" means all payments of liquidated damages
or penalties, warranties, guarantees or fees payable by a Contractor to the
Borrower, pursuant to the terms of the relevant Construction Contract, if any.
"Permits" means all permits, licenses, approvals and other authorizations
issued by any Regulatory Authority listed in Item 7.1.4(a) ("Permits") of the
Disclosure Schedule or any other Governmental Approval subsequently acquired or
obtained.
"Person" means any natural person, corporation, partnership, firm,
association, company, trust, government, governmental agency or any other
entity, whether acting in an individual, fiduciary or other capacity.
"Pledge Agreement" means the Pledge Agreement between Trigen and the
Collateral Agent executed and delivered pursuant to Section 6.1.3, in
substantially the form of Exhibit K-1 hereto.
"Project" means, collectively, the Energy Facility, the Thermal System and
the Expansion.
"Project Accounts" has the meaning assigned to the term "Accounts" in the
Accounts Agreement.
"Project Cash Flow" means, for any three month period, the excess of
(a) Project Revenues for such period;
over
(b) Project Expenses for such period.
"Project Completion" and "Project Completion Date" means the first date on
which all of the following events have occurred:
(a) (i) the Project (and all components thereof) shall have been
completed and accepted by the Borrower;
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(ii) the Borrower shall have certified to the Administrative
Agent (A) physical completion of the Project (and all
components thereof), (B) the satisfactory completion of
Start-Up Tests and (C) the conformity of the Project
(and each of the Energy Facility, the Expansion and the
Thermal System) to the plans and specifications therefor
and made a part of the Construction Contracts;
(iii) the Independent Engineer shall have failed to object to
the Borrower's certification pursuant to clause (ii)
above within 30 days after the date of such
certification; and
(iv) all Project Costs have been paid in full, or funds
sufficient to pay the Project Costs shall have been
deposited in escrow;
(b) Trigen, or a related party, shall have made the required
Equity Contribution at no additional cost or charge to the
Borrower, in cash and reasonably satisfactory to the
Administrative Agent;
(c) no Default or Event of Default shall exist under this
Agreement or any other Credit Document and the representations
and warranties of the Borrower and of Trigen made as of the
Closing Date under any of the Credit Documents to which it is
a party, shall be true and correct in all material respects;
(d) all Permits with respect to use, ownership and operation of
the Project at its full rate capacity shall have been
obtained, shall be in full force and effect and shall not be
subject to material litigation; and
(e) the Project Documents shall be in full force and effect, no
default by any party shall be in existence and all conditions
precedent to the obligations of each party shall have been
satisfied.
"Project Costs" means all costs and expenses to the extent budgeted,
(other than Minor Costs or Minor Costs in an aggregate amount less than
C$250,000 in any quarterly period as to which no prior approval or budget is
required) to be incurred by the Borrower to finance and complete the Project in
the manner
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contemplated by the Project Documents, including, without limitation, (i) all
construction, acquisition and refurbishment costs of the Project, including all
amounts payable under any Construction Contract, interconnection and
transmission costs, expenses associated with real estate and security deposits;
(ii) approved Project development expenses; (iii) start-up costs, initial fuel
supply and working capital costs; (iv) all Project-related costs and expenses to
complete construction and financing of the Project; (v) spare parts inventory
costs, (vi) Scheduled Obligations during construction and (vii) all related
legal, advisory and other transaction costs of the Borrower and the Lenders.
"Project Credit Facility" means the Construction Loans together with the
Term Loans.
"Project Credit Facility Commitment" means the Construction Loan
Commitment, together with the Term Loan Commitment.
"Project Documents" means, collectively, the Credit Documents, the Fuel
Agreements, the Waste Processing Agreement, the Thermal Energy Services
Agreements, the Guarantee Agreement, the Indemnification Agreement, the Boiler
Plant Operating Agreements, the Equipment Lease Agreements, the Facility
Purchase Agreement, the Construction Contracts, the Insurance, the Debt Service
and Support Agreement, any other material agreement necessary for the
construction or operation of the Project, each Additional Project Document and
any agreement entered into with the consent of the Majority Lenders in
replacement of any of the foregoing.
"Project Expenses" means, to the extent budgeted, other than Minor
Expenses, or Minor Expenses in aggregate amount less than C$250,000 in any
quarterly period as to which no prior budget or approval is required,
collectively all
(a) general expenses of administering, managing and operating the
Project and of maintaining it in good repair and operating condition
(excluding, for purposes of calculating Excess Cash Flow, Management Fees
from and after the tenth anniversary of the Commitment Termination Date);
(b) fuel procurement and transportation costs;
(c) direct operating and maintenance costs of the Project, including
operations fees and major maintenance expenses;
(d) insurance costs;
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(e) all taxes, with respect to the Project, payable by the Borrower;
(f) sales and excise taxes payable by the Borrower (other than taxes
imposed on or measured by income or receipts);
(g) franchise taxes payable by the Borrower;
(h) costs and fees incurred in connection with obtaining and
maintaining in effect the Governmental Approvals;
(i) working capital requirements funded from cash flow;
(j) legal, accounting and other professional fees incurred in
connection with any of the foregoing items;
(k) spare parts inventory costs; and
(l) security deposits made pursuant to the terms of any Project
Document or otherwise in the ordinary course of business.
"Project Participant" means each Material Project Participant and all
other parties to the Project Documents or the Credit Documents (other than the
Agents and the Lenders); provided, however, that each of the foregoing (other
than the Borrower) shall only be a "Project Participant" or otherwise considered
a party to the Project Documents until such time that all of its obligations are
discharged under such Project Document or it is otherwise replaced as permitted
therein.
"Project Revenues" means the sum of payments earned pursuant to the Waste
Processing Agreement, the Thermal Energy Service Agreements, sales of other
Thermal System products plus interest
income and all other income of the Project.
"Property" means any right or interest in or to property of any kind
whatsoever, whether real, personal or mixed and whether tangible or intangible.
"Quarterly Payment Date" means the last day of each March, June,
September, and December or, if any such day is not a Business Day, the next
succeeding Business Day.
"Registry Act" means the Registry Act, R.S.P.E.I. 1988 Cap. R-10, as
amended, reformed or modified from time to time.
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"Regulatory Authority" means any national, state, provincial or local
government, any political subdivision or any governmental, quasi-governmental,
judicial, public or statutory instrumentality, authority, body or entity, other
regulatory bureau, authority, body or entity, including the Canadian Deposit
Insurance Corporation, the Board of Governors, the Bank of Canada, the U.S.
Federal Deposit Insurance Corporation, the Comptroller of the Currency, the
F.R.S. Board, any central bank or any comparable authority.
"Regulatory Records" is defined in Section 8.1.9.
"Replacement Project Participant" means, with respect to any Project
Participant, any Person reasonably satisfactory to the Majority Lenders which,
pursuant to an agreement reasonably satisfactory to the Majority Lenders,
assumes the obligation of purchasing or providing the services or products on
terms and conditions no less favorable to the Borrower than those which such
Project Participant is obligated to purchase or provide pursuant to the Project
Document to which such Project Participant is a party.
"Schedule I Reference Lender" means each of The Bank of Nova Scotia, The
Bank of Montreal, Toronto Dominion Bank, Canadian Imperial Bank of Commerce and
Royal Bank of Canada.
"Scheduled Obligations" means, for any period, the sum of (i) all amounts
payable by the Borrower during such period pursuant to Sections 4.1, 4.2 and 4.3
and (ii) net payments under any Hedging Agreement entered into with a Lender.
"Secured Parties" means the Agents and the Lenders.
"Security Agreement" means the Security Agreement executed and delivered
by the Borrower and the Collateral Agent, substantially in the form of Exhibit I
hereto.
"Security Documents" means, individually and collectively, the Security
Agreement, the Debenture, the Assignment of Book Debts, the Assignment of
Principal Contracts, the Accounts Agreement, the Pledge Agreement, and all
financing statements required by the Security Documents and all other documents,
agreements and instruments supporting, securing or otherwise related to such
Security Agreements, including, without limitation, all other mortgages,
debentures, assignment agreements, security agreements, depository agreements,
accounts agreements, pledge agreements, support agreements, guarantees and
related instruments and certificates; provided, however, "Security Documents"
shall not include those agreements related solely to the construction and
operation of the Project.
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"Segregated Account" is defined in Section 8.1.19.
"Site" means the Energy Facility Site, the Expansion and the Thermal
System Site, collectively.
"Start Up Tests" means the tests or standards set forth in the relevant
Construction Contract which must be successfully met prior to the Final
Completion Date of such Construction Contract.
"Stated Maturity Date" means the Construction Loan Maturity Date or the
Term Loan Maturity Date, as applicable.
"Steen Construction Contract" means the construction contract, approved by
the Administrative Agent and the Independent Engineer on or prior to the Full
Availability Date (such approval not to be unreasonably withheld or delayed),
between the Borrower and Steen Contractors Limited, substantially in the form
attached as Exhibit B to the Closing Date Certificate.
"Subsidiary" means, with respect to any Person, any corporation of which
more than 50% of the outstanding capital stock having ordinary voting power to
elect a majority of the board of directors of such corporation (irrespective of
whether at the time capital stock of any other class or classes of such
corporation shall or might have voting power upon the occurrence of any
contingency) is at the time directly or indirectly owned by such Person, by such
Person and one or more other Subsidiaries of such Person, or by one or more
other Subsidiaries of such Person.
"Substantial Completion Date" means, with respect to each Construction
Contract, the date (if any) on which such Construction Contract is deemed to be
substantially complete pursuant to the terms of such Construction Contract.
"Survey" is defined in clause (d) of Section 6.1.3.
"Taking" means any of the following events with respect to the Project,
the Energy Facility, the Expansion or the Thermal System:
(a) any permanent taking by eminent domain of such scope (i) that
the untaken portion of the Project, the Energy Facility, the Expansion or
the Thermal System is insufficient to permit the economic restoration of
the Project, the Energy Facility, the Expansion or the Thermal System, as
the case may be, so that the untaken portion shall not have the capacity
and functional ability to perform in all material respects, on a
continuing basis, in normal commercial operation, the functions which the
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Project, the Energy Facility, the Expansion or the Thermal System
performed prior to such taking, (ii) that deprives the remaining portion
of the Project, the Energy Facility, the Expansion or the Thermal System
of adequate access or egress or (iii) that causes the remaining portion of
the Project, the Energy Facility, the Expansion or the Thermal System not
to be in Material Compliance with any Governmental Rule; or
(b) as a result of any Governmental Rule, the use of the Project,
the Energy Facility, the Expansion or the Thermal System in the normal
course of the business of the Borrower shall have been prohibited,
directly or indirectly, for a period of 30 consecutive days, unless the
Borrower, prior to the expiration of such 30-day period, shall have
undertaken and shall be diligently carrying forward all steps which are
necessary or desirable to permit the normal use of the Project by the
Borrower or, in any event, the use of the Project, the Energy Facility,
the Expansion or the Thermal System shall have been prohibited, directly
or indirectly, for a period of two consecutive months.
"Taxes" is defined in Section 5.5.
"Term Loan" is defined in Section 2.1.2.
"Term Loan Closing Date" means the date on which all of the conditions
precedent set forth in Section 6.3 shall have been satisfied or waived by the
Lenders provided, however, that such date may be no later than the Date Certain.
"Term Loan Closing Date Notice" means the notice of the Borrower to the
Administrative Agent to refinance the Construction Loans with Term Loans on the
Term Loan Closing Date, substantially in the form of Exhibit H hereto.
"Term Loan Commitment" means, relative to any Lender, such Lender's
obligation to make Term Loans pursuant to Section 2.1.2.
"Term Loan Commitment Amount" means, on any date, an aggregate principal
amount not to exceed C$28,800,000, as such amount may be reduced from time to
time pursuant to Section 2.2.
"Term Loan Commitment Termination Date" means the earliest of
(a) the Date Certain;
(b) the date on which the Term Loan Commitment Amount is terminated
in full or reduced to zero pursuant to Section 2.2; and
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(c) the date on which any Commitment Termination Event occurs.
Upon the occurrence of any event described in clause (c), the Term Loan
Commitments shall terminate automatically and without any further action.
"Term Loan Conversion Notice" means a notice of conversion and certificate
duly executed by an Authorized Officer of the Borrower, substantially in the
form of Exhibit G hereto.
"Term Loan Maturity Date" means the tenth anniversary of the Term Loan
Closing Date, provided that such date shall be no later than March 31, 2008.
"Term Loans" is defined in Section 2.1.2.
"Term Note" means a promissory note of the Borrower payable to any Lender,
in the form of Exhibit C hereto, evidencing the aggregate Indebtedness of the
Borrower to such Lender resulting from outstanding Term Loans, and also means
all other promissory notes accepted from time to time in substitution therefor
or renewal thereof.
"Thermal Energy Service Agreements" means each of the thermal service
agreements, dated August 8, 1995, for a term of thirty years between the
Borrower and each of Queens Region Health Community Services, the Government of
Prince Edward Island, represented by the Minister of Transportation and Public
Works and UPEI, respectively, pursuant to which thermal energy produced by the
Project will be sold to local customers.
"Thermal System" means the three distinct heating systems the Borrower
acquired, pursuant to the Facility Purchase Agreement, from PEIEC in the area in
and around Charlottetown on Prince Edward Island, as described in Part C of
Schedule V hereto.
"Thermal System Site" means the site or sites of the Thermal System
located in Prince Edward Island and all assets connected therewith, in and
around Charlottetown.
"Trigen" means Trigen Energy Corporation, a U.S. corporation, incorporated
under the laws of Delaware.
"type" means, (i) with respect to any Loan other than a Bankers'
Acceptance, the portion thereof, if any, being maintained as a Canadian Funds
Rate Loan or a Fixed Rate Term Loan, and, (ii) with respect to Bankers'
Acceptances, the aggregate face amount of the outstanding Bankers' Acceptances
accepted by the Lenders.
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"United States" or "U.S." means the United States of America, its fifty
States and the District of Columbia.
"UPEI" means the University of Prince Edward Island.
"Waste Processing Agreement" means the waste processing agreement, dated
August 8, 1995, between the Borrower and the Government of Prince Edward Island,
as represented by the Minister of Environmental Resources, pursuant to which the
Borrower shall receive a minimum monthly amount of acceptable waste.
"Work" is defined in Section 4.2 of the Accounts Agreement.
SECTION 1.2. Cross-References; Other References. Unless otherwise
specified,
(a) references in this Agreement and in each other Project Document
to any Article or Section are references to such Article or Section of
this Agreement or such other Project Document, as the case may be;
(b) references in any Article, Section or definition to any clause
are references to such clause of such Article, Section or definition; and
(c) references to any of the Project Documents are references to any
such documents as the same are amended, modified or supplemented from time
to time.
SECTION 1.3. Accounting and Financial Determinations. Unless otherwise
specified, all accounting terms used herein or in any other Project Document
shall be interpreted, all accounting determinations and computations hereunder
or thereunder shall be made, and all financial statements required to be
delivered hereunder or thereunder shall be prepared in accordance with GAAP.
ARTICLE II
COMMITMENTS, BORROWING PROCEDURES AND NOTES
SECTION 2.1. Commitments. On the terms and subject to the conditions of
this Agreement (including Article VI), each Lender, severally and not jointly,
agrees to make Loans pursuant to the Commitments described in this Section 2.1.
SECTION 2.1.1. Construction Loan Commitment. From time to time on any
Business Day occurring on or prior to the Construction Loan Commitment
Termination Date, each Lender will
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make Loans or create Bankers' Acceptances (relative to such Lender, its
"Construction Loans") to the Borrower equal to such Lender's Percentage of the
aggregate amount of the Borrowing of Construction Loans as requested by the
Borrower to be made on such day, subject to Section 2.1.3. The Commitment of
each Lender described in this Section 2.1.1 is herein referred to as its
"Construction Loan Commitment". On the terms and subject to the conditions
hereof, the Borrower may from time to time borrow, prepay and reborrow
Construction Loans.
SECTION 2.1.2. Term Loan Commitment. On the Term Loan Closing Date, each
Lender will make Loans or create Bankers' Acceptances (relative to such Lender,
its "Term Loans") to the Borrower equal to such Lender's Percentage of the
aggregate amount of the Borrowing of Term Loans requested by the Borrower to be
made on such day. The Commitment of each Lender described in this Section 2.1.2
is herein referred to as its "Term Loan Commitment". No amounts paid or prepaid
with respect to the Term Loans may be reborrowed.
SECTION 2.1.3. Lenders Not Permitted or Required To Make the Loans. No
Lender shall be permitted or required
(a) to make any Construction Loan if, after giving effect thereto,
the aggregate original principal amount of all the Construction Loans,
(i) of all Lenders made from and including the Closing Date
would exceed the Construction Loan Commitment Amount, or
(ii) of such Lender made from and including the Closing Date
would exceed such Lender's Percentage of the Construction Loan
Commitment Amount;
(iii) of all Lenders made from and including the Closing Date
until the Full Availability Date would exceed C$6,000,000 (the
"Initial Construction Loan Commitment") or
(iv) of such Lender made from and including the Closing Date
until the Full Availability Date would exceed such Lender's
Percentage of the Initial Construction Loan Commitment; or
(b) to make any Term Loan if, after giving effect thereto, the
aggregate original principal amount of all the Term Loans,
(i) of all Lenders would exceed the Term Loan Commitment
Amount, or
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(ii) of such Lender would exceed such Lender's Percentage of
the Term Loan Commitment Amount.
SECTION 2.2. Reduction of the Commitment Amounts. The Commitment Amounts
are subject to reduction from time to time pursuant to this Section 2.2.
(a) All Commitments will be automatically reduced to zero upon the
occurrence of a Casualty Event or Taking requiring the repayment in full
of all Loans pursuant to clause (a) of Section 4.1.2.
(b) Upon the full utilization of the Construction Loan Commitment,
the Construction Loan Commitment will be terminated.
(c) The Term Loan Commitment will terminate on the Term Loan Closing
Date on the first to occur of (i) Construction Loans are refinanced by
Term Loans or (ii) 12:00 midnight on the Term Loan Closing Date.
SECTION 2.3. Borrowing Procedure. By delivering a Borrowing Request to the
Collateral Agent (with a copy to the Administrative Agent) on or before 10:00
a.m. (Montreal time), on a Business Day, the Borrower may from time to time
irrevocably request, on not less than two nor more than five Business Days'
notice, that a Borrowing be made in Canadian Dollars in a minimum face amount of
C$1,000,000 and in integral multiples of the C$100,000, except in the case of
Borrowings solely to pay interest, fees or other amounts due hereunder to the
Administrative Agent, Collateral Agent, or any Lender, in which case such
minimum and integral multiples shall not apply, in the unused amount of the
Commitment Amount. On the terms and subject to the conditions of this Agreement,
each Borrowing shall be comprised of the type of Loans, and shall be made on the
Business Day, specified in such Borrowing Request. On or before 12:00 noon
(Montreal time) on such Business Day each Lender shall deposit with the
Collateral Agent same day funds in an amount equal to such Lender's Percentage
of the requested Borrowing. Such deposit will be made into a Canadian dollar
account which the Collateral Agent shall specify from time to time by notice to
the Lenders. To the extent funds are received from the Lenders, the Collateral
Agent shall deposit such funds into the Operating Account in accordance with the
terms of the Accounts Agreement. No Lender's obligation to make any Loan shall
be affected by any other Lender's failure to make any Loan.
(a) In addition to the requirements set forth above, with respect to
all Construction Loans other than Construction Loans applied solely for
the payment of Scheduled Obligations, the Borrower shall have delivered to
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the Independent Engineer and the Administrative Agent with the Borrowing
Request in respect of such Loan a Borrower Construction Certificate
designating, among other things, the application of the proceeds of such
Borrowing. Not more than one Business Day prior to the date of such Loan,
following a brief review of the Borrower Construction Certificate, the
Administrative Agent shall provisionally accept or reject such Borrower
Construction Certificate; provided, however, any provisional acceptance of
such Borrower Construction Certificate does not bar a later rejection by
the Administrative Agent of such Borrower Construction Certificate.
(b) On the first day of each Fiscal Quarter, the Independent
Engineer shall deliver to the Administrative Agent and the Lenders an
Independent Engineer's Construction Certificate with respect to all Loans
made since the previous delivery of a notice pursuant to this Section
2.3(b) affirming (i) satisfactory construction progress as measured
against the milestone schedule in each Construction Contract, (ii) that
the amount of projected Project Costs does not exceed funds available to
complete the Project and (iii) that the Project will be completed on or
prior to the Final Completion Date or, in the event that the Independent
Engineer has a dispute with any item in the Borrower Construction
Certificate delivered as set forth above or the Borrower Construction
Certificate has been provisionally rejected as set forth above, the
Independent Engineer shall, notwithstanding such dispute, deliver the
relevant Borrower's Construction Certificate and the Independent
Engineer's Certificate (noting any such dispute) and immediately notify
the Administrative Agent of such dispute. If such disputed item shall
cause the Administrative Agent to reject a portion of such Borrower
Construction Certificate (each a "Disputed Item"), then, upon the next
request for Construction Loans, the Lenders shall make available to the
Borrower an amount of Construction Loans equal to the requested Borrowing
minus the aggregate amount of the Disputed Items. Not more than two
Business Days after the Administrative Agent shall have received notice of
such Disputed Item from the Independent Engineer, the Administrative Agent
shall consult with the Borrower and the Independent Engineer to resolve
such Disputed Item. In the event that the Administrative Agent, the
Borrower and the Independent Engineer cannot resolve such Disputed Item
within three Business Days, then (i) the Borrower may resubmit such
Disputed Item with the next requested Borrowing or (ii) submit such
disputed item for resolution to the Independent Engineer and the
Borrower's independent engineering consultant and, following a mutually
agreed determination by the Independent Engineer and the Borrower's
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independent engineering consultant, such disputed item shall be paid or
resubmitted with the next requested Borrowing.
SECTION 2.4. Continuation/Conversion Elections. By delivering a
Continuation/Conversion Notice to the Collateral Agent (with a copy to the
Administrative Agent) on or before 10:00 a.m. (Montreal time) on a Business Day,
the Borrower may from time to time irrevocably elect, subject to the provisions
of Sections 3.6, 3.10 and 3.11, on not less than two nor more than five Business
Days' notice that all, or any portion in an aggregate minimum amount of
C$1,000,000 and an integral multiple of C$100,000 (except in the case of
Borrowings solely to pay interest, fees or other amounts due hereunder to the
Administrative Agent, Collateral Agent, or any Lender, in which case such
minimum and integral multiples shall not apply), of (a) any Loan be continued as
a Loan of the same type and specified Interest Period, (b) any Canadian Funds
Rate Loan be converted to Bankers' Acceptances or (c) any Bankers' Acceptance be
converted to a Canadian Funds Rate Loan. In the absence of delivery of a
Continuation/Conversion Notice with respect to any Loan at least two Business
Days before the last day of the then current Interest Period with respect
thereto, such Loan shall, on such last day, automatically convert to a Canadian
Funds Rate Loan with an Interest Period of three months duration; provided,
however, with respect to the conversion of Bankers' Acceptances, such Canadian
Funds Rate Loan shall be in an amount equal to the face amount of such converted
Bankers' Acceptance. Each such continuation or conversion shall be pro rated
among the applicable outstanding Loans of all Lenders, and (ii) no portion of
the outstanding principal amount of any Loans may be continued or converted when
any Default has occurred and is continuing or beyond the Stated Maturity Date.
SECTION 2.5. Term Loan Conversion Election. On a date no more than ten
Business Days prior to the Term Loan Closing Date and at any time on or after
the Term Loan Closing Date, subject to the provisions of Sections 3.6, 3.10 and
3.11, the Borrower may request Societe Generale (Canada) to quote a rate for a
Fixed Rate Term Loan to be made hereunder from the Term Loan Closing Date or
such other later date, as the case may be, until Stated Maturity Date. By
delivering a Term Loan Conversion Notice to the Collateral Agent (with a copy to
the Administrative Agent) on or before 10:00 a.m. (Montreal time) the Borrower
may irrevocably elect, on not less than two nor more than ten Business Days'
notice prior to the Term Loan Closing Date or at any date on or after the Term
Loan Closing Date, that the Term Loan be converted into a Fixed Rate Term Loan
at such quoted rate; provided, however, with respect to the conversion of
Bankers' Acceptances, such Fixed Rate Term Loan shall be in an amount equal to
the face amount of the converted Bankers' Acceptances; provided, further,
however, that (x) subject to Section 5.1, such conversion shall
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be pro rated among the applicable outstanding Loans of all Lenders, (y) no
portion of the outstanding principal amount of any Loans may be converted into a
Fixed Rate Term Loan in the event any Default has occurred and is continuing and
(z) the Borrower shall reimburse each Lender for any amount payable with respect
to Hedging Breakage Fees (if any) then due and payable to Lenders.
SECTION 2.6. Funding. Each Lender may, if it so elects, fulfill its
obligation to make, continue or convert the Loans hereunder by causing one of
its foreign branches or Affiliates (or an international banking facility created
by such Lender) to make or maintain such Loans, so long as no additional costs
which would be passed on to the Borrower shall be incurred; provided, however,
that such Loans shall nonetheless be deemed to have been made and to be held by
such Lender, and the obligation of the Borrower to repay such Loans shall
nevertheless be to such Lender for the account of such foreign branch, Affiliate
or international banking facility.
SECTION 2.7. Notes.
(a) Construction Note. Each Lender's Loans under a Construction Loan
Commitment shall be evidenced by a Construction Note and/or one or more
Bankers' Acceptances in Canadian Dollars payable to the order of such
Lender in a maximum principal amount equal to such Lender's Percentage of
the original Construction Loan Commitment Amount. The Borrower hereby
irrevocably authorizes each Lender to make (or cause to be made)
appropriate notations on the grid attached to such Lender's Notes (or on
any continuation of such grid), which notations, if made, shall evidence,
inter alia, the date of, the outstanding principal of, and the interest
rate and Interest Period applicable to the Loans evidenced thereby. Such
notations shall be conclusive and binding on the Borrower absent manifest
error; provided, however, that the failure of any Lender to make any such
notations shall not limit or otherwise affect any Obligations of the
Borrower.
(b) Term Notes. Each Lender's Loans under a Term Loan Commitment
shall be evidenced by a Term Note and/or one or more Bankers' Acceptances
in Canadian Dollars payable to the order of such Lender in a maximum
principal amount equal to such Lender's Percentage of the original Term
Loan Commitment Amount. The Borrower hereby irrevocably authorizes each
Lender to make (or cause to be made) appropriate notations on the grid
attached to such Lender's Notes (or on any continuation of such grid),
which notations, if made, shall evidence, inter alia, the date of, the
outstanding principal of, and the interest rate and, if
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applicable, Interest Period applicable to the Loans evidenced thereby.
Such notations shall be conclusive and binding on the Borrower absent
manifest error; provided, however, that the failure of any Lender to make
any such notations shall not limit or otherwise affect any Obligations of
the Borrower.
ARTICLE III
BANKERS' ACCEPTANCES
SECTION 3.1. Power of Attorney for the Execution of Bankers' Acceptances.
To facilitate the utilization of the Project Credit Facility through Bankers'
Acceptances, upon the receipt by the Collateral Agent of any Borrowing Request,
any Continuation/Conversion Notice or any Term Loan Conversion Notice with
respect to Bankers' Acceptances, the Borrower hereby appoints each Lender as its
mandatary to sign and endorse on its behalf, in handwriting or by facsimile or
mechanical signature as and when deemed necessary by such Lender, blank forms of
Bankers' Acceptances. In this respect, it is each Lenders' responsibility to
maintain an adequate supply of blank forms of Bankers' Acceptances for
acceptance under this Agreement. The Borrower recognizes and agrees that all
Bankers' Acceptances signed and/or endorsed on its behalf by a Lender shall bind
the Borrower as fully and effectually as if signed in the handwriting of and
duly issued by an Authorized Officer of the Borrower. Each Lender is hereby
authorized to issue such Bankers' Acceptances endorsed in blank in such face
amounts as may be determined by such Lender; provided that the aggregate amount
thereof is equal to the aggregate amount of Bankers' Acceptances required to be
accepted and purchased by such Lender. No Lender shall be liable for any damage,
loss or other claim arising by reason of any loss or improper use of any such
instrument except the gross negligence or willful misconduct of the Lender or
its officers, employees, agents or representatives. Each Lender shall maintain a
record with respect to Bankers' Acceptances (1) voided by such Lender for any
reason, (2) accepted and purchased by it hereunder, and (3) cancelled at their
respective maturities. Each Lender further agrees to retain such records in the
manner and for the statutory periods provided in the various provincial or
federal statutes and regulations which apply to such Lender. On request by or on
behalf of the Borrower, a Lender shall cancel all forms of Bankers' Acceptances
which have been pre-signed or pre-endorsed on behalf of the Borrower and which
are held by the said Lender and are not required to be issued in accordance with
the Borrower's irrevocable Borrowing Request.
SECTION 3.2. Execution of Bankers' Acceptances. Drafts of the Borrower to
be accepted as Bankers' Acceptances hereunder
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shall be signed as set forth in Section 3.1. Notwithstanding that any Person
whose signature appears on any Bankers' Acceptance may no longer be an
authorized signatory for any of the Lenders or the Borrower at the date of
issuance of a Bankers' Acceptance, such signature shall nevertheless be valid
and sufficient for all purposes as if such authority had remained in force at
the time of such issuance and any such Bankers' Acceptance so signed shall be
binding on the Borrower.
SECTION 3.3. Issuance of Bankers' Acceptances. Promptly following receipt
of a Borrowing Request or Continuation/Conversion Notice in respect of Bankers'
Acceptances, the Collateral Agent shall so advise the Lenders and shall advise
each Lender of the aggregate face amount of the Bankers' Acceptances to be
accepted or advanced by it and the applicable Interest Period (which shall be
identical for all Lenders). The aggregate face amount of the Bankers'
Acceptances to be accepted or advanced by a Lender shall be determined by the
Collateral Agent by reference to the respective Percentages of the Lenders;
provided, however, no Lender shall be permitted or required to accept or advance
Bankers' Acceptances unless such acceptance or advance is permitted under
Section 2.1.3.
SECTION 3.4. Purchase of Bankers' Acceptances and Payment of the
Acceptance Fee. Upon acceptance of a Bankers' Acceptance by a Lender, such
Lender shall purchase, or arrange the purchase of, each Bankers' Acceptance from
the Borrower at the Discount Rate applicable to such Bankers' Acceptance
accepted by it and provide to the Collateral Agent the Discount Proceeds for
deposit, subject to the provisions of Section 3.8, into the Operating Account of
the Borrower. The Borrower shall also pay each Lender the Acceptance Fee in
respect of each Bankers' Acceptance accepted or advanced by such Lender and such
payment shall be set-off against the Discount Proceeds payable by such Lender
under this Section 3.4.
SECTION 3.5. Sale of Bankers' Acceptances. Each Lender may at any time and
from time to time hold, sell, rediscount or otherwise dispose of any or all
Bankers' Acceptances accepted and purchased by it.
SECTION 3.6. Maturing Bankers' Acceptances. The Borrower unconditionally
agrees to reimburse each Lender for any payment made by that Lender pursuant to
Bankers' Acceptances accepted or advanced by it, such reimbursement to be made
upon demand or, if the Lender, or any Agent on its behalf, shall not have
elected to enforce any or all of its rights and remedies pursuant to Sections
9.2, 9.3 or 9.4 prior to the time of payment by the Lenders, to be made by
effecting a continuation, conversion or repayment with respect to such Bankers'
Acceptance, in which case the Borrower shall:
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(a) by 10:00 A.M. (Montreal time) on a Business Day which is at least
two (2) Business Days prior to the maturity date of the Bankers'
Acceptances, deliver to the Collateral Agent (with a copy to the
Administrative Agent) a Continuation/Conversion Notice if the
Borrower intends to draw and present for acceptance on the maturity
date drafts of the Borrower to be issued as new Bankers'
Acceptances; or
(b) by 10:00 A.M. (Montreal time) on a Business Day which is at least
two (2) Business Days prior to the maturity date of the Bankers'
Acceptances, deliver to the Collateral Agent (with a copy to the
Administrative Agent) a Term Loan Conversion Notice pursuant to
Section 2.5 if the Borrower intends to change the ----------- manner
of utilizing the Loan with respect to these Bankers' Acceptances to
a Fixed Rate Term Loan; or
(c) by 10:00 A.M. (Montreal time) on the maturity date of the Bankers'
Acceptances, pay to the Collateral Agent on behalf of the Lenders an
amount equal to the aggregate face amount of such Bankers'
Acceptances.
If the Borrower fails to so notify the Collateral Agent or, having so
notified the Collateral Agent, fails to act on the maturity date in accordance
with such notice, or shall fail to make such payment, as the case may be, such
maturing Bankers' Acceptances shall be deemed to have been converted on their
maturity date into a Canadian Funds Rate Loan with an Interest Period of three
months duration in an amount equal to the face amount of such Bankers'
Acceptances and the Borrower shall pay on demand any penalties that may have
been incurred by the Agent and any Lender due to such failure of the Borrower.
SECTION 3.7. Waiver of Presentment and Other Conditions. The Borrower
waives presentment for payment and any other defense to payment of any amounts
due to a Lender of a Bankers' Acceptance accepted and purchased by it pursuant
to this Agreement which might exist solely by reason of such Bankers' Acceptance
being held, at the maturity thereof, by such Lender in its own right and the
Borrower agrees not to claim any days of grace if such Lender as holder sues the
Borrower on the Bankers' Acceptance for payment of the amount payable by the
Borrower hereunder. On the specified maturity date of a Bankers' Acceptance, or
such earlier date as may be required or permitted pursuant to the provisions of
this Agreement, the Borrower shall pay the Lender that has accepted and
purchased such Bankers' Acceptance the full face amount of such Bankers'
Acceptance and after such payment, the Borrower shall have no further liability
in respect of such Bankers' Acceptance and such Lender shall be
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entitled to all benefits of, and be responsible for all payments due to third
parties under such Bankers' Acceptance.
SECTION 3.8. Authority Given to the Collateral Agent To
Debit Borrower's Accounts.
(a) In the case of each conversion of a Canadian Funds Rate Loan
to a Bankers' Acceptance pursuant to Section 2.4, the
Collateral Agent is hereby irrevocably authorized and directed
to apply the Discount Proceeds to the payment of such
outstanding Canadian Funds Rate Loan and to remit to the
Lenders their Percentage of the amount of the Canadian Funds
Rate Loan so converted, upon the receipt of which the Lenders
shall record such payment in respect of such Canadian Funds
Rate Loan maintained by them and the Borrower shall pay all
accrued and unpaid interest with respect to such Canadian
Funds Rate Loan together with the Deficiency Amount with
respect to such converted Canadian Funds Rate Loan.
(b) In the case of a continuation of a Bankers' Acceptance
pursuant to Section 2.4, the Collateral Agent is hereby
irrevocably authorized and directed to apply the Discount
Proceeds of such continued Loans to the payment of maturing
Bankers' Acceptances and to remit to the Lenders the amount
necessary to satisfy the continuing liability of the Borrower
to such Lender for the face amount of the maturing Bankers'
Acceptance, as if the Bankers' Acceptance was maturing and the
Borrower shall pay any Deficiency Amount with respect to such
continued Bankers' Acceptance; each Lender shall then remit to
the Collateral Agent in accordance with the procedures set
forth in Section 2.3, in immediately available funds, an
amount equal to the excess of the Discount Proceeds of the new
Bankers' Acceptance over the Acceptance Fee payable in respect
of such Bankers' Acceptance.
SECTION 3.9. Payment at Maturity. In the case of a conversion of a
Bankers' Acceptance into a Loan other than a Bankers' Acceptance pursuant to
Section 2.4 or Section 2.5, each Lender shall advance to the Collateral Agent
for credit to the Borrower's account, as provided in Section 2.3, the amount of
such Loan and shall record the obligation of such Borrower to such Lender by way
of Loan of the type into which the obligation has been converted and the
Collateral Agent is hereby irrevocably authorized and directed to debit the
aforesaid account of the
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Borrower, and remit to the Lenders the amounts necessary to satisfy the face
amounts of maturing Bankers' Acceptances.
SECTION 3.10. Payment before Maturity.
(a) Notwithstanding any other provisions of this Agreement, the
Borrower may not repay any Bankers' Acceptance otherwise than
upon maturity thereof provided the Borrower may make payments
with respect to the principal of any Bankers' Acceptances
outstanding before the maturity date of same, which payments
shall be held by the Collateral Agent in cash collateral
accounts as provided for in Section 3.12.
(b) In the event the Borrower is required to make any payments
pursuant to Section 4.1.2 at a time when any Bankers'
Acceptances are outstanding hereunder, the Borrower shall pay
an amount in Canadian Dollars equal to the face amount at
maturity of all Bankers' Acceptances outstanding hereunder at
such time.
SECTION 3.11. Lenders To Be Indemnified if Maturity of Bankers'
Acceptances Do Not Coincide with Principal Reductions. In the event that the
Borrower is required under the terms of this Agreement to repay all or part of a
Bankers' Acceptance prior to the maturity thereof, the Collateral Agent shall
make the necessary arrangements for early termination of such Bankers'
Acceptance and the Borrower shall indemnify the Lenders for any loss (excluding
loss of profits) or expense reasonably incurred by any of the Lenders as a
result of such early termination. The amount of any such loss or expense
incurred by any Lender for purposes of this Section 3.11 shall be as certified
by each Lender in good faith which certification shall be conclusive and binding
upon the Borrower absent manifest error and any other error which the Borrower
shall demonstrate to the satisfaction of any such Lender.
SECTION 3.12. Cash Collateral Accounts. Payments made by the Borrower with
respect to the principal of outstanding Bankers' Acceptances pursuant to Section
3.10 and payments made by the Borrower pursuant to Sections 9.2 or 9.3, shall be
held by the Collateral Agent in cash collateral accounts for the benefit of the
Lenders and shall be applied in payment of the Bankers' Acceptances as they
mature. For the purposes of the foregoing, the Borrower shall promptly upon
demand execute and deliver to the Collateral Agent and the Lenders such security
agreements as the Collateral Agent may deem advisable or necessary including,
without limitation, hypothecation of credit balances in the cash collateral
accounts.
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ARTICLE IV
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES
SECTION 4.1. Repayments and Prepayments. The Borrower shall repay in full
the unpaid principal amount of each Loan upon the Stated Maturity Date therefor.
Prior thereto repayments and prepayments of Loans shall be made as set forth in
this Section 4.1 and subject to the provisions of Section 3.10. Each repayment
or prepayment of any Loans made pursuant to this Section 4.1 shall be without
premium or penalty, except as may be required by Section 5.3.
SECTION 4.1.1. Voluntary Prepayments. From time to time, on five Business
Days' prior written notice the Borrower may make a voluntary prepayment, in
whole or in part, of the outstanding principal amount of any Loan together with
accrued interest costs and fees; provided, however, that
(a) any such prepayment shall be made pro rata among Loans, if
applicable, having the same Interest Period; and
(b) no such prepayment of any Loan may be made on any day other than
the last day of the Interest Period for such Loan.
SECTION 4.1.2. Mandatory Prepayments.
(a) After the occurrence of a Casualty Event or a Taking, if the
criteria for releasing Casualty/Taking Proceeds with respect to such
Casualty Event or Taking set forth in the Accounts Agreement shall not
have been satisfied, and in the event the Borrower fails to elect to
rebuild the Project, the Borrower shall make a prepayment of all Loans
outstanding. After the occurrence of a Partial Casualty Event or a Partial
Taking, if the criteria for releasing such Casualty/Taking Proceeds with
respect to such Partial Casualty Event or Partial Taking set forth in the
Accounts Agreement shall not have been satisfied, and in the event the
Borrower fails to elect to rebuild the Project, then the Borrower shall,
within 180 days of such Partial Casualty Event or Partial Taking, or, in
the event any dispute exists between the Borrower and the insurance
provider with respect to such Casualty/Taking Proceeds, within 90 days of
such Partial Casualty Event or Partial Taking, make a prepayment of Loans
in an aggregate principal amount which, together with any amount payable
with respect to Hedging Breakage Fees (if any) then due and payable to
Lenders, would equal the amount of such Casualty/Taking Proceeds;
provided, however, in the event the Borrower
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elects to rebuild the Project after the occurrence of a Partial Casualty
Event or a Partial Taking, the Borrower must deliver, at the Borrower's
expense, a rebuilding certificate to the Administrative Agent (with
sufficient copies for each of the Lenders), affirming the feasibility of
rebuilding the Project and such Rebuilding Certificate must be approved by
the Administrative Agent and the Independent Engineer, such approval not
to be unreasonably withheld or delayed. Each such prepayment of Loans
shall be at the principal amount so to be prepaid, together with interest
accrued thereon to the date fixed for such prepayment, plus an amount
equal to costs, fees and Hedging Breakage Fees, if any, then due and
payable to the Lenders.
(b) If the Borrower receives any amount under any Construction
Contract in payment of Performance Liquidated Damages and the Borrower
fails to elect to rebuild or repair the Project, then, immediately upon
the receipt by the Borrower of such proceeds, the Borrower shall make a
mandatory prepayment of Loans in an aggregate principal amount which would
equal the amount of such proceeds. Each such prepayment of Loans shall be
at the principal amount so to be prepaid, together with interest accrued
thereon to the date fixed for such prepayment, plus an amount equal to
costs, fees and Hedging Breakage Fees (if any) then due and payable to the
Lenders. In the event the Borrower elects to rebuild or repair the
Project, any amount received by the Borrower in payment of Performance
Liquidated Damages pursuant to any Construction Contract shall be placed
in the Operating Account and shall be used to fund all repairs of the
Project.
(c) On the Term Loan Closing Date, the Borrower shall prepay the
then outstanding Loans in an aggregate principal amount (after giving
effect to any prepayment under clause (b)) equal to the excess of the
aggregate principal amount of all Loans then outstanding over the lesser
of (i) the Term Loans to be made on the Term Loan Closing Date and (ii)
the Term Loan Commitment Amount.
(d) Upon the refinancing of any Loans outstanding under the Project
Credit Facilities, the proceeds of such refinancing shall be applied to
prepay outstanding principal, together with accrued interest, costs and
fees in whole or in part, as the case may be.
(e) Upon the Obligations becoming due and payable, whether due to
the occurrence of the Stated Maturity Date, the passage of time,
acceleration pursuant to Sections 9.2 and 9.3, or otherwise, including,
without limitation, in the event the Closing Date has failed to occur
before October 1,
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1996 (or such later date as the Administrative Agent and the Majority
Lenders may agree), or in the event the Project Completion has not
occurred by the Construction Loan Commitment Termination Date, the
Borrower shall pay in full the unpaid principal amount of each Loan
outstanding under the Project Credit Facility, together with accrued
interest, costs, fees, payments required pursuant to Section 5.3 and
Hedging Breakage Fees, if any.
(f) Any prepayment required pursuant to the provisions of this
Section 4.1.2 shall be made at the principal amount due to be repaid
together with interest accrued thereon to the date fixed for such
prepayment, costs, fees, payments required pursuant to Section 5.3 and
Hedging Breakage Fees, if any.
SECTION 4.1.3. Scheduled Amortization of Term Loans. On each date set
forth on Schedule II hereto, the Borrower shall make a scheduled payment of Term
Loans in the aggregate principal amount as calculated by reference to the
percentage set forth opposite the applicable principal reduction date, such
repayments to begin on the first to occur of (i) the six month anniversary of
the Project Completion Date or (ii) June 30, 1998; provided that such scheduled
payments shall be sufficient to amortize 50% of the aggregate amount of Term
Loans outstanding on the Term Loan Closing Date by the Term Loan Maturity Date
with the balance of such Term Loan payable on the Term Loan Maturity Date;
provided, further, that if the Term Loan is not refinanced or paid in full on or
before the tenth anniversary of the Commitment Termination Date, the balance of
such Term Loan shall be amortized from the greater of (i) the scheduled
amortization set forth in Schedule II hereto or (ii) 100% of Excess Cash Flow,
and in any event, the balance of such Term Loan shall be fully paid by the
fifteenth anniversary of the Commitment Termination Date.
SECTION 4.1.4. Application of Prepayments. Each prepayment of Loans under
clause (a), (b), (d) or (e) of Section 4.1.2, other than prepayments in respect
of Bankers' Acceptances which shall be made in accordance with Section 3.10
hereof, shall be applied pro rata to the remaining scheduled maturities thereof.
Each prepayment of any Loans made pursuant to this Section shall be without
premium or penalty, except as may be required by Section 5.3.
SECTION 4.2. Interest Provisions. Interest on the outstanding principal
amount of Loans shall accrue and be payable in accordance with this Section 4.2.
SECTION 4.2.1. Rates. Pursuant to an appropriately delivered Borrowing
Request the Loans, other than Bankers' Acceptances, comprising a Borrowing shall
accrue interest at a
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rate per annum during each Interest Period applicable thereto, equal to the
Canadian Funds Rate plus the Applicable Margin; provided, however, if the
Borrower has elected to convert the Term Loan into a Fixed Rate Term Loan such
Loan will accrue interest at a rate per annum quoted pursuant to the provisions
of Section 2.5; and provided further that each Loan shall bear interest from and
including the first day of the applicable Interest Period to (but not including)
the last day of such Interest Period at the interest rate determined as
applicable to such Loan (or in the case of a Fixed Rate Term Loan from (but not
including) the Commitment Termination Date to and including the Stated Maturity
Date).
SECTION 4.2.2. Post-Maturity Rates. After the date any principal amount of
any Loan is due and payable (whether on the Final Maturity Date, upon
acceleration or otherwise), or after any other monetary Obligation of the
Borrower shall have become due and payable, the Borrower shall pay, but only to
the extent permitted by law, interest (after as well as before judgment) on such
amounts at a rate per annum equal, with respect to Canadian Funds Rate Loans, to
the Canadian Funds Rate plus the Applicable Margin plus an additional margin of
2.0% per annum and, with respect to Bankers' Acceptances, to the Discount Rate
plus an additional margin of 2.0% per annum.
SECTION 4.2.3. Payment Dates. Interest accrued on each Loan shall be
payable, without duplication:
(a) on the Stated Maturity Date therefor;
(b) on the date of any prepayment, in whole or in part, of principal
outstanding on such Loan, the accrued and unpaid interest with respect to
such amount of the Loan being so prepaid;
(c) with respect to Canadian Funds Rate Loans and Bankers'
Acceptances, on the last day of each applicable Interest Period (and, if
such Interest Period shall exceed 90 days, on the ninetieth day of such
Interest Period);
(d) with respect to any Term Loan which is a Fixed Rate Term Loan,
on each Quarterly Payment Date occurring after the first to occur of (i)
the six month anniversary of the Project Completion Date or (ii) June 30,
1998;
(e) on that portion of any Loan the Stated Maturity Date of which is
accelerated pursuant to Section 9.2 or Section 9.3, immediately upon such
acceleration.
Interest accrued on Loans or other monetary Obligations arising under this
Agreement or any other Project Document after the date
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such amount is due and payable (whether on the Stated Maturity Date, upon
acceleration or otherwise) shall be payable upon demand.
SECTION 4.3. Fees. The Borrower agrees to pay the fees set forth in this
Section 4.3. All such fees shall be non- refundable.
SECTION 4.3.1. Commitment Fee. The Borrower agrees to pay to the
Collateral Agent for the account of each Lender, for the period (including any
portion thereof when any of its Commitments are suspended by reason of the
Borrower's inability to satisfy any condition of Article VI) commencing on the
Closing Date and continuing through the Term Loan Closing Date, a commitment fee
at the rate of 0.4% per annum on such Lender's Percentage of the average of the
daily amount by which the Construction Loan Commitment exceeds the sum of the
outstanding Loans from the Closing Date until the Construction Loan Commitment
Termination Date. Such commitment fees will accrue from the Closing Date and
shall be payable in arrears on each Quarterly Payment Date, commencing September
30, 1996 and ending on the Construction Loan Commitment Termination Date.
ARTICLE V
CERTAIN CANADIAN FUNDS RATE AND OTHER PROVISIONS
SECTION 5.1. Fixed Rate Lending Unlawful. If any Lender shall determine
(which determination shall, upon notice thereof to the Borrower and the Lenders,
be conclusive and binding on the Borrower) that the introduction of or any
change in or in the interpretation of any law makes it unlawful, or any central
bank or other governmental authority asserts that it is unlawful, for such
Lender to make, continue or maintain any Loan as a Canadian Funds Rate Loan, the
obligations of such Lender to make, continue, maintain or convert any such Loans
shall, upon such determination, forthwith be suspended until such Lender shall
notify the Administrative Agent that the circumstances causing such suspension
no longer exist, and all Canadian Funds Rate Loans of such Lender shall
automatically convert into Bank of Canada Discount Rate Loans at the end of the
then current Interest Periods with respect thereto or sooner, if required by
such law or assertion.
SECTION 5.2. Increased Costs, etc. The Borrower agrees to reimburse each
Lender for any increase in the cost to such Lender of, or any reduction in the
amount of any sum receivable by such Lender in respect of, making, continuing or
maintaining (or of its obligation to make, continue or maintain) any Loans as,
or of converting (or of its obligation to convert) any Loans into,
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Fixed Rate Term Loans. Such Lender shall promptly notify the Collateral Agent
(with a copy to the Administrative Agent) and the Borrower in writing of the
occurrence of any such event, such notice to state, in reasonable detail, the
reasons therefor and the additional amount required to fully compensate such
Lender for such increased cost or reduced amount. Such additional amounts shall
be payable by the Borrower directly to the Collateral Agent for the account of
such Lender within five days of its receipt of such notice, and such notice
shall, in the absence of manifest error, be conclusive and binding on the
Borrower.
SECTION 5.3. Funding Losses. In the event any Lender shall incur any loss
or expense (including any loss or expense incurred by reason of the liquidation
or reemployment of deposits or other funds acquired by such Lender to make,
continue or maintain any portion of the principal amount of any Loan as a
Canadian Funds Rate Loan, a Bankers' Acceptance or a Fixed Rate Term Loan (but
excluding loss of anticipated profits)) as a result of
(a) any conversion or repayment or prepayment of the principal
amount of any Loan on a date other than the scheduled last day of the
Interest Period applicable thereto (or in the case of any Fixed Rate Term
Loan, prior to the Stated Maturity Date therefor), whether pursuant to
Section 4.1 or otherwise;
(b) any Loans not being made as Canadian Funds Rate Loans or
Bankers' Acceptances, as the case may be, in accordance with the Borrowing
Request therefor; or
(c) any Loans not being converted into Fixed Rate Term Loans in
accordance with the Term Loan Conversion Notice therefor,
then, upon the written notice of such Lender to the Borrower (with a copy to the
Collateral Agent and the Administrative Agent), the Borrower shall, within five
days of its receipt thereof, pay directly to such Lender such amount as will (in
the reasonable determination of such Lender) reimburse such Lender for such loss
or expense. Such written notice (which shall include calculations in reasonable
detail) shall, in the absence of manifest error, be conclusive and binding on
the Borrower; provided, however, that if any loss described above is due to the
failure of the Administrative Agent to take required actions on a timely basis,
such losses shall not be the liability of the Borrower.
The Lenders and the Borrower hereby expressly understand and agree that
amounts payable hereunder, including Hedging Breakage Fees, shall be payable
regardless of whether such amounts are
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payable as a result of a voluntary or involuntary event or act which causes such
amounts to become payable hereunder.
SECTION 5.4. Increased Capital Costs. If any change in, or the
introduction, adoption, effectiveness, interpretation, reinterpretation or
phase-in of, any law or regulation, directive, guideline, decision or request
(whether or not having the force of law) of any court, central bank, regulator
or other governmental authority affects the amount of capital required or
expected to be maintained by any Lender or any Person controlling such Lender,
and such Lender determines (in its sole and absolute discretion) that the rate
of return on its or such controlling Person's capital as a consequence of its
Commitments or the Loans made or Bankers' Acceptances created by such Lender is
reduced to a level below that which such Lender or such controlling Person could
have achieved but for the occurrence of any such circumstance, then, in any such
case upon notice from time to time by such Lender to the Borrower, the Borrower
shall within five Business Days of receipt of such notice pay to the Collateral
Agent for distribution to such Lender additional amounts sufficient to
compensate such Lender or such controlling Person for such reduction in rate of
return. A statement of such Lender as to any such additional amount or amounts
(including calculations thereof in reasonable detail) shall, in the absence of
manifest error, be conclusive and binding on the Borrower. In determining such
amount, such Lender may use any method of averaging and attribution that it (in
its sole and absolute discretion) shall deem applicable.
SECTION 5.5. Taxes. Subject to the penultimate paragraph of this Section
5.5, all payments by the Borrower of principal of, and interest on, the Loans
and all other amounts payable hereunder shall be made free and clear of and
without deduction for any present or future income, excise, stamp or franchise
taxes and other taxes, fees, duties, withholdings or other charges of any nature
whatsoever imposed by the taxing authorities of any jurisdiction (or any
subdivision thereof), but excluding franchise taxes and taxes imposed on or
measured by any Lender's net or gross income or receipts and levied by the
taxing authorities of any jurisdiction (or any subdivision thereof) where such
Lender has its principal place of business or any representative office, branch
or agency (such non-excluded items being called "Taxes"). In the event that any
withholding or deduction from any payment to be made by the Borrower hereunder
is required in respect of any Taxes pursuant to any applicable Governmental
Rule, then the Borrower will
(a) pay directly to the relevant authority the full amount required
to be so withheld or deducted; and
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(b) pay to the Collateral Agent for the account of the Lenders such
additional amount or amounts as is necessary to ensure that the net amount
actually received by each Lender will equal the full amount such Lender
would have received had no such withholding or deduction been required.
Moreover, if any Taxes are directly asserted against the Collateral Agent or any
Lender with respect to any payment received by the Collateral Agent or such
Lender hereunder, the Collateral Agent or such Lender may pay such Taxes and the
Borrower will within five Business Days of receipt of request for payment pay to
the Collateral Agent for distribution to the appropriate Lender such additional
amounts (including any penalties, interest or expenses not caused by the gross
negligence or willful misconduct of the Collateral Agent or any Lender) as is
necessary in order that the net amount received by such Person after the payment
of such Taxes (including any Taxes on such additional amount) shall equal the
amount such Person would have received had not such Taxes been asserted.
If the Borrower fails to pay any Taxes when due to the appropriate taxing
authority or fails to remit to the Collateral Agent, for the account of the
respective Lenders, the required receipts or other required documentary
evidence, the Borrower shall indemnify the Lenders for any incremental Taxes,
interest or penalties that may become payable by any Lender as a result of any
such failure. For purposes of this Section, a distribution hereunder by the
Collateral Agent or any Lender to or for the account of any Lender shall be
deemed a payment by the Borrower.
If a Lender makes a request for payment under this Section, then such
Lender will, if requested by the Borrower and upon receipt of such payment, use
reasonable efforts (subject to overall policy considerations of such Lender) to
mitigate the amount of Taxes payable by such Lender in respect of which such
request was made; provided, that such action to mitigate is made on such terms
that such Lender suffers no economic, legal or regulatory disadvantage, with the
object of avoiding the consequence of the event giving rise to the operation of
this Section. The Borrower agrees to pay all reasonable expenses incurred by any
Lender taking action under this paragraph.
SECTION 5.6. Payments, Computations, etc. Unless otherwise expressly
provided, all payments and all disbursements hereunder by the Borrower, any
Agent or any Lender shall be in Canadian Dollars. Unless otherwise expressly
provided, all payments by the Borrower for the account of any Lender pursuant to
this Agreement, the Notes or any other Project Document shall be made by the
Borrower to the Collateral Agent for the pro rata account of the Lenders
entitled to receive such payment. All such payments required to be made to the
Collateral Agent shall be
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made, without setoff, deduction or counterclaim, not later than 11:00 a.m.
Montreal time on the date due, in same day funds, to such account as the
Collateral Agent shall specify from time to time by notice to the Borrower.
Funds received after that time shall be deemed to have been received by the
Collateral Agent on the next succeeding Business Day. The Collateral Agent shall
promptly remit in same day funds to each Lender its share, if any, of such
payments received by the Collateral Agent for the account of such Lender. All
interest and fees payable to the Collateral Agent or Lender shall be computed on
the basis of the actual number of days (including the first day but excluding
the last day) occurring during the period for which such interest or fee is
payable over a year comprised of 365 days or 366 days, as the case may be.
Whenever any payment to be made shall otherwise be due on a day which is not a
Business Day, such payment shall (except as otherwise required by clause (b) of
the definition of the term "Interest Period" be made on the next succeeding
Business Day and such extension of time shall be included in computing interest
and fees, if any, in connection with such payment.
SECTION 5.7. Sharing of Payments. If any Lender shall obtain any payment
or other recovery (whether voluntary, involuntary, by application of setoff or
otherwise) on account of any Loan (other than pursuant to the terms of Sections
5.3, 5.4, 5.5 and 5.6 or as expressly contemplated hereunder) in excess of its
pro rata share of payments then or therewith obtained by all Lenders, such
Lender shall purchase from the other Lenders such participation in Loans made by
them as shall be necessary to cause such purchasing Lender to share the excess
payment or other recovery ratably with each of them; provided, however, that if
all or any portion of the excess payment or other recovery is thereafter
recovered from such purchasing Lender, the purchase shall be rescinded and each
Lender which has sold a participation to the purchasing Lender shall repay to
the purchasing Lender the purchase price to the ratable extent of such recovery
together with an amount equal to such selling Lender's ratable share (according
to the proportion of
(a) the amount of such selling Lender's required repayment to the
purchasing Lender
to
(b) the total amount so recovered from the purchasing Lender)
of any interest or other amount paid or payable by the purchasing Lender in
respect of the total amount so recovered. The Borrower agrees that any Lender so
purchasing a participation from another Lender pursuant to this Section may, to
the fullest extent
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permitted by law, exercise all its rights of payment (including pursuant to
Section 5.8) with respect to such participation as fully as if such Lender were
the direct creditor of the Borrower in the amount of such participation. If
under any applicable bankruptcy, insolvency or other similar law, any Lender
receives a secured claim in lieu of a setoff to which this Section applies, such
Lender shall, to the extent practicable, exercise its rights in respect of such
secured claim in a manner consistent with the rights of the Lenders entitled
under this Section to share in the benefits of any recovery on such secured
claim.
SECTION 5.8. Setoff. Each Lender shall, upon the occurrence of any Default
described in clauses (a) through (d) of Section 9.1.9 with respect to the
Borrower or, with the consent of the Administrative Agent, upon the occurrence
of any other Event of Default, have the right to appropriate and apply to the
payment of the Obligations due and owing to it, and (as security for such
Obligations) the Borrower hereby grants to each Lender a continuing security
interest in any and all balances, credits, deposits, accounts or moneys of the
Borrower then or thereafter maintained with such Lender; provided, however, that
any such appropriation and application shall be subject to the provisions of
Section 5.6. Each Lender agrees to promptly notify the Borrower and the
Administrative Agent after any such setoff and application made by such Lender;
provided, however, that the failure to give such notice shall not affect the
validity of such setoff and application. The rights of each Lender under this
Section are in addition to other rights and remedies (including other rights of
setoff under applicable law or otherwise) which such Lender may have.
SECTION 5.9. Use of and Application of Proceeds. The Borrower shall apply
the proceeds of
(a) each Borrowing of Construction Loans solely
(i) to pay Project Costs during the construction,
refurbishment, expansion and interconnection of the Project,
and
(ii) to pay acquisition costs incurred in the purchase of the
Project,
(b) a Borrowing of Term Loans to refinance all Construction Loans
together with accrued interest, fees, costs and interest rate hedging
costs, on the Term Loan Closing Date.
Without limiting the foregoing, no proceeds of any Loan will be used to acquire
any equity security of a class which is
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registered pursuant to Section 12 of the Securities Exchange Act of 1934 or any
"margin stock", as defined in F.R.S. Board Regulation U or G.
SECTION 5.10. Change of Lending Office. Each Lender agrees that, upon the
occurrence of any event described in Section 5.1 or 5.3 with respect to such
Lender, it will, if requested by the Borrower, use reasonable efforts (subject
to the overall policy considerations of such Lender) to designate another
lending office for any Loans affected by such event; provided, that such
designation shall be made on terms so that such Lender and its lending office
suffer no economic, legal or regulatory disadvantage, with the object of
avoiding the consequence of the event giving rise to the operation of such
Sections. The Borrower agrees to pay all reasonable expenses incurred by any
Lender in utilizing another lending office of such Lender pursuant to this
Section 5.10. Nothing in this Section 5.10 shall affect or postpone any of the
obligations of the Borrower or the rights of any Lender pursuant to the terms of
this Agreement.
SECTION 5.11. Replacement of Lenders. Each Lender hereby agrees that if
such Lender makes demand upon the Borrower for compensation resulting from any
increased costs pursuant to Section 5.1, Section 5.2, Section 5.3, Section 5.4
or Section 5.5, the Borrower may, within 90 days of receipt by the Borrower of
such demand and after consultation with the Administrative Agent and such
Lender, deliver to the Administrative Agent and such Lender a notice in a form
reasonably acceptable to the Administrative Agent, which sets forth the
Borrower's intention to replace such Lender with the financial institution
designated in such notice. If the Administrative Agent shall, in the exercise of
its reasonable discretion and within 30 days of its receipt of such notice,
notify the Borrower and such Lender in writing of its consent to such designated
financial institution (such consent not to be unreasonably withheld or delayed),
then such Lender shall, so long as no Default or Event of Default shall have
occurred and be continuing, assign, in accordance with Section 11.11.1, all of
its Commitments, Loans, Notes and other rights and obligations under this
Agreement and all other Credit Documents to such designated financial
institution, provided that (i) such assignment shall be without recourse,
representation or warranty and shall be substantially in the form of Exhibit M
attached hereto and (ii) the purchase price paid by such designated financial
institution shall be in an amount equal to the aggregate unpaid principal amount
of, and accrued interest and fees on, such Lender's Loans plus all other amounts
(including the amounts demanded and unreimbursed under Section 5.1, Section 5.2,
Section 5.3, Section 5.4 or Section 5.5) owing to such Lender hereunder.
Notwithstanding any provision of this Section 5.11, the Borrower has no
obligation to reimburse any
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Lender for increased costs under Section 5.1, 5.2, 5.3, 5.4 or 5.5 for any
period (i) after five days from the date the Borrower tenders payment in full
and in cash of all Obligations payable to such Lender or (ii) after five days
from the date the Administrative Agent shall have consented to the replacement
lender and such replacement lender shall have agreed to execute and deliver an
assignment agreement substantially in the form of Exhibit M. Upon the effective
date of such assignment, the Borrower shall issue a replacement Note or Notes,
as the case may be, to such designated financial institution and such
institution shall become a "Lender" for all purposes under this Agreement and
the other Credit Documents.
ARTICLE VI
CONDITIONS TO ALL LOANS, CONTINUATION
AND CONVERSION OF LOANS
SECTION 6.1. Conditions Precedent to Obligations of the Lenders. The
obligations of the Lenders to make the initial Loans shall be subject to the
fulfillment to the satisfaction of the Lenders in form and substance on or prior
to the Closing Date of the following conditions precedent; notwithstanding the
foregoing provisions, the obligation of the Lenders to make the Initial
Construction Loan Commitment available to the Borrower shall not be subject to
(i) the due execution and delivery of the Steen Construction Contract pursuant
to Section 6.1.2, (ii) the due execution and delivery of the Assignment of
Principal Contracts by each of the Project Participants made a party thereto
pursuant to Sections 6.1.2 and 6.1.3, and (iii) the delivery to each of the
Lenders and the Agents of the opinion set forth in Section 6.1.15(e):
SECTION 6.1.1. Authorization Documents. The Administrative Agent shall
have received with copies for each Lender:
(a) (i) certified copies of the Organizational Documents of the
Borrower and Trigen, and (ii) certified copies of all corporate action
taken by the Borrower and Trigen, respectively, authorizing the execution,
delivery and performance by such Project Participant of each Project
Document to which such Project Participant is a party; and
(b) a certificate of the Borrower and Trigen, respectively,
specifying each of its officers or representatives (A) who is authorized
to execute the Project Documents on such Project Participant's behalf, and
(B) who will, until replaced by another officer or representative as
evidenced by a further certificate of such Project Participant delivered
to the Administrative Agent, act as
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such Project Participant's representative for the purposes of signing
documents and giving notices and other communications in connection with
the Project Documents; and certified (or audited) copies of the financial
statements with respect to the Borrower, Trigen and each of the Material
Project Participants, described in Section 6.1.8 for the most recent
quarter, shall have been delivered to the Administrative Agent and to each
Lender.
SECTION 6.1.2. Credit Documents; Project Documents; Notes. The Borrower
shall have duly executed and delivered to the Administrative Agent and each of
the Lenders each of the Credit Documents (including written consents and
assignments from third parties to the Project Documents in a form satisfactory
to the Administrative Agent and the Majority Lenders which shall be delivered on
the first to occur of (i) the Full Availability Date or (ii) November 30, 1996)
and such Credit Documents shall be in full force and effect; the Borrower shall
have duly issued, executed and delivered to each Lender the Construction Note
payable to such Lender; and the Borrower shall have duly executed and delivered
to the Administrative Agent and each Lender each of the Project Documents and
such Project Documents shall be in full force and effect.
SECTION 6.1.3. Security Matters.
(a) The Agents and each Lender shall have received:
(i) executed counterparts of the Security Agreement, executed
by the Borrower and the Collateral Agent,
(ii) an executed counterpart of the Debenture, executed by the
Borrower,
(iii) executed counterparts of the Pledge Agreement, executed
by Trigen and the Collateral Agent,
(iv) an executed counterpart to the Assignment of Book Debts,
executed by the Borrower, and
(v) executed counterparts to the Assignment of Principal
Contracts, executed by the Borrower, the Collateral Agent and the
other parties thereto;
(b) The Administrative Agent shall have received (with a copy for
each Lender) the results of any lien searches undertaken relating to the
Project and the Collateral and such lien searches (if any) show no Liens
which are unacceptable to any Lender or their counsel;
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(c) The Administrative Agent shall have received (with a copy for
each Lender):
(i) without duplication of the documents delivered pursuant to
clause (a) above, acknowledgment copies of properly filed financing
statements or such other evidence of filing as may be acceptable to
the Agents naming the Borrower as the debtor and the Collateral
Agent as the secured party, or other similar instruments or
documents, filed under the Canadian Security Acts of all
jurisdictions as may be necessary or, in the opinion of either of
the Agents, desirable to perfect the security interest of the
Collateral Agent pursuant to the Security Agreement;
(ii) without duplication of the documents delivered pursuant
to clause (a) above, executed copies of proper termination
statements or other consents, if any, necessary to release all Liens
and other rights of any Person in any Collateral previously granted
by any Person, together with such other termination statements as
the Collateral Agent may reasonably request from the Borrower; and
(iii) on the first to occur of (i) the Full Availability Date
or (ii) November 30, 1996, the consent of all parties to the Project
Documents in respect of the assignment of any Collateral the subject
of such Project Documents;
(d) The Collateral Agent shall have received
(i) counterparts of the Debenture, dated as of the date
hereof, duly executed by the Borrower together with a copy of the
opinion of counsel delivered to the Borrower in connection with the
Facility Purchase Agreement regarding good and marketable title; and
(ii) evidence of the completion (or satisfactory arrangements
for the completion) of all recordings and filings of the Debenture
as may be necessary or, in the reasonable opinion of the Collateral
Agent, desirable to effectively create a valid, perfected first
priority Lien against the properties purported to be covered
thereby;
(e) The Administrative Agent shall have received (with a copy for
each Lender) a current survey (the "Survey") of the Project, prepared and
certified by a licensed surveyor or civil engineer, which shall show the
boundaries of the Project and the location within or adjacent to the Site
of
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all buildings and improvements, all utilities services, transmission
lines, pipelines, rights of way and easements, bodies of water, high water
lines, points of ingress and egress and other pertinent information.
SECTION 6.1.4. Compliance with Warranties, No Default, etc. Both before
and after giving effect to the initial Loans, the following statements shall be
true and correct:
(a) the representations and warranties set forth in this Agreement,
each of the other Credit Documents and each Project Document shall be true
and correct in all material respects with the same effect as if then made
(unless stated to relate solely to an earlier date, in which case such
representations and warranties shall be true and correct as of such
earlier date); and
(b) no Default or Event of Default shall exist with respect to this
Agreement, any other Credit Document or any Project Document.
SECTION 6.1.5. Closing Date Certificate. Each Lender and each Agent shall
have received the Closing Date Certificate (including all exhibits and
attachments thereto), dated the Closing Date and duly executed by an Authorized
Officer of the Borrower, in which such Closing Date Certificate the Borrower
shall have represented and warranted that the statements made therein are true
and correct on and as of the Closing Date, and, at the time such certificate is
delivered, the Agents and the Lenders shall be satisfied that such statements
shall in fact be true and correct. Each of the documents, agreements, reports
and other written material described in or attached as exhibits to the Closing
Date Certificate shall be in form and substance reasonably satisfactory to the
Lenders.
SECTION 6.1.6. Independent Engineer's Reports. Each of the Lenders and the
Agents shall have received from the Independent Engineer a report reviewing the
engineering aspects of the Project, the economic and technical viability of the
Project, the sufficiency of the Governmental Approvals listed in Item 7.1.4 of
the Disclosure Schedule and such other matters as the Lenders may request, which
report shall be in form, scope and substance satisfactory to the Lenders and
such report shall not disclose any opinion, fact or state of affairs which shall
be unacceptable to any Lender.
SECTION 6.1.7. Environmental Report. Each of the Lenders and the Agents
shall have received from the Environmental Consultant a report relating to the
Project, which report may be included in the report of the Independent Engineer
delivered pursuant to Section 6.1.6; such report shall be in form and
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substance satisfactory to the Lenders and such report shall (i) review the Phase
I report, (ii) set forth any additional investigations deemed necessary in the
reasonable judgment of the Environmental Consultant, and (iii) disclose no
opinion, fact or state of affairs which shall be unacceptable to any Lender.
SECTION 6.1.8. Financial Condition. Each of the Lenders and the Agents
shall have received copies of the most recent financial statements and budgets
from the Borrower and the most recent financial statements of Trigen and each of
the Material Project Participants, except the Government of Prince Edward Island
(but in any event no earlier than as of the end of the last day of the most
recent fiscal year of the Borrower and Trigen, respectively), together with a
certificate from each of the Borrower and Trigen to the effect that (i) such
financial statements are true, complete and correct, and neither the Borrower,
nor Trigen, respectively has any reason to believe any information contained in
their respective financial statements, or budgets is misleading or incomplete,
(ii) there has been no change in the respective financial condition of the
Borrower and Trigen, from the date of their respective financial statements and
budgets to the Closing Date which could reasonably be expected to have a
Material Adverse Effect and (iii) no other event affecting the Borrower and
Trigen, respectively, shall have occurred since the date of such financial
statements which could reasonably be expected to have a Material Adverse Effect.
SECTION 6.1.9. Insurance. The scope, coverage, deductibles and carriers of
the Insurance carried by the Borrower shall be satisfactory to the
Administrative Agent and the Lenders, and the Administrative Agent shall have
received (with a copy for each Lender):
(a) certificates of insurance with respect to the insurance required
to be obtained pursuant to Section 8.1.4 signed in each case by the
insurer or an agent authorized to bind the insurer, and
(b) a letter of the Insurance Consultant
(i) as to the matters set forth in Section 17 of the Closing
Date Certificate,
(ii) that, in their opinion, such insurance adequately
protects the interests of the Secured Parties,
(iii) that such insurance is comparable in all respects with
insurance carried by responsible owners and operators of projects
similar to those covered by the Debenture, and
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(iv) as to such other matters as may be requested by the
Administrative Agent or the Lenders.
SECTION 6.1.10. Governmental Approvals; Compliance With Governmental
Rules, etc. The Borrower shall have received, in a form satisfactory to the
Agents, the Lenders and the Independent Engineer, all Governmental Approvals and
Permits required for the construction, operation and maintenance of the Project
which are required to be obtained prior to the date of such Loan shall have been
duly obtained or made and shall be in full force and effect and there shall not
have been any appeal of any such Governmental Approval and the Project shall
have been and be in Material Compliance with all Governmental Approvals and
Governmental Rules relating to the construction, operation and maintenance of
the Project which are applicable prior to and on the date of such Loan, and the
Project as described in the Project Documents, without additions or
modifications, shall reasonably be expected to satisfy and be in Material
Compliance with all established and anticipated requirements (including those
requirements in proposed rules) of existing and presently known future
Governmental Approvals and Governmental Rules relating to the future
construction, operation and maintenance of the Project which are or are
anticipated to be applicable after the date of such Loan and there shall have
been no change in any applicable Governmental Approval or Governmental Rule, and
no issuance of any order, writ, injunction or decree of any Regulatory Authority
which could reasonably be expected to have a Material Adverse Effect, and, to
the best knowledge of the Borrower, there shall have been no proposed or
threatened change in or modification of any applicable Governmental Rule which
could reasonably be expected to have a Material Adverse Effect. The use of such
Loan shall not cause any Lender to violate or be in conflict with any law.
SECTION 6.1.11. Process Agent. The Administrative Agent shall have
received (with a copy for each Lender) a letter from CT Corporation accepting
its appointment as process agent in New York for the Borrower and Trigen.
SECTION 6.1.12. Debt Service and Support Agreement. Trigen shall have
delivered to each of the Lenders and the Agents copies of the Debt Service and
Support Agreement.
SECTION 6.1.13. Closing Fees, etc. Each of the Lenders and the Agents
shall have received payments of all fees, costs and expenses due and payable on
the Closing Date under any Project Document and as set forth in the term sheet
dated May 21, 1996, and the Administrative Agent Fee Letter relating to the
transactions contemplated hereby, including the fees of, and disbursements
incurred by, counsel to the Agents, the Independent
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Engineer, the Environmental Consultant, the Insurance Consultant in connection
with the transactions contemplated hereby.
SECTION 6.1.14. Construction Milestone Schedule. The Borrower shall have
delivered to the Agents and each of the Lenders (i) the Construction Milestone
Schedule and (ii) an estimate of the major maintenance and repair schedule in
accordance with usual and customary practice within the industry in each case,
certified and in a form satisfactory to the Administrative Agent and, in the
case of clause (i), the Independent Engineer and subject to the final approval,
in the case of clause (i) of the Administrative Agent and the Independent
Engineer on or prior to the Full Availability Date.
SECTION 6.1.15. Legal Opinion of the Counsel to the Borrower. Each of the
Lenders and the Agents shall have received an opinion of
(a) the Borrower's General Counsel, substantially in the form of
Exhibit S-1 hereto, dated the Closing Date and covering such other matters
as any Lender or Agent may reasonably request;
(b) the Borrower's Canadian counsel, substantially in the form of
Exhibit S-2 hereto, dated the Closing Date and covering such other matters
as any Lender or Agent may reasonably request;
(c) Trigen's General Counsel, substantially in the form of Exhibit
S-3 hereto, dated the Closing Date and covering such other matters as any
Lender or Agent may reasonably request;
(d) Canadian counsel (which may be counsel to the Borrower) for each
of the Material Project Participants, as to the enforceability of each of
the Project Documents to which such Material Project Participant is a
party dated the Closing Date and covering such other matters as any Lender
or Agent may reasonably request; and
(e) Canadian counsel (which may be counsel to the Borrower) for each
of the Material Project Participants, as to the enforceability, validity
and due execution of the related consent to assignment thereof and
covering such other matters as any Lender or Agent may reasonably request.
SECTION 6.1.16. Pending Litigation. No legal action, suit or labor
controversy is pending which, in the reasonable judgment of the Agents or the
Lenders may have a Material Adverse Effect.
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SECTION 6.1.17. Consents; Waivers. The Administrative Agent shall have
received a waiver from UPEI with respect to certain rights of UPEI under the
chattel mortgage dated September 25, 1995 between the Borrower and UPEI, in a
form reasonably acceptable to the Administrative Agent.
SECTION 6.1.18. Other Documents. The Administrative Agent
shall have received such other certificates, opinions, agreements
and documents, in form and substance satisfactory to it, as it
may reasonably request.
SECTION 6.2. Loans Subsequent to the Initial Drawdown. No Lender will
make any Loan unless each of the conditions precedent set forth in this Section
6.2 has been satisfied.
SECTION 6.2.1. Compliance with Warranties, No Default, etc. Both before
and after giving effect to any Loan the following statements shall be true and
correct:
(a) the representations and warranties set forth in Article
VII and of the Borrower contained in each other Credit Document and
each other Project Document shall be true and correct in all material
respects with the same effect as if then made (unless stated to relate
solely to an earlier date, in which case such representations and
warranties shall be true and correct as of such earlier date);
(b) to the knowledge of the Borrower, the representations and
warranties of each other Project Participant contained in each Credit
Document and each Project Document shall be true and correct in all
material respects with the same effect as if then made (unless stated
to relate solely to an earlier date, in which case such representations
and warranties shall be true and correct as of such earlier date);
(c) the Project Costs or Project Expenses to be funded
shall be incurred in accordance with the provisions of this
Agreement;
(d) no labor controversy, litigation, dispute with or breach
or default by any Contractor or any subcontractor, arbitration or
governmental investigation or proceeding shall be pending or, to the
knowledge of the Borrower, threatened against the Borrower or the
Project which would reasonably be expected to have a Material Adverse
Effect; and
(e) no Default or Event of Default shall have then
occurred and be continuing under this Agreement, any other
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Credit Document or any other Project Document, and neither the
Borrower, nor, to the knowledge of the Borrower, no other Project
Participant shall be in material violation of any Governmental Approval
relating to the Project which would reasonably be expected to have a
Material Adverse Effect.
SECTION 6.2.2. Borrowing Request. The Administrative Agent shall have
received a Borrowing Request for each Loan. Each of the delivery of a Borrowing
Request and the acceptance by the Borrower of the proceeds of such Loan shall
constitute a representation and warranty by the Borrower that on the date of
such Loan (both immediately before and after giving effect to such Loan and the
application of the proceeds thereof) the statements made in Section 6.2.1 are
true and correct.
SECTION 6.2.3. Waiver of Liens. The Agents and the Lenders shall have
received lien waivers with respect to work on the Project financed hereunder.
SECTION 6.2.4. Borrower Construction Certificates. Except for Loans
applied solely for the payment of interest on the Loans or fees, the
Administrative Agent shall have received an Independent Engineer Construction
Certificate and a Borrower Construction Certificate, in each case at such times
as required by clause (b) of Section 2.3 and on a quarterly basis to the effect
that (i) satisfactory construction progress as measured against the milestone
schedules in each Construction Contract shall have been made with respect to the
Project, (ii) the amount of projected Project Costs does not exceed the funds
available to complete the Project and (iii) the Project will be completed on or
prior to the Final Completion Date.
SECTION 6.2.5. Insurance Matters. The Administrative Agent shall have
received evidence satisfactory to it that all insurance required by Section
8.1.4 is in full force and effect and no default or event of default by the
Borrower or any Contractor, as the case may be, exists with respect to such
insurance.
SECTION 6.2.6. No Material Adverse Effect. There shall have occurred no
event or condition constituting, or which would reasonably be expected to
constitute, a Material Adverse Effect with respect to the Borrower, Trigen or
the Project.
SECTION 6.2.7. Satisfactory Legal Form. All documents executed or
submitted pursuant hereto by or on behalf of the Borrower or any other Project
Participant shall be reasonably satisfactory in form, scope and substance to the
Majority Lenders and their respective counsel; the Majority Lenders and their
respective counsel shall have received all information,
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approvals, opinions, documents or instruments as the Lenders or their respective
counsel may reasonably request.
SECTION 6.3. Term Loan Closing Date and Refinancing of Construction
Loans With Term Loans. The obligation of each Lender to make any Term Loan on
the Term Loan Closing Date shall be subject to the satisfaction of each of the
conditions set forth in this Section 6.3.
SECTION 6.3.1. Compliance with Warranties, No Default, etc. Both before
and after giving effect to the Term Loan, the following statements shall be true
and correct:
(a) the representations and warranties of the Borrower set
forth in this Agreement, each of the other Credit Documents and each
Project Document shall be true and correct in all material respects
with the same effect as if then made (unless stated to relate solely to
an earlier date, in which case such representations and warranties
shall be true and correct as of such earlier date);
(b) to the knowledge of the Borrower, the representations and
warranties of each other Material Project Participant contained in the
Credit Documents and the Project Documents are true and correct; and
(c) no Default or Event of Default has occurred and is
continuing with respect to this Agreement or any other Credit Document
and no Default or Event of Default has occurred with respect to any
Project Document.
SECTION 6.3.2. Term Loan Closing Date Notice. The Administrative Agent
(with a copy for each Lender) shall have received the Term Loan Closing Date
Notice (including all exhibits and attachments thereto), dated the Term Loan
Closing Date and duly executed by an Authorized Officer of the Borrower, in
which such Term Loan Closing Date Notice the Borrower shall have represented and
warranted that the statements made therein are true and correct as of the Term
Loan Closing Date. At the time such certificate is delivered, such statements
shall in fact be true and correct.
SECTION 6.3.3. Completion Certificates. The Administrative Agent (with
a copy for each Lender) shall have received (i) the Independent Engineer
Completion Certificate and a Borrower Completion Certificate, in each case,
including all exhibits and attachments thereto and dated not more than ten days
prior to the Term Loan Closing Date, together with evidence satisfactory to them
from the Borrower confirming the matters set forth therein and an instrument in
writing from the Canadian Counsel to the Borrower, addressed to the
Administrative Agent, dated not more
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than ten days prior to the Term Loan Closing Date, insuring the priority of the
Liens created under the Debenture for the full aggregate principal amount of the
Loans outstanding, subject only to such exceptions as are satisfactory to the
Administrative Agent.
SECTION 6.3.4. Prepayment of Loans. The prepayments of Loans required
by clauses (a), (b) and (d) and, if applicable, clause (c) of Section 4.1.2
shall have been made.
SECTION 6.3.5. Equity Contribution. Trigen or an Affiliate of Trigen
shall have made the Equity Contribution and such Equity Contribution shall have
been used in full to pay Project Costs.
SECTION 6.3.6. Insurance. The Administrative Agent shall
have received (with a copy for each Lender):
(a) certificates of insurance with respect to the insurance
required to be obtained pursuant to Section 8.1.4 signed in each case
by the insurer or an agent authorized to bind the insurer, and
(b) a certificate of the Insurance Consultant
(i) as to the matters set forth in Section 17 of
the Term Loan Closing Date Notice,
(ii) that, in their opinion, such insurance
adequately protects the interests of the Secured Parties,
(iii) that such insurance is comparable in all
respects with insurance carried by responsible owners and
operators of projects similar to those covered by the
Debenture,
(iv) that all insurance requirements with respect to
the Project Documents and the Credit Documents shall have been
obtained and are in full force and effect, and
(v) as to such other matters as may be requested by
the Lenders.
SECTION 6.3.7. No Material Adverse Effect. The Borrower represents and
warrants that there shall have occurred no event or condition constituting, or
which would constitute, a Material Adverse Effect with respect to the Project,
Trigen or the Borrower.
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SECTION 6.3.8. Project Completion Date. The Project Completion Date
shall have occurred.
SECTION 6.3.9. Governmental Approvals; Compliance With Governmental
Rules, etc. The Borrower shall have received, in a form satisfactory to the
Agents, the Lenders and the Independent Engineer, all Governmental Approvals and
Permits set forth in Section 6.1.10 and all such Governmental Approvals and
Permits shall be in final non-appealable form.
SECTION 6.3.10. Legal Opinions. Each Lender and each Agent shall have
received such supplemental legal opinions dated as of the Term Loan Closing Date
confirming and updating their opinions delivered pursuant to Section 6.1.15 and
covering such other matters incidental to the transaction contemplated by the
Project Documents as the Majority Lenders or any Agent may request, which
opinions shall be in form, scope and substance satisfactory to such Agent or
Majority Lenders, as the case may be.
SECTION 6.3.11. Satisfactory Legal Form. All documents executed or
submitted pursuant hereto by or on behalf of the Borrower or any other Project
Participant shall be reasonably satisfactory in form and substance to the
Majority Lenders and their respective counsel; the Majority Lenders and their
respective counsel shall have received all information, approvals, opinions,
documents or instruments as the Lenders and their respective counsel may
reasonably request.
SECTION 6.3.12. Notes. The Borrower shall have duly issued, executed
and delivered to each Lender the Term Note payable to such Lender.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF THE BORROWER
SECTION 7.1. Representations and Warranties of the Borrower. In order
to induce the Lenders and the Agents to enter into this Agreement and to make
Loans hereunder, the Borrower represents and warrants to each Lender and each
Agent as set forth in this Section 7.1.
SECTION 7.1.1. Project Participant Organization, etc.
(a) The Borrower is a corporation validly organized and
existing and in good standing under the laws of Ontario, Canada, is
duly qualified to do business and is in good standing as a foreign
corporation in each jurisdiction where the nature of its business
requires such qualification, and has full power and authority and holds
all requisite
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governmental licenses, permits and other approvals to enter into and
perform its Obligations under this Agreement, the Notes and each other
Credit Document and each other Project Document to which it is a party
and to own and hold under lease its property and to conduct its
business substantially as currently conducted by it. Except as set
forth in Item 7.1.1(a) of the Disclosure Schedule or as disclosed to
the Administrative Agent at a date subsequent to the Closing Date, the
Borrower has not engaged in and is not engaged in any business other
than the owning, construction and operation of the Project and
activities as may be incidental or related thereto. Except as set forth
in Item 7.1.1(a) of the Disclosure Schedule or as disclosed to the
administrative Agent at a date subsequent to the Closing Date, the
Borrower has no Subsidiaries.
(b) Each other Affiliated Project Participant is a corporation
duly organized, validly existing and in good standing under the laws of
its respective jurisdiction of incorporation and is duly qualified to
do business in all jurisdictions in which the conduct of its business
or the ownership or leasing of its properties requires such
qualification. Each Affiliated Project Participant has all requisite
power and authority to conduct its business or to own or lease its
properties and to enter into and perform its obligations under any of
the Credit Documents or the Project Documents to which it is a party.
(c) Except as set forth on Item 7.1.1(c) of the Disclosure
Schedule, the Borrower does not have outstanding any securities
convertible into or exchangeable for any of its capital stock or any
rights to subscribe for or to purchase, or any warrants or options for
the purchase of, or any agreements providing for the issuance
(contingent or otherwise) of, or any calls, commitments or claims of
any character relating to any such capital stock.
SECTION 7.1.2. Due Authorization, Non-Contravention, Compliance with
Laws, etc.
(a) Each Credit Document and Project Document to which the
Borrower and each Project Participant is a party has been duly and
validly executed and delivered by such Project Participant. The
execution, delivery and performance by the Borrower and each Project
Participant of each Credit Document and Project Document executed or to
be executed by it, are within such Project Participant's corporate or
partnership powers, as the case may be, have been duly authorized by
all necessary corporate or partnership action, as the case may be, and
do not
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(i) contravene such Project Participant's
Organizational Documents, or
(ii) contravene any contractual restriction, any
Governmental Approval or any Governmental Rule binding on or
affecting such Project Participant or require the consent of
any Person which has not been obtained, or
(iii) result in, or require the creation or
imposition of, any Lien on any of such Project Participant's
Properties (other than Liens permitted under Section 8.2.3).
(b) Neither the Borrower, nor any of its Subsidiaries, nor any
of the Affiliated Project Participants is in breach of or in default
under any contractual restriction or any Governmental Rule or
Governmental Approval binding on or affecting such Project Participant
or its properties or its Organizational Documents which could have a
Material Adverse Effect on the Borrower or the Project.
(c) The Borrower has not entered into any agreement (excluding
this Agreement, any other Credit Document and any Project Document)
which (i) restricts the ability of the Borrower to enter into the
Project Documents or (ii) restricts the ability of the Borrower to
complete the Project on a commercial basis in the manner contemplated
by the Project Documents.
SECTION 7.1.3. Status as a Regulated Facility.
(a) The Borrower is not subject to regulation
(i) as a "public utility" or "public service
corporation" or the equivalent under the applicable law
of any province,
(ii) under the applicable laws of any province
relating to public utilities and/or public service
corporations, or
(iii) under the Island Regulatory and Appeals
Commission.
(b) Neither Agent nor any Lender, solely by virtue of the
execution, delivery and performance of, and the consummation of the
transactions contemplated by, the Project Documents shall be or shall
become subject to regulation
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(i) under the Island Regulatory and Appeals
Commission,
(ii) as a "public utility" or "public service
corporation" or the equivalent under the applicable law
of any province, or
(iii) under the applicable laws of any province
relating to public utilities and/or public service
corporations.
SECTION 7.1.4. Governmental Approvals and Compliance with Governmental
Approvals and Governmental Rules. All of the Governmental Approvals necessary
(i) for the construction, ownership, operation and maintenance of the Project as
contemplated by the Credit Documents and the Project Documents, (ii) for the
execution, delivery and performance by each Project Participant of its
obligations, and the exercise of its rights, under each Credit Document and
Project Document to which it is a party, and (iii) for the grant by each of the
Borrower and Trigen of the Liens and security interests created by the Security
Documents, and for the validity and enforceability of such Security Documents
and for the exercise by the Collateral Agent of its remedies under the Security
Documents, and all other applicable Governmental Rules that do not require
specific Governmental Approval, as listed in Item 7.1.4(b) of the Disclosure
Schedule, have been obtained, were validly issued, are being Complied with in
All Material Respects and are in full force and effect and not subject to appeal
or renewal (or if subject to issuance, the Borrower has no reason to believe
such Governmental Approvals will not be issued or reissued, as the case may be),
are held in the name of the Borrower or the relevant Project Participant, as the
case may be, and are free from conditions or requirements compliance with which
could have a Material Adverse Effect or which the Borrower or the relevant
Project Participant, as the case may be, does not reasonably expect to be able
to satisfy. The information set forth in each application submitted in
connection with each such Governmental Approval and all material correspondence
sent in respect of such application is accurate and complete in all material
respects. There is no proceeding pending or, to the Borrower's knowledge,
threatened against any Project Participant which seeks, or may reasonably be
expected, to rescind, terminate, modify or suspend any Governmental Approval so
obtained. The Governmental Approvals and Permits specified in Item 7.1.4 of the
Disclosure Schedule are required solely in connection with later stages of
construction, expansion, interconnection and operation of the Project and are
not customarily obtained or complied with until a later stage of construction or
after commercial operation has commenced. The Borrower has no reason to believe
that any applicable Governmental Rule will not be complied with or that
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any Governmental Approval which has not been obtained by the applicable Project
Participant will not be obtained on or prior to the date specified in Item
7.1.4(b) of the Disclosure Schedule. The Project, if constructed in accordance
with the plans and specifications therefor and the Project Documents, and upon
Project Completion including full scale commercial operation, shall satisfy,
conform to and Comply in All Material Respects with all requirements for and all
covenants, conditions, restrictions and reservations in the then applicable
Governmental Approvals and the Project Documents applicable thereto and all
federal, state provincial, and local zoning, environmental, land use and other
Governmental Rules applicable thereto. The Collateral Agent, acting for the
benefit of the Secured Parties, will be entitled, without undue expense or
delay, to the benefit of each Governmental Approval set forth in Item 7.1.4 on
the Disclosure Schedule upon the exercise of remedies under the Security
Documents to the extent permitted by Governmental Rules.
SECTION 7.1.5. Validity, etc. Each Project Document and each Credit
Document to which the Borrower and each Affiliated Project Participant is a
party constitutes the legal, valid and binding obligation of such Project
Participant enforceable in accordance with its terms.
SECTION 7.1.6. Financial Information.
(a) The unaudited balance sheet of the Borrower (before giving
effect to the transactions contemplated hereby) as at June 30, 1996,
certified by an Authorized Officer of the Borrower has been prepared in
accordance with GAAP, copies of which have been furnished to each Agent
and each Lender, and all other financial information of the Borrower
delivered to any Agent or any Lender, is complete and correct and
present fairly the financial condition of the Borrower as at June 30,
1996. Since June 30, 1996 (after giving effect to the transactions
contemplated hereby), there has been no event or occurrence nor the
existence of any fact or state of facts which, as at the Closing Date
could, and which thereafter would, reasonably be expected to have a
Material Adverse Effect.
(b) The unaudited balance sheet of the Borrower and the
audited consolidated balance sheet of Trigen and its consolidated
Subsidiaries as at December 31, 1995 and the related unaudited (with
respect to the Borrower) and audited consolidated (with respect to
Trigen) statements of income, retained earnings and changes in cash
flow or similar financial statements for the fiscal year ended on said
date, signed by an Authorized Officer of the Borrower and Trigen,
respectively, heretofore furnished to each of the Agents and each
Lender prior to the Closing Date, are complete and
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correct and fairly present the consolidated financial condition of the
Borrower and Trigen and its consolidated Subsidiaries, and the
consolidated results of such Project Participant and its consolidated
Subsidiaries, for the period then ended in accordance with GAAP. No
such Project Participant (including the Borrower) or any of its
respective Subsidiaries had on the date of the most recent of its
financial statements described above any material liabilities (matured
or unmatured, fixed or contingent), for taxes or unusual forward or
long term commitments or unrealized or anticipated losses from any
unfavorable commitments except as referred to or reflected or provided
for in said balance sheet as at said date or as disclosed on the
Disclosure Schedule. From March 31, 1996 to the Closing Date there has
been no event or occurrence or any fact or state of facts which, as at
the Closing Date could, and which thereafter would, reasonably be
expected to have a Material Adverse Effect.
SECTION 7.1.7. Litigation, Labor Controversies, etc. There is no
pending or, to the knowledge of the Borrower, threatened litigation, action,
proceeding, or labor controversy affecting the Borrower, or any of its
properties, businesses, assets or revenues, which may materially adversely
affect the financial condition, operations, assets, business, properties or
prospects of the Borrower or which purports to affect the legality, validity or
enforceability of this Agreement, the Notes, any other Credit Document or any
other Project Document, with respect to each of the foregoing, of the ability of
the Borrower to meet its obligation to any Agent or any Lender except (in each
case) as disclosed in Item 7.1.7 ("Litigation") of the Disclosure Schedule.
SECTION 7.1.8. No Material Adverse Change. Since the date of the
financial statements described in Section 7.1.6, there has been no material
adverse change in the financial condition, operations, assets, business,
properties or prospects of the Borrower or, to the knowledge of the Borrower, of
any other Material Project Participant.
SECTION 7.1.9. Title to Project; Ownership and Condition of
Properties, etc.
(a) The Borrower owns and has good and marketable title to the
Collateral free and clear of all Liens other than Liens permitted under
Section 8.2.3. The Borrower owns and has good marketable title to all
easements, rights-of-way, licenses or other real property rights
required for access to, or construction and interconnection of the
Project. The Borrower holds a valid leasehold interest in
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each of the assets held under lease free and clear of all Liens, other
than Liens permitted under Section 8.2.3.
(b) The property interests of the Borrower referred to
in clause (a) are sufficient
(i) to enable the construction of the Project to be
completed on a commercial basis in the manner contemplated by
the Project Documents, and
(ii) to enable the Borrower to own, maintain and
operate the Project and the utilities at the Site in a manner
consistent with the Project Documents to which it is a party.
(iii) to enable the Borrower to perform its
obligations in all material respects under the Project
Documents to which it is a party.
(c) The Project does not encroach upon any property rights of
any Person or violate any Governmental Rule or Governmental Approval
relating to setbacks, heights of structures, zoning or land use.
(d) The Borrower owns and possesses, or is duly licensed in
respect of, all patents, trade secrets, processes, trademarks, service
marks, trade names, copyrights, licenses, rights and any other
intellectual property as are necessary for the conduct of its business
as proposed to be operated after the date of Project Completion
(collectively, the "Essential Technical Information"), and without any
obligation to pay royalties or license fees therefor and without any
claim of infringement by any Person known to the Borrower.
(e) The Borrower owns good and marketable title to all of its
properties, leaseholds and assets, real and personal, tangible and
intangible, of any nature whatsoever.
(f) The Borrower has maintained, preserved, protected and kept
its properties (including all Essential Technical Information) in good
repair, working order and condition, and has made necessary and proper
repairs, renewals and replacements so that its business carried on in
connection therewith may be properly conducted at all times unless the
Borrower has determined, in good faith, that the continued maintenance
of any of its properties is no longer economically desirable.
SECTION 7.1.10. Security Documents. The provisions of the
Security Documents are effective to create, in favor of the
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Collateral Agent for the benefit of the Secured Parties, a legal, valid and
enforceable Lien on or in all of the right, title and interest of each of the
Borrower and Trigen in the Collateral, and all necessary recordings and filings
have been made in all necessary public offices set forth on Schedule IV so that
the Liens created by each Security Document constitute perfected first priority
Liens on or in all right, title, estate and interest of the Borrower in the
Collateral covered thereby, prior and superior to all other Liens other than
Liens permitted under Section 8.2.3, and all necessary consents to the creation
and perfection of such Lien of each of the parties to the Project Documents have
been obtained.
SECTION 7.1.11. Taxes. The Borrower and each Affiliated Project
Participant has filed all tax returns and reports required by law to have been
filed by it and has paid all taxes and governmental charges thereby shown to be
owing, except any such taxes or charges which are being contested in accordance
with Section 8.1.7. No tax liens have been filed against the Borrower or any
Affiliated Project Participant and no claims are being asserted against such
Project Participant with respect to any such taxes or charges which, as at the
Closing Date could, and which thereafter would, reasonably be expected to have a
Material Adverse Effect. For federal income tax purposes, the Borrower is a
corporation and not a partnership. Neither the execution and delivery of this
Agreement or the other Project Documents nor the consummation of any of the
transactions contemplated hereby or thereby shall affect such status.
SECTION 7.1.12. Pension and Welfare Plans. Except as disclosed on Item
7.1.12 of the Disclosure Schedule, the Borrower does not maintain or contribute
to any pension plans or contribution plans except as required by law.
SECTION 7.1.13. Insurance. The Borrower holds valid insurance policies
in full force and effect covering all of the insurance required to be maintained
by it pursuant to Section 8.1.4. The global corporate insurance policy of Trigen
is in full force and effect and, except for builder's risk and delayed startup
insurance, covers all of the insurance required to be maintained by the Borrower
pursuant to Section 8.1.4.
SECTION 7.1.14. Liens. Except with respect to Liens permitted pursuant
to Section 8.2.3 and the Liens set forth on Item 7.1.14 of the Disclosure
Schedule, the Borrower has not created, incurred, assumed or suffered to exist
any Lien upon any of its property, revenues or assets.
SECTION 7.1.15. Use of Proceeds. The Borrower has used and
will use the proceeds of the Construction Loans and the Term
Loans only for the purposes described in Section 5.9.
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SECTION 7.1.16. Business Activities. The Borrower has not and is not
currently engaged in any activities other than those related to the Project and
those activities set forth in Item 7.1.16 of the Disclosure Schedule.
SECTION 7.1.17. Material Agreements; Delivery of Project Documents. The
Project Documents (and any exhibits or documents referred to therein) constitute
and include all agreements relating to the Project which as at the Closing Date
could, and which thereafter would, reasonably be expected to affect materially
the financial condition, assets, construction, ownership or operations of the
Borrower or the legal, technical or economic viability of the Project. The
services to be performed, the materials to be supplied and the property
interests and other rights granted pursuant to the Project Documents comprise
all of the property interests necessary to secure any such right material to the
construction, operation and maintenance of the Project in accordance with all
Governmental Rules (including, without limitation, Environmental Laws) and as
contemplated by the Project Documents. There are no services, materials or
rights required for the construction, operation and maintenance of the Project
in accordance with the Project Documents other than those granted by, or to be
provided to the Borrower pursuant to, the Project Documents or those that will
be made available at the Project by utilities or governmental authorities. The
Borrower has delivered to the Administrative Agent (with sufficient copies for
each of the Lenders) complete copies of all Project Documents, and none of the
Project Documents has been amended, modified or terminated.
SECTION 7.1.18. Projections of Operating Results. The projections of
the Borrower with respect to the operating results of the Project are based on
reasonable assumptions consistent with the Project Documents.
SECTION 7.1.19. Restrictive Agreements; Borrower's Ability to Complete
the Project. The Borrower has not entered into any agreement (excluding this
Agreement, any other Credit Document and any other Project Document) that
restricts the ability of the Borrower to complete the Project or to perform its
obligations under any Project Document or that would otherwise result in a
Material Adverse Effect.
SECTION 7.1.20. Environmental Warranties. Except as set forth in Item
7.1.20 ("Environmental Matters") of the Disclosure Schedule:
(a) all facilities and real property owned, leased or operated
by any Affiliated Project Participant comprising a part of the Project
have been, and continue to be, owned,
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leased or operated by such Affiliated Project Participant in Material
Compliance with all applicable Environmental Laws;
(b) there have been no past, and there are no pending or, to
the knowledge of the Borrower, threatened
(i) claims, complaints, notices or requests for
information relating to the Project or the Project property
received by any Affiliated Project Participant with respect to
any alleged violation of, or Release of Hazardous Materials
under, any applicable Environmental Law, or
(ii) complaints, notices or inquiries relating to the
Project or the Project property received by an Affiliated
Project Participant regarding potential liability under any
applicable Environmental Law;
(c) to the knowledge of the Borrower, there have been no
Releases of Hazardous Materials at, on or under any property now or
previously owned, leased or operated in connection with the Project
that, singly or in the aggregate, have a Material Adverse Effect, or
which as at the Closing Date could, and which thereafter would,
reasonably be expected to have a Material Adverse Effect;
(d) except for those Governmental Approvals and Permits set
forth in Item 7.1.4 ("Governmental Approvals to be Obtained") of the
Disclosure Schedule which have not yet been obtained, each Affiliated
Project Participant has been issued and is in Material Compliance with
all currently applicable Governmental Approvals to be obtained by or on
behalf of the Borrower and Governmental Rules relating to environmental
matters necessary in connection with the construction, ownership, lease
or operation of the Project;
(e) to the knowledge of the Borrower, no property now or
previously owned, leased or operated in connection with the Project is
listed or proposed for listing under the EPA or EPA (Canada) or on any
similar federal, provincial or local list of sites requiring
investigation or clean-up;
(f) to the knowledge of the Borrower, there are no underground
storage tanks, active or abandoned, including petroleum storage tanks,
on or under any property now or previously owned, leased or operated by
any Affiliated Project Participant comprising a part of or relating to
the Project that, singly or in the aggregate, has a Material Adverse
Effect, or which as at the Closing Date could, and which thereafter
would, reasonably be expected to have a Material Adverse Effect;
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(g) to the knowledge of the Borrower, no Affiliated Project
Participant has directly transported or directly arranged for the
transportation of any Hazardous Material to any location which is
listed or proposed for listing on the EPA or on the EPA (Canada) or on
any similar state or provincial list or which is the subject of
federal, state, provincial or local enforcement actions or other
investigations which has a Material Adverse Effect, or which as at the
Closing Date could, and which thereafter would, reasonably be expected
to have a Material Adverse Effect;
(h) to the knowledge of the Borrower, there are no
polychlorinated biphenyls or friable asbestos present at any property
now or previously owned, leased or operated by any Affiliated Project
Participant comprising a part of or relating to the Project that,
singly or in the aggregate, has a Material Adverse Effect, or which as
at the Closing Date could, and which thereafter would, reasonably be
expected to have a Material Adverse Effect;
(i) the distribution pipes used in connection with the Project
are not insulated, surrounded by, covered or otherwise protected by or
in contact with any form of asbestos; and
(j) no conditions exist at, on or under any property now or
previously owned, leased or operated by any Affiliated Project
Participant comprising a part of or relating to the Project which, with
the passage of time, or the giving of notice or both, might give rise
to liability under any applicable Environmental Law which as at the
Closing Date could, and which thereafter would, reasonably be expected
to have a Material Adverse Effect.
SECTION 7.1.21. Operation of the Project. Upon Project Completion the
Project shall be able to be operated on a safe and commercially sound basis in
Material Compliance with all Governmental Rules, Governmental Approvals relating
or applicable to the Project, and the requirements of all Project Documents and
(i), in the case of the Thermal Facility, in accordance with sound practices of
the thermal energy industry and (ii), in the case of the Energy Facility, in
accordance with sound practices of the waste processing industry, in each case,
for a period ending no earlier than March 31, 2015.
SECTION 7.1.22. No Default. No Affiliated Project Participant and to
the best of the Borrower's knowledge no other Project Participant is in default
under or with respect to any Credit Document or any Project Document. No Default
or Event of Default under this Agreement, any other Credit Document or any
Project Document has occurred and is continuing.
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SECTION 7.1.23. Utilities, etc. All utility services, means of
transportation, facilities and other materials necessary for the construction
and operation of the Project and the achievement of Project Completion
(including, without limitation, as necessary, electrical, water supply, storm,
telephone and sewage services and facilities) are available to the Project and,
to the extent necessary or desirable, arrangements have been made on
commercially reasonable terms for such services, means of transportation,
facilities and other materials.
SECTION 7.1.24. Accuracy of Information.
(a) No written information heretofore or contemporaneously
furnished, relating to the Project Participants, the Project, the
Credit Documents or the construction, ownership or operation of the
Project, as the case may be, or the Project Documents, which has been
supplied by the Borrower or any Affiliate thereof or, to the knowledge
of the Borrower, by any Project Participant or any Affiliate thereof to
the Independent Engineer, any Regulatory Authority, the Environmental
Consultant, the Insurance Consultant, any Agent or any Lender, contains
any untrue statement of a material fact or omits to state a material
fact necessary to make the statements therein not misleading in light
of the circumstances under which they were made. All information
hereafter furnished by each Project Participant or any Affiliate
thereof to the Independent Engineer, any Regulatory Authority, the
Environmental Consultant, the Insurance Consultant, any Agent or any
Lender will be true and accurate in every material respect on the date
as of which such information is dated or certified and such information
shall not as to information provided by a Project Participant, be
incomplete by omitting to state any material information necessary to
make such information not misleading in light of the circumstances
under which they were made. The Borrower acknowledges that the
Independent Engineer, the Environmental Consultant, the Insurance
Consultant, the Agents and the Lenders are relying on such information.
There is no fact known to any Project Participant, which as at the
Closing Date could, and which thereafter would, reasonably be expected
to have a Material Adverse Effect.
(b) The Agents have received a true and complete copy of each
Project Document (including all exhibits, schedules and disclosure
letters referred to therein or delivered pursuant thereto, if any).
Except as may be permitted from time to time pursuant to Section
8.2.11, none of the Project Documents has been amended, modified or
terminated at any time after the date of such delivery, and all of the
Project Documents are in full force and effect.
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SECTION 7.1.25. Regulations G, T, U and X. No Affiliated Project
Participant is engaged in the business of extending credit for the purpose of
purchasing or carrying margin stock, and no proceeds of any Loans will be used
for a purpose which violates, or would be inconsistent with, F.R.S. Board
Regulation G, T, U or X. Terms for which meanings are provided in F.R.S. Board
Regulation G, T, U or X or any regulations substituted therefor, as from time to
time in effect, are used in this Section with such meanings.
SECTION 7.1.26. Financial Advisors. (i) Except for Kramer, Clark &
Company, Inc., no Affiliated Project Participant has retained any broker, finder
or financial advisor in connection with the transactions contemplated by this
Agreement or by the other Project Documents, which will result in the obligation
of any Person to pay any finder's fee, brokerage commission or similar payment
in connection with the transactions contemplated herein or therein, and (ii) the
Borrower will indemnify and hold harmless each Lender and each Agent from and
against all losses, claims, damages or liabilities (including legal fees and
costs of investigation and defense thereof) to which such Person may become
subject arising out of or based upon any act or omission arising out of a breach
of the representation and warranty given in this Section.
ARTICLE VIII
COVENANTS AND AGREEMENTS
SECTION 8.1. Affirmative Covenants and Agreements of the Borrower. The
Borrower agrees with each Agent and each Lender that, until all Commitments have
been terminated and all Obligations have been paid and performed in full, the
Borrower will perform the obligations set forth in this Section 8.1.
SECTION 8.1.1. Financial Information, Reports, Notices, etc. The
Borrower will furnish, or will cause to be furnished, to the Administrative
Agent (with sufficient copies for the Lenders) copies of the following financial
statements, reports, notices and information:
(a) as soon as available and in any event within 60 days after
the end of each Fiscal Quarter of each Fiscal Year of the Borrower and
Trigen, respectively, unaudited financial statements of such Project
Participant as of the end of such Fiscal Quarter and statements of
income, retained earnings and cash flow of such Project Participant
(including, in the case of the Borrower, a reconciliation of the
Borrower capital accounts for such Fiscal Quarter and for the period
commencing at the end of the previous Fiscal
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Year and ending with the end of such Fiscal Quarter), certified, in
each case, by the treasurer of such Project Participant;
(b) as soon as available and in any event within 120 days
after the end of each Fiscal Year of the Borrower and Trigen,
respectively (i) a copy of the annual audited financial statements (if
any) for such Fiscal Year for such Project Participant, including
therein a balance sheet as of the end of such Fiscal Year, statements
of income, retained earnings and cash flow or other similar financial
statements of such Project Participant including, in the case of the
Borrower, a reconciliation of the Borrower capital accounts for such
Fiscal Year, certified by KPMG Peat Marwick or by such other nationally
recognized certified public accountant acceptable to the Majority
Lenders; provided, however, in the case of the Borrower, a certificate
from such accountants containing a certification that, in making the
examination necessary for the signing of such annual report by such
accountants, they have not become aware of any Default that has
occurred and is continuing, or, if they have become aware of such
Default, describing such Default and the steps, if any, being taken to
cure it;
(c) as soon as available and in any event within 60 days after
the end of each Fiscal Quarter of the Borrower and Trigen, a
certificate of the Borrower and Trigen, respectively, executed by an
officer of such Project Participant, certifying that no Default exists
(including no Default under Section 8.1.6) or, if a Default exists,
describing such Default and the steps, if any, being taken to cure it;
[(d) as soon as possible and in any event on or prior to the
30th day prior to the expected Term Loan Closing Date and within 30
days after the end of each succeeding Fiscal Year, the Operating Budget
of the Borrower;]*
(e) as soon as possible and in any event within 60 days after
the end of each Fiscal Quarter ending after the Term Loan Closing Date,
a status report, certified by a senior officer of the Borrower, setting
forth in reasonable detail satisfactory to the Administrative Agent,
the calculation of the Fixed Charge Coverage Ratio in respect of such
Fiscal Quarter;
(f) as soon as possible and in any event within 60 days after
the end of each Fiscal Quarter ending after the
- --------
* SocGen to confirm.
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Term Loan Closing Date, if required, the Revenue Shortfall Certificate
delivered pursuant to Section 3.1(b) of the Accounts Agreement;
(g) as soon as possible and in any event within three Business
Days after the occurrence of each Default, a statement of a senior
officer of the Borrower setting forth details of such Default and the
action which the Borrower has taken and proposes to take with respect
thereto;
(h) as soon as possible and in any event within three
Business Days after knowledge by the Borrower or Trigen of
(i) the occurrence of any material adverse
development with respect to any litigation, action,
proceeding, or labor controversy described in
Section 7.1.7,
(ii) the commencement of any material labor
controversy, dispute with or breach or default by any
Contractor or any subcontractor, litigation, action or
proceeding of the type described in Section 7.1.7, notice
thereof and copies of all documentation relating thereto,
(iii) any challenge to, appeal of, termination of or
adverse change or modification to any Permit or other
Governmental Approval relating or applicable to the Project
whether by judicial, administrative or other proceeding,
(iv) the occurrence of any adverse development with
respect to any Taking, Partial Taking, Casualty Event or
Partial Casualty Event,
(v) the occurrence of any matured or unmatured
default by any Project Participant under any Project
Document,
(vi) upon the Borrower obtaining knowledge thereof,
the occurrence with respect to any Project Participant, a
Material Adverse Effect, or
(vii) any material adverse change in the
financial condition of the Borrower or Trigen;
(i) promptly after the sending or filing thereof, copies of
all
(i) applications, reports and registration
statements which any Affiliated Project Participant
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files with the Securities and Exchange Commission or any
national securities exchange, and
(ii) notices delivered pursuant to any other Project
Document not otherwise required to be delivered pursuant to
this Section 8.1;
(j) as soon as possible and in any event within 18 Business
Days after the end of each calendar month, a Certificate of Operational
Results, substantially in the form of Exhibit O hereto, executed by an
officer of the Borrower which certifies (i) the items set forth on
Exhibit O and (ii) such other similar results of the Project reasonably
requested by the Administrative Agent;
(k) as soon as possible and in any event within one calendar
month after the end of each calendar month occurring before the date on
which Project Completion has been achieved, a monthly progress report,
certified by a senior officer of the Borrower, setting forth in
reasonable detail (and attaching all pertinent schedules, statements,
Change Orders, etc.), covering with respect to such month,
(A) status of engineering, procurement, construction,
vendor deliveries of equipment that is material to the
Project, start-up activities, performance testing and the
Borrower's adherence to the Construction Schedule and the
Construction Budget, material revisions to the Construction
Schedule, and Change-Orders,
(B) Project Costs incurred and disbursements made in
respect thereof in excess of more than 5% of such Project
Costs as shown in the Construction Budget,
(C) material milestones met during such month,
(D) retained amounts with respect to work done by any
Contractor under any Construction Contract during such month,
(E) status of Governmental Approvals necessary
for construction or operation of the Project or Project
Completion,
(F) status of safety, training, estimated work and
material milestones to be completed in the next succeeding
month,
(G) disputes concerning Change-Orders,
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(H) the estimated date on which Project Completion
will be achieved,
(I) a determination of whether sufficient funds
remain available either from the proceeds of the Loans or
amounts held on deposit under the Accounts Agreement for such
purposes in order for the Project to achieve Project
Completion, and
(J) any other event or circumstance which would
reasonably be expected to have a Material Adverse Effect;
(l) as soon as possible and in any event within 120 days after
the end of each Fiscal Year of Trigen, an opinion or opinions of
Trigen's Canadian counsel, in form and substance satisfactory to the
Administrative Agent, addressed to the Administrative Agent and each
Lender (i) stating the enforceability and validity of the Credit
Documents and the material Project Documents, (ii) stating that all
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 perfected security interests of the Collateral
Agent and the Lenders in and to the Collateral and the Liens on and in
the Collateral created by the Security Documents in Canada and reciting
the details of such action or referring to prior opinions of counsel in
which such details are given and (iii) stating what, if any, action of
the foregoing nature may, based on applicable Canadian law existing at
the time such opinion is issued, reasonably be expected to become
necessary during the next fifteen months in order to protect and
preserve the rights and interests of the Agents and the Lenders in and
to the Collateral and the Liens on and in the Collateral created by the
Security Documents;
(m) as soon as possible and in any event within 30 days after
each anniversary of the Closing Date, a letter in form and substance
satisfactory to the Administrative Agent from the Insurance Consultant,
or such other nationally-recognized independent insurance advisor
satisfactory to the Administrative Agent, setting forth the Borrower's
compliance with Section 8.1.4 and with the insurance requirements of
the Project Documents (which letter may be commissioned by the
Administrative Agent rather than the Borrower);
(n) promptly after the same are available, copies of all press
releases and other statements made available
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generally by the Borrower to the public concerning developments in the
Project;
(o) such other notices and information respecting the
condition or operations, financial or otherwise, of any Project
Participant, as any Lender or any Agent may from time to time
reasonably request.
SECTION 8.1.2. Compliance with Governmental Rules, etc.
(a) The Borrower will Comply in All Material Respects with all
applicable Governmental Rules and Governmental Approvals, such
compliance to include compliance with all Canadian, provincial and
local laws and applicable Environmental Laws and the maintenance of the
Borrower's corporate existence and qualification to do business in each
jurisdiction where the Borrower conducts business.
(b) The Borrower shall obtain and keep in full force and
effect all applicable Governmental Approvals as shall now or hereafter
be necessary under applicable Governmental Rules for the construction,
ownership, operation or maintenance of the Project, or the execution,
delivery and performance by the Borrower of any of the Credit Documents
or Project Documents to which it is a party and shall promptly furnish
copies thereof to the Administrative Agent and the Lenders. In
particular, the Borrower shall file all applications for Governmental
Approvals and shall obtain all Governmental Approvals and comply with
all Governmental Rules listed in Item 7.1.4 ("Governmental Approvals to
be Obtained") of the Disclosure Schedule by the dates specified in Item
7.1.4(b) of the Disclosure Schedule.
SECTION 8.1.3. Operation and Maintenance of the Project.
(a) The Borrower shall at all times operate, maintain,
service and repair the Project in all material respects
(i) in accordance with the applicable provisions of
the Credit Documents, the Project Documents, the Insurance and
the standards of prudence applicable to the waste processing
and thermal energy industry and consistent with good
engineering and utility practices for such industry,
(ii) in accordance with all provincial laws,
federal laws, Governmental Rules and Governmental
Approvals, and
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(iii) to the extent required to
(A) maintain the Project in good operating
condition, ordinary wear and tear excepted,
(B) cause the Project to continue to have
the functional ability to perform, on a continuing
basis, in normal commercial operation (whether or not
then operating), the functions for which it was
designed, in accordance with the Project Documents,
ordinary wear and tear excepted, and
(C) comply with such standards and periodic
maintenance inspections as shall be required to
enforce claims under all applicable warranties and
any standards imposed by any insurance policies in
effect at any time with respect to the Project or any
part thereof.
(b) The Borrower shall, at all times, maintain good and
marketable title to the Collateral free and clear of all Liens other
than Liens permitted under Section 8.2.3. The Borrower shall maintain
good and marketable title to all easements, rights-of-way, licenses or
other real property rights required for access to, or construction and
interconnection of the Project. The Borrower shall maintain a valid
leasehold interest in each of the assets held under lease free and
clear of all Liens, other than Liens permitted under Section 8.2.3.
(c) The Borrower shall cause the contractor which performs
each phase of the construction, interconnection and Expansion, whether
scheduled or not, to provide a warranty of its services and of the
parts provided for a period not less than 90 days or such longer period
as shall be customary in the Borrower's reasonable judgment.
(d) The Borrower shall make improvements of the Project in
accordance with the Project Documents and all legal requirements.
(e) After Project Completion, the Borrower shall not make any
modification, alteration or addition to the Project if such
modification, alteration or addition would reasonably be expected to:
(i) result in the loss or adverse modification of any manufacturer's or
contractor's warranty, (ii) materially interfere with the ability of
any Project Participant to perform its obligations under any Project
Document, (iii) impair the value of the Collateral or (iv) adversely
affect the output capacity, performance,
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heat rate, availability, anticipated revenues or cash flows
of the Project or of the Borrower.
(f) If the Majority Lenders, pursuant to Section 4.2 of the
Accounts Agreement, permit the Borrower to restore, repair and rebuild
the Project, or any portion thereof, then the Borrower shall restore,
repair and rebuild the Project, or any portion thereof, to the extent
damaged or destroyed by any Casualty Event or Partial Casualty Event
notwithstanding the insufficiency of any Casualty/Taking Proceeds
received as a result of such Casualty Event or Partial Casualty Event.
SECTION 8.1.4. Insurance.
(a) Insurance By The Contractors: The Borrower shall cause the
Contractors to maintain in full force and effect at all times on and
after the Closing Date and continuing until the Project Completion
Date, the insurance required under each Construction Contract.
(b) Insurance by the Borrower: The Borrower shall procure at
its own expense and maintain in full force and effect at all times on
and after the Closing Date (except for the builder's risk and delayed
startup insurance) and continuing throughout the term of this Credit
Agreement insurance policies with responsible insurance companies
authorized to do business in the Province of Prince Edward Island with
a Best Insurance Reports rating of `A-' or better and a financial size
category of `IX' or higher or if not rated by Best a Standard & Poor's
claims paying ability rating of `A' or higher (and other companies
acceptable to the Administrative Agent), with limits and coverage
provisions sufficient to satisfy the requirements set forth in each of
the Project Documents, but in no event less than the limits and
coverage provisions set forth below:
(i) Employer's Liability Insurance: Employer's
liability insurance, if the Borrower has any
employees, with a US$1,000,000 minimum limit per
accident. A maximum deductible or self-insured
retention of C$250,000 per occurrence shall be
allowed.
(ii) General Liability Insurance: Liability insurance
on an occurrence basis against claims filed in the
United States or Canada and occurring in the
United States or Canada for personal injury
(including bodily injury and death) and property
damage. Such insurance shall provide coverage for
products-completed operations, blanket
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contractual, explosion, collapse and underground
coverage, broad form property damage, personal injury
insurance, and the hostile fire exception to the
pollution liability exclusion with a US$1,000,000
minimum limit per occurrence for combined bodily
injury and property damage provided that policy
aggregates, if any, shall apply separately to claims
occurring with respect to the Project. A maximum
deductible or self-insured retention of C$250,000 per
occurrence shall be allowed.
(iii) Automobile Liability Insurance: Automobile
liability insurance against claims filed in the
United States or Canada and occurring in the
United States or Canada for personal injury
(including bodily injury and death) and property
damage covering all owned, leased non-owned and
hired motor vehicles, including loading and
unloading, with a US$1,000,000 minimum limit per
occurrence for combined bodily injury and property
damage and containing appropriate no-fault
insurance provisions wherever applicable. A
maximum deductible or self-insured retention of
C$250,000 per occurrence shall be allowed.
(iv) Excess Insurance: Excess liability insurance on
an occurrence basis covering claims in excess of
the underlying insurance described in the
foregoing subsections (i), (ii) and (iii), with a
US$40,000,000 minimum aggregate limit, provided,
however, in the event the available limit of
liability under such excess liability insurance is
less than US$30,000,000 due to claims against such
excess liability insurance, the Borrower shall
purchase (or cause Trigen to purchase, pursuant to
Section 3.2 of the Debt Service and Support
Agreement) additional coverage so that the
available limit of liability under such excess
liability insurance is not less than
US$40,000,000.
The amounts of insurance required in the foregoing
subsections (i), (ii), (iii) and this subsection (iv)
may be satisfied by Borrower purchasing coverage in
the amounts specified or by any combination of
primary and excess insurance, so long as the total
amount of insurance meets the requirements specified
above.
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(v) Aircraft Insurance: If the performance of any of the
Project Documents requires the use of any aircraft
that is owned, leased or chartered by the Borrower,
aircraft liability insurance with a US$25,000,000
minimum limit per occurrence for combined property
damage and bodily injury, including passengers and
crew.
On or prior to the Full Availability Date the Borrower shall
procure and put into effect the builder's risk and delayed
startup insurance required by clauses (vi) and (vii) below.
(vi) Builder's Risk Insurance: A builder's risk
insurance policy on an "all risk" basis including
coverage for the perils of earth movement
(including but not limited to earthquake,
landslide, subsidence and volcanic eruption),
flood, boiler, turbine and machinery accidents,
sabotage, terrorism. Such insurance shall be on a
completed value form, with no periodic reporting
requirements, insuring the Contract Price of each
Construction Contract and providing coverage for
(a) the buildings, structures, boilers, machinery,
equipment, facilities, fixtures, supplies, fuel
and other properties constituting a part of the
Project, (b) transit including ocean and air
transit if any key equipment is to be moved by
vessel or aircraft, with sub-limits sufficient to
insure the full replacement value of key equipment
items, (c) off-site storage with sub-limits
sufficient to insure the full replacement value of
any property or equipment not stored on the Site,
(d) removal of debris with a sub-limit not less
than 25 percent of the loss amount, (e) pollution
clean up and removal for a sub-limit not less than
US$250,000, (f) foundations and other property
below the surface of the ground, and (g) all
operation and performance testing for a period not
less than 60 days. The earth movement and flood
coverage may be insured with a sub-limit not less
than Contract Price of each Construction Contract
plus the amount required in clause (vii) below for
the delayed startup coverage. The deductible for
all such insurance shall not exceed (h) $150,000
per occurrence. The policy is to insure steam and
electrical transmission lines and equipment to the
extent the Borrower has an insurable interest.
The ocean/air transit policy (which may be written
separately) shall be on a "warehouse to warehouse"
basis and contain ninety (90) day concealed damage
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discovery clause. The builder's risk coverage shall
not contain an exclusion for freezing, mechanical
breakdown, loss or damage covered under any guarantee
or warranty with respect to products not manufactured
by the Borrower, arising out of an insured peril, or
resultant damage caused by faulty workmanship, design
or materials. Coverage shall remain in effect until
replaced by physical damage insurance as specified in
clause (b)(viii) hereof.
If the insurance company providing the physical
damage insurance is different from the company
providing the boiler & machinery insurance required
in this Section, then a joint loss agreement between
them will be required and included as part of the
respective policies.
(vii) Delayed Startup Insurance: Delayed startup
coverage in an amount equal to 12 months projected
continuing expenses plus Scheduled Obligations of
the Borrower caused by damage or loss to any
property required to be insured in clause (vi)
above including contingent loss as a result of
damage or destruction of key equipment while in
transit and finished equipment at manufacturers'
premises. Such insurance shall (a) for damage to
the steam turbine generator, have a deductible of
not greater than 30 times average daily Project
gross income, calculated on an annual basis and
for all other losses, have a deductible of not
greater than seven times average daily Project
gross income, calculated on an annual basis, (b)
include extra expenses (defined as extraordinary
expenses incurred after an insured loss to make
temporary repairs and expedite the permanent
repair of the damaged property in excess of the
delayed startup coverage even if such expenses do
not reduce the delayed startup loss) in an amount
not less than US$1,000,000, (c) include an
indemnity period not less than 12 months and (d)
not contain any form of a coinsurance provision or
include a waiver of such provision. Coverage
shall remain in effect until replaced by business
interruption insurance as specified in clause
(b)(ix) hereof.
The insurance policies required by clauses (vii) and
(viii) shall be amended to waive any rights by the
insurer to subrogate against the Contractors, all
sub-contractors, the Borrower, Lenders and
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their respective officers and employees and
include as insureds all sub-contractors and the
Borrower.
(viii) Physical Damage Insurance: Property damage
insurance on an "all risk" basis, boiler and
machinery insurance on a comprehensive basis
(covering all production machinery,
including but not limited to pressure
vessels, electrical turbines, generators,
transformers and other related equipment,
motors, air tanks, boilers, machinery,
pressure piping or any other similar
objects) including coverage against damage
or loss caused by earth movement (including
but not limited to earthquake, landslide,
subsidence and volcanic eruption) and flood
and providing coverage for (1) the Project
(excluding the Expansion while insured by
the builder's risk coverage and the steam
and water pipelines) in a minimum aggregate
amount equal to the "full insurable value"
of the Project (excluding the Expansion
while insured by the builder's risk coverage
and the steam and water pipelines), (2)
transit including ocean marine transit, if
applicable, with sub- limits sufficient to
insure the full replacement value of the
property or equipment prior to its being
removed from the Site and while located away
from the Site, (3) foundations and other
property below the surface of the ground and
(4) attorneys fees, engineering and other
consulting costs, and permit fees directly
incurred in order to repair or replace
damaged insured property in a minimum amount
of US$1,000,000. For purposes of this clause
(b)(viii), "full insurable value" shall mean
the full replacement value of the Project
(excluding the steam and water pipelines),
including any improvements, equipment, spare
parts, fuel and supplies, without deduction
for physical depreciation and/or
obsolescence. All such insurance may have
deductibles of not greater than US$150,000
per occurrence. Such insurance shall (5) not
include any coinsurance provision, (6)
provide for increased cost of construction
and loss to undamaged property as the result
of enforcement of building laws or
ordinances with sub-limits not less than 10%
of the
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"full insurable value" of the Project, and
(7) include debris removal with sub-limits
not less than US$500,000 or 25% of the loss,
whichever is greater. The earth movement and
flood coverage may be insured with a sub-
limit not less than 100% of the "full
insurable value" of the Project plus 100% of
the business income amount required by
clause (b)(ix) below. The property damage
coverage shall not contain an exclusion for
freezing, mechanical breakdown, loss or
damage covered under any guarantee or
warranty, or resultant damage caused by
faulty workmanship, design or materials.
If the insurance company providing the physical
damage insurance is different from the company
providing the boiler & machinery insurance required
in this Section, then a joint loss agreement between
them will be required and included as part of the
respective policies.
(ix) Business Interruption Insurance: Business
Interruption insurance covering 100% of continuing
operating expenses including payroll and Scheduled
Obligations for a period of 12 months, arising
from loss required to be insured by clause
(b)(viii) above. The maximum deductible shall be
no greater than thirty times average daily Project
gross income, calculated on an annual basis, for
losses resulting from damage to the steam turbine
generator and seven times average daily Project
gross income, calculated on an annual basis, for
all other losses. Such insurance shall also
include an indemnity period of not less than 15
months and extra expenses (defined as
extraordinary expenses incurred after an insured
loss to make temporary repairs and expedite the
permanent repair of the damaged property in excess
of the business interruption even if such expense
does not reduce the business interruption loss) in
an amount not less than US$1,000,000. Such
insurance shall not contain any coinsurance clause
or include a waiver of such clause.
(x) Endorsements: All policies of insurance to be
maintained by the Borrower shall provide for
waivers of subrogation in favor of the Lenders and
their respective officers and employees (and such
other Persons as may be required by the Project
Documents). All policies of liability insurance
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required to be maintained by the Borrower under this
Section 8.1.4(b), other than employer's liability,
shall be endorsed as follows:
(A) To provide a severability of interest or
cross liability clause.
(B) That the insurance shall be primary and not
excess to or contributing with any insurance
or self-insurance maintained by the
Administrative Agent or the Lenders.
(C) To name the Lenders and their respective
officers and employees (and such other
persons as may be required by the Project
Documents) as additional insureds.
(2) Waiver of Subrogation: The Borrower hereby
waives any and every claim for recovery from
the Lenders for any and all loss or damage
covered by any of the insurance policies to
be maintained under this Agreement to the
extent that such loss or damage is recovered
under any such policy. Inasmuch as the
foregoing waiver will preclude the
assignment of any such claim to the extent
of such recovery, by subrogation (or
otherwise), to an insurance company (or
other person), the Borrower shall give
written notice of the terms of such waiver
to each insurance company which has issued,
or which may issue in the future, any such
policy of insurance (if such notice is
required by the insurance policy) and shall
cause each such insurance policy to be
properly endorsed by the issuer thereof to,
or to otherwise contain one or more
provisions that, prevent the invalidation of
the insurance coverage provided thereby by
reason of such waiver.
(c) Amendment of Requirements: The Administrative Agent
may at any time amend the requirements and approved
insurance companies of this Section 8.1.4 due to (i)
new information not known by the Lenders on the Closing
Date or (ii) changed circumstances after the Closing
Date which in the reasonable judgment of the
Administrative Agent either renders such coverage
materially inadequate or materially reduces the
financial ability of the approved insurance companies
to pay claims.
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In the event any insurance (including the limits or
deductibles thereof) hereby required to be maintained shall
not be reasonably available and commercially feasible in the
commercial insurance market, the Administrative Agent shall
not unreasonably withhold its agreement 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 an insurance advisor to the Borrower and one of
which may be the Insurance Consultant), certifying that such
insurance is not reasonably available and commercially
feasible in the commercial insurance market for district
heating systems of similar type and location (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; (ii) at any time after
the granting of any such waiver, but not more often than once
a year, the Administrative Agent may request, and the Borrower
shall furnish to the Administrative Agent within fifteen (15)
days after such request, supplemental reports reasonably
acceptable to the Administrative Agent from such independent
insurance broker or the Insurance Consultant 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 reasonably available and commercially feasible in
the commercial insurance market, it being understood that the
failure of the Borrower to timely furnish any such supplement
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. The failure at any time to satisfy the
condition to any waiver of an insurance requirement set forth
in the proviso to the preceding sentence shall not impair or
be construed as a relinquishment of the Borrower's ability to
obtain a waiver of an insurance requirement pursuant to the
preceding sentence at any other time upon satisfaction of such
conditions.
(c) Application of Proceeds. All insurance proceeds recovered by
the Administrative Agent as aforesaid on account of damage or
destruction to the Project shall be applied in accordance with
Section 4.1.2.
(d) Conditions:
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(xi) The Borrower shall promptly notify the Administrative
Agent of any loss in excess of US$100,000 covered by
any insurance maintained pursuant to Sections
8.14(b)(vi), (vii), (viii) and (ix).
(xii) All policies of insurance required to be maintained
pursuant to Sections 8.1.4 (b)(vi), (vii), (viii) and
(ix) shall provide that the proceeds of such policies
shall be payable to the Collateral Agent pursuant to
a standard first mortgage endorsement substantially
equivalent to the Lenders Loss Payable Endorsement
438BFU or ISO endorsement CP12181091, without
contribution, provided that, if the proceeds thereof
are less than US$100,000, such proceeds shall be paid
to the Borrower. The Administrative Agent shall have
the right to join the Borrower in adjusting any loss
in excess of US$100,000. All policies (other than in
respect to liability or workers compensation
insurance) shall insure the interests of the Lenders
regardless of any breach or violation by the Borrower
of warranties, declarations or conditions contained
in such policies, any action or inaction of the
Borrowers or others, or any foreclosure relating to
the Project or any change in ownership of all or any
portion of the Project (the foregoing may be
accomplished by the use of the Lender Loss Payable
Endorsement required above).
(iii) A loss under any insurance required to be carried
under Sections 8.1.4(b)(vi), (vii), (viii) and (ix)
shall be adjusted with the insurance companies,
including the filing in a timely manner of
appropriate proceedings, by the Borrower, subject to
the approval of the Administrative Agent if such loss
is in excess of US$100,000. In addition, the Borrower
may in its reasonable judgment consent to the
settlement of any loss, provided that in the event
that the amount of the loss exceeds US$100,000 the
terms of such settlement is concurred with by the
Administrative Agent.
(iv) All policies of insurance required to be maintained
pursuant to Section 8.1.4(b) shall be endorsed so
that if at any time should they be
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canceled, or coverage be reduced which affects the
interests of the Lenders, such cancellation or
reduction shall not be effective as to the Lenders
for 60 days, except for non-payment of premium which
shall be for 10 days, after receipt by the
Administrative Agent of written notice from such
insurer of such cancellation or reduction.
(v) All policies of insurance required to be maintained
pursuant to Sections 8.1.4(b)(vi), (vii), (viii) and
(ix) shall not include any annual or term aggregate
limits of liability or clause requiring the payment
of additional premium to reinstate the limits after
loss except as regards the insurance applicable to
the perils of flood and earth movement.
(e) Evidence of Insurance: On the Closing Date and on an annual
basis at least 10 days prior to each policy anniversary, the
Borrower shall furnish the Administrative Agent with (1)
approved certification of all required insurance and (2) a
schedule of the insurance policies held by or for the benefit
of the Borrower and required to be in force by the provisions
of this Section 8.1.4(b). Such certification shall be executed
by each insurer or by an authorized representative of each
insurer where it is not practical for such insurer to execute
the certificate itself. Such certification shall identify
underwriters, the type of insurance, the insurance limits and
the policy term and shall specifically list the special
provisions enumerated for such insurance required by this
Section 8.1.4(b). Upon request, the Borrower will promptly
furnish the Administrative Agent with copies of all insurance
policies, binders and cover notes or other evidence of such
insurance relating to the insurance required to be maintained
by the Borrower. The schedule of insurance shall include the
name of the insurance company, policy number, type of
insurance, major limits of liability and expiration date of
the insurance policies.
(f) Reports: Concurrently with the furnishing of the certification
referred to in clause (f), the Borrower shall furnish the
Administrative Agent with a report of an independent broker,
signed by an officer of the broker, stating that in the
opinion of such broker, the insurance then carried or to be
renewed is in accordance with the terms of this Section 8.1.4.
and attaching an updated copy of the schedule of insurance
required by clause (f) above. In addition the Borrower
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will advise the Administrative Agent 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
8.1.4.
(g) Failure to Maintain Insurance: In the event the
Borrower fails, or fails to cause the Contractors or
the Operator, to take out or maintain the full
insurance coverage required by this Section 8.1.4(b),
the Administrative Agent, upon 30 days' prior notice
(unless the aforementioned insurance would lapse within
such period, in which event notice should be given as
soon as reasonably possible) to the Borrower of any
such failure, may (but shall not be obligated to) take
out the required policies of insurance and pay the
premiums on the same. All amounts so advanced thereof
by the Administrative Agent shall become an additional
obligation of the Borrower to the Administrative Agent,
and the Borrower shall forthwith pay such amounts to
the Administrative Agent, together with interest on
such amounts at a rate per annum equal to the Canadian
Funds Rate plus the Applicable Margin plus an
additional margin of 2.0% per annum.
(h) No Duty of Administrative Agent to Verify or Review: No
provision of this Section 8.1.4 or any provision of the Credit
Agreement or any Project Document shall impose on the
Administrative Agent any duty or obligation to verify the
existence or adequacy of the insurance coverage maintained by
the Borrower, nor shall the Administrative Agent be
responsible for any representations or warranties made by or
on behalf of the Borrower to any insurance company or
underwriter. Any failure on the part of the Administrative
Agent to pursue or obtain the evidence of insurance required
by this Agreement from the Borrower and/or failure of the
Administrative Agent to point out any non-compliance of such
evidence of insurance shall not constitute a waiver of any of
the insurance requirements in this Agreement.
(i) Maintenance of Insurance: The Borrower shall at all times
maintain the insurance coverage required under the terms of
the Project Documents.
SECTION 8.1.5. Books and Records. The Borrower will keep complete books
and records in accordance with GAAP which accurately reflect all of its business
affairs and transactions. If no Default has occurred and is continuing, the
Borrower will
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permit each Agent and each Lender and any of their respective representatives to
visit all of its offices during normal business hours to discuss its financial
matters with its officers and independent public accountant (and the Borrower
hereby authorizes such independent public accountant to discuss the Borrower's
financial matters with each Agent, each Lender and any of their respective
representatives whether or not any representative of the Borrower is present)
and to examine (and, at the expense of the Borrower, photocopy extracts from)
any of its books and records. Upon the occurrence and during the continuation of
an Event of Default, the Borrower will permit each of the Agents and each of the
Lenders and any of their respective representatives to visit and inspect the
Project at any time and investigate all matters as such Person deems to be
appropriate. All such visits shall be subject to the Borrower's reasonable
safety and security procedures. The Borrower shall pay any fees of such
independent public accountant incurred in connection with each Agent's or any
Lender's exercise of its rights pursuant to this Section. Each of the Agents and
the Lenders, any of their respective representatives and the Independent
Engineer shall have the right, upon reasonable notice to the Borrower, to
inspect the Project from time to time and to witness and verify the performance
tests conducted in connection with the Project and to attend any regular or
special information meetings with any Contractor. The Independent Engineer shall
be permitted to visit the Project at all times. On each such visit, the
Independent Engineer shall be entitled to investigate such matters as the
Independent Engineer believes to be appropriate for its duty to keep the Lenders
informed of the progress of construction, repair or maintenance, the results and
methods of operations, compliance with Governmental Rules and Governmental
Approvals (including environmental matters) and such other matters as requested
by the Lenders or any Agent or required pursuant to the terms of any Project
Document. The Borrower shall cooperate fully with such visits and investigations
and shall make available to the Independent Engineer such officers and employees
of the Borrower as the Independent Engineer deems necessary for the completion
of such investigations.
SECTION 8.1.6. Environmental Covenant. The Borrower will
(a) construct, use and operate the Project in Material
Compliance with all applicable Environmental Laws, obtain, renew and
maintain all Governmental Approvals relating to environmental matters
in effect and remain in Material Compliance therewith, and handle all
Hazardous Materials in Material Compliance with all applicable
Environmental Laws;
(b) promptly, but in any event within two Business Days,
notify the Administrative Agent and provide copies upon receipt of all
written claims, complaints, notices or
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inquiries relating to the environmental condition of the Project and
the Project property or compliance with Environmental Laws, and shall
promptly cure and have dismissed with prejudice to the satisfaction of
the Administrative Agent any actions and proceedings relating to
compliance with any applicable Environmental Laws; provided, however,
that with the prior written consent of the Majority Lenders, the
Borrower may settle or compromise such actions and proceedings;
(c) deliver on each of each anniversary of the Closing Date,
the Term Loan Closing Date and each anniversary of the Term Loan
Closing Date an Environmental Certificate (which may be combined with
other certificates delivered at such times); and
(d) provide other such information and certifications relating
to the subject matter of this Section 8.1.6 which the Administrative
Agent may reasonably request in writing from time to time to evidence
compliance with this Section.
SECTION 8.1.7. Taxes. The Borrower shall pay and discharge or cause to
be paid or discharged, all Taxes imposed on it or on its income or profits or on
any of its property prior to the date on which penalties attach to its income,
profits or property, and all lawful claims which, if unpaid, might become a Lien
upon the income, profits or property of the Borrower; provided, however, that
the Borrower shall have the right to contest in good faith the validity or
amount of any Tax by proper proceedings timely instituted, if:
(a) the Borrower diligently prosecutes such contest;
(b) during the period of such contest the enforcement of any
contested item is effectively stayed;
(c) such reserves, if any, as required by GAAP shall have been
set aside by the Borrower with respect thereto;
(d) such claim could not result in the imposition of any civil
or criminal penalty against the Borrower, any Lender or any Agent; and
(e) adequate security in the form of a bond or other security
satisfactory to the Administrative Agent is provided by the Borrower to
the Administrative Agent for the payment of any contested item to the
extent that such security is necessary in order for the enforcement of
any contested item to be effectively stayed and any Lien arising
thereby to be effectively removed. The Borrower will
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promptly pay any valid, final judgment enforcing any Tax and cause the
same to be satisfied of record.
SECTION 8.1.8. Essential Technical Information. The Borrower shall from
time to time obtain and shall comply with all Essential Technical Information,
shall maintain all such Essential Technical Information necessary to operate and
construct the Project and shall promptly make available copies thereof to the
Agents and the Lenders and, upon the request of the Administrative Agent, make
copies available to the Agents and their advisors, including copies of such
Essential Technical Information received by the Borrower in connection with any
Construction Contract, subject, in each case, to the extent not prohibited by
any agreement relating thereto; no Construction Contract contains any such
prohibition. All Essential Technical Information which by its terms can be
assigned as collateral security shall be assigned by the Borrower to the
Collateral Agent for the benefit of the Secured Parties pursuant to, and
included as part of the Collateral under, the Security Documents, and the
Borrower shall, from time to time at its own expense, promptly execute and
deliver all agreements, instruments and documents, and take all actions, that
may be necessary or that the Administrative Agent or the Collateral Agent may
reasonably request to ensure that all such Essential Technical Information is
subject to the Liens of the Security Documents and that the Lien on such
Essential Technical Information is properly perfected.
SECTION 8.1.9. Operating Logs, etc. On and after the Final Completion
Date, the Borrower shall maintain and keep on site at the Site at least the
following: (i) hourly operating logs showing the production of hot water, steam,
process heat and electricity (the "Operating Logs"), (ii) maintenance and repair
reports in sufficient detail to indicate the nature and date of all planned
regular and extraordinary or unplanned maintenance and repair activities (the
"Maintenance Logs"), and (iii) all records, correspondence and other materials
relating to obtaining and maintaining Governmental Approvals relating or
applicable to the Project, and compliance with Governmental Rules relating or
applicable to the Project (the "Regulatory Records"). The Borrower shall ensure
at all times that the Operating Logs, the Maintenance Logs and the Regulatory
Records are complete and accurate in all material respects and shall make the
Operating Logs, the Maintenance Logs and the Regulatory Records available for
inspection by any Agent, any Lender or any of their respective representatives
(including the Independent Engineer). The Borrower shall not dispose of or
destroy any of the Operating Logs, the Maintenance Logs or the Regulatory
Records for a period of three years after their respective dates without the
prior written consent of the Administrative Agent.
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SECTION 8.1.10. Operating Budgets. On or prior to the 30th day prior to
the expected Term Loan Closing Date and within 30 days after the end of each
succeeding Fiscal Year, the Borrower shall adopt an operating plan (including a
maintenance schedule) and a budget and a pro forma statement of income and
retained earnings and a pro forma cash flow statement of the Borrower
(collectively, an "Operating Budget"). Copies of the proposed Operating Budget
for each Fiscal Year shall be furnished to the Administrative Agent and shall
show in reasonable detail all projected revenues and operating costs and
expenses projected for such Fiscal Year or period, as the case may be, on a
quarterly basis.
SECTION 8.1.11. Accounts Agreement. The Borrower shall fully perform
its obligations pursuant to the Accounts Agreement, the Borrower shall maintain
all bank accounts in compliance with the Accounts Agreement and such accounts
shall be maintained with a local banking institution reasonably acceptable to
the Administrative Agent; provided, however, that such institution shall act as
the Administrative Agent's collateral agent in respect of such account.
SECTION 8.1.12. Maintenance of Lien.
(a) The Borrower will take or cause to be taken all action
required or desirable to maintain and preserve the Liens of the
Security Documents and the priority thereof.
(b) The Borrower shall, on each six month anniversary of the
Closing Date, (i) execute a supplemental Debenture (a "Supplemental
Debenture"), (ii) deliver an executed counterpart of such Supplemental
Debenture to the Agents (with sufficient copies for each of the
Lenders) and (iii) file such Supplemental Debenture in accordance with
the Canada Security Acts.
(c) The Borrower shall from time to time execute or cause to
be executed any and all further instruments (including financing
statements, continuation statements and similar statements with respect
to any of the Security Documents) and register and record such Project
Documents in such offices reasonably requested by any Agent for such
purposes. The Borrower shall take all action required to cause each
Additional Project Document to be or become subject to the Lien of the
Security Agreement and the Assignment of Principal Contracts (whether
by amendment to the Security Agreement, the Assignment of Principal
Contracts or otherwise) and shall deliver or cause to be delivered to
the Agents such legal opinions, certificates or other documents with
respect to such Additional Project Document as either Agent may
reasonably request. The
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Borrower shall cause each Material Project Participant (other than the
Borrower) to execute and deliver a consent in writing, which consent
shall be in form and substance satisfactory to the Agents, the Liens
created by the Security Documents (or otherwise) on each Additional
Project Document entered into by the Borrower with the prior consent of
the Agents and the Majority Lenders and such legal opinions relating to
such Additional Project Document and such consents as the Collateral
Agent may reasonably request.
SECTION 8.1.13. Performance of Project Documents; Operation. The
Borrower shall perform and observe all of its covenants and agreements contained
in any of the Project Documents to which it is a party, shall take all necessary
action to prevent the termination of any such Project Documents in accordance
with the terms thereof or otherwise, shall enforce each material covenant or
obligation (or any other covenant or obligation upon the written request of the
Administrative Agent) of such Project Document in accordance with its terms,
shall comply with all recommended operating procedures or manufacturers'
warranty conditions, as applicable, and shall take all such action to that end
as from time to time may be reasonably requested by the Administrative Agent
(including the replacement of any Contractor, if such Person is in default of
their respective Obligations under the Project Documents). The Borrower shall
request each action, document, certificate or other information under each
Project Document where, in the Borrower's discretion, it may so request. The
Borrower at all times shall operate and maintain the Project in accordance with
prudent engineering, operation and maintenance practices for the waste
processing and thermal energy industry. The Borrower at all times shall operate
and maintain the Project in accordance with generally accepted prudent waste
processing and thermal energy practices for the industry. The Borrower shall not
take any action which would reasonably be expected to result in any rescission,
termination, modification or suspension of any Governmental Approval or permit
any other Affiliated Project Participant to take any action which should
reasonably be expected to result in any rescission, termination, modification or
suspension of any Governmental Approval relating to the Project.
SECTION 8.1.14. Construction of the Project; Performance Tests. The
Borrower shall cause the Project to be duly completed in all material respects
in accordance with all applicable Project Documents, all Governmental Rules and
Governmental Approvals and all prudent construction and engineering practices
and consistent with good engineering practices for the waste processing and
thermal energy industry. The Borrower shall cause
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the Start-Up Tests to be achieved without giving effect to any variances or
waivers, except with respect to emissions.
SECTION 8.1.15. Use of Proceeds. All proceeds recovered by the Borrower
or the Administrative Agent on account of (i) any Casualty/Taking Proceeds or
(ii) any indemnified loss shall be applied pursuant to Section 4.2 of the
Accounts Agreement. The Borrower shall apply the proceeds of each Borrowing in
accordance with Section 5.9.
SECTION 8.1.16. Payment of Project Costs. At any time that the amount
of remaining unused Commitments is insufficient or reasonably expected to be
insufficient to pay all Project Costs necessary to attain Final Completion, the
Borrower must within 30 days thereof, either provide additional funds in an
amount equal to the excess of such Project Costs over such Commitment ("Excess
Costs") or provide credit support, satisfactory in form and substance to the
Lenders and their respective counsel, in an amount equal to such Excess Costs.
SECTION 8.1.17. Hedging Agreements. In the event the Borrower receives
an offer to enter into any Hedging Agreement, the Borrower shall grant the
Administrative Agent a right of first refusal with respect to such Hedging
Agreement.
SECTION 8.1.18. Assignment of Principal Contracts. The Borrower agrees
that it shall cause each Project Participant to execute and deliver the
Assignment of Principal Contracts, in a form reasonably acceptable to the
Administrative Agent, to the Collateral Agent, together with the opinion of
counsel set forth in Section 6.1.15(e), on the first to occur of (i) the Full
Availability Date or (ii) November 30, 1996.
SECTION 8.1.19. Financial Statements of Material Project Participants.
The Borrower agrees that it shall deliver to each of the Lenders and the Agents
the financial statements described in Section 6.1.8, together with the
certificate described in such Section, of the Government of Prince Edward Island
no later than February 15, 1997.
SECTION 8.1.20. Steen Construction Contract. The Borrower agrees that
it shall deliver to each of the Lenders and the Agents the Steen Construction
Contract, duly executed and in a form reasonably satisfactory to the
Administrative Agent and the Independent Engineer on the first to occur of (i)
the Full Availability Date or (ii) November 30, 1996.
SECTION 8.1.21. Exhibit to Equipment Lease Agreement. On the first to
occur of (i) the Full Availability Date or (ii) November 30, 1996, the Borrower
shall deliver to the Administrative Agent (with sufficient copies for the
Lenders) a
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copy of Schedule A to the Equipment Lease Agreement dated August 8, 1995 between
the Borrower and UPEI, together with a certificate of an Authorized Officer of
the Borrower stating that such Schedule is a true and complete copy of Schedule
A to such Equipment Lease Agreement.
SECTION 8.1.22. Revenues of Borrower. The Borrower shall deposit all
revenues into the Accounts in accordance with the Accounts Agreement, provided,
however, revenues received which have no connection with the Project shall be
deposited into an account other than an Account maintained pursuant to the terms
of the Accounts Agreement (the "Segregated Account").
SECTION 8.1.23. Notice of Default. The Borrower shall, upon the receipt
of any notice of default under any Project Document, immediately deliver to the
Administrative Agent (with a copy to the Collateral Agent) a copy of such
notice.
SECTION 8.2. Negative Covenants. The Borrower agrees with each Agent
and each Lender that until all Commitments have been terminated and all
Obligations paid and performed in full, the Borrower will perform the
obligations set forth in this Section 8.2.
SECTION 8.2.1. Business Activities. Except as set forth in Item 7.1.16
of the Disclosure Schedule on the Closing Date, the Borrower will not engage in
any business activity other than the ownership, construction, operation and
maintenance of the Project, district energy systems and co-generation
facilities, and all developmental activities as may be incidental or related
thereto, provided, however, the Borrower may engage in development activities
with respect to other projects of a similar nature so long as the Borrower shall
not enter into any binding agreements with respect to an investment or
obligation to incur costs or make expenditures without the prior written
approval of the Administrative Agent.
SECTION 8.2.2. Indebtedness. The Borrower will not create,
incur, assume or suffer to exist or otherwise become or be liable
in respect of any Indebtedness, other than, without duplication,
the following:
(a) Indebtedness incurred in connection with the Project
Credit Facilities;
(b) unsecured Indebtedness incurred in the ordinary course of
business (including open accounts (not more than 90 days past due)
extended by suppliers on normal trade terms in connection with
purchases of goods and services, but excluding the Indebtedness
incurred through the borrowing of money or Contingent Liabilities);
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(c) Indebtedness that, by its terms, is subordinate and junior
to the Project Credit Facilities in amounts and with terms and
provisions substantially in the form of Exhibit T hereto satisfactory
to the Agent and the Lenders; and
(d) unsecured Indebtedness of a type described in clause (c),
(d), (f) or (g) of the definition of Indebtedness in an aggregate
principal amount not to exceed C$500,000 at any time outstanding having
such terms and conditions (including interest rate, maturity,
covenants, events of default and remedies) and incurred pursuant to
such documentation which is, in each case, in form and substance
reasonably satisfactory to the Administrative Agent.
SECTION 8.2.3. Liens. The Borrower will not create, incur, assume or
suffer to exist any Lien upon any of its property, revenues or assets, or any of
the property, revenues or assets of the Project, whether now owned or hereafter
acquired, except:
(a) the Liens created under the Security Documents and
the Liens set forth on Item 7.1.14 of the Disclosure
Schedule;
(b) Liens for Taxes not at the time delinquent or thereafter
payable without penalty or being diligently contested in good faith in
accordance with Section 8.1.7 and for which proper reserves have been
established in accordance with GAAP;
(c) the Liens of carriers, warehousemen, mechanics,
materialmen and landlords incurred in the ordinary course of business
for sums not overdue or being diligently contested in good faith by
appropriate proceedings and for which adequate reserves in accordance
with GAAP shall have been set aside on its books;
(d) Liens incurred in the ordinary course of business in
connection with workmen's compensation, unemployment insurance or other
forms of governmental insurance or benefits, or to secure performance
of tenders, statutory obligations, leases and contracts (other than for
borrowed money) entered into in the ordinary course of business or to
secure obligations on surety or appeal bonds;
(e) Liens securing indebtedness permitted under Section
8.2.2(d);
(f) those matters listed as exceptions to title in the opinion
of Stewart McKelvey Sterling & Scales delivered
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to the Borrower in connection with the Facility Purchase
Agreement; and
(g) in the event the Borrower enters into a Hedging Agreement
with any Person who is not a Lender or an Agent, a security interest in
the Borrower's assets may be granted to such Person, provided, however,
such Person may only direct the disposition of collateral in an amount
that does not exceed the amount at risk pursuant to such Hedging
Agreement immediately prior to the acceleration of such Hedging
Agreement.
SECTION 8.2.4. Investments. Except as set forth in Item 8.2.4 of the
Disclosure Schedule, the Borrower will not make, incur, assume or suffer to
exist any Investment in any other Person, except Cash Equivalent Investments and
other business activities permitted under Section 8.2.1; provided, however, that
any Investment which when made complies with the requirements of the definition
of the term "Cash Equivalent Investment" may continue to be held notwithstanding
that such Investment if made thereafter would not comply with such requirements.
SECTION 8.2.5. Restricted Payments; Distributions. The Borrower will
not make, pay, distribute or set aside funds after an Event of Default has
occurred and is continuing. The Borrower shall not make any distributions to
Trigen, provided, however, that so long as (i) no default or event of default
exists under the Debt Service and Support Agreement, (ii) no default has
occurred and is continuing under any other Credit Document, (iii) the Term Loan
Closing Date has occurred and (iv) adequate provision has been made for working
capital in an amount not less than C$250,000, distributions may be made to
Trigen.
SECTION 8.2.6. Capital Expenditures, etc. On or prior to the Term Loan
Closing Date the Borrower will not make any Capital Expenditure not reflected in
the Construction Budget or permitted Change Orders.
SECTION 8.2.7. Issuance of Capital Stock. The Borrower shall not sell
or issue any capital stock, partnership interest or other equity interests or
any warrants, options or other securities convertible into or exercisable for
any capital stock, partnership interests or other equity interests.
SECTION 8.2.8. Take or Pay Contracts. The Borrower will not enter into
or be a party to any arrangement for the purchase of materials, supplies, other
property or services if (i) such arrangement by its terms requires that payment
be made by the Borrower regardless of whether such materials, supplies, other
property or services are delivered or furnished to it and
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(ii) such arrangement would have a Material Adverse Effect on the Borrower or
the Project.
SECTION 8.2.9. Consolidation, Merger, etc. The Borrower will not
liquidate or dissolve, consolidate with, or merge into or with, any other
Person, or purchase or otherwise acquire all or substantially all of the assets
of any Person (or of any division thereof).
SECTION 8.2.10. Asset Dispositions, etc. The Borrower will not sell,
transfer, lease, contribute or otherwise convey, or grant options, warrants or
other rights with respect to, all or any part of its assets (including accounts
receivable) to any Person other than (i) sales of divisions, other than any
division necessary for or involved in the operation and maintenance of the
Facility, or of Subsidiaries, (ii) sales, transfers, leases, contributions or
other conveyances of assets in the ordinary course of business which are not
necessary for the operation or maintenance of the Facility having a fair market
value not exceeding C$100,000 in the aggregate in any Fiscal Year and (iii)
sales of Cash Equivalent Investments prior to the maturity thereof.
SECTION 8.2.11. Certain Agreements and Other Documents.
(a) Except with respect to Change Orders, the Borrower
shall not
(i) enter into or consent to any amendment,
modification or supplement of, any material Project Document
except with the prior written consent of the Administrative
Agent and the Majority Lenders, such consent not to be
unreasonably withheld or delayed,
(ii) cancel or terminate any material Project
Document to which it is a party, except with the prior written
consent of the Administrative Agent and the Majority Lenders,
such consent not to be unreasonably withheld or delayed,
(iii) sell, transfer, assign (other than pursuant to
the Security Documents) or otherwise dispose of (by operation
of law or otherwise) any part of its interest in any Project
Document or any Project asset,
(iv) waive any default under, or breach of, any
material Project Document or waive, fail to enforce, forgive
or release any right, interest or entitlement, howsoever
arising, under or in respect of any Project Document or vary
or agree to the variation in any way of any material provision
of any Project Document or of
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the performance of any material obligation by any other Person
under any Project Document, except with prior written consent
of the Administrative Agent and the Majority Lenders, such
consent not to be unreasonably withheld or delayed, or
(v) petition, request or take any other legal or
administrative action that seeks, or may reasonably be
expected, to rescind, terminate or suspend any Project
Document or amend or modify any thereof.
(b) Without the prior written consent of the Administrative
Agent (after consultation with the Independent Engineer) and, if
required by the immediately succeeding sentence, the Majority Lenders,
the Borrower shall not enter into any Change Order which (i) results in
an increase in Project Costs in excess of C$100,000 individually or,
together with all prior Change Orders, results in an increase in Costs
exceeding C$500,000 or (ii) either individually or in conjunction with
some or all prior Change Orders (A) changes or modifies the plans and
specifications of any Construction Contract and the other relevant
construction contracts in any material way, changes the Construction
Schedule or other relevant construction schedules in any material way
or adversely affects the performance levels or performance guarantees
set forth in any Construction Contract or the performance levels set
forth in other relevant construction contracts or (B) results in any
change to the Project which is adverse to the interests of the Lenders.
If such Change Order results in an increase in Project Costs in excess
of C$500,000 or, together with all prior Change Orders, results in an
increase in Costs exceeding C$1,000,000 in the aggregate, the Borrower
shall obtain the prior written consent of the Majority Lenders to such
Change Order. The Borrower shall give at least five Business Days'
prior written notice to the Administrative Agent and the Independent
Engineer of each and every Change Order to be entered into by the
Borrower with a reasonably detailed explanation of such Change Order,
including the Cost thereof, and shall certify whether such Change Order
requires the consent of the Administrative Agent or the Majority
Lenders and stating the reasons therefor. For Change Orders requiring
the consent of the Majority Lenders, the Borrower shall simultaneously
send written notice thereof to all Lenders.
(c) The Borrower shall not enter into any Additional Project
Document which would reasonably be expected to have a Material Adverse
Effect.
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(d) Without the prior written consent of the Majority Lenders
(which consent shall not be unreasonably withheld or delayed), the
Borrower shall not amend, modify or reallocate any portion of the
Construction Budget, except the Borrower may make such allocations and
reallocations with the prior written consent of the Administrative
Agent, which consent shall not be unreasonably withheld or delayed.
(e) From and after the Term Loan Closing Date, the Borrower
shall not permit its Fixed Charge Coverage Ratio to be less than 1.0 to
1.0.
SECTION 8.2.12. Transactions with Affiliates. The Borrower will not
enter into, or cause, suffer or permit to exist any arrangement or contract with
any of its Affiliates that is not on commercially reasonable terms and, in
connection with such arrangements (other than the Project Documents) under which
C$250,000 or more is to be paid to or by the Borrower, without the approval of
the Administrative Agent and the Majority Lenders.
SECTION 8.2.13. Negative Pledges, Restrictive Agreements, etc. The
Borrower will not enter into any agreement (excluding this Agreement and any
other Project Document) prohibiting the creation or assumption of any Lien upon
its properties, revenues or assets, whether now owned or hereafter acquired, or
the ability of the Borrower to amend or otherwise modify this Agreement or any
other Project Document.
SECTION 8.2.14. Bonus Payments. Except as expressly provided for in the
Project Documents, the Borrower shall not make any bonus, incentive or other
similar payment to Trigen, any Contractor or any other subcontractor or any
operator.
SECTION 8.2.15. Certain Matters Related to Project Documents. The
Borrower shall not, except with the prior written consent of the Administrative
Agent (after consultation with the Independent Engineer) (i) agree or consent to
any test procedures under or related to any Construction Contract, (ii) accept
any notice of Substantial Completion, Project Completion, or other similar
notice under the Project Documents, (iii) accept the results of any item
described in the preceding clause (i), or of any performance tests, or (iv)
accept any notice of the completion of any milestone pursuant to any
Construction Contract.
SECTION 8.2.16. Management Fees. From and after the tenth
anniversary of the Commitment Termination Date the Borrower shall
not pay any Management Fees.
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ARTICLE IX
EVENTS OF DEFAULT
SECTION 9.1. Listing of Events of Default. Each of the following events
or occurrences described in this Section 9.1 shall constitute an event of
default (an "Event of Default").
SECTION 9.1.1. Condemnation. A material portion of the Project shall be
permanently condemned or seized or title thereto shall be permanently
requisitioned or taken by any Regulatory Authority under power of eminent domain
or otherwise; or a material portion of the Project shall be temporarily
condemned or seized or title thereto shall be temporarily requisitioned or taken
by any Regulatory Authority under power of eminent domain or otherwise and such
temporary condemnation, seizure, requisition or taking would have a Material
Adverse Effect.
SECTION 9.1.2. Non-Payment of Obligations. The Borrower
shall
(a) default in the payment of principal of any Loan when due
(for purposes of clarity, the term "principal" shall mean, with respect
to any outstanding Loan in the form of Bankers' Acceptances, the face
amount of such Bankers' Acceptance); or
(b) default in the payment of any interest on any Loan, any
prepayment premium, fee or any other amount payable by the Borrower
hereunder or under any other Project Document when due and such default
shall have continued unremedied for five days; provided, however, that
the Borrower may withhold payments due in respect of any Project
Document, which is not a Credit Document, pursuant to a bona fide
dispute in connection therewith provided (i) that any such withholding
of payment does not entitle any party to such Project Document to
terminate such Project Document and (ii) that, in the event the Project
Document does not expressly permit any such withholding of payments,
the Borrower has not received a notice from a party to such Project
Document that such Project Document will be terminated due to the
Borrower's failure to make any payments due under or in respect of such
Project Document.
SECTION 9.1.3. Breach of Warranty. Any representation or warranty of
any Affiliated Project Participant made or deemed to be made under or in any
Credit Document or Project Document or any other writing or certificate
furnished by or on behalf of the Borrower or such other Project Participant, to
any Agent or any Lender for the purposes of or in connection with any Credit
Document or any Project Document (including any certificates
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delivered pursuant to Article VI) is or shall be incorrect in any material
respect when made and such default would reasonably be expected to have or has a
Material Adverse Effect.
SECTION 9.1.4. Non-Performance of Certain Covenants and Obligations.
The Borrower shall default in the due performance and observance of its
obligations under Sections 5.9, 8.1.1(e), 8.1.4, 8.2.1, 8.2.4, 8.2.5, 8.2.6,
8.2.7, 8.2.8, 8.2.9, 8.2.10, 8.2.11, 8.2.13, 8.2.14 or 8.2.15. The Borrower
shall default in the due performance and observance of its obligations under (i)
Sections 8.2.2 or 8.2.3, and such default shall continue unremedied for a period
of three Business Days and (ii) Section 8.2.12, and such default shall continue
unremedied for a period of five Business Days (or such longer period, not to
exceed ten Business Days, as shall be required in the Administrative Agent's and
the Majority Lenders' sole determination to remedy any such failure to perform
or observe any such agreement so long as the Borrower shall be diligently and in
good faith seeking to remedy such failure to perform or observe such covenant).
SECTION 9.1.5. Non-Performance of Other Covenants and Obligations. Any
Material Project Participant shall default in the due performance and observance
of any other agreement (other than failures referred to in Section 9.1.2, 9.1.3,
9.1.4, 9.1.15 or 9.1.17) contained in any Project Document, the Debt Service and
Support Agreement or any Security Document and such default shall continue
unremedied for a period of 30 days (or such longer period, not to exceed 90
days, as shall reasonably be required in the Administrative Agent's and the
Majority Lenders' reasonable determination to remedy any such failure to perform
or observe any such agreement so long as such Material Project Participant shall
be diligently and in good faith seeking to remedy such failure to perform or
observe such covenant) or shall disavow its obligations thereunder after the
earlier of the date the Borrower knew or should have known of the occurrence of
such default or any Agent shall have given notice of such default to the
Borrower and, with respect to a Material Project Participant which is not an
Affiliated Project Participant, such default could reasonably be expected to
have or has a Material Adverse Effect.
SECTION 9.1.6. Default on Other Indebtedness. (i) A default shall occur
in the payment when due, whether by acceleration, stated maturity or otherwise,
of any Indebtedness (x) of the Borrower in an amount individually or in the
aggregate in excess of C$250,000 if the effect of such default is to accelerate
or permit the acceleration of (whether or not any applicable notice has been
given or any period has elapsed) the maturity of any such Indebtedness, or (ii)
a default shall occur in the performance or observance of any obligation or
condition with respect to Indebtedness of Trigen in an amount individually or in
the aggregate in excess of US$1,000,000 if the effect of
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such default is to accelerate the maturity of any such Indebtedness.
SECTION 9.1.7. Judgments. Any judgment or order (a) for the payment of
money, individually or in the aggregate, (i) in excess of C$100,000 shall be
rendered against the Borrower which judgment or order would have a Material
Adverse Effect, and in each such case, either
(i) enforcement proceedings shall have been commenced by any
creditor upon such judgment or order; or
(ii) there shall be any period of ten consecutive days during
which a stay of enforcement of such judgment or order, by reason of a
pending appeal or otherwise, shall not be in effect
SECTION 9.1.8. Change in Control. Any Change in Control shall occur.
Trigen shall cease to own directly or indirectly all of the voting interests in
the Borrower, without the prior written approval of the Administrative Agent.
SECTION 9.1.9. Bankruptcy, Insolvency, etc. Any Affiliated
Project Participant shall
(a) become insolvent or generally fail to pay, or admit in
writing its inability or unwillingness to pay, debts as they become
due;
(b) apply for, consent to, or acquiesce in, the appointment of
a trustee, receiver, sequestrator or other custodian for such Person or
any property of any thereof, or make a general assignment for the
benefit of creditors;
(c) in the absence of such application, consent or
acquiescence, permit or suffer to exist the appointment of a trustee,
receiver, sequestrator or other custodian for such Person or for a
substantial part of the property of any thereof, and such trustee,
receiver, sequestrator or other custodian shall not be discharged
within 60 days, provided that each such Person hereby authorizes each
Agent and each Lender to appear in any court conducting any relevant
proceeding during such 60-day period to preserve, protect and defend
their rights under the Credit Documents or Project Documents;
(d) permit or suffer to exist the commencement of any
bankruptcy, reorganization, debt arrangement or other case or
proceeding under any bankruptcy or insolvency law, or any dissolution,
winding up or liquidation proceeding, in respect of such Person and, if
any such case or proceeding
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is not commenced by such Person, such case or proceeding shall be
consented to or acquiesced in by such Person, or shall result in the
entry of an order for relief or shall remain for 60 days undismissed,
provided that such Person hereby expressly authorizes each Agent and
each Lender to appear in any court conducting any such case or
proceeding during such 60-day period to preserve, protect and defend
their rights under the Credit Documents or Project Documents; or
(e) take any action authorizing, or in furtherance of,
any of the foregoing;
provided, however, replacement cure periods for certain Project Participants
will be negotiated.
SECTION 9.1.10. Governmental Approvals and Governmental Rules. Any
Material Project Participant shall fail to obtain, renew, maintain or Comply in
All Material Respects with any Governmental Approvals or comply with any
Governmental Rules in any material respect as shall be necessary (1) for the
execution, delivery or performance of such Project Participant of its
obligations, or the exercise of its rights or performance of its obligations,
under any Project Document, or (2) for the construction or operation of the
Project as contemplated by the Project Documents or (3) for the grant by any
Affiliated Project Participant of the Liens created under the Security Documents
or for the validity and enforceability or the perfection of or exercise by the
Collateral Agent of its rights and remedies under the Security Documents; or any
such Governmental Approval shall be revoked, terminated, withdrawn, suspended,
modified or withheld or shall cease to be in full force and effect; or any
proceeding or investigation by a public authority shall be commenced by or
before any Regulatory Authority for the purpose of revoking, terminating,
withdrawing, suspending, modifying or withholding any such Governmental
Approval, and such proceeding or investigation by a public authority is not
contested in good faith by such Project Participant; and the result of all of
the foregoing would have a Material Adverse Effect.
SECTION 9.1.11. Impairment of Security, etc. Any Security Document, or
any Lien granted thereunder in favor of the Collateral Agent or any Secured
Party, shall, in whole or in part, terminate, cease to be effective or cease to
be the legally valid, binding and enforceable obligation of any party thereto or
any party thereto shall so assert in writing; any Lien granted thereunder shall
fail to have the priority purported to be granted thereunder; any Security
Document, or any material provision thereof, shall be declared to be null and
void or the validity or enforceability thereof shall be contested by any party
thereto or by any Regulatory Authority.
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SECTION 9.1.12. Title to Properties. The Borrower ceases to have good
and marketable title to the Project or the rights necessary to own, construct,
operate and maintain the Project.
SECTION 9.1.13. Final Completion Date. The Final Completion Date shall
not have occurred on or prior to December 31, 1997.
SECTION 9.1.14. Trigen Debt Service and Support Agreement. Trigen shall
default in any of its obligations under the Debt Service and Support Agreement
and such default shall continue unremedied for a period of five Business Days.
SECTION 9.1.15. Abandonment of Project. The Borrower shall, in the
reasonable opinion of the Administrative Agent or the Majority Lenders, have
abandoned the construction or the operation of the Project or any material part
thereof.
SECTION 9.1.16. Accounts Agreement. The Borrower shall default in the
performance of its obligations under the Accounts Agreement, and such default
shall continue unremedied for a period of three Business Days.
SECTION 9.1.17. Closing Date. The Closing Date shall not have occurred
prior to October 1, 1996.
SECTION 9.2. Action if Bankruptcy. If any Event of Default described in
clauses (a) through (d) of Section 9.1.9 shall occur with respect to the
Borrower, the Commitments (if not theretofore terminated) shall automatically
terminate and the outstanding principal amount of all outstanding Loans and all
other Obligations shall automatically be and become immediately due and payable,
without notice or demand.
SECTION 9.3. Action if Other Event of Default. If any Event of Default
(other than any Event of Default described in clauses (a) through (d) of Section
9.1.9 with respect to the Borrower) shall occur for any reason, whether
voluntary or involuntary, and be continuing, the Agent, upon the direction of
the Majority Lenders shall by notice to the Borrower declare all or any portion
of the outstanding principal amount of the Loans and other Obligations to be due
and payable and/or the Commitments (if not theretofore terminated), to be
terminated, whereupon the full unpaid amount of such Loans and other Obligations
which shall be so declared due and payable shall be and become immediately due
and payable, without further notice, demand or presentment, and/or, as the case
may be, the Commitments shall terminate.
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SECTION 9.4. Additional Remedies.
(a) Upon the occurrence of an Event of Default, to the extent
necessary to cure any such Event of Default, (i) with the prior written
consent of the Administrative Agent, which consent may be given or
withheld in the Administrative Agent's sole discretion or at the
direction of the Administrative Majority Lenders, any Contractor or any
subcontractor may submit a Borrower Construction Certificate on behalf
of the Borrower, and (ii) the Administrative Agent with the consent of
the Majority Lenders may make payments directly to any Contractor, any
subcontractor or any other Person. The Administrative Agent shall give
the Borrower prior written notice of all Loans and payments made by the
Administrative Agent pursuant to this provision. All sums advanced and
disbursed hereunder, including, without limitation, any Loan made by
the Administrative Agent, the proceeds of which are paid to any
Contractor, any subcontractor or any other Person shall be disbursed
under this Agreement and the Notes and shall be secured by the Security
Documents.
(b) Administrative Agent Attorney-in-Fact. The Borrower hereby
appoints the Administrative Agent as the attorney-in-fact of the
Borrower, with full power of substitution, and in the name of the
Borrower, if the Administrative Agent elects to do so (in consultation
with the Independent Engineer and with the consent of the Majority
Lenders), upon an Event of Default, to:
(i) make such changes in the plans and specifications
for the reasonable construction of the Project, employ such
engineers and contractors as may be required, and use such
sums as are necessary, including any proceeds of the Loans,
for the purpose of completing the construction of the Project
and the Bypass Pipeline substantially in accordance with the
plans and specifications for the construction of the Project
and the Bypass Pipeline, and in compliance with Governmental
Approvals,
(ii) apply any monies in the accounts under the
Accounts Agreement to the payment of the Borrower's
obligations to the Lenders and the Agents or any other Person
(whether or not then due and payable) under any of the Project
Documents,
(iii) disburse and directly apply the proceeds of
any Loan to the satisfaction of any of the Borrower's
Obligations,
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(iv) hold, use, disburse and apply the Loans for
payment of any Project Costs, and the payment or performance
of any obligation of the Borrower under any Project Document,
(v) advance and incur such expenses as the
Administrative Agent deems reasonably necessary for the
completion of construction of the Project and to preserve the
Project,
(vi) disburse any portion of any Loan, from time to
time, to Persons other than the Borrower for the purposes
specified herein or in any other Project Document,
(vii) construct, maintain or operate the Project and,
prior to the sale to Southwest, the Bypass Pipeline,
(viii) execute all applications and certificates in
the name of the Borrower as required for construction and
operation of the Project,
(ix) endorse the name of the Borrower on any checks
or drafts, representing proceeds of any insurance policies, or
other checks or instruments payable to the Borrower with
respect to the Project,
(x) do every act with respect to the Project
Documents and the construction and operation of the Project
which the Borrower may do,
(xi) prosecute or defend any action or proceeding
incident to the Project, and
(xii) select, for the account of the Borrower, an
operator to operate the Project on such terms and conditions
as the Administrative Agent shall reasonably deem advisable.
The power-of-attorney granted hereby is a power coupled with an
interest and is irrevocable. The Agents and the Lenders shall have no
obligation to undertake any of the foregoing actions, and, if they take
any such action they shall have no liability to the Borrower to
continue the same or for the sufficiency or adequacy thereof.
(c) Enforcement Costs and Expenses. Any funds of the Agents or
Lenders (including, without limitation, Loans by the Administrative
Agent) used for any purpose referred to in this Section, whether or not
in excess (without
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obligating the Lenders to fund any Loans in excess of commitments
hereunder) of the aggregate Commitments, shall
(i) be paid by the Borrower pursuant to Section 11.4,
(ii) be governed hereby,
(iii) constitute a part of the indebtedness secured
by the Security Documents, and
(iv) be payable upon demand by the Administrative
Agent.
SECTION 9.5. Distribution of Proceeds of Collateral. Except as
otherwise expressly provided herein, following an Event of Default and the
acceleration of the maturity date of the Loans and all other Obligations, the
proceeds of any collection, sale or other realization of all or any of the
collateral or of any payment received pursuant to any turnover provisions
hereunder, and of all proceeds of the enforcement of any Lien of the Security
Documents together with any other sums then held by any Lender or the Collateral
Agent as part of the Collateral, shall be applied as follows:
(a) first, to the payment of the reasonable costs and expenses
of the Collateral Agent in connection with such enforcement or sale;
(b) second, pro rata to the payment of interest on all Loans
accrued and unpaid as of the date of such payment (whether or not such
interest was then due and owing);
(c) third, to the payment in full of the principal amount of
the Notes, and in the event such proceeds are insufficient to pay in
full such Obligations, then to the payment of such Obligations ratably,
in proportion to the respective unpaid amount of such Obligations owed
to each Lender;
(d) fourth, to the payment of all other Obligations owed to
any Lender hereunder or under any other Project Document, and in the
event such proceeds are insufficient to pay in full such Obligations,
then to the payment of such Obligations ratably, in proportion to the
respective unpaid amount of such Obligations owed to each Lender; and
(e) fifth, to the payment to the Borrower, or its successors
or assigns, or as a court of competent jurisdiction may direct, of any
surplus then remaining.
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As used in this Section 9.5, "proceeds" of Collateral shall mean any cash,
securities and other property realized in respect of, and distributions in kind
of, collateral, including any thereof, received under any reorganization,
liquidation or adjustment of Debt of the Borrower.
ARTICLE X
THE AGENTS
SECTION 10.1. Actions. Each Lender hereby appoints Societe Generale,
New York Branch as its Administrative Agent under and for purposes of this
Agreement, the Notes, the Security Documents, each other Credit Document and
each other Project Document and hereby appoints Societe Generale (Canada), as
Collateral Agent under the Security Documents. Each Lender authorizes the
Administrative Agent and the Collateral Agent to act on behalf of such Lender
under this Agreement, the Notes and each other Project Document and, in the
absence of other written instructions from the Majority Lenders received from
time to time by such applicable Agent (with respect to which the applicable
Agent agrees that it will comply, except as otherwise provided in this Section
or as otherwise advised by counsel), to exercise such powers hereunder and
thereunder as are specifically delegated to or required of the Administrative
Agent or the Collateral Agent, as the case may be, by the terms hereof and
thereof, together with such powers as may be reasonably incidental thereto.
Each Lender hereby indemnifies (which indemnity shall survive any
termination of this Agreement) the Administrative Agent and the Collateral
Agent, pro rata according to such Lender's Percentage, from and against any and
all liabilities, obligations, losses, damages, claims, costs or expenses of any
kind or nature whatsoever which may at any time be imposed on, incurred by, or
asserted against, such Agent in any way relating to or arising out of this
Agreement, the Notes, the Security Documents, any other Credit Document and any
other Project Document, including reasonable attorneys' fees, and as to which
such Agent is not reimbursed by the Borrower; provided, however, that no Lender
shall be liable for the payment of any portion of such liabilities, obligations,
losses, damages, claims, costs or expenses of the Administrative Agent or the
Collateral Agent which are determined by a court of competent jurisdiction in a
final proceeding to have resulted solely from such Agent's gross negligence or
wilful misconduct. Neither the Administrative Agent nor the Collateral Agent
shall be required to take any action hereunder, under the Notes, the Security
Documents, any other Credit Document or under any other Project Document, or to
prosecute or defend any suit in respect of this Agreement, the
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Notes or any other Project Document, unless it is indemnified hereunder to its
satisfaction. If any indemnity in favor of such Agent shall be or become, in
such Agent's determination, inadequate, such Agent may call for additional
indemnification from the Lenders and cease to do the acts indemnified against
hereunder until such additional indemnity is given.
SECTION 10.2. Funding Reliance, etc. Unless the Administrative Agent
shall have been notified by telephone, confirmed in writing, by any Lender by
5:00 p.m. (New York City time), on the day prior to a Borrowing that such Lender
will not make available the amount which would constitute its Percentage of such
Borrowing on the date specified therefor, the Administrative Agent may assume
that such Lender has made such amount available to the Administrative Agent and,
in reliance upon such assumption, make available to the Borrower a corresponding
amount. If and to the extent that such Lender shall not have made such amount
available to the Administrative Agent, such Lender and the Borrower severally
agree to repay the Administrative Agent forthwith on demand such corresponding
amount together with interest thereon, for each day from the date the
Administrative Agent made such amount available to the Borrower to the date such
amount is repaid to the Administrative Agent, at the interest rate applicable at
the time to Loans comprising such Borrowing.
SECTION 10.3. Exculpation. Neither Agent nor any of its directors,
officers, employees or agents shall be liable to any Lender for any action taken
or omitted to be taken by it under this Agreement, the Notes, the Security
Documents, any other Credit Document or any other Project Document, or in
connection herewith or therewith, except for its own wilful misconduct or gross
negligence, nor responsible for any recitals or warranties herein or therein,
nor for the effectiveness, enforceability, validity or due execution of this
Agreement, the Notes, the Security Documents, any other Credit Document or any
other Project Document, nor for the creation, perfection or priority of any
Liens purported to be created by any of the Security Documents, or the validity,
genuineness, enforceability, existence, value or sufficiency of any collateral
security, nor to make any inquiry respecting the performance by the Borrower of
its obligations hereunder or under the Notes, the Security Documents, any other
Credit Document or any other Project Document. Any such inquiry which may be
made by any Agent shall not obligate it or any other Agent to make any further
inquiry or to take any action. Each Agent shall be entitled to rely and shall be
held harmless from acting upon advice of counsel concerning legal matters or
advice of the Independent Engineer and upon any notice, consent, certificate,
statement or writing which such Agent believes to be genuine and to have been
presented by a proper Person.
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SECTION 10.4. Successors. Either Agent may resign as such at any time
upon at least 30 days' prior notice to the Borrower and all Lenders. If any
Agent at any time shall resign, the Majority Lenders may appoint a successor
Agent (which shall be reasonably acceptable to the Borrower if other than a
Lender) which shall thereupon become the Administrative Agent or the Collateral
Agent hereunder, as the case may be. If no successor shall have been so
appointed by the Majority Lenders, and shall have accepted such appointment,
within 30 days after such notice of resignation, then the Agent so retiring may,
on behalf of the Lenders, appoint a successor Administrative Agent or Collateral
Agent, as the case may be (which such successor Agent or Collateral Agent, as
the case may be, shall be reasonably acceptable to the Borrower if other than a
Lender). Each successor Administrative Agent or Collateral Agent shall be a
commercial banking institution organized under the laws of the U.S. or Canada
(or any State thereof) or a U.S. or Canadian branch or agency of a commercial
banking institution, and having a combined capital and surplus of at least
C$650,000,000 US$500,000,000. Upon the acceptance of any appointment as the
Administrative Agent or the Collateral Agent hereunder by a successor Agent, the
resignation of the retiring Administrative Agent or Collateral Agent, as the
case may be, shall become effective and such successor Agent shall be entitled
to receive from the retiring Agent such documents of transfer and assignment as
such successor Agent may reasonably request, and shall thereupon succeed to and
become vested with all rights, powers, privileges and duties of the retiring
Agent, and the retiring Agent shall be discharged from its duties and
obligations under this Agreement. After any retiring Agent's resignation or
removal hereunder as the Administrative Agent or the Collateral Agent, the
provisions of
(a) this Article X shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was the
Administrative Agent or the Collateral Agent under this Agreement; and
(b) Section 11.3 and Section 11.4 shall continue to inure to
its benefit.
SECTION 10.5. Loans by Agents. Each Agent shall have the same rights
and powers with respect to (x) the Loans made by it or any of its Affiliates,
and (y) the Notes held by it or any of its Affiliates as any other Lender and
may exercise the same as if it were not an Agent. Each Agent and its Affiliates
may accept deposits from, lend money to, and generally engage in any kind of
business with the Borrower or any Affiliate of the Borrower as if it were not a
Agent hereunder.
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SECTION 10.6. Credit Decisions. Each Lender acknowledges that it has,
independently of each Agent and each other Lender, and based on such Lender's
review of the financial information of the Affiliated Project Participants, this
Agreement, the other Project Documents (the terms and provisions of which being
satisfactory to such Lender) and such other documents, information and
investigations as such Lender has deemed appropriate, made its own credit
decision to extend its Commitments. Each Lender also acknowledges that it will,
independently of any Agent and each other Lender, and based on such other
documents, information and investigations as it shall deem appropriate at any
time, continue to make its own credit decisions as to exercising or not
exercising from time to time any rights and privileges available to it under
this Agreement or any other Project Document.
SECTION 10.7. Copies, etc. The Administrative Agent shall give prompt
notice to each Lender of each notice or request required or permitted to be
given to the Administrative Agent by the Borrower pursuant to the terms of this
Agreement (unless concurrently delivered to the Lenders by the Borrower). The
Administrative Agent will distribute to each Lender each document or instrument
received for its account and copies of all other communications received by the
Administrative Agent from the Borrower for distribution to the Lenders by the
Administrative Agent in accordance with the terms of this Agreement.
ARTICLE XI
MISCELLANEOUS PROVISIONS
SECTION 11.1. Waivers, Amendments, etc. The provisions of this
Agreement and of each other Project Document may from time to time be amended,
modified or waived, if such amendment, modification or waiver is in writing and
consented to by the Borrower and the Administrative Agent and the Majority
Lenders; provided, however, that no such amendment, modification or waiver which
would:
(a) modify any requirement hereunder that any particular
action be taken by all the Lenders or by the Majority Lenders shall be
effective unless consented to by each Lender;
(b) modify this Section 11.1, change the definition of
"Majority Lenders", increase any Commitment Amount or the Percentage of
any Lender, reduce any fees described in Article IV, release any of the
collateral security, or extend any Commitment Termination Date without
the consent of each Lender and each Participant;
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(c) extend the due date for, or reduce the amount of, any
scheduled repayment or prepayment of principal of or interest on any
Loan (or reduce the principal amount of or rate of interest on any
Loan) without the consent of the holder of that Note evidencing such
Loan; or
(d) affect adversely the interests, rights or obligations of
an Agent qua Agent shall be made without consent of such Agent.
No failure or delay on the part of any Agent, any Lender or the holder of any
Note in exercising any power or right under this Agreement the Notes, the
Security Documents, any other Credit Document or any other Project Document
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such power or right preclude any other or further exercise thereof or the
exercise of any other power or right. No notice to or demand on the Borrower in
any case shall entitle it to any notice or demand in similar or other
circumstances. No waiver or approval by any Agent, any Lender or the holder of
any Note under this Agreement the Notes, the Security Documents, any other
Credit Document or any other Project Document shall, except as may be otherwise
stated in such waiver or approval, be applicable to subsequent transactions. No
waiver or approval hereunder shall require any similar or dissimilar waiver or
approval thereafter to be granted hereunder.
SECTION 11.2. Notices. All notices and other communications provided to
any party hereto under this Agreement or any other Project Document shall be in
writing or by facsimile (with an undertaking to promptly provide hard copy) and
addressed, delivered or transmitted to such party at its address or facsimile
number set forth below its signature hereto or set forth in the Assignment
Agreement, or at such other address or facsimile number as may be designated by
such party in a notice to the other parties. Any notice, if mailed and properly
addressed with postage prepaid or if properly addressed and sent by pre-paid
courier service, shall be deemed given when received; any notice, if transmitted
by facsimile, shall be deemed given when transmitted.
SECTION 11.3. Payment of Costs and Expenses. (a) The Borrower agrees to
pay, subject, with respect to the Agents and the Advisors to the Lenders (other
than any services of Toronto Dominion as subagent, which shall not be subject to
Section 11.3(b)), on demand all reasonable expenses of
(i) the Administrative Agent, the Collateral Agent and Toronto
Dominion as subagent (including the reasonable fees and out-of-pocket
expenses of counsel to such Agents and of
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local counsel, if any, who may be retained by counsel to such Agents)
in connection with
(A) the negotiation, preparation, execution and
delivery of this Agreement the Notes, the Security Documents,
any other Credit Documents and of each other Project Document,
including schedules and exhibits, and any amendments, waivers,
consents, supplements or other modifications to this Agreement
the Notes, the Security Documents, any other Credit Document
or any other Project Document as may from time to time
hereafter be required, whether or not the transactions
contemplated hereby are consummated,
(B) the filing, recording, refiling or rerecording of
any Security Document and all amendments, supplements and
modifications to any thereof and any and all other documents
or instruments of further assurance required to be filed or
recorded or refiled or rerecorded by the terms hereof or of
Security Document, and
(C) the preparation and review of the form of any
document or instrument relevant to this Agreement any other
Credit Document or any other Project Document;
(ii) the Independent Engineer; and
(iii) the Insurance Consultant.
The Borrower further agrees to pay, and to save the Agents and the Lenders
harmless from all liability for, any stamp or other similar taxes which may be
payable in connection with the execution or delivery of this Agreement, the
Borrowings hereunder, or the issuance of the Notes any other Credit Document or
any other Project Document.
(b) The Borrower will pay up to a total cap of US$250,000 for the
following reasonable costs and expenses (the "Fee Cap"): (i) all fees and
expenses of the Administrative Agent's legal counsel, Mayer, Brown & Platt, and
(ii) all fees and expenses of the Advisors to the Lenders and of the Agents
incurred prior to the last to occur of (i) Project Completion or (ii) the Term
Loan Closing Date arising out of or in connection with the Project Credit
Facilities or the transactions contemplated hereby or thereby, provided,
however, in the event of a Default or an Event of Default, all fees of the
Advisors to Lenders shall be paid by Borrower whether or not Project Completion
has occurred, including any such fees and expenses which may arise from or in
connection with any action, suit or proceeding (whether or not an Indemnified
Party is a party to or is subject thereto). The
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Administrative Agent shall have the ability to allocate the payment of expenses
of the consultants without limitation under the Fee Cap set forth in this
Section.
In the event the transaction work exceeds the Fee Cap, and the Closing
Date occurs, all additional reasonable fees of the Advisors to the Lenders
thereafter shall be shared equally by the Administrative Agent and the Borrower
and the total expenses owed by the Agent shall be deducted from the amount due
to such Agent under the arrangement fee as set forth in the Administrative Agent
Fee Letter (the "Arrangement Fee") on the Closing Date less the Monthly Fees
paid to date, provided, however, any additional expenses payable by the Agents
shall not exceed the Arrangement Fee. In the event the Closing Date fails to
occur, all legal expenses incurred by the Agents shall be paid by the Borrower.
The Borrower shall pay all reasonable out-of-pocket expenses of the Agents
incurred from and after and during the continuation of any Default or Event of
Default, including all reasonable out-of-pocket expenses of the Advisors to the
Lenders.
SECTION 11.4. Indemnification. In consideration of the execution and
delivery of this Agreement by each Lender and the extension of the Commitments,
the Borrower hereby indemnifies, exonerates and holds each Agent and each Lender
and each of their respective officers, directors, shareholders, employees and
agents and Affiliates thereof and each other person controlling any of the
foregoing within the meaning of either Section 15 of the Securities Exchange Act
of 1934, as amended (collectively, the "Indemnified Parties") free and harmless
from and against any and all actions, causes of action, suits, losses, costs,
liabilities and damages, and expenses incurred in connection therewith
(irrespective of whether any such Indemnified Party is a party to the action for
which indemnification hereunder is sought), including reasonable attorneys' fees
and disbursements (collectively, the "Indemnified Liabilities"), incurred by the
Indemnified Parties or any of them as a result of, or arising out of, or
relating to
(a) any transaction financed or to be financed in whole or in
part, directly or indirectly, with the proceeds of any Loan;
(b) the entering into and performance of this Agreement, the
Security Document, the Notes, any other Credit Documents and any other
Project Document by any of the Indemnified Parties (including any
action brought by or on behalf of the Borrower as the result of any
determination by the Majority Lenders pursuant to Article VI not to
fund any Borrowing);
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(c) any investigation, litigation or proceeding related to any
acquisition or proposed acquisition by the Borrower of all or any
portion of the stock or assets of any Person, whether or not such Agent
or such Lender is party thereto;
(d) any investigation, litigation or proceeding related to any
environmental cleanup, audit, compliance or other matter relating to
the protection of the environment or the actual, suspected, or
threatened releases or the Release by any Project Participant of any
Hazardous Material; or
(e) the presence on or under, or the escape, seepage, leakage,
spillage, discharge, emission, discharging or releases from, any real
property owned or operated by any Project Participant of a Release or
any Hazardous Material (including any losses, liabilities, damages,
injuries, costs, expenses or claims asserted or arising under any
applicable Environmental Law), regardless of whether caused by, or
within the control of, such Project Participant,
except for any such Indemnified Liabilities arising for the account of a
particular Indemnified Party by reason of the relevant Indemnified Party's gross
negligence or wilful misconduct. If and to the extent that the foregoing
undertaking may be unenforceable for any reason, the Borrower hereby agrees to
make the maximum contribution to the payment and satisfaction of each of the
Indemnified Liabilities which is permissible under applicable law.
SECTION 11.5. Survival. The obligations of the Borrower under Sections
5.2, 5.3, 5.4, 5.5, 11.3 and 11.4, and the obligations of the Lenders under
Section 10.1, shall in each case survive any termination of this Agreement, the
payment in full of all the Obligations and the termination of all the
Commitments. The representations and warranties made by each Project Participant
in each Project Document shall survive the execution and delivery of this
Agreement and each such other Project Document.
SECTION 11.6. Severability. Any provision of this Agreement any other
Credit Document or any other Project Document which is prohibited or
unenforceable in any jurisdiction shall, as to such provision and such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of this
Agreement, such other Credit Document or such Project Document or affecting the
validity or enforceability of such provision in any other jurisdiction.
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SECTION 11.7. Headings. The various headings of this Agreement each
other Credit Document and of each other Project Document are inserted for
convenience only and shall not affect the meaning or interpretation of this
Agreement such other Credit Document or such other Project Document or any
provisions hereof or thereof.
SECTION 11.8. Execution in Counterparts, Effectiveness, etc. This
Agreement may be executed by the parties hereto in several counterparts, each of
which shall be executed by the Borrower, the Administrative Agent and the
Collateral Agent and be deemed to be an original and all of which shall
constitute together but one and the same agreement. This Agreement shall become
effective when counterparts hereof executed on behalf of the Borrower and each
Lender (or notice thereof satisfactory to the Administrative Agent) shall have
been received by the Agent and notice thereof shall have been given by the
Administrative Agent to the Borrower and each Lender.
SECTION 11.9. Governing Law; Entire Agreement. THIS AGREEMENT, THE
NOTES, THE FEE LETTER AND EACH OTHER CREDIT DOCUMENT SHALL EACH BE DEEMED TO BE
A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW
YORK. This Agreement, the Notes, the Fee Letter the other Credit Documents and
the other Project Documents constitute the entire understanding among the
parties hereto with respect to the subject matter hereof and supersede any prior
agreements, written or oral, with respect thereto.
SECTION 11.10. Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that:
(a) the Borrower may not assign or transfer its rights or
obligations hereunder without the prior written consent of the
Administrative Agent and all Lenders; and
(b) the rights of sale, assignment and transfer of the Lenders
are subject to Section 11.11.
SECTION 11.11. Sale and Transfer of Loans and Notes; Participation in
Loans and Notes. Each Lender may transfer, assign or sell participation in, its
Loans and Commitments to one or more other Persons in accordance with this
Section 11.11.
SECTION 11.11.1. Assignments. Any Lender
(a) may, with the consent of the Administrative Agent, at any
time assign and delegate to one or more commercial banks or other
financial institutions with a credit rating
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issued by Standard & Poor's Corporation for long-term debt of A- or
higher consented to by the Borrower (such consent not to be
unreasonably withheld or delayed); and
(b) with notice to the Administrative Agent, but without the
consent of the Borrower or any Agent, may assign and delegate to any of
its Affiliates with a credit rating issued by Standard & Poor's
Corporation for long-term debt of A- or higher
(each Person described in either of the foregoing clauses as being the Person to
whom such assignment and delegation is to be made, being hereinafter referred to
as an "Assignee Lender"), all or any fraction of such Lender's total Loans and
Commitments (which assignment and delegation shall be of a constant, and not a
varying, percentage of all the assigning Lender's Loans and Commitments) in a
minimum aggregate amount of C$7,500,000; provided, however, that any such
Assignee Lender will comply, if applicable, with the provisions contained in the
penultimate sentence of Section 5.7; and provided, further, however, that the
Borrower and the Agents shall be entitled to continue to deal solely and
directly with such Lender in connection with the interests so assigned and
delegated to an Assignee Lender until
(c) written notice of such assignment and delegation, together
with payment instructions, addresses and related information with
respect to such Assignee Lender, shall have been given to the Borrower
and the Administrative Agent by such Lender and such Assignee Lender;
(d) such Assignee Lender shall have executed and delivered to
the Borrower and the Administrative Agent an Assignment Agreement,
accepted by the Administrative Agent; and
(e) in the case of an assignment pursuant to clause (a), the
payment to the Administrative Agent of an assignment fee of US$3,000 by
the Assignee or Assignor as may be mutually agreed.
From and after the date that the Administrative Agent accepts such Assignment
Agreement, (x) the Assignee Lender thereunder shall be deemed automatically to
have become a party hereto and to the extent that rights and obligations
hereunder have been assigned and delegated to such Assignee Lender in connection
with such Assignment Agreement, shall have the rights and obligations of a
Lender hereunder and under the other Project Documents, and (y) the assignor
Lender, to the extent that rights and obligations hereunder have been assigned
and delegated by it in connection with such Assignment Agreement, shall be
released from its obligations hereunder and under the other Project Documents.
-125-
<PAGE> 134
Within five Business Days after its receipt of notice that the Administrative
Agent has received an executed Assignment Agreement, the Borrower shall execute
and deliver to the Administrative Agent (for delivery to the relevant Assignee
Lender) new Notes evidencing such Assignee Lender's assigned Loans and
Commitments and, if the assignor Lender has retained Loans and Commitments
hereunder, replacement Notes in the principal amount of the Loans and
Commitments retained by the assignor Lender hereunder (such Notes to be in
exchange for, but not in payment of, those Notes then held by such assignor
Lender). Each such Note shall be dated the date of the predecessor Notes. The
assignor Lender shall mark the predecessor Notes "exchanged" and deliver them to
the Borrower. Accrued interest on that part of the predecessor Notes evidenced
by the new Notes, and accrued fees, shall be paid as provided in the Assignment
Agreement. Accrued interest on that part of the predecessor Notes evidenced by
the replacement Notes shall be paid to the assignor Lender. Accrued interest and
accrued fees shall be paid at the same time or times provided in the predecessor
Notes and in this Agreement. Any attempted assignment and delegation not made in
accordance with this Section 11.11.1 shall be null and void.
Anything in this Agreement to the contrary notwithstanding, and without
the need to comply with any of the formal or procedural requirements of this
Agreement, any Lender may at any time and from time to time pledge and assign
all or any portion of its rights under all or any of the Notes to a Federal
Reserve Bank; provided, that no such pledge or assignment shall release such
Lender from its obligations hereunder.
SECTION 11.11.2. Participation. Any Lender may at any time, with the
consent of the Borrower (not unreasonably withheld or delayed) sell to one or
more commercial banks or other Persons (each of such commercial banks and other
Persons being herein called a "Participant") participating interests in any of
the Loans, Commitments, or other interests of such Lender hereunder; provided,
however, that
(a) no participation contemplated in this Section 11.11 shall
relieve such Lender from its Commitments or its other obligations
hereunder or under any other Project Document;
(b) such Lender shall remain solely responsible for the
performance of its Commitments and such other obligations;
(c) the Borrower and the Agents shall continue to deal solely
and directly with such Lender in connection with such
-126-
<PAGE> 135
Lender's rights and obligations under this Agreement and each of the
other Project Documents; and
(d) no Participant, unless such Participant is an Affiliate of
such Lender, or is itself a Lender, shall be entitled to require such
Lender to take or refrain from taking any action hereunder under any
other Credit Document or under any other Project Document, except that
such Lender may agree with any Participant that such Lender will not,
without such Participant's consent, take any actions of the type
described in clause (b) or (c) of Section 11.1.
The Borrower acknowledges and agrees that each Participant, for purposes of
Sections 5.1, 5.2, 5.3, 5.4, 5.5, 5.8, 5.9 and 11.4, shall be considered a
Lender.
SECTION 11.12. Other Transactions. Nothing contained herein shall
preclude any Agent or any other Lender from engaging in any transaction, in
addition to those contemplated by this Agreement any other Credit Document or
any other Project Document, with the Borrower or any of its Affiliates in which
the Borrower or such Affiliate is not restricted hereby from engaging with any
other Person.
SECTION 11.13. Non-Recourse Parties.
(a) Notwithstanding anything to the contrary contained in this
Agreement any other Credit Document or in any of the other Project
Documents (but subject to the following provisions of this Section),
the Agents and each Lender, agree that the Affiliated Project
Participants and their respective shareholders, directors, officers,
employees and affiliates (other than the Borrower) (the "Non-Recourse
Parties") shall not be liable (such liability, including as may arise
by operation of law, hereby being expressly waived) for the payment of
any sums now or hereafter owing by the Borrower, or for the performance
of any of the obligations of the Borrower, under this Agreement any
other Credit Document or any other Project Document. Except as provided
below, if any Event of Default should occur or if any claim of the
Administrative Agent or any Lender shall be asserted under this
Agreement any other Credit Document or any other Project Document, the
Administrative Agent and each Lender agree that: (i) its rights shall
be limited to proceeding against the Borrower, the security for the
indebtedness evidenced by the Notes and against any other third party
other than the Non-Recourse Parties, (ii) it shall have no right to
proceed against the Non-Recourse Parties for the satisfaction of any
obligation of or enforcement of any claim against the Borrower or for
any deficiency judgment remaining after foreclosure of, or
-127-
<PAGE> 136
exercise of any other remedies with respect to, any real or personal
property securing the obligations owed to any Agent or any Lender under
this Agreement any other Credit Document or any other Project Document,
and (iii) such indebtedness shall be treated as fully secured for
purposes of Section 1111(b)(2) of the U.S. Bankruptcy Code in any
proceeding involving the Borrower (and each of the Agents and the
Lenders shall make such election in any such proceeding).
(b) Nothing in this Section shall:
(i) in any manner or way constitute or be deemed a
release of the debt evidenced by the Notes the other Credit
Document or the other Project Documents or otherwise affect or
impair the enforceability against the Borrower of the Liens
created by the Security Documents;
(ii) preclude the Collateral Agent from foreclosing
the Liens created by the Security Documents or from enforcing
any of the rights or remedies of the Agents or any Lender in
law or in equity against the Borrower or its assets, except as
stated in this Section;
(iii) impair in any manner any right, remedy or
recourse any Agent or any Lender may have against any party
executing any Credit Document or Project Document to which it
is a party (including the Non-Recourse Parties) with respect
to such party's obligations thereunder;
(iv) impair in any manner any right, remedy or
recourse any Agent or any Lender may have against any Person
including the Non-Recourse Parties, for fraud, willful
misrepresentation, misappropriation or misapplication of
funds; or
(v) impair in any manner any right, remedy or
recourse any Agent or any Lender may have against Trigen with
respect to the Debt Service and Support Agreement.
SECTION 11.14. Forum Selection and Consent to Jurisdiction. ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS
AGREEMENT THE NOTES, THE SECURITY DOCUMENTS, ANY OTHER CREDIT DOCUMENTS OR ANY
OTHER PROJECT DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY AGENT, THE LENDERS OR THE BORROWER
SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF NEW
YORK OR IN THE UNITED STATES
-128-
<PAGE> 137
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK; PROVIDED, HOWEVER, THAT
ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE
BROUGHT, AT THE ADMINISTRATIVE AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION
WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. THE BORROWER, EACH AGENT
AND EACH LENDER HEREBY EXPRESSLY AND IRREVOCABLY SUBMIT TO THE JURISDICTION OF
THE COURTS OF THE STATE OF NEW YORK AND OF THE UNITED STATES DISTRICT COURT FOR
THE SOUTHERN DISTRICT OF NEW YORK FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET
FORTH ABOVE AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY
IN CONNECTION WITH SUCH LITIGATION. THE BORROWER, EACH AGENT AND EACH LENDER
FURTHER IRREVOCABLY CONSENT TO THE SERVICE OF PROCESS BY REGISTERED MAIL,
POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK.
THE BORROWER, EACH AGENT AND EACH LENDER HEREBY EXPRESSLY AND IRREVOCABLY WAIVE,
TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH THEY MAY HAVE OR
HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY
SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT THE BORROWER, EACH AGENT
AND EACH LENDER HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF
ANY COURT FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT
PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO
ITSELF OR ITS PROPERTY, THE BORROWER, EACH AGENT AND EACH LENDER HEREBY
IRREVOCABLY WAIVE SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS
AGREEMENT, EACH OTHER CREDIT DOCUMENT AND THE OTHER PROJECT DOCUMENTS.
SECTION 11.15. Waiver of Jury Trial. THE AGENTS, THE LENDERS AND THE
BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY
MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR
ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT THE NOTES, THE
SECURITY DOCUMENTS, ANY OTHER CREDIT DOCUMENTS OR ANY OTHER PROJECT DOCUMENT, OR
ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN)
OR ACTIONS OF ANY AGENT, THE LENDERS OR THE BORROWER. THE BORROWER ACKNOWLEDGES
AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS
PROVISION (AND EACH OTHER PROVISION OF EACH OTHER CREDIT DOCUMENT AND EACH OTHER
PROJECT DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE AGENTS AND THE LENDERS ENTERING INTO THIS AGREEMENT AND EACH
SUCH OTHER CREDIT DOCUMENT AND EACH SUCH OTHER PROJECT DOCUMENT.
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<PAGE> 138
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
Borrower
TRIGEN ENERGY CANADA INC.
By:/s/ Stephen T. Ward
-----------------------------------------
Name: Stephen T. Ward
Title: Treasurer
Address: c/o Trigen Energy
Corporation
One Water Street
White Plains, NY 10601
Facsimile No.: (914) 948-9157
Attention: Treasurer
Administrative Agent
SOCIETE GENERALE, NEW YORK BRANCH
By: /s/ Bruce T. Spector
-----------------------------------------
Name: Bruce T. Spector
Title: Vice President
Address: 1221 Avenue of the
Americas
New York, NY 10020
Facsimile No.: (212) 278-6136
Attention: Project Finance
Department
<PAGE> 139
Collateral Agent
SOCIETE GENERALE (CANADA)
By: /s/ Bruce T. Spector
-----------------------------------------
Name: Bruce T. Spector
Title: Attorney-in-Fact
Address: 1501 McGill College Avenue
Office 1800
Montreal, Quebec H3A3M8
Facsimile No.: (514) 841-6250
Attention: Benoit Desmarais
Lenders
SOCIETE GENERALE (CANADA)
By: /s/ Bruce T. Spector
-----------------------------------------
Name:Bruce T. Spector
Title: Attorney-in-Fact
Address: 1501 McGill College Avenue
Office 1800
Montreal, Quebec H3A3M8
Facsimile No.: (514) 841-6250
Attention: Benoit Desmarais
<PAGE> 1
EXHIBIT 11
TRIGEN ENERGY CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
(ALL AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED
DECEMBER 31,
-----------------------------
1996 1995
---------- ----------
<S> <C> <C>
Earnings Per Share--Primary
Net Income.............................................. $ 12,108 $ 10,564
========= =========
Weighted average number of common and common equivalent
shares applicable to primary earnings per share
calculation........................................... 11,612,107 11,390,445
Dilutive effect of stock options........................ 72,117 85,886
---------- ----------
Weighted average number of shares outstanding........... 11,684,224 11,476,331
========= =========
Net income per share--primary........................... $1.04 $0.92
========= =========
Earnings Per Share--Assuming Full Dilution
Net Income.............................................. $ 12,108 $ 10,564
Plus: Interest on convertible subordinated debt (net of
taxes)................................................ -- 654
---------- ----------
Net income for fully diluted earnings per share
calculation........................................... $ 12,108 $ 11,218
========= =========
Weighted average number of common and common equivalent
shares applicable to fully diluted earnings per share
calculation........................................... $ 12,108 $ 11,218
========= =========
Weighted average number of shares outstanding........... 11,612,107 11,390,445
Shares issuable upon conversion of subordinated debt.... -- 385,692
Dilutive effect of stock options........................ 149,201 85,886
---------- ----------
11,761,308 11,862,023
========= =========
Net income per share assuming full dilution............. $1.03 $0.95
========= =========
</TABLE>
<PAGE> 1
EXHIBIT 21
TRIGEN ENERGY CORPORATION & SUBSIDIARIES
<TABLE>
<CAPTION>
U.S. CORPORATIONS INCORPORATED
- ---------------------------------------------------------------------------- ---------------
<S> <C>
Baltimore Thermal Development Corporation................................... Maryland
Catalyst Steam Corporation.................................................. Delaware
Ewing Power Systems, Inc. .................................................. Delaware
Ohio Thermal Energy Corporation............................................. Ohio
Philadelphia Steam Development Corporation.................................. Pennsylvania
Philadelphia Thermal Development Corporation................................ Pennsylvania
Philadelphia Thermal Services Corporation................................... Pennsylvania
Philadelphia United Power Corporation....................................... Delaware
St. Louis Thermal Development Corporation................................... Missouri
Trenton Energy Corporation.................................................. Delaware
Trigen Building Services Corporation........................................ Delaware
Trigen Development Corporation.............................................. Delaware
Trigen Energy Corporation................................................... Delaware
Trigen Energia, Inc. ....................................................... Delaware
Trigen Fuels Corporation.................................................... Delaware
Trigen Insulation Corporation............................................... Delaware
Trigen Lindbergh Corp....................................................... Delaware
Trigen M/I Corporation...................................................... Delaware
Trigen Services Corporation................................................. Delaware
Trigen Solutions, Inc....................................................... Delaware
Trigen-Baltimore Energy Corporation......................................... Maryland
Trigen-Boston Energy Corporation............................................ Delaware
Trigen-Chicago Energy Corporation........................................... Delaware
Trigen-Colorado Energy Corporation.......................................... Delaware
Trigen-Kansas City Energy Corporation....................................... Delaware
Trigen-Missouri Energy Corporation.......................................... Delaware
Trigen-Nassau Energy Corporation............................................ Delaware
Trigen-New England Energy Corporation....................................... Delaware
Trigen-Oklahoma City Energy Corporation..................................... Delaware
Trigen-Oklahoma Energy Corporation.......................................... Delaware
Trigen-Philadelphia Energy Corporation...................................... Pennsylvania
Trigen-Schuylkill Cogeneration, Inc......................................... Pennsylvania
Trigen-St. Louis Energy Corporation......................................... Missouri
Trigen-Tulsa Energy Corporation............................................. Delaware
Tulsa Cold Storage, Inc..................................................... Delaware
United Thermal Corporation.................................................. Delaware
United Thermal Development Corporation...................................... Delaware
United Thermal Services Corp................................................ Delaware
CANADIAN CORPORATIONS
Trigen Energy Canada, Inc................................................... Canada
Trigen-London District Energy Corporation................................... Canada
PARTNERSHIPS
Baltimore Steam Company..................................................... Maryland
Trigen-Nations Energy Company LLLP.......................................... Colorado
Trigen-Trenton Energy Company LP............................................ Delaware
</TABLE>
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors
Trigen Energy Corporation
We consent to incorporation by reference in the registration statements No.
333-4198 on Form S-3 and No. 33-83736 and No. 33-92468 on Form S-8 of Trigen
Energy Corporation and subsidiaries of our report dated March 24, 1997, relating
to the consolidated balance sheets of Trigen Energy Corporation and subsidiaries
as of December 31, 1996, and 1995, and the related consolidated statements of
operations, stockholders' equity and cash flows for each of the years in the
three-year period ended December 31, 1996, and the related schedules, which
report appears in the December 31, 1996 Annual Report on Form 10-K of Trigen
Energy Corporation. Our report on the consolidated financial statements refers
to a change in accounting for the impairment of long-lived assets in 1995.
KPMG Peat Marwick LLP
Stamford, CT
March 24, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> MAR-26-1997
<PERIOD-END> MAR-26-1997
<CASH> 14,598
<SECURITIES> 0
<RECEIVABLES> 36,564
<ALLOWANCES> 1,128
<INVENTORY> 6,900
<CURRENT-ASSETS> 67,759
<PP&E> 436,545
<DEPRECIATION> 61,996
<TOTAL-ASSETS> 494,436
<CURRENT-LIABILITIES> 73,295
<BONDS> 226,487
0
0
<COMMON> 120
<OTHER-SE> 140,414
<TOTAL-LIABILITY-AND-EQUITY> 494,436
<SALES> 0
<TOTAL-REVENUES> 243,634
<CGS> 0
<TOTAL-COSTS> 200,496
<OTHER-EXPENSES> 331
<LOSS-PROVISION> 664
<INTEREST-EXPENSE> 18,840
<INCOME-PRETAX> 23,303
<INCOME-TAX> 9,252
<INCOME-CONTINUING> 14,051
<DISCONTINUED> 0
<EXTRAORDINARY> (1,943)
<CHANGES> 0
<NET-INCOME> 12,108
<EPS-PRIMARY> 1.04
<EPS-DILUTED> 1.03
</TABLE>
