1
EXHIBIT 10.2.1
CREDIT AGREEMENT
among
CALPINE CONSTRUCTION FINANCE COMPANY, L.P.,
a Delaware limited partnership
(Borrower)
and
THE BANK OF NOVA SCOTIA CREDIT SUISSE FIRST BOSTON
(Lead Arranger, LC Bank and (Lead Arranger, Syndication Agent
Administrative Agent) and Bookrunner)
and
TD SECURITIES (USA) INC.
(Co-Arranger and Co-Documentation Agent)
and
CIBC WORLD MARKETS CORP.
(Co-Arranger and Co-Documentation Agent)
and
THE BANKS PARTIES HERETO
2
TABLE OF CONTENTS
PAGE
----
ARTICLE 1 DEFINITIONS........................................................................1
1.1 Definitions..........................................................................1
1.2 Rules of Interpretation..............................................................1
ARTICLE 2 THE CREDIT FACILITIES..............................................................1
2.1 Loans................................................................................1
2.1.1 Loan Facility....................................................................1
2.1.2 Interest Provisions Relating to Loans............................................2
2.1.3 Promissory Notes.................................................................4
2.1.4 Loan Funding.....................................................................4
2.1.5 Conversion of Loans..............................................................5
2.1.6 Prepayments......................................................................5
2.2 Letter of Credit Facilities..........................................................6
2.2.1 Issuance of the Letters of Credit................................................6
2.2.2 Availability.....................................................................6
2.2.3 Notice of LC Activity............................................................6
2.2.4 Reimbursement....................................................................7
2.2.5 Reimbursement Obligation Absolute................................................7
2.2.6 Reduction and Reinstatement of Stated Amount.....................................8
2.2.7 Bank Participation...............................................................9
2.2.8 Commercial Practices.............................................................9
2.2.9 Term of Letters of Credit.......................................................10
2.3 Total Commitments...................................................................10
2.3.1 Loan Commitment.................................................................10
2.3.2 Letter of Credit Commitment.....................................................10
2.3.3 Reductions and Cancellations....................................................10
2.4 Fees................................................................................11
2.4.1 Fee Letter......................................................................11
2.4.2 Loan Commitment Fees............................................................11
2.4.3 Activation Fee..................................................................11
2.5 Letter of Credit Fees...............................................................11
2.6 Other Payment Terms.................................................................12
2.6.1 Place and Manner................................................................12
2.6.2 Date............................................................................12
2.6.3 Late Payments...................................................................12
2.6.4 Net of Taxes, Etc...............................................................12
2.6.5 Application of Payments.........................................................14
2.6.6 Failure to Pay Administrative Agent.............................................14
2.6.7 Withholding Exemption Certificates..............................................14
2.7 Pro Rata Treatment..................................................................15
2.7.1 Borrowings, Commitment Reductions, Etc..........................................15
i
3
2.7.2 Sharing of Payments, Etc........................................................15
2.8 Change of Circumstances.............................................................16
2.8.1 Inability to Determine Rates....................................................16
2.8.2 Illegality......................................................................16
2.8.3 Increased Costs.................................................................17
2.8.4 Capital Requirements............................................................17
2.8.5 Notice; Participating Banks' Rights.............................................18
2.9 Funding Losses......................................................................18
2.10 Alternate Office; Minimization of Costs.............................................18
2.11 Extension of Loan Maturity Date.....................................................19
ARTICLE 3 CONDITIONS PRECEDENT..............................................................21
3.1 Conditions Precedent to the Closing Date............................................21
3.1.1 Resolutions.....................................................................21
3.1.2 Incumbency......................................................................21
3.1.3 Formation Documents.............................................................21
3.1.4 Good Standing Certificates......................................................21
3.1.5 Satisfactory Proceedings........................................................22
3.1.6 Operative Documents.............................................................22
3.1.7 Certificates of Borrower........................................................23
3.1.8 Legal Opinions..................................................................23
3.1.9 Certificate of Insurance Consultant.............................................23
3.1.10 Insurance.......................................................................23
3.1.11 Certificate of the Independent Engineer.........................................23
3.1.12 Reports of the Environmental Consultant.........................................23
3.1.13 Certificate of the Fuel Consultant..............................................24
3.1.14 Certificate of Power Marketing Consultant.......................................24
3.1.15 Power Marketing Plan............................................................24
3.1.16 Fuel Plan.......................................................................24
3.1.17 No Change in Tax Laws...........................................................24
3.1.18 Absence of Litigation...........................................................24
3.1.19 Payment of Filing Fees..........................................................25
3.1.20 Financial Statements............................................................25
3.1.21 UCC Reports.....................................................................25
3.1.22 Project Budgets.................................................................25
3.1.23 Project Schedules...............................................................25
3.1.24 Base Case Project Projections...................................................25
3.1.25 No Material Adverse Change......................................................26
3.1.26 A.L.T.A. Surveys................................................................26
3.1.27 Title Policies..................................................................26
3.1.28 Regulatory Status...............................................................27
3.1.29 Establishment of Accounts.......................................................27
3.1.30 Representations and Warranties of Partners, Calpine and Borrower................27
3.1.31 Utilities.......................................................................27
ii
4
3.1.32 Mechanics' Lien Indemnity.......................................................27
3.1.33 Payment of Bank and Consultants Fees............................................27
3.2 Conditions Precedent to the Initial Funding of the Initial Projects.................28
3.2.1 Borrower Equity.................................................................28
3.2.2 No Change in Tax Laws...........................................................28
3.2.3 Base Case Project Projections...................................................28
3.2.4 Calpine Compliance..............................................................28
3.2.5 Schedule of Applicable Permits and Applicable Third Party Permits...............28
3.2.6 Calpine Corporation Credit Rating...............................................29
3.2.7 Notice to Proceed...............................................................29
3.2.8 Real Estate Rights..............................................................29
3.2.9 Project Pre-Funding Requirements................................................29
3.3 Conditions Precedent to the Initial Funding of the Subsequent Projects..............30
3.3.1 Subsequent Project..............................................................30
3.3.2 Resolutions.....................................................................30
3.3.3 Incumbency......................................................................30
3.3.4 Formation Documents.............................................................30
3.3.5 Good Standing Certificates......................................................31
3.3.6 Satisfactory Proceedings........................................................31
3.3.7 Operative Documents.............................................................31
3.3.8 Certificate of Borrower.........................................................32
3.3.9 Legal Opinions..................................................................32
3.3.10 Certificate of Insurance Consultant.............................................33
3.3.11 Insurance.......................................................................33
3.3.12 Certificate of the Independent Engineer.........................................33
3.3.13 Reports of the Environmental Consultant.........................................33
3.3.14 Certificate of the Fuel Consultant..............................................34
3.3.15 Certificate of Power Marketing Consultant.......................................34
3.3.16 Power Marketing Plan............................................................34
3.3.17 Fuel Plan.......................................................................34
3.3.18 Schedule of Applicable Permits and Applicable Third Party Permits...............34
3.3.19 No Change in Tax Laws...........................................................35
3.3.20 Absence of Litigation...........................................................35
3.3.21 Payment of Filing Fees..........................................................36
3.3.22 Financial Statements............................................................36
3.3.23 UCC Reports.....................................................................36
3.3.24 Project Budgets.................................................................36
3.3.25 Project Schedule................................................................37
3.3.26 Base Case Project Projections...................................................37
3.3.27 No Material Adverse Change......................................................37
3.3.28 A.L.T.A. Surveys................................................................37
3.3.29 Title Policies..................................................................38
3.3.30 Regulatory Status...............................................................38
3.3.31 Notice to Proceed...............................................................38
iii
5
3.3.32 Representations and Warranties of Partners, Calpine and Borrower..............39
3.3.33 Utilities.......................................................................39
3.3.34 Mechanics' Lien Indemnity.......................................................39
3.3.35 Calpine Compliance..............................................................39
3.3.36 Calpine Guaranty................................................................39
3.3.37 Debt to Capitalization Ratio....................................................39
3.3.38 Debt to Collateral Value Ratio..................................................39
3.3.39 Updated Exhibits................................................................40
3.3.40 Diversification Requirements....................................................40
3.4 Conditions Precedent to Each Credit Event...........................................40
3.4.1 Monthly Drawdown Frequency......................................................40
3.4.2 Notice of Borrowing.............................................................40
3.4.3 Drawdown Certificate and Engineer's Certificate.................................40
3.4.4 Amount..........................................................................41
3.4.5 Title Policy Endorsement........................................................41
3.4.6 Lien Releases...................................................................41
3.4.7 Applicable Permits..............................................................41
3.4.8 Equity Contributions............................................................42
3.4.9 Additional Documentation........................................................42
3.4.10 Acceptable Work; No Liens.......................................................42
3.4.11 Casualty........................................................................42
3.4.12 Absence of Litigation...........................................................42
3.4.13 Insurance.......................................................................42
3.4.14 Available Construction Funds....................................................42
3.4.15 Representations and Warranties..................................................43
3.4.16 No Event of Default or Inchoate Default.........................................43
3.4.17 Operative Documents, Applicable Permits and Applicable Third Party
Permits in Effect............................................................43
3.4.18 No Material Adverse Effect......................................................43
3.4.19 Third Party Funding.............................................................43
3.4.20 Debt to Capitalization Ratio....................................................43
3.4.21 Debt to Collateral Value Ratio..................................................43
3.4.22 Interest Coverage Ratio.........................................................43
3.5 Conditions Precedent to Final Completion............................................44
3.5.1 Notice of Completion............................................................44
3.5.2 Completion......................................................................44
3.5.3 Annual Budget...................................................................44
3.5.4 Insurance.......................................................................44
3.5.5 Applicable Permits and Applicable Third Party Permits...........................44
3.5.6 A.L.T.A. Surveys................................................................45
3.5.7 Title Policy....................................................................45
3.5.8 Project Pre-Completion Requirements.............................................46
3.5.9 Operating Plans.................................................................46
3.6 Conditions Precedent to the Issuance of Letters of Credit...........................46
iv
6
3.6.1 Representations and Warranties True and Correct.................................46
3.6.2 No Event of Default or Inchoate Default.........................................46
3.6.3 Operative Documents, Applicable Permits and Applicable Third Party Permits in
Effect.......................................................................46
3.6.4 No Material Adverse Effect......................................................46
3.6.5 Interest Coverage Ratio.........................................................46
3.6.6 Project Pre-Funding Requirements................................................46
3.6.7 Debt to Collateral Value Ratio..................................................46
3.6.8 Project Status..................................................................47
3.7 Failure of Conditions Precedent to be Satisfied for a Particular Project............47
3.8 Funding of Equity...................................................................48
3.9 No Approval of Work.................................................................49
3.10 Waiver of Funding; Adjustment of Drawdown Requests..................................49
ARTICLE 4 REPRESENTATIONS AND WARRANTIES....................................................49
4.1 Organization........................................................................49
4.2 Authorization; No Conflict..........................................................50
4.3 Enforceability......................................................................50
4.4 Compliance with Law.................................................................50
4.5 Business, Debt, Contracts, Joint Ventures Etc.......................................50
4.6 Adverse Change......................................................................51
4.7 Investment Company Act, Etc.........................................................51
4.8 ERISA...............................................................................51
4.9 Permits.............................................................................51
4.10 Qualifying Facility/Exempt Wholesale Generator......................................51
4.11 Hazardous Substance.................................................................52
4.12 Litigation..........................................................................53
4.13 Labor Disputes and Acts of God......................................................53
4.14 Project Documents...................................................................53
4.15 Disclosure..........................................................................54
4.16 Private Offering by Borrower........................................................54
4.17 Taxes...............................................................................54
4.18 Governmental Regulation.............................................................54
4.19 Regulation U, Etc...................................................................55
4.20 Project Budgets; Projections........................................................55
4.21 Financial Statements................................................................55
4.22 Existing Defaults...................................................................55
4.23 No Default..........................................................................55
4.24 Offices, Location of Collateral.....................................................56
4.25 Title and Liens.....................................................................56
4.26 Trademarks..........................................................................56
4.27 Collateral..........................................................................57
4.28 Sufficiency of Project Documents....................................................57
4.29 Utilities...........................................................................58
v
7
4.30 Roads/Transmission Line.............................................................58
4.31 Proper Subdivision..................................................................58
4.32 Flood Zone Disclosure...............................................................58
4.33 Year 2000 Compliance................................................................58
4.34 Acquisition of Real Property........................................................59
ARTICLE 5 COVENANTS OF BORROWER.............................................................59
5.1 Use of Proceeds and Project Revenues................................................59
5.1.1 Proceeds........................................................................59
5.1.2 Revenues........................................................................59
5.2 Payment.............................................................................59
5.2.1 Credit Documents................................................................59
5.2.2 Project Documents...............................................................59
5.3 Warranty of Title...................................................................60
5.4 Notices.............................................................................60
5.5 Financial Statements................................................................62
5.6 Books, Records, Access..............................................................63
5.7 Compliance with Laws, Instruments, Etc..............................................63
5.8 Reports.............................................................................63
5.9 Existence, Conduct of Business, Properties, Etc.....................................65
5.10 Minimum Four-Quarter Portfolio Interest Coverage Ratio; Maximum Debt to
Capitalization Ratio.............................................................65
5.11 Indemnification.....................................................................66
5.12 Qualifying Facility/Exempt Wholesale Generator......................................68
5.13 Construction of Each Project........................................................69
5.14 Completion..........................................................................69
5.15 Operation of Projects and Annual Operating Budget...................................69
5.16 Preservation of Rights; Further Assurances..........................................70
5.17 Project Equity......................................................................71
5.18 Maintenance of Insurance............................................................72
5.19 Taxes and Other Government Charges..................................................72
5.20 Event of Eminent Domain.............................................................73
5.21 Power Marketing Plan; Fuel Plan.....................................................73
5.22 Utility Charges.....................................................................73
5.23 Project Document Scope of Liability.................................................73
5.24 Funded Subsequent Projects..........................................................73
ARTICLE 6 NEGATIVE COVENANTS................................................................73
6.1 Contingent Liabilities..............................................................73
6.2 Limitations on Liens................................................................74
6.3 Indebtedness........................................................................74
6.4 Sale or Lease of Assets.............................................................74
6.5 Changes.............................................................................78
6.6 Distributions.......................................................................78
6.7 Investments.........................................................................78
vi
8
6.8 Transactions With Affiliates........................................................78
6.9 Regulations.........................................................................79
6.10 ERISA...............................................................................79
6.11 Partnerships, etc...................................................................79
6.12 Dissolution.........................................................................79
6.13 Amendments; Change Orders; Completion...............................................79
6.14 Compliance with Operative Documents.................................................81
6.15 Name and Location; Fiscal Year......................................................81
6.16 Use of Project Sites................................................................81
6.17 Assignment..........................................................................81
6.18 Abandonment of Project..............................................................81
6.19 Hazardous Substance.................................................................82
6.20 Additional Project Documents........................................................82
6.21 Project Budget Amendments...........................................................82
6.22 Loan Proceeds; Project Revenues.....................................................82
6.23 Acquisition of Real Property........................................................82
ARTICLE 7 APPLICATION OF FUNDS..............................................................83
7.1 Construction Account................................................................83
7.1.1 Establishment of Account........................................................83
7.1.2 Disbursements from Construction Account.........................................83
7.1.3 Rights of Administrative Agent..................................................84
7.2 Revenue Account.....................................................................84
7.2.1 Establishment of Account; Priority of Payments..................................84
7.2.2 O&M Costs.......................................................................85
7.2.3 Subordinated O&M Costs..........................................................86
7.2.4 Mandatory Prepayment............................................................86
7.3 Operating Account...................................................................87
7.3.1 Establishment of Account........................................................87
7.3.2 Funding.........................................................................87
7.3.3 Withdrawals.....................................................................87
7.3.4 Security Interest...............................................................87
7.4 Loss Proceeds Account...............................................................87
7.5 Application of Insurance Proceeds...................................................87
7.5.1 General.........................................................................87
7.5.2 Delay in Start Up and Business Interruption Insurance...........................88
7.5.3 Applications; Mandatory Prepayments.............................................88
7.5.4 Proceeds Less than $1,000,000...................................................89
7.5.5 Proceeds in Excess of $1,000,000, Not in Excess of $10,000,000..................89
7.5.6 Proceeds in Excess of $10,000,000...............................................90
7.5.7 Repair and Restoration Procedures...............................................90
7.5.8 Excess Insurance Proceeds.......................................................90
7.5.9 Events of Default...............................................................91
7.6 Application of Eminent Domain Proceeds..............................................91
vii
9
7.7 Application of Certain Damages Payments; Mandatory Prepayments......................91
7.7.1 Contractor......................................................................91
7.7.2 Power Purchasers................................................................91
7.7.3 Other...........................................................................91
7.8 Working Capital Reserve Account.....................................................92
7.8.1 Establishment of Account........................................................92
7.8.2 Funding.........................................................................92
7.8.3 Withdrawals.....................................................................92
7.8.4 Earnings........................................................................92
7.9 Security Interest in Proceeds and Accounts..........................................92
7.10 Permitted Investments...............................................................93
7.11 Earnings on Accounts................................................................93
7.12 Dominion and Control................................................................93
7.13 Termination of Commitments..........................................................93
ARTICLE 8 EVENTS OF DEFAULT; REMEDIES.......................................................93
8.1 Events of Default...................................................................93
8.1.1 Failure to Make Payments........................................................93
8.1.2 Judgments.......................................................................94
8.1.3 Misstatements; Omissions........................................................94
8.1.4 Bankruptcy; Insolvency..........................................................94
8.1.5 Debt Cross Default..............................................................94
8.1.6 ERISA...........................................................................95
8.1.7 Breach of Terms of Agreement....................................................96
8.1.8 Loss of Qualifying Facility or Eligible Facility Status.........................96
8.1.9 Abandonment.....................................................................97
8.1.10 Security........................................................................97
8.1.11 Loss of Control.................................................................97
8.1.12 Loss of or Failure to Obtain Applicable Permits or Applicable Third Party
Permits......................................................................97
8.1.13 Loss of Collateral..............................................................98
8.1.14 Non-Fundamental Project Default.................................................98
8.1.15 Pledge of Borrower Ownership Interest...........................................98
8.2 Remedies............................................................................98
8.2.1 No Further Loans or Letters of Credit...........................................98
8.2.2 Cash Collateralization of Letters of Credit.....................................99
8.2.3 Prepayment of Loans.............................................................99
8.2.4 Cure by Administrative Agent....................................................99
8.2.5 Acceleration....................................................................99
8.2.6 Cash Collateral.................................................................99
8.2.7 Possession of Projects..........................................................99
8.2.8 Remedies Under Credit Documents................................................100
ARTICLE 9 SCOPE OF LIABILITY...............................................................100
viii
10
ARTICLE 10 ADMINISTRATIVE AGENT; SUBSTITUTION; TECHNICAL COMMITTEE.........................101
10.1 Appointment, Powers and Immunities.................................................101
10.2 Reliance by Administrative Agent...................................................102
10.3 Non-Reliance.......................................................................102
10.4 Defaults...........................................................................102
10.5 Indemnification....................................................................103
10.6 Successor Administrative Agent.....................................................103
10.7 Authorization......................................................................104
10.8 Administrative Agent, Co-Arrangers and Co-Documentation Agent......................104
10.9 Amendments; Waivers................................................................104
10.10 Withholding Tax..................................................................105
10.11 General Provisions as to Payments................................................106
10.12 Substitution of Bank.............................................................106
10.13 Participation....................................................................106
10.14 Transfer of Commitment...........................................................107
10.15 Laws.............................................................................108
10.16 Assignability to Federal Reserve Bank............................................108
10.17 Technical Committee..............................................................108
10.18 Notices to Technical Committee and Banks.........................................109
ARTICLE 11 INDEPENDENT CONSULTANTS.........................................................109
11.1 Removal and Fees...................................................................109
11.2 Duties.............................................................................109
11.3 Independent Consultants' Certificates..............................................109
11.4 Certification of Dates.............................................................110
ARTICLE 12 MISCELLANEOUS...................................................................110
12.1 Addresses..........................................................................110
12.2 Additional Security; Right to Set-Off..............................................112
12.3 Delay and Waiver...................................................................112
12.4 Costs, Expenses and Attorneys' Fees; Syndication...................................113
12.5 Entire Agreement...................................................................113
12.6 Governing Law......................................................................114
12.7 Severability.......................................................................114
12.8 Headings...........................................................................114
12.9 Accounting Terms...................................................................114
12.10 Additional Financing.............................................................114
12.11 No Partnership, Etc..............................................................114
12.12 Deed of Trust/Collateral Documents...............................................114
12.13 Limitation on Liability..........................................................115
12.14 Waiver of Jury Trial.............................................................115
12.15 Consent to Jurisdiction..........................................................115
12.16 Usury............................................................................115
12.17 Knowledge and Attribution........................................................115
ix
11
12.18 Successors and Assigns...........................................................116
12.19 Counterparts.....................................................................116
x
12
INDEX OF EXHIBITS
Exhibit A Definitions and Rules of Interpretation
NOTES
Exhibit B Form of Note
LOAN DISBURSEMENT PROCEDURES
Exhibit C-1 Form of Notice of Borrowing
Exhibit C-2 Form of Confirmation of Interest Period Selection
Exhibit C-3 Form of Notice of Conversion of Loan Type
Exhibit C-4 Form of Notice of LC Activity
Exhibit C-5 Form of Drawdown Certificate
Exhibit C-6 Form of Engineer's Certificate
Exhibit C-7 Form of Disbursement Requisition
Exhibit C-8 Form of Reserve Account Disbursement Requisition
EQUITY AND SECURITY-RELATED DOCUMENTS
Exhibit D-1 Form of Depositary Agreement
Exhibit D-2A Form of Affiliated Party Agreement Guaranty
Exhibit D-2B Form of Completion Guaranty
Exhibit D-3 Form of Deed of Trust
Exhibit D-4 Form of Security Agreement
Exhibit D-5 Form of Lien Subordination Agreement
Exhibit D-6 Schedule of Security Filings
Exhibit D-7 Form of Debt Subordination Agreement
Exhibit D-8 Form of Affiliated Party Subordination Agreement
CONSENTS
Exhibit E-1 Form of Consent for Contracting Party
Exhibit E-2 Schedule of Consents
CLOSING CERTIFICATES
Exhibit F-1 Form of Borrower's Closing Certificate
Exhibit F-2 Form of Insurance Consultant's Certificate
Exhibit F-3 Form of Independent Engineer's Certificate
Exhibit F-4 Form of Fuel Consultant's Certificate
Exhibit F-5 Form of Power Marketing Consultant's Certificate
PROJECT DESCRIPTION EXHIBITS
Exhibit G-1 Description of Projects
Appendix G-1A Description of Magic Valley Project
Appendix G-1B Description of South Point Project
Appendix G-1C Description of Xxxxxxxxx Project
xi
00
Xxxxxxxx X-0X Description of Xxxxxx Project
Appendix G-1E Description of Ontelaunee Project
Appendix G-1F Description of Eastern Region Project 00
Xxxxxxxx X-0X Description of Eastern Region Project 00
Xxxxxxxx X-0X Xxxxxxxxxxx xx Xxxxxxx Xxxxxx Project 00
Xxxxxxxx X-0X Description of Eastern Region Project 00
Xxxxxxxx X-0X Description of Lost Pines Project
Appendix G-1K Description of Central Region Project 00
Xxxxxxxx X-0X Description of Baytown Project
Appendix G-1M Description of Lyondell Citgo Project
Appendix G-1N Description of Central Region Project 02
Appendix G-1O Description of Los Medanos Project
Xxxxxxxx X-0X Description of West Phoenix Project
Appendix G-1Q Description of Delta Project
Appendix G-1R Description of Xxxxxxx Project
Appendix G-1S Description of Western Region Project 01
Exhibit G-2 Power Marketing Plans
Appendix G-2A Magic Valley Power Marketing Plan
Appendix G-2B South Point Power Marketing Plan
Appendix G-2C Xxxxxxxxx Power Marketing Plan
Appendix G-2D Xxxxxx Power Marketing Plan
Exhibit G-3 Schedule of Applicable Permits
Appendix G-3A Magic Valley Schedule of Applicable Permits
Appendix G-3B South Point Schedule of Applicable Permits
Appendix G-3C Xxxxxxxxx Schedule of Applicable Permits
Appendix G-3D Xxxxxx Schedule of Applicable Permits
Exhibit G-4 Project Budgets
Appendix G-4A Magic Valley Project Budget
Appendix G-4B South Point Project Budget
Appendix G-4C Xxxxxxxxx Project Budget
Appendix G-4D Xxxxxx Project Budget
Appendix G-4E Borrower Budget of Non-Allocated Costs
Exhibit G-5 Base Case Project Projections
Exhibit G-6 Project Schedules
Appendix G-6A Magic Valley Project Schedule
Appendix G-6B South Point Project Schedule
Appendix G-6C Xxxxxxxxx Project Schedule
Exhibit G-7 Pending Litigation
Exhibit G-8 Hazardous Substances Disclosure
Exhibit G-9 Fuel Plans
Appendix G-9A Magic Valley Fuel Plan
Appendix X-0X Xxxxx Xxxxx Xxxx Xxxx
Xxxxxxxx X-0X Xxxxxxxxx Fuel Plan
Appendix G-9D Xxxxxx Fuel Plan
xii
14
OTHER
Exhibit H Banks/Lending Offices
Exhibit I Annual Insurance Consultant's Certificate
Exhibit J-1 Form of Withholding Certificate (Treaty)
Exhibit J-2 Form of Withholding Certificate (Effectively Connected)
Exhibit K Insurance Requirements
Exhibit L Magic Valley Project Pre-Funding Requirements
Exhibit M South Point Project Pre-Funding Requirements
Exhibit N Xxxxxx Project Pre-Funding Requirements
Exhibit X Xxxxxxxxx Project Pre-Funding Requirements
Exhibit P Magic Valley Project Pre-Completion Requirements
Exhibit Q South Point Project Pre-Completion Requirements
Exhibit R Xxxxxx Project Pre-Completion Requirements
Exhibit S Xxxxxxxxx Project Pre-Completion Requirements
xiii
15
THIS CREDIT AGREEMENT (this "Agreement") dated as of October 20,
1999, is entered into among CALPINE CONSTRUCTION FINANCE COMPANY, L.P., a
Delaware limited partnership, as Borrower, the financial institutions listed on
Exhibit H hereto (the "Banks"), CREDIT SUISSE FIRST BOSTON, as Lead Arranger,
Syndication Agent and Bookrunner, THE BANK OF NOVA SCOTIA, as Lead Arranger, LC
Bank and Administrative Agent, TD SECURITIES (USA) INC., as Co-Arranger and
Co-Documentation Agent, and CIBC WORLD MARKETS CORP., as Co-Arranger and
Co-Documentation Agent.
In consideration of the agreements herein and in the other Credit
Documents and in reliance upon the representations and warranties set forth
herein and therein, the parties agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Definitions. Except as otherwise expressly provided,
capitalized terms used in this Agreement and its exhibits shall have the
meanings given in Exhibit A.
1.2 Rules of Interpretation. Except as otherwise expressly
provided, the rules of interpretation set forth in Exhibit A shall apply to this
Agreement and the other Credit Documents.
ARTICLE 2
THE CREDIT FACILITIES
2.1 Loans.
2.1.1 Loan Facility.
(a) Availability. Subject to the terms and conditions set
forth in this Agreement, each Bank severally agrees to advance to Borrower from
time to time during the Loan Availability Period such loans as Borrower may
request under this Section 2.1.1 (individually, a "Loan" and collectively the
"Loans"), in an aggregate principal amount which, when added to such Bank's
Proportionate Share of the Aggregate LC Stated Amount and all outstanding
Reimbursement Obligations owed such Bank, does not exceed such Bank's Loan
Commitment. Subject to the terms hereof (including without limitation the
conditions to drawdowns set forth in Article 3), Borrower may borrow, repay and
reborrow the Loans from time to time during the Loan Availability Period.
(b) Notice of Borrowing. Borrower shall request Loans by
delivering to Administrative Agent a written notice in the form of Exhibit C-1,
appropriately completed (a "Notice of Borrowing"), which specifies, among other
things:
(i) The principal portion of the requested Borrowing
which will bear interest as provided in (1) Section 2.1.1(c)(i) (individually, a
"Base Rate Loan") and/or (2) Section 2.1.1(c)(ii) (individually, a "LIBOR
Loan");
1
16
(ii) The amount of the requested Borrowing, which shall
be in the minimum amount of $1,000,000 or an integral multiple of $10,000 in
excess thereof;
(iii) The date of the requested Borrowing, which shall
be a Banking Day;
(iv) If the requested Borrowing is to consist of LIBOR
Loans, the initial Interest Periods selected by Borrower for such Loans; and
(v) The Project(s) to which such Borrowing relates.
Borrower shall give each Notice of Borrowing relating to Loans to
Administrative Agent so as to provide the Minimum Notice Period applicable to
Loans of the Type requested. Any Notice of Borrowing may be modified or revoked
by Borrower through the Banking Day prior to the Minimum Notice Period, and
shall thereafter be irrevocable.
(c) Loan Interest. Borrower shall pay interest on the unpaid
principal amount of each Loan from the date of such Loan until the maturity or
prepayment thereof at the following rates per annum:
(i) With respect to the principal portion of such Loan
which is, and during such periods as such Loan is, a Base Rate Loan, at a rate
per annum equal to the Base Rate plus the Applicable Margin, such rate to change
from time to time as the Base Rate shall change; and
(ii) With respect to the principal portion of such Loan
which is, and during such portion of such periods as such Loan is, a LIBOR Loan,
at a rate per annum, at all times during each Interest Period for such LIBOR
Loan, equal to the LIBO Rate for such Interest Period plus the Applicable
Margin.
(d) Loan Principal Payments. Borrower shall repay to
Administrative Agent, for the account of each Bank, in full on the Loan Maturity
Date the unpaid principal amount of all Loans made by such Bank.
2.1.2 Interest Provisions Relating to Loans.
(a) Interest Payment Dates. Borrower shall pay accrued
interest on the unpaid principal amount of each Loan (i) in the case of each
Base Rate Loan, on the last Banking Day of each calendar quarter, (ii) in the
case of each LIBOR Loan, on the last day of each Interest Period related to such
LIBOR Loan and, if such Interest Period is longer than three months, every three
months after the date of such LIBOR Loan and (iii) in all cases, upon prepayment
(to the extent thereof and including any optional prepayments or Mandatory
Prepayments), upon conversion from one Type of Loan to another Type, and on the
Loan Maturity Date.
2
17
(b) LIBOR Loan Interest Periods.
(i) The initial and subsequent Interest Periods for
LIBOR Loans shall be a maximum of one month during the six month period
immediately following the Closing Date; provided that Administrative Agent may
otherwise approve, in its sole discretion, a longer Interest Period which is
requested by Borrower and otherwise complies with the following provisions of
this Section 2.1.2(b)(i). Thereafter, each subsequent Interest Period (including
any Interest Period referenced in the proviso of the first sentence of this
Section 2.1.2(b)) selected by Borrower for all LIBOR Loans shall be one, two,
three, six or, if made available by Administrative Agent, 12 months or such
other period as close to three months as is practicable to enable Borrower to
limit the number of LIBOR Loans as required by this Section 2.1.2(b)(i) or to
comply with clauses (C), (D) or (F) of the next sentence. Notwithstanding
anything to the contrary in either of the two preceding sentences, (A) any
Interest Period which would otherwise end on a day which is not a Banking Day
shall be extended to the next succeeding Banking Day unless such next Banking
Day falls in another calendar month, in which case such Interest Period shall
end on the immediately preceding Banking Day; (B) any Interest Period which
begins on the last Banking Day of a calendar month (or on a day for which there
is no numerically corresponding day in the calendar month at the end of such
Interest Period) shall end on the last Banking Day of a calendar month; (C)
Borrower may not select Interest Periods which would leave a greater principal
amount of Loans subject to Interest Periods ending after a date upon which Loans
are or may be required to be repaid than principal amount of Loans scheduled to
be outstanding after such date; (D) any Interest Period for a Loan which would
otherwise end after the Loan Maturity Date shall end on the Loan Maturity Date;
(E) LIBOR Loans for each Interest Period shall be in the amount of at least
$100,000; and (F) Borrower may not at any time have outstanding more than twelve
different Interest Periods relating to LIBOR Loans.
(ii) Borrower may contact Administrative Agent at any
time prior to the end of an Interest Period, for a quotation of Interest Rates
in effect at such time for given Interest Periods and Administrative Agent shall
promptly provide such quotation. Borrower may select an Interest Period
telephonically within the time periods specified in Section 2.1.5, which
selection shall be irrevocable on and after the applicable Minimum Notice
Period. Borrower shall confirm such telephonic notice to Administrative Agent by
telecopy on the day such notice is given (in substantially the form of Exhibit
C-2, a "Confirmation of Interest Period Selection"). Borrower shall promptly
deliver to Administrative Agent the original of the Confirmation of Interest
Period Selection initially delivered by telecopy. If Borrower fails to notify
Administrative Agent of the next Interest Period for any LIBOR Loans in
accordance with this Section 2.1.2(b), such Loans shall automatically convert to
Base Rate Loans on the last day of the current Interest Period therefor.
Administrative Agent shall as soon as practicable (and, in any case, within two
Banking Days after delivery of the Confirmation of Interest Period Selection)
notify Borrower of each determination of the Interest Rate applicable to each
Loan.
(c) Interest Account and Interest Computations. Borrower
authorizes Administrative Agent to record in an account or accounts maintained
by Administrative Agent on its books (i) the interest rates applicable to all
Loans and the effective dates of all changes thereto, (ii) the Interest Period
for each LIBOR Loan, (iii) the date and amount of each principal and interest
payment on each Loan and (iv) such other information as Administrative Agent may
3
18
determine is necessary for the computation of interest payable by Borrower
hereunder. Borrower agrees that all computations by Administrative Agent of
interest shall be conclusive in the absence of manifest error. All computations
of interest on Base Rate Loans shall be based upon a year of 365 or 366 days and
the actual days elapsed, and shall be adjusted in accordance with any changes in
the Base Rate to take effect on the beginning of the day of such change in the
Base Rate. All computations of interest on LIBOR Loans shall be based upon a
year of 360 days and the actual days elapsed.
2.1.3 Promissory Notes. The obligation of Borrower to repay the
Loans made by each Bank and to pay interest thereon at the rates provided herein
shall be evidenced by promissory notes in the form of Exhibit B (individually, a
"Note"), each payable to the order of such Bank and in the principal amount of
such Bank's Loan Commitment. Borrower authorizes each Bank to record on the
schedule annexed to such Bank's Note, the date and amount of each Loan made by
such Bank, and each payment or prepayment of principal thereunder and agrees
that all such notations shall constitute prima facie evidence of the matters
noted. Borrower further authorizes each Bank to attach to and make a part of
such Bank's Note continuations of the schedule attached thereto as necessary. No
failure to make any such notations, nor any errors in making any such notations,
shall affect the validity of Borrower's obligations to repay the full unpaid
principal amount of the Loans or the duties of Borrower hereunder or thereunder.
2.1.4 Loan Funding.
(a) Notice. Each Notice of Borrowing shall be delivered by
Borrower to Administrative Agent in accordance with Section 12.1. Administrative
Agent shall promptly notify each Bank of the contents of each Notice of
Borrowing.
(b) Pro Rata Loans. All Loans shall be made on a pro rata
basis by the Banks in accordance with their respective Proportionate Shares of
such Loans, with each Borrowing to consist of a Loan by each Bank equal to such
Bank's Proportionate Share of such Borrowing.
(c) Bank Funding. Each Bank shall, before 12:00 noon on the
date of each Borrowing, make available to Administrative Agent at its office
specified in Section 12.1, in same day funds, such Bank's Proportionate Share of
such Borrowing. The failure of any Bank to make the Loan to be made by it as
part of any Borrowing shall not relieve any other Bank of its obligation
hereunder to make its Loan on the date of such Borrowing. No Bank shall be
responsible for the failure of any other Bank to make the Loan to be made by
such other Bank on the date of any Borrowing.
(d) Construction Account. No later than 2:00 p.m. on the date
specified in each Notice of Borrowing, if the applicable conditions precedent
listed in Article 3 have been satisfied and to the extent Administrative Agent
shall have received the appropriate funds from the Banks, Administrative Agent
will make available the Loans requested in such Notice of Borrowing (or so much
thereof as the Banks shall have approved pursuant to this Agreement) in Dollars
and in immediately available funds, at Administrative Agent's New York Branch,
and shall deposit such Loans into the Construction Account.
4
19
2.1.5 Conversion of Loans. Borrower may convert Loans from one
Type of Loans to another Type; provided, however, that (i) any conversion of
LIBOR Loans into Base Rate Loans shall be made on, and only on, the first day
after the last day of an Interest Period for such LIBOR Loans and (ii) Loans
shall be converted only in amounts of $100,000 or more. Borrower shall request
such a conversion by a written notice to Administrative Agent in the form of
Exhibit C-3, appropriately completed (a "Notice of Conversion of Loan Type"),
which specifies:
(a) The Loans, or portion thereof, which are to be converted;
(b) The Type into which such Loans, or portion thereof, are
to be converted;
(c) If such Loans are to be converted into LIBOR Loans, the
initial Interest Period selected by Borrower for such Loans in accordance with
Section 2.1.2(b); and
(d) The date of the requested conversion, which shall be a
Banking Day.
Borrower shall so deliver each Notice of Conversion of Loan Type so as to
provide at least the applicable Minimum Notice Period. Any Notice of Conversion
of Loan Type may be modified or revoked by Borrower through the Banking Day
prior to the Minimum Notice Period, and shall thereafter be irrevocable. Each
Notice of Conversion of Loan Type shall be delivered by first-class mail or
telecopy to Administrative Agent at the office or to the telecopy number and
during the hours specified in Section 12.1; provided, however, that Borrower
shall promptly deliver to Administrative Agent the original of any Notice of
Conversion of Loan Type initially delivered by telecopy. Administrative Agent
shall promptly notify each Bank of the contents of each Notice of Conversion of
Loan Type.
2.1.6 Prepayments.
(a) Terms of All Prepayments. Upon the prepayment of any Loan
(whether such prepayment is an optional prepayment under Section 2.1.6(b) or a
Mandatory Prepayment), Borrower shall pay to Administrative Agent for the
account of the Bank which made such Loan, as applicable, (i) all accrued
interest to the date of such prepayment on the amount prepaid, (ii) all accrued
fees to the date of such prepayment of the amount being prepaid, and (iii) if
such prepayment is the prepayment of a LIBOR Loan on a day other than the last
day of an Interest Period for such LIBOR Loan, all Liquidation Costs incurred by
such Bank as a result of such prepayment. Notwithstanding the foregoing,
Borrower shall have the right, by giving five Banking Days' notice to
Administrative Agent, in lieu of prepaying a LIBOR Loan on a day other than the
last day of an Interest Period for such LIBOR Loan, to deposit or cause
Administrative Agent to deposit, into an account to be held by Depositary Agent
(which account shall be subjected to the Lien of the Collateral Documents in a
manner satisfactory to Administrative Agent) an amount equal to the LIBOR Loans
to be prepaid. Such funds shall be held in such account until the expiration of
the Interest Period applicable to the LIBOR Loan to be prepaid at which time the
amount deposited in such account shall be used to prepay such
5
20
LIBOR Loan and any interest accrued on such amount shall be deposited in the
Revenue Account. The deposit of amounts into such account shall not constitute a
prepayment of Loans and all Loans to be prepaid using the proceeds from such
account shall continue to accrue interest at the then applicable interest rate
for such Loans until actually prepaid. All amounts in such account shall only be
invested in Permitted Investments as directed by and at the expense and risk of
Borrower. Borrower may reborrow the principal amount of any Loan which is
prepaid.
(b) Optional Prepayments. Subject to Section 2.1.6(a), Borrower
may, at its option and without penalty, upon five Banking Days' notice to
Administrative Agent, prepay any Loans in whole or in part in minimum amounts of
$5,000,000 or an incremental multiple of $1,000,000 in excess thereof.
(c) Mandatory Prepayments. Borrower shall prepay (or cause to be
prepaid) Loans to the extent required by Section 7.2.1(9), 7.2.4, 7.5, 7.6, or
7.7 of this Agreement, or any other provision of this Agreement which requires
prepayment of Loans (such prepayment, "Mandatory Prepayment").
2.2 Letter of Credit Facilities.
2.2.1 Issuance of the Letters of Credit. Subject to the terms and
conditions set forth in this Agreement, LC Bank shall, during the Loan
Availability Period, on each Banking Day specified in a Notice of LC Activity
described in Section 2.2.3, issue, extend or increase the Stated Amount (as
applicable), for the account of Borrower, of the Letter(s) of Credit to which
such Notice of LC Activity relates, and deliver each such Letter of Credit (or a
notice of extension or increase in the Stated Amount thereof) to the applicable
LC Beneficiary. Subject to Section 2.2.6(b), LC Bank shall not modify the
conditions for draws or terms of availability for any Letter of Credit issued
and outstanding hereunder without Borrower's consent.
2.2.2 Availability. LC Bank shall, subject to the terms and
conditions of the Agreement, make Letter(s) of Credit available to Borrower
solely to enable Borrower to provide security for its obligations under Project
Documents. No Letter of Credit shall be issued, renewed, replaced or extended by
LC Bank until such time (or a reasonable period before such time) as required
under the Project Document pursuant to which such Letter of Credit is being
issued. The expiration date of each Letter of Credit shall be on or prior to the
scheduled Loan Maturity Date.
2.2.3 Notice of LC Activity. Borrower shall request the issuance,
extension or increase in the Stated Amount of any Letter of Credit by delivering
to Administrative Agent an irrevocable written notice in the form of Exhibit
C-4, appropriately completed (a "Notice of LC Activity"), which specifies, among
other things:
(a) The particulars of the Letter of Credit to be issued or
the specific Letter of Credit to be extended or the Stated Amount of which is to
be increased;
(b) The Project to which such Letter of Credit relates;
6
21
(c) The issue date and expiration date of the Letter of
Credit to be issued or extended (neither of which shall in any event be later
than the scheduled Loan Maturity Date);
(d) The Stated Amount of such Letter of Credit which,
together with the Aggregate LC Stated Amount and all outstanding Reimbursement
Obligations, shall not exceed the lesser of (i) Total Letter of Credit
Commitment and (ii) an amount equal to the excess, if any, of (A) the amount of
the Total Loan Commitment at such time over (B) the aggregate principal amount
of all Loans then outstanding plus the Aggregate LC Stated Amount and all
outstanding Reimbursement Obligations; and
(e) The Available Construction Funds which, after taking into
effect the issuance of such Letter of Credit, will be equal to or exceed the
remaining Project Costs for the Initial Projects and the Funded Subsequent
Projects.
Borrower shall give the Notice of LC Activity to Administrative Agent and LC
Bank at least five Banking Days before the requested date of issuance of any
Letter of Credit, and at least five Banking Days before the requested date of
extension, or increase in the Stated Amount, thereof. Any Notice of LC Activity,
once given by Borrower, may not be modified or revoked without the prior consent
of the LC Bank.
2.2.4 Reimbursement. LC Bank shall notify Borrower of any Drawing
Payment under any Letter of Credit within one Banking Day after the date that
such Drawing Payment is made (the date such Drawing Payment is made, the
"Drawing Date"); provided, however, that LC Bank's failure to provide such
notification shall not relieve Borrower of its Reimbursement Obligation (it
being understood, however, that LC Bank shall not be excused from any liability
it may have to Borrower as a result of such failure to provide the required
notice). No later than 11:00 a.m. on the fifth Banking Day after the Drawing
Date, Borrower shall make or cause to be made to LC Bank a Reimbursement Payment
in an amount equal to the sum of (a) the full amount of such Drawing Payment and
(b) interest thereon for each day or portion thereof until such Reimbursement
Payment is made at a rate equal to (i) from the Drawing Date through the fifth
Banking Day following the Drawing Date, the LIBO Rate plus the Applicable Margin
then applicable to LIBOR Loans and (ii) thereafter, the Default Rate; provided,
however, that such Reimbursement Payment shall be for the benefit of each Bank
(in proportion to its Proportionate Share of the Total Letter of Credit
Commitment) to the extent that, prior to the time such Reimbursement Payment is
made, such Bank has, pursuant to Section 2.2.7, paid LC Bank its respective
Proportionate Share of the Drawing Payment made by LC Bank. If a Reimbursement
Payment is made in the full amount of such Drawing Payment by 3:00 p.m. on the
applicable Drawing Date, no interest shall be payable on such Drawing Payment.
2.2.5 Reimbursement Obligation Absolute. The Reimbursement
Obligation of Borrower for each Drawing Payment shall be absolute, unconditional
and irrevocable, and shall be performed strictly in accordance with the terms of
this Agreement under and without regard to any circumstances, including, (a) any
lack of validity or enforceability of any of the Operative Documents, (b) any
amendment or waiver of or any consent to departure from all or any terms of any
of the Operative Documents, (c) the existence of any claim, setoff, defense or
other right
7
22
which Borrower may have at any time against any LC Beneficiary or any transferee
of any Letter of Credit (or any Persons for whom any such LC Beneficiary or
transferee may be acting), LC Bank, Administrative Agent, any Bank or any other
Person, whether in connection with this Agreement, the transactions contemplated
herein or in the other Operative Documents, or in any unrelated transaction, (d)
any breach of contract or dispute among or between Borrower, LC Bank,
Administrative Agent, any Bank, or any other Person, (e) any demand, statement,
certificate, draft or other document presented under any Letter of Credit
proving to be forged, fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect, (f) payment by LC
Bank under any Letter of Credit against presentation of any demand, statement,
certificate, draft or other document which does not comply with the terms of
such Letter of Credit, (g) any non-application or misapplication by an LC
Beneficiary of the proceeds of any Drawing Payment under a Letter of Credit or
any other act or omission of an LC Beneficiary in connection with a Letter of
Credit, (h) any extension of time for or delay, renewal or compromise of or
other indulgence or modification to the Drawing Payment granted or agreed to by
LC Bank, Administrative Agent or any Bank, with or without notice to or approval
by Borrower, (i) any failure to preserve or protect any Collateral, any failure
to perfect or preserve the perfection of any Lien thereon, or the release of any
of the Collateral securing the performance or observance of the terms of this
Agreement or any of the other Operative Documents, or (j) any other
circumstances or happenings whatsoever relating to Borrower, such Reimbursement
Obligation or any Project, whether or not similar to any of the foregoing,
including the failure of Borrower to occupy or use any Project in the manner
contemplated by the Operative Documents or otherwise, any defect in title,
design, operation, merchantability, fitness or condition of any Project or in
the suitability of any Project for Borrower's purposes or needs, any failure of
consideration, destruction of or damage to any Project, any commercial
frustration of purpose, the taking by condemnation of title to or the use of all
or any part of any Project, any Regulatory Change, any failure of an LC
Beneficiary or any other Person to perform or observe any agreement, whether
express or implied, or any duty, liability or obligation arising out of or in
connection with the Operative Documents to which each is a party; provided,
however, that nothing in this Section 2.2.5 shall relieve LC Bank,
Administrative Agent or any Bank from liability for its gross negligence or
willful misconduct or breach of this Agreement.
2.2.6 Reduction and Reinstatement of Stated Amount.
(a) The Stated Amount of each Letter of Credit shall be
reduced by the amount of Drawing Payments made in respect thereof.
Notwithstanding anything to the contrary contained in this Section 2.2, once so
reduced, the Stated Amount of any Letter of Credit shall not be reinstated
except (i) upon the prior written consent of Administrative Agent, LC Bank and
the Required Banks or (ii) upon payment by Borrower of the Reimbursement
Obligation corresponding to such Drawing Payment and satisfaction of the
conditions for an increase in the Stated Amount of a Letter of Credit set forth
in Section 2.2.3 and Article 3.
(b) Upon the occurrence and during the continuation of an
Event of Default under Section 8.1.4 or at such time as, pursuant to the terms
hereof, Administrative Agent and the Banks have accelerated the Obligations,
Administrative Agent (acting at the direction of the LC Bank or the Required
Banks) shall be entitled to cancel all outstanding Letters of Credit any time at
least 15 days after delivery to the LC Beneficiary of each Letter of Credit that
will be
8
23
canceled a written notice of such intent to cancel, whereupon the LC Beneficiary
shall be entitled to draw upon the applicable Letter of Credit in accordance
with its terms.
2.2.7 Bank Participation. Each Bank severally agrees to
participate with LC Bank in the extension of credit arising from the issuance of
the Letters of Credit in an amount equal to such Bank's Proportionate Share of
the Stated Amount of each Letter of Credit, and the issuance of a Letter of
Credit shall be deemed a confirmation to LC Bank of such participation in such
amount. LC Bank may request the Banks to pay to LC Bank their respective
Proportionate Shares of all or any portion of any Drawing Payment made or to be
made by LC Bank under any Letter of Credit by contacting each Bank and
Administrative Agent telephonically (promptly confirmed in writing) at any time
after LC Bank has received notice of or request for such Drawing Payment, and
specifying the amount of such Drawing Payment, such Bank's Proportionate Share
thereof, and the date on which such Drawing Payment is to be made or was made;
provided, however, that LC Bank shall not request the Banks to make any payment
under this Section 2.2.7 in connection with any portion of a Drawing Payment for
which LC Bank has been reimbursed through a Reimbursement Payment by Borrower
(unless such Reimbursement Payment has been thereafter recovered by Borrower).
Upon receipt of any such request for payment from LC Bank, each Bank shall pay
to LC Bank such Bank's Proportionate Share of the unreimbursed portion of such
Drawing Payment, together with interest thereon at a per annum rate equal to the
Federal Funds Rate, as in effect from time to time, from the date of such
Drawing Payment to the date on which such Bank makes payment. Each Bank's
obligation to make each such payment to LC Bank shall be absolute, unconditional
and irrevocable and shall not be affected by any circumstance whatsoever,
including the occurrence or continuance of any Inchoate Default or Event of
Default, or the failure of any other Bank to make any payment under this Section
2.2.7, and each Bank further agrees that each such payment shall be made without
any offset, abatement, withholding or reduction whatsoever. If any Reimbursement
Payment is made to Administrative Agent or LC Bank, Administrative Agent or LC
Bank, as applicable, shall pay to each Bank which has paid its Proportionate
Share of the Drawing Payment such Bank's Proportionate Share of the
Reimbursement Payment and shall, in the case of Administrative Agent, pay to LC
Bank and, in the case of LC Bank, retain, the balance of such Reimbursement
Payment.
2.2.8 Commercial Practices. Borrower assumes all risks of the
acts or omissions of any LC Beneficiary or transferee of any Letter of Credit
with respect to the use of such Letter of Credit. Borrower agrees that neither
LC Bank, Administrative Agent nor any Bank (nor any of their respective
directors, officers or employees) shall be liable or responsible for: (a) the
use which may be made of any Letter of Credit or for any acts or omissions of
any LC Beneficiary or transferee in connection therewith; (b) any reference
which may be made to this Agreement or to any Letter of Credit in any
agreements, instruments or other documents; (c) the validity, sufficiency or
genuineness of documents other than the Letters of Credit, or of any
endorsement(s) thereon, even if such documents should in fact prove to be in any
or all respects invalid, insufficient, fraudulent or forged or any statement
therein prove to be untrue or inaccurate in any respect whatsoever; (d) payment
by LC Bank against presentation of documents which do not strictly comply with
the terms of the applicable Letter of Credit, including failure of any documents
to bear any reference or adequate reference to such Letter of Credit; or (e) any
other circumstances whatsoever in making or failing to make payment under any
Letter of Credit,
9
24
except only that LC Bank shall be liable to Borrower for acts or events
described in clauses (a) through (e) above, to the extent, but only to the
extent, of any direct damages, as opposed to indirect, special or consequential
damages, suffered by Borrower which Borrower proves were caused by (i) LC Bank's
willful misconduct or gross negligence in determining whether a drawing made
under the applicable Letter of Credit complies with the terms and conditions
therefor stated in such Letter of Credit or (ii) LC Bank's willful failure to
pay under any Letter of Credit after a drawing by the respective LC Beneficiary
strictly complying with the terms and conditions of the applicable Letter of
Credit. Without limiting the foregoing, LC Bank may accept any document that
appears on its face to be in order, without responsibility for further
investigation. Borrower hereby waives any right to object to any payment made
under a Letter of Credit with regard to a drawing that is in the form provided
in such Letter of Credit but which varies with respect to punctuation (except
punctuation with respect to any Dollar amount specified therein),
capitalization, spelling or similar matters of form.
2.2.9 Term of Letters of Credit. Unless terminated earlier in
accordance with its terms, or extended pursuant to Section 2.2.3, each Letter of
Credit shall terminate on the earlier to occur of (i) 12:01 a.m., on the
Expiration Date stated therein (which shall be no later than the earlier of one
year from the date such Letter of Credit is issued and 15 days following the
scheduled expiration of the letter of credit obligations under the Project
Document in connection with which such Letter of Credit is to be issued) and
(ii) cancellation of such Letter of Credit pursuant to Section 2.2.6(b);
provided, however, that no Letter of Credit shall expire after the Loan Maturity
Date.
2.3 Total Commitments.
2.3.1 Loan Commitment. The aggregate principal amount of all
Loans outstanding at any time or times shall not exceed $1,000,000,000 or, if
such amount is reduced by Borrower pursuant to Section 2.3.3, such lower amount
(such amount, so reduced from time to time, the "Total Loan Commitment"), minus
the sum of (i) the aggregate Stated Amount of all Letters of Credit then
outstanding plus (ii) the aggregate amount of all Reimbursement Obligations then
outstanding.
2.3.2 Letter of Credit Commitment. The aggregate Stated Amount of
all Letters of Credit from time to time outstanding and all outstanding
Reimbursement Obligations thereunder shall not exceed $50,000,000, or, if such
amount is reduced by Borrower pursuant to Section 2.3.3, such lower amount (such
amount, as so reduced from time to time, the "Total Letter of Credit
Commitment").
2.3.3 Reductions and Cancellations. Borrower may, from time to
time upon five Banking Days written notice to Administrative Agent, permanently
reduce, by an amount of $10,000,000 or an integral multiple of $1,000,000 in
excess thereof or cancel in its entirety the Total Loan Commitment and/or the
Total Letter of Credit Commitment. Notwithstanding the foregoing, Borrower may
not reduce or cancel the Total Loan Commitment and/or the Total Letter of Credit
Commitment if, after giving effect to such reduction or cancellation, (i) the
sum of the aggregate principal amount of all Loans then outstanding and the
Aggregate LC Stated Amount together with all outstanding Reimbursement
Obligations would exceed the Total Loan
10
25
Commitment, (ii) the Available Construction Funds would not, in the reasonable
judgment of the Technical Committee and the Independent Engineer, be equal to or
exceed remaining Project Costs for all Initial Projects and Funded Subsequent
Projects, or (iii) such reduction or cancellation would cause a violation of any
other provision of this Agreement, the other Credit Documents, any Project
Documents or have a Material Adverse Effect. Borrower shall pay to
Administrative Agent any Commitment Fees then due upon any cancellation and,
from the effective date of any reduction, the Commitment Fees shall be computed
on the basis of the Available Loan Commitment, as so reduced. Once reduced or
canceled, none of the Total Loan Commitment may be increased or reinstated. Any
reductions in the Total Loan Commitment or the Total Letter of Credit Commitment
pursuant to this Section 2.3.3 shall be applied ratably to each Bank's
respective Commitments in accordance with Section 2.7.1.
2.4 Fees.
2.4.1 Fee Letter. Borrower shall pay to the Lead Arrangers, and
Administrative Agent solely for the Lead Arrangers' and Administrative Agent's
respective accounts the fees described in that certain letter from Borrower to
the Lead Arrangers and Administrative Agent dated the Closing Date.
2.4.2 Loan Commitment Fees. On the last Banking Day in each
calendar quarter (where all or any portion of such calendar quarter occurs on or
after the Closing Date and prior to the Loan Maturity Date) and on the Loan
Maturity Date (or, if the Total Loan Commitment is canceled prior to such date,
on the date of such cancellation), Borrower shall pay to Administrative Agent,
for the benefit of the Banks, accruing from the Closing Date or the first day of
such quarter, as the case may be, a commitment fee (the "Commitment Fee") for
such quarter (or portion thereof) then ending equal to the product of (i) 0.50%
times (ii) the daily average Available Loan Commitment for such quarter (or
portion thereof) times (iii) a fraction, the numerator of which is the number of
days in such quarter (or portion thereof) and the denominator of which is the
number of days in that calendar year (365 or 366, as the case may be).
2.4.3 Activation Fee. Concurrently with the first Borrowing in
respect of each Subsequent Project, Borrower shall pay to Administrative Agent,
for the benefit of the Banks, an activation fee (the "Activation Fee") equal to
the product of (a) 0.25% times (b) the total amount of Project Costs in respect
of such Subsequent Project less any Contributions by Calpine previously applied
to pay Project Costs for such Subsequent Project as reflected in such Subsequent
Project's Project Budget.
2.5 Letter of Credit Fees.
2.5.1 On the last Banking Day in each calendar quarter (or
portion thereof) commencing on or after the Closing Date and ending on the Loan
Maturity Date and on the Expiration Date of each Letter of Credit, Borrower
shall pay to Administrative Agent for the benefit of the Banks, accruing from
the date of issuance of such Letter of Credit, a Letter of Credit fee (the
"Letter of Credit Fee") for such quarter (or portion thereof) then ending at the
rates per annum described below and computed in the following manner: The Letter
of Credit
11
26
Fee in respect of each Letter of Credit shall be equal to the product of (a) the
Applicable Margin with respect to LIBOR Loans applicable at such time, times (b)
the daily average Stated Amount of each such Letter of Credit for such quarter
(or portion thereof) times (c) a fraction, the numerator of which is the number
of days in such quarter (or portion thereof) and the denominator of which is
360.
2.5.2 Borrower shall pay to LC Bank solely for LC Bank's account
the issuing and paying fee and LC Bank's usual and customary charges for the
opening of any Letter of Credit, for the negotiation of any drafts paid pursuant
to any Letter of Credit and for any wire transfers described in that certain
letter from Borrower to LC Bank dated the Closing Date.
2.6 Other Payment Terms.
2.6.1 Place and Manner. Borrower shall make all payments due to
each Bank or Administrative Agent hereunder to Administrative Agent, for the
account of such Bank, to The Bank of Nova Scotia, Federal Reserve Bank of New
York ABA#000000000, for further credit to account #0000000-BNS San Francisco
Loan Servicing Account; Reference: Calpine Construction Finance Company, in
lawful money of the United States and in immediately available funds not later
than 12:00 noon on the date on which such payment is due. Any payment made after
such time on any day shall be deemed received on the Banking Day after such
payment is received. Administrative Agent shall disburse to each Bank each such
payment received by Administrative Agent for such Bank, such disbursement to
occur on the day such payment is received if received by 12:00 noon or if
otherwise reasonably possible, otherwise on the next Banking Day.
2.6.2 Date. Whenever any payment due hereunder shall fall due on
a day other than a Banking Day, such payment shall be made on the next
succeeding Banking Day (except in the case of any payment relating to a LIBOR
Loan where such next succeeding Banking Day is in the next calendar month, in
which case such payment shall be made on the next preceding Banking Day), and
such extension of time shall be included in the computation of interest or fees,
as the case may be.
2.6.3 Late Payments. If any amounts required to be paid by
Borrower under this Agreement or the other Credit Documents (including principal
or interest payable on any Loan, and any fees or other amounts otherwise payable
to Administrative Agent or any Bank) remain unpaid after such amounts are due,
Borrower shall pay interest on the aggregate, unpaid balance of such amounts
from the date due until those amounts are paid in full at a per annum rate equal
to the Default Rate.
2.6.4 Net of Taxes, Etc.
(a) Taxes. Subject to each Bank's compliance with Section
2.6.7, any and all payments to or for the benefit of Administrative Agent or any
Bank by Borrower hereunder or under any other Credit Document shall be made free
and clear of and without deduction, setoff or counterclaim of any kind
whatsoever and in such amounts as may be necessary in order that all such
payments, after deduction for or on account of any present or future taxes,
levies, imposts, deductions, charges or withholdings, and all liabilities with
respect
12
27
thereto (excluding income and franchise taxes, which include taxes imposed on or
measured by the net income or capital of Administrative Agent or such Bank by
any jurisdiction or any political subdivision or taxing authority thereof or
therein solely as a result of a connection between such Bank and such
jurisdiction or political subdivision, other than a connection resulting solely
from executing, delivering or performing its obligations or receiving a payment
under, or enforcing, this Agreement or any Note) (all such non-excluded taxes,
levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as "Taxes"), shall be equal to the amounts otherwise
specified to be paid under this Agreement and the other Credit Documents. If
Borrower shall be required by law to withhold or deduct any Taxes from or in
respect of any sum payable hereunder or under any other Credit Document to
Administrative Agent or any Bank, (i) the sum payable shall be increased as may
be necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section 2.6.4, Administrative
Agent or such Bank receives an amount equal to the sum it would have received
had no such deductions been made, (ii) Borrower shall make such deductions and
(iii) Borrower shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law. If Borrower
shall make any payment under this Section 2.6.4 to or for the benefit of
Administrative Agent or any Bank with respect to Taxes and if Administrative
Agent or such Bank shall claim any credit or deduction for such Taxes against
any other taxes payable by Administrative Agent or such Bank to any taxing
jurisdiction then Administrative Agent or such Bank shall pay to Borrower an
amount equal to the amount by which such other taxes are actually reduced;
provided that the aggregate amount payable by Administrative Agent or such Bank
pursuant to this sentence shall not exceed the aggregate amount previously paid
by Borrower with respect to such Taxes. In addition, Borrower agrees to pay any
present or future stamp, recording or documentary taxes and any other excise or
property taxes, charges or similar levies (not including income or franchise
taxes) that arise under the laws of the United States of America, the State of
New York or any other state or jurisdiction where a Project is located from any
payment made hereunder or under any other Credit Document or from the execution
or delivery or otherwise with respect to this Agreement or any other Credit
Document (hereinafter referred to as "Other Taxes").
(b) Indemnity. Borrower shall indemnify each Bank for the
full amount of Taxes and Other Taxes (including any Taxes or Other Taxes imposed
by any jurisdiction on amounts payable under this Section 2.6.4 paid by any
Bank, or any liability (including penalties, interest and expenses) arising
therefrom or with respect thereto, whether or not such Taxes or Other Taxes were
correctly or legally asserted; provided that Borrower shall not be obligated to
indemnify any Bank for any penalties, interest or expenses relating to Taxes or
Other Taxes arising from the indemnitee's gross negligence or willful
misconduct. Each Bank agrees to give written notice to Borrower of the assertion
of any claim against such Bank relating to such Taxes or Other Taxes as promptly
as is practicable after being notified of such assertion, and in no event later
than 180 days after the principal officer of such Bank responsible for
administering this Agreement obtains knowledge thereof; provided that any Bank's
failure to notify Borrower of such assertion within such 180 days period shall
not relieve Borrower of its obligation under this Section 2.6.4 with respect to
Taxes or Other Taxes arising prior to the end of such period, but shall relieve
Borrower of its obligations under this Section 2.6.4 with respect to Taxes or
Other Taxes between the end of such period and such time as Borrower receives
notice from such Bank
13
28
as provided herein. Payments by Borrower pursuant to this indemnification shall
be made within 30 days from the date such Bank makes written demand therefor
(submitted through Administrative Agent), which demand shall be accompanied by a
certificate describing in reasonable detail the basis thereof. Each Bank agrees
to repay to Borrower any refund (including that portion of any interest that was
included as part of such refund with respect to Taxes or Other Taxes paid by
Borrower pursuant to this Section 2.6.4) received by such Bank for Taxes or
Other Taxes that were paid by Borrower pursuant to this Section 2.6.4 and to
contest, with the approval and participation of and at the expense of Borrower,
any such Taxes or Other Taxes which such Bank or Borrower reasonably believes
not to have been properly assessed.
(c) Notice. Within 30 days after the date of any payment of
Taxes by Borrower, Borrower shall furnish to Administrative Agent, at its
address referred to in Section 12.1, the original or a certified copy of a
receipt evidencing payment thereof. Borrower shall compensate each Bank for all
reasonable losses and expenses sustained by such Bank as a result of any failure
by Borrower to so furnish such copy of such receipt.
(d) Survival of Obligations. The obligations of Borrower
under this Section 2.6.4 shall survive the termination of this Agreement and the
repayment of the Obligations.
2.6.5 Application of Payments. Payments made under this Agreement
or the other Credit Documents and other amounts received by Administrative Agent
and the Banks under this Agreement or the other Credit Documents shall first be
applied to any fees, costs, charges or expenses payable to Administrative Agent
or the other Banks hereunder or under the other Credit Documents, next to any
accrued but unpaid interest then due and owing, and then to outstanding
principal then due and owing or otherwise to be prepaid.
2.6.6 Failure to Pay Administrative Agent. Unless Administrative
Agent shall have received notice from Borrower at least two Banking Days prior
to the date on which any payment is due to the Banks hereunder that Borrower
will not make such payment in full, Administrative Agent may assume that
Borrower has made such payment in full to Administrative Agent on such date and
Administrative Agent may, in reliance upon such assumption, cause to be
distributed to each Bank on such due date an amount equal to the amount then due
such Bank. If and to the extent Borrower shall not have so made such payment in
full to Administrative Agent, such Bank shall repay to Administrative Agent
forthwith upon demand such amount distributed to such Bank, together with
interest thereon, for each day from the date such amount is distributed to such
Bank until the date such Bank repays such amount to Administrative Agent, at the
Federal Funds Rate for the first five days after such date, and subsequent
thereto at the Base Rate. A certificate of Administrative Agent submitted to any
Bank with respect to any amounts owing by such Bank under this Section 2.6.6
shall be conclusive in the absence of manifest error.
2.6.7 Withholding Exemption Certificates. Administrative Agent on
the Closing Date and each Bank upon becoming a Bank hereunder including any
entity to which any Bank grants a participation, or otherwise transfers its
interest in this Agreement, agree that they will deliver to Borrower and
Administrative Agent (and Administrative Agent agrees that it will deliver to
Borrower) either (a) a statement that it is formed under the laws of the United
States of
14
29
America or a state thereof or (b) if it is not so formed, a letter in the form
of Exhibit J-1 or Exhibit J-2, as appropriate, or other documentation reasonably
acceptable to Borrower and Administrative Agent and two duly completed copies of
United States Internal Revenue Service Form 1001 or 4224 or successor applicable
form, as the case may be, certifying in each case that such Bank is entitled to
receive payments under this Agreement without deduction or withholding of any
United States federal income taxes. Each Bank which delivers to Borrower and
Administrative Agent a Form 1001 or 4224 pursuant to the preceding sentence
further undertakes to deliver to Borrower and Administrative Agent further
copies of the said letter and Form 1001 or 4224, or successor applicable forms,
or other manner of certification or procedure, as the case may be, on or before
the date that any such letter or form expires or becomes obsolete or within a
reasonable time after gaining knowledge of the occurrence of any event requiring
a change in the most recent letter and forms previously delivered by it to
Borrower, and such extensions or renewals thereof as may reasonably be requested
by Borrower, certifying in the case of a Form 1001 or 4224 that such Bank is
entitled to receive payments under this Agreement without deduction or
withholding of any United States federal income taxes, unless in any such cases
an event (including any change in treaty, law or regulation) has occurred prior
to the date on which any such delivery would otherwise be required which renders
all such forms inapplicable or which would prevent a Bank from duly completing
and delivering any such letter or form with respect to it and such Bank advises
Borrower that it is not capable of receiving payments without any deduction or
withholding of United States federal income tax, and in the case of Form W-8 or
W-9, establishing an exemption from United States backup withholding tax.
Borrower shall not be obligated, however, to pay any additional amounts in
respect of United States Federal income tax pursuant to Section 2.6.4 (or make
an indemnification payment pursuant to Section 2.6.4) to any Bank (including any
entity to which any Bank sells, assigns, grants a participation in, or otherwise
transfers its rights under this Agreement) if the obligation to pay such
additional amounts (or such indemnification) would not have arisen but for a
failure of such Bank to comply with its obligations under this Section 2.6.7.
2.7 Pro Rata Treatment.
2.7.1 Borrowings, Commitment Reductions, Etc. Except as otherwise
provided herein, (a) each Borrowing and each reduction of the Total Loan
Commitment or the Total Letter of Credit Commitment shall be made or allocated
among the Banks pro rata according to their respective Proportionate Shares of
such Loans or Commitments, as the case may be, (b) each payment of principal of
and interest on Loans shall be made or shared among the Banks holding such Loans
pro rata according to the respective unpaid principal amounts of such Loans held
by such Banks and (c) each payment of Commitment Fees and Letter of Credit Fees
shall be shared among the Banks pro rata according to (i) their respective
Proportionate Shares of the Commitments to which such fees apply and (ii) in the
case of each Bank which becomes a Bank hereunder after the date hereof, the date
upon which such Bank so became a Bank.
2.7.2 Sharing of Payments, Etc. If any Bank shall obtain any
payment (whether voluntary, involuntary, through the exercise of any right of
setoff, or otherwise) on account of Loans owed to it, in excess of its ratable
share of payments on account of such Loans obtained by all Banks entitled to
such payments, such Bank shall forthwith purchase from the other Banks such
participation in the Loans, as the case may be, as shall be necessary to cause
such purchasing
15
30
Bank to share the excess payment ratably with each of them; provided, however,
that if all or any portion of such excess payment is thereafter recovered from
such purchasing Bank, such purchase from such Bank shall be rescinded and each
other Bank shall repay to the purchasing Bank the purchase price to the extent
of such recovery together with an amount equal to such other Bank's ratable
share (according to the proportion of (a) the amount of such other Bank's
required repayment to (b) the total amount so recovered from the purchasing
Bank) of any interest or other amount paid or payable by the purchasing Bank in
respect of the total amount so recovered. Borrower agrees that any Bank so
purchasing a participation from another Bank pursuant to this Section 2.7.2 may,
to the fullest extent permitted by law, exercise all its rights of payment
(including the right of setoff) with respect to such participation as fully as
if such Bank were the direct creditor of Borrower in the amount of such
participation.
2.8 Change of Circumstances.
2.8.1 Inability to Determine Rates. If, on or before the first
day of any Interest Period for any LIBOR Loans, (a) Administrative Agent
determines that the LIBO Rate for such Interest Period cannot be adequately and
reasonably determined due to the unavailability of funds in or other
circumstances affecting the London interbank market, or (b) Banks holding
aggregate Proportionate Shares of 33-1/3% or more of the Total Loan Commitment
shall advise Administrative Agent that (i) the rates of interest for such LIBOR
Loans do not adequately and fairly reflect the cost to such Banks of making or
maintaining such Loans or (ii) deposits in Dollars in the London interbank
market are not available to such Banks (as conclusively certified by each such
Bank in good faith in writing to Administrative Agent and to Borrower) in the
ordinary course of business in sufficient amounts to make and/or maintain their
LIBOR Loans, Administrative Agent shall immediately give notice of such
condition to Borrower. After the giving of any such notice and until
Administrative Agent shall otherwise notify Borrower that the circumstances
giving rise to such condition no longer exist, Borrower's right to request the
making of or conversion to, and the Banks' obligations to make or convert to
LIBOR Loans shall be suspended. Any LIBOR Loans outstanding at the commencement
of any such suspension shall be converted at the end of the then current
Interest Period for such Loans into Base Rate Loans unless such suspension has
then ended.
2.8.2 Illegality. If, after the date of this Agreement, the
adoption of any Governmental Rule, any change in any Governmental Rule or the
application or requirements thereof (whether such change occurs in accordance
with the terms of such Governmental Rule as enacted, as a result of amendment,
or otherwise), any change in the interpretation or administration of any
Governmental Rule by any Governmental Authority, or compliance by any Bank or
Borrower with any request or directive (whether or not having the force of law)
of any Governmental Authority (a "Change of Law") shall make it unlawful or
impossible for any Bank to make or maintain any LIBOR Loan, such Bank shall
immediately notify Administrative Agent and Borrower of such Change of Law. Upon
receipt of such notice, (a) Borrower's right to request the making of or
conversion to, and the Bank's obligations to make or convert to, LIBOR Loans
shall be suspended for so long as such condition shall exist, and (b) Borrower
shall, at the request of such Bank, either (i) pursuant to Section 2.1.5,
convert any then outstanding LIBOR Loans into Base Rate Loans at the end of the
current Interest Periods for such Loans, or (ii) immediately repay pursuant to
Section 2.1.6 or convert LIBOR Loans of the affected Type
16
31
into Base Rate Loans if such Bank shall notify Borrower that such Bank may not
lawfully continue to fund and maintain such Loans. Any conversion or prepayment
of LIBOR Loans made pursuant to the preceding sentence prior to the last day of
an Interest Period for such Loans shall be deemed a prepayment thereof for
purposes of Section 2.9.
2.8.3 Increased Costs. If, after the date of this Agreement, any
Change of Law:
(a) Shall subject any Bank to any tax, duty or other charge
with respect to any LIBOR Loan or Commitment, or shall change the basis of
taxation of payments by Borrower to any Bank on such a Loan or with respect to
any Commitment (except for Taxes, Other Taxes or changes in the rate of taxation
on the overall net income of any Bank); or
(b) Shall impose, modify or hold applicable any reserve,
special deposit or similar requirement (without duplication of any reserve
requirement included within the applicable Interest Rate through the definition
of "Reserve Requirement") against assets held by, deposits or other liabilities
in or for the account of, advances or loans by, or any other acquisition of
funds by any Bank for any LIBOR Loan; or
(c) Shall impose on any Bank any other condition directly
related to any LIBOR Loan or Commitment;
and the effect of any of the foregoing is to increase the cost to such Bank of
making, issuing, creating, renewing, participating in (subject to the
limitations in Section 10.13) or maintaining any such LIBOR Loan or Commitment
or to reduce any amount receivable by such Bank hereunder; then Borrower shall
from time to time, upon demand by such Bank, pay to such Bank additional amounts
sufficient to reimburse such Bank for such increased costs or to compensate such
Bank for such reduced amounts. A certificate setting forth in reasonable detail
the amount of such increased costs or reduced amounts and the basis for
determination of such amount, submitted by such Bank to Borrower, shall, in the
absence of manifest error, be conclusive and binding on Borrower for purposes of
this Agreement.
2.8.4 Capital Requirements. If any Bank determines that (a) any
Change of Law after the date of this Agreement increases the amount of capital
required or expected to be maintained by such Bank (or the Lending Office of
such Bank) or any Person controlling such Bank (a "Capital Adequacy
Requirement") and (b) the amount of capital maintained by such Bank or such
Person which is attributable to or based upon the Loans, the Commitments or this
Agreement must be increased as a result of such Capital Adequacy Requirement
(taking into account such Bank's or such Person's policies with respect to
capital adequacy), Borrower shall pay to Administrative Agent on behalf of such
Bank or such Person, upon demand of Administrative Agent on behalf of such Bank
or such Person, such amounts as such Bank or such Person shall reasonably
determine are necessary to compensate such Bank or such Person for the increased
costs to such Bank or such Person of such increased capital. A certificate of
such Bank or such Person, setting forth in reasonable detail the computation of
any such increased costs, delivered to Borrower by Administrative Agent on
behalf of such Bank or such Person shall, in the absence of manifest error, be
conclusive and binding on Borrower for purposes of this Agreement.
17
32
2.8.5 Notice; Participating Banks' Rights. Each Bank will notify
Borrower of any event occurring after the date of this Agreement that will
entitle such Bank to compensation pursuant to this Section 2.8, as promptly as
practicable, and in no event later than 90 days after the principal officer of
such Bank responsible for administering this Agreement obtains knowledge
thereof; provided that any Bank's failure to notify Borrower within such 90 day
period shall not relieve Borrower of its obligation under this Section 2.8.5
with respect to claims arising prior to the end of such period, but shall
relieve Borrower of its obligations under this Section 2.8.5 with respect to the
time between the end of such period and such time as Borrower receives notice
from the indemnitee as provided herein. No Person purchasing from a Bank a
participation in any Commitment (as opposed to an assignment) shall be entitled
to any payment from or on behalf of Borrower pursuant to Section 2.8.3 or
Section 2.8.4 which would be in excess of the applicable proportionate amount
(based on the portion of the Commitment in which such Person is participating)
which would then be payable to such Bank if such Bank had not sold a
participation in that portion of the Commitment.
2.9 Funding Losses. If Borrower shall (a) repay or prepay any
LIBOR Loans on any day other than the last day of an Interest Period for such
Loans (whether an optional prepayment or a Mandatory Prepayment), (b) fail to
borrow any LIBOR Loans in accordance with a Notice of Borrowing delivered to
Administrative Agent (whether as a result of the failure to satisfy any
applicable conditions or otherwise), (c) fail to convert any Loans into LIBOR
Loans in accordance with a Notice of Conversion of Loan Type delivered to
Administrative Agent (whether as a result of the failure to satisfy any
applicable conditions or otherwise), or (d) fail to make any prepayment in
accordance with any notice of prepayment delivered to Administrative Agent;
Borrower shall, upon demand by any Bank, reimburse such Bank for all costs and
losses incurred by such Bank as a result of such repayment, prepayment or
failure ("Liquidation Costs"). Borrower understands that such costs and losses
may include losses incurred by a Bank as a result of funding and other contracts
entered into by such Bank to fund LIBOR Loans. Each Bank demanding payment under
this Section 2.9 shall deliver to Borrower a certificate setting forth in
reasonable detail the basis for and the amount of costs and losses for which
demand is made. Such a certificate so delivered to Borrower shall, in the
absence of manifest error, be conclusive and binding as to the amount of such
loss for purposes of this Agreement.
2.10 Alternate Office; Minimization of Costs.
2.10.1 To the extent reasonably possible, each Bank shall
designate an alternative Lending Office with respect to its LIBOR Loans and
otherwise take any reasonable actions to reduce any liability of Borrower to any
Bank under Section 2.6.4, 2.8.3 or 2.8.4, or to avoid the unavailability of any
Type of Loans under Section 2.8.2 so long as such Bank, in its sole discretion,
does not determine that such designation is disadvantageous to such Bank.
2.10.2 If and with respect to each occasion that a Bank either
makes a demand for compensation pursuant to Section 2.6.4, 2.6.7, 2.8.3 or 2.8.4
or is unable to fund LIBOR Loans pursuant to Section 2.8.2 or such Bank
wrongfully fails to fund a Loan, Borrower may, upon at least five Banking Days'
prior irrevocable written notice to each of such Bank and Administrative Agent,
in whole permanently replace the Commitment of such Bank; provided that Borrower
shall replace such Commitment with the Commitment of a commercial bank
reasonably satisfactory to
18
33
the Lead Arrangers. Such replacement Bank shall upon the effective date of
replacement purchase the Obligations owed to such replaced Bank for the
aggregate amount thereof and shall thereupon for all purposes become a "Bank"
hereunder. Such notice from Borrower shall specify an effective date for the
replacement of such Bank's Commitment, which date shall not be later than the
tenth day after the day such notice is given. On the effective date of any
replacement of such Bank's Commitment pursuant to this Section 2.10.2, Borrower
shall pay to Administrative Agent for the account of such Bank (a) any fees due
to such Bank to the date of such replacement; (b) accrued interest on the
principal amount of outstanding Loans held by such Bank to the date of such
replacement, and (c) the amount or amounts requested by such Bank pursuant to
each of Sections 2.6.4, 2.6.7, 2.8.3 and 2.8.4, as applicable. Borrower will
remain liable to such replaced Bank for any Liquidation Costs that such Bank may
sustain or incur as a consequence of repayment of such Bank's Loans (unless such
Bank has defaulted on its obligation to fund a Loan hereunder). Upon the
effective date of repayment of any Bank's Loans and termination of such Bank's
Commitment pursuant to this Section 2.10.2, such Bank shall cease to be a Bank
hereunder. No such termination of any such Bank's Commitment and the purchase of
such Bank's Loans pursuant to this Section 2.10.2 shall affect (i) any liability
or obligation of Borrower or any other Bank to such terminated Bank which
accrued on or prior to the date of such termination or (ii) such terminated
Bank's rights hereunder in respect of any such liability or obligation.
2.10.3 Any Bank may designate a Lending Office other than that
set forth on Exhibit H and may assign all of its interests under the Credit
Documents, and its Notes, to such Lending Office; provided that such designation
and assignment do not at the time of such designation and assignment increase
the reasonably foreseeable liability of Borrower under Sections 2.6.4, 2.8.3, or
2.8.4 or make an Interest Rate option unavailable pursuant to Section 2.8.2.
2.11 Extension of Loan Maturity Date.
2.11.1 Borrower may, not earlier than 730 days and not later than
365 days prior to the initial Date Certain, request Administrative Agent to
request that the Banks agree to an extension of the initial Date Certain for an
additional period not to exceed one year from the date of the initial Date
Certain upon the terms and conditions of this Section 2.11.
2.11.2 Upon receipt of any such request from Borrower,
Administrative Agent shall promptly notify each Bank of such request. Each Bank
shall notify Administrative Agent not later than 45 days after receiving notice
of the extension request from Administrative Agent if, in its sole discretion,
it agrees to extend its Commitment (or any portion thereof) for such additional
requested period. Each such notice from a Bank which agrees to extend such
Commitment (each, a "Renewing Bank") shall specify (i) all or that portion of
its Commitment which it is willing to extend and (ii) the amount of any
additional Commitment it would be willing to assume (with respect to any
Renewing Bank, an "Additional Commitment"). Any Bank which fails to deliver such
notice to Administrative Agent shall be deemed to have declined to renew its
Commitment for such additional requested period. Each Commitment (or portion
thereof) which is not renewed is hereinafter referred to as a "Declined
Commitment" and collectively, the "Declined Commitments." After receipt of such
notices, Administrative Agent shall allocate the Declined
19
34
Commitments (if any) among each Renewing Bank pro rata according to the
respective amounts of their Additional Commitments (provided that in no event
shall any such Renewing Bank be allocated an amount in excess of its Additional
Commitment). On the first Business Day after the 60th day following the notice
issued by Administrative Agent to the Banks of the extension request,
Administrative Agent shall advise Borrower in writing (a "Renewal Notice"), with
a copy to each of the Banks, of the affirmative responses which it has received
from the Renewing Banks and the respective amounts of the Commitments of each
Renewing Bank.
2.11.3 Subject to the following sentence, if the aggregate amount
of the Additional Commitments is less than 100% of the aggregate of the Declined
Commitments then in effect, the initial Date Certain shall only be extended if,
(i) on or before the initial Date Certain Borrower repays in accordance with
Section 2.1.6 (and subject to Section 2.3.3) the Loans outstanding comprising
Declined Commitments not being assumed pursuant to Section 2.11.4, if any, and
(ii) the Available Construction Funds, after giving effect to such repayment,
equal or exceed the remaining Project Costs of all Initial Projects and Funded
Subsequent Projects. Notwithstanding the foregoing, if the aggregate amount of
the Additional Commitments is less than 100% of the aggregate of the Declined
Commitments, Borrower may replace any Bank to the extent of such Bank's Declined
Commitment, with another commercial bank or banks reasonably satisfactory to the
Lead Arrangers and the LC Bank (a "Replacement Bank"). Borrower shall notify
Administrative Agent (who shall promptly forward such notice to the Banks), no
later than 180 days prior to the initial Loan Maturity Date, whether it will
prepay the Loans comprising the Declined Commitments in accordance with Section
2.1.6 and/or replace Banks to the extent of such Banks' Declined Commitments as
described in the preceding sentences. Each Bank whose outstanding Loans have
been repaid in full and who has been paid all other amounts due to it hereunder
shall cease to be a Bank hereunder and shall cancel and return to Borrower any
Notes held by such Bank.
2.11.4 If the aggregate amount of the Additional Commitments
(including the Commitments provided by any Replacement Banks) is equal to or
greater than 100% of the aggregate of the Commitments of all Banks then in
effect, the following shall occur:
(a) the initial Date Certain shall be extended as requested
by Borrower;
(b) Borrower shall repay any Loans (and all fees and other
Obligations due in respect of such Loans) it has elected to repay pursuant to
Section 2.11.3;
(c) the Banks (including the Replacement Banks, if any) shall
enter into such assignment and assumption agreements reasonably acceptable to
Administrative Agent as may be necessary to transfer any Banks' Declined
Commitments to Banks (and Replacement Banks) extending Additional Commitments,
such assignment and assumption agreements to become effective on the initial
Date Certain (before giving effect to any extension thereof);
(d) on the initial Date Certain (prior to giving effect to
any extension thereof) each Replacement Bank shall for all purposes become a
"Bank" hereunder;
20
35
(e) Borrower shall, if applicable, execute and deliver to
each Bank a new Note to reflect such Bank's new Commitment (after giving effect
to such Bank's Additional Commitment or Declined Commitment) and each Bank
receiving such new Note shall cancel and return to Borrower the pre-existing
Note held by such Bank; and
(f) each Bank whose outstanding Loans have been repaid in
full and who has been paid all other amounts due to it hereunder shall cease to
be a Bank hereunder and shall cancel and return to Borrower any Notes held by
such Bank.
ARTICLE 3
CONDITIONS PRECEDENT
3.1 Conditions Precedent to the Closing Date. The occurrence of
the Closing Date is subject to the prior satisfaction of each of the following
conditions (unless waived in writing by Administrative Agent with the consent of
all Banks):
3.1.1 Resolutions. Delivery to the Lead Arrangers of a copy of
one or more resolutions or other authorizations of Borrower and each of the
Partners, Calpine and Affiliated Major Project Participants with respect to the
Initial Projects, certified by the appropriate officers of each such entity as
being in full force and effect on the Closing Date, authorizing, as applicable,
the Borrowings herein provided for and the execution, delivery and performance
of this Agreement and the other Operative Documents with respect to the Initial
Projects and any instruments or agreements required hereunder or thereunder to
which such entity is a party.
3.1.2 Incumbency. Delivery to the Lead Arrangers of a certificate
satisfactory in form and substance to the Lead Arrangers, from the Managing
Partner of Borrower and from each of the Partners, Calpine and Affiliated Major
Project Participants with respect to the Initial Projects, signed by the
appropriate authorized officer of each such entity and dated the Closing Date,
as to the incumbency of the natural persons authorized to execute and deliver
this Agreement and the other Operative Documents with respect to the Initial
Projects and any instruments or agreements required hereunder or thereunder to
which such entity is a party.
3.1.3 Formation Documents. Delivery to the Lead Arrangers of (a)
a copy of the Partnership Agreement, certified by the secretary or an assistant
secretary of the Managing Partner of Borrower as being true, current and
complete on the Closing Date, and any related agreements or certificates filed
in accordance with applicable state law, and (b) copies of the articles of
incorporation or certificate of incorporation or charter or other state
certified constituent documents of each Major Project Participant with respect
to the Initial Projects other than Borrower, certified, if requested by the Lead
Arrangers, by the secretary of state of the state of formation, and (c) copies
of the Bylaws or other comparable constituent documents of each of the Partners,
Calpine and Affiliated Major Project Participants with respect to the Initial
Projects, certified by its secretary or an assistant secretary.
3.1.4 Good Standing Certificates. With respect to each Major
Project Participant with respect to the Initial Projects, delivery to the Lead
Arrangers of certificates issued by the secretary of state of the state in which
the applicable Initial Project is located and, if other
21
36
than such state, the state of formation of such Major Project Participant
certifying that such Major Project Participant is in good standing and is
qualified to do business in, and has paid all franchise taxes or similar taxes
due to, such states.
3.1.5 Satisfactory Proceedings. All corporate, partnership and
legal proceedings and all instruments in connection with the transactions
contemplated by this Agreement shall be satisfactory in form and substance to
the Lead Arrangers, and the Lead Arrangers shall have received all information
and copies of all documents, including records of corporate or partnership or
limited liability company proceedings and copies of any approval by any
Governmental Authority required in connection with any transaction herein
contemplated (with respect to the Initial Projects), which the Lead Arrangers
may reasonably have requested in connection herewith, such documents where
appropriate to be certified by proper corporate or partnership officers or
Governmental Authorities.
3.1.6 Operative Documents.
(a) Delivery to the Lead Arrangers of executed originals of
each Credit Document, including the Completion Guaranty and all Collateral
Documents (except for Consents listed on Exhibit L, M, N or O or Consents
relating to any Subsequent Projects). All actions shall have been taken to
provide the Banks with a valid Lien on all Collateral and a valid and perfected
first priority Lien on the Collateral comprising the Initial Projects,
including, without limitation, the execution, delivery and recordation of Deeds
of Trust and fixture filings in the appropriate locations and the filing of
UCC-1 financing statements with appropriate secretaries of state and/or other
filing offices.
(b) Delivery to the Lead Arrangers of a certified list of and
true and correct copies of, each Project Document with respect to the Initial
Projects then in effect, and any supplements or amendments thereto.
(c) All Major Project Documents with respect to the Initial
Projects (other than Major Gas Supply Contracts (other than Affiliated Fuel
Supply Agreements), Major Gas Transportation Contracts and Major Power Purchase
Agreements) shall have been executed and delivered and shall be in full force
and effect.
(d) All the documents specified in clauses (a), (b) and (c)
above shall be in form and substance satisfactory to the Lead Arrangers, shall
have been duly authorized, executed and delivered by the parties thereto, and
all of which Project Documents shall be certified by a Responsible Officer of
Borrower as being true, complete and correct and in full force and effect on the
Closing Date pursuant to the certificates delivered as provided in the following
paragraph, which certificate shall state that neither Borrower nor, to
Borrower's knowledge, any other party to any such Project Document is or, but
for the passage of time or giving of notice or both will be, in breach of any
material obligation thereunder, and that all conditions precedent to the
performance of the parties under such Project Documents then required to have
been performed have been satisfied.
22
37
3.1.7 Certificates of Borrower. The Lead Arrangers shall have
received a certificate, dated as of the Closing Date, signed by a Responsible
Officer of Borrower, in substantially the form of Exhibit F-1.
3.1.8 Legal Opinions. Delivery to the Lead Arrangers of legal
opinions of counsel to Borrower, its respective Affiliates that are party to any
Operative Agreements and each Major Project Participant and each counterparty to
a material water supply agreement with respect to the Initial Projects (other
than with respect to the matters referred to in Section 3.2.5), in form and
substance satisfactory to the Lead Arrangers.
3.1.9 Certificate of Insurance Consultant. Delivery to the Lead
Arrangers of the Insurance Consultant's certificate with respect to the Initial
Projects, in substantially the form of Exhibit F-2, with the Insurance
Consultant's report with respect to the Initial Projects, confirming the
adequacy of the insurance described on Exhibit K or otherwise in form and
substance satisfactory to the Lead Arrangers, attached thereto.
3.1.10 Insurance. Insurance with respect to the Initial Projects
complying with Exhibit K shall be in full force and effect and the Lead
Arrangers shall have received (a) a certificate from Borrower's insurance
broker(s), dated as of the Closing Date and identifying underwriters, type of
insurance, insurance limits and policy terms, listing the special provisions
required as set forth in Exhibit K, describing the insurance obtained and
stating that such insurance is in full force and effect and that all premiums
due thereon through the Loan Maturity Date have been paid and that, in the
opinion of such broker(s), such insurance complies with Exhibit K, and (b)
certified copies of all policies evidencing such insurance (or a binder,
commitment or certificates signed by the insurer or a broker authorized to bind
the insurer), in form and substance satisfactory to the Lead Arrangers.
3.1.11 Certificate of the Independent Engineer. Delivery to the
Lead Arrangers of the Independent Engineer's certificate with respect to the
Initial Projects, in substantially the form of Exhibit F-3, with the Independent
Engineer's report with respect to the Initial Projects attached thereto,
confirming, in form and substance satisfactory to the Lead Arrangers, that the
projected Project Costs, the projected Project Schedule, the projected O&M
Costs, the design and other technical aspects of each such Project, and the
projected performance (output, heat rate, environmental and Permit compliance
and availability) of the Initial Projects as reflected in the Base Case Project
Projections delivered to the Lead Arrangers in accordance with Section 3.1.24
hereof are reasonable and achievable in a manner consistent with the Project
Budgets and Project Schedules for the Initial Projects and that the revenue
assumptions approved by the Power Marketing Consultant in its report delivered
to the Lead Arrangers pursuant to Section 3.1.14 and the fuel price assumptions
approved by the Fuel Consultant in its report delivered to the Lead Arrangers
pursuant to Section 3.1.13 have been properly incorporated into the Base Case
Project Projections.
3.1.12 Reports of the Environmental Consultant. Delivery to the
Lead Arrangers of Borrower's Environmental Consultant's Phase I reports with
respect to each Initial Project and, if a Phase II environmental review is
warranted by any of such Phase I reports, delivery to the Lead Arrangers of
Phase II report(s), in each case, along with the corresponding reliance
23
38
letter from such Environmental Consultant, in form and substance satisfactory to
the Lead Arrangers, either (i) confirming that no Hazardous Substances were
found in, on or under the Site or Easements of the Initial Projects or (ii)
disclosing matters that are otherwise satisfactory to the Lead Arrangers.
3.1.13 Certificate of the Fuel Consultant. Delivery to the Lead
Arrangers of the Fuel Consultant's certificate with respect to the Initial
Projects, in substantially the form of Exhibit F-4, with the Fuel Consultant's
report with respect to the Initial Projects attached thereto, confirming, in
form and substance satisfactory to the Lead Arrangers, that there is sufficient
fuel available to the Initial Projects to operate the Initial Projects in the
manner contemplated by and in accordance with the fuel price assumptions
incorporated in the Base Case Project Projections delivered to the Lead
Arrangers in accordance with Section 3.1.24 and that the Fuel Plans delivered to
the Lead Arrangers in accordance with Section 3.1.16 for the Initial Projects
constitute reasonable plans for the supply and transportation of fuel for the
Initial Projects under existing and expected market conditions affecting the
Initial Projects and consistent with the intended operation thereof.
3.1.14 Certificate of Power Marketing Consultant. Delivery to the
Lead Arrangers of the Power Marketing Consultants' certificate with respect to
the Initial Projects, in substantially the form of Exhibit F-5, with the Power
Marketing Consultants' report with respect to the Initial Projects attached
thereto, confirming, in form and substance satisfactory to the Lead Arrangers,
that the revenue assumptions incorporated in the Base Case Project Projections
delivered to the Lead Arrangers in accordance with Section 3.1.24 are reasonable
in light of existing and expected market conditions affecting the Initial
Projects.
3.1.15 Power Marketing Plan. Delivery to the Lead Arrangers of
plans with respect to power marketing for each Initial Project setting forth
Borrower's good faith assessment of the projected sales of power with respect to
each of the Initial Projects, which plans shall not in any way be construed to
modify or limit Borrower's rights and obligations set forth herein,
substantially in the form of Appendices G-2A through G-2D.
3.1.16 Fuel Plan. Delivery to the Lead Arrangers of plans with
respect to fuel for each Initial Project setting forth Borrower's good faith
assessment of each of the Initial Projects' projected fuel consumption needs and
fuel supply and transportation strategy, which plans shall not in any way be
construed to modify or limit Borrower's rights and obligations set forth herein,
substantially in the form of Appendices G-9A through G-9D.
3.1.17 No Change in Tax Laws. No change shall have occurred,
since the date upon which this Agreement was executed and delivered, in any law
or regulation or interpretation thereof that would subject any Bank to any
material unreimbursed Tax or Other Tax.
3.1.18 Absence of Litigation. (a) No action, suit, proceeding or
investigation shall have been instituted or threatened against Borrower and (b)
except for the applicability of the FPA solely by reason of Borrower being an
Exempt Wholesale Generator, no order, judgment or decree shall have been issued
or proposed to be issued by any Governmental Authority that, as a result of the
construction, ownership, leasing or operation of the Initial Projects, the sale
of
24
39
electricity or steam therefrom or the entering into of any Operative Document or
any transaction contemplated hereby or thereby, would cause or deem the Banks,
Borrower or any Affiliate of any of them to be subject to, or not exempted from,
regulation under the FPA or PUHCA or under state laws and regulations respecting
the rates or the financial or organizational regulation of electric utilities.
3.1.19 Payment of Filing Fees. All amounts required to be paid to
or deposited with the Lead Arrangers, and all taxes, fees and other costs
payable in connection with the execution, delivery, recordation and filing of
the documents and instruments referred to in this Section 3.1, shall have been
paid in full or, as approved by the Lead Arrangers, provided for.
3.1.20 Financial Statements. The Lead Arrangers shall have
received the most recent annual financial statements (audited if available) or
Form 10-K and most recent quarterly financial statements or Form 10-Q from
Borrower and each other Major Project Participant with respect to the Initial
Projects (or their respective parent corporations), together (in the case of
Borrower and the Affiliated Major Project Participants with respect to the
Initial Projects) with certificates from the appropriate Responsible Officer
thereof, stating that no material adverse change in the consolidated assets,
liabilities, operations or financial condition of such Person has occurred from
those set forth in the most recent financial statements or the balance sheet, as
the case may be, provided to the Lead Arrangers.
3.1.21 UCC Reports. The Lead Arrangers shall have received a UCC
report of a date reasonably close to the Closing Date for each of the
jurisdictions in which the UCC-1 financing statements are intended to be filed
in respect of the Collateral with respect to the Initial Projects, showing that
upon due filing (assuming such filing or recordation occurred on the date of
such respective reports), the security interests created under the Collateral
Documents with respect to the Initial Projects will be prior to all other
financing statements, or other security documents wherein the security interest
is perfected by filing in respect of such Collateral.
3.1.22 Project Budgets. Borrower shall have furnished the Lead
Arrangers budgets in substantially the form of Appendices G-4A through G-4E for
all anticipated costs to be incurred in connection with the construction and
start-up of each of the Initial Projects, including in such budgets all
construction and non-construction costs, and including all interest, taxes and
other carrying costs, non-allocated costs of Borrower, and such other
information as the Lead Arrangers may require, together with a balanced
statement of sources (including an allocation between Loan proceeds and
Contributions) and uses of proceeds (and any other funds necessary to complete
each of the Initial Projects), broken down as to separate construction phases
and components, which project budgets shall be satisfactory to the Lead
Arrangers.
3.1.23 Project Schedules. Borrower shall have furnished a project
schedule for each Initial Project other than the Xxxxxx Project in substantially
the form of Appendices G-6A through G-6C.
3.1.24 Base Case Project Projections. Borrower shall have
furnished to the Lead Arrangers the Base Case Project Projections of operating
expenses and cash flow for the Initial
25
40
Projects in substantially the form of Exhibit G-5 and in form and substance
satisfactory to the Lead Arrangers.
3.1.25 No Material Adverse Change. Since May 28, 1999, in the
reasonable judgment of the Lead Arrangers, there shall not have occurred any
change in the Project Budgets, Project Schedules or Base Case Project
Projections with respect to the Initial Projects, in the economics or
feasibility of constructing and/or operating the Initial Projects, or in the
financial condition, business, prospects or property of any Major Project
Participants with respect to the Initial Projects, which could reasonably be
expected to have a Material Adverse Effect.
3.1.26 A.L.T.A. Surveys. The Lead Arrangers shall (a) be
satisfied that Borrower has obtained all real estate rights necessary for
construction and operation of the Initial Projects other than (i) such rights as
can be obtained through eminent domain proceedings, (ii) rights, the procurement
of which, in the Lead Arrangers' reasonable judgment, is not subject to the
discretion of any third party or (iii) rights which, in the Lead Arrangers'
reasonable opinion, Borrower will be able to obtain at a cost and in a time
frame consistent with the Project Budget and Project Schedule for such Project,
and in the case of clause (i), (ii) or (iii) above, the Lead Arrangers shall be
satisfied that, any rights which have not been obtained can be obtained without
material difficulty or delay by the time they are needed and (b) have received
A.L.T.A. surveys of the Sites and, unless not required by Lead Arrangers, the
Easements with respect to the Initial Projects in existence on the Closing Date,
satisfactory in form and substance to the Lead Arrangers and the Title Insurer,
reasonably current and certified to the Lead Arrangers by a licensed surveyor
satisfactory to the Lead Arrangers, showing (i) as to such Sites, the exact
location and dimensions thereof, including the location of all means of access
thereto and all easements relating thereto and showing the perimeter within
which all foundations are or are to be located; (ii) as to such Easements in
existence on the Closing Date, the exact location and dimensions thereof,
including the location of all means of access thereto, and all improvements or
other encroachments in or on such Easements in existence on the Closing Date;
(iii) the existing utility facilities servicing the Initial Projects (including
water, electricity, gas, telephone, sanitary sewer and storm water distribution
and detention facilities); (iv) that such existing improvements do not encroach
or interfere with adjacent property or existing easements or other rights
(whether on, above or below ground), and that there are no gaps, gores,
projections, protrusions or other survey defects; (v) whether such Sites or any
portion thereof is located in a special earthquake or flood hazard zone; and
(vi) that there are no other matters that could reasonably be expected to be
disclosed by a survey constituting a defect in title other than Permitted
Encumbrances with respect to the Initial Projects; provided, however, that the
matters described in clause (v) may be shown by separate maps, surveys, or other
information reasonably satisfactory to the Lead Arrangers.
3.1.27 Title Policies. With respect to each Initial Project,
Borrower shall have delivered to the Lead Arrangers a lender's A.L.T.A. policy
of title insurance, together with such endorsements as are required by the Lead
Arrangers, or commitment to issue such policy, dated as of the Closing Date in
an amount, for each such Initial Project, equal to 55% of the aggregate amount
of Project Costs set forth in the Project Budget for such Initial Project (or
such other amount as is reasonably acceptable to the Lead Arrangers) and with
such reinsurance as is
26
41
satisfactory to the Lead Arrangers, issued by the Title Insurer in form and
substance satisfactory to the Lead Arrangers, insuring (or agreeing to insure)
that:
(a) Borrower has a good, marketable and insurable fee or
leasehold title to or right to control, occupy and use the Site and the
Easements with respect to each Initial Project in existence on the Closing Date,
free and clear of liens, encumbrances or other exceptions to title except those
exceptions satisfactory to the Lead Arrangers and specified on such policy; and
(b) the Deed of Trust with respect to such Initial Project is
(or will be when recorded) a valid first lien on the Mortgaged Property with
respect to such Initial Project, free and clear of all liens, encumbrances and
exceptions to title whatsoever, other than those encumbrances permitted pursuant
to Section 3.1.27(a).
3.1.28 Regulatory Status. Each of the Initial Projects shall (a)
have complied with the requirements of 18 C.F.R. Section 292.207 required to be
complied with as of the Closing Date and delivered to the Lead Arrangers, in
form and substance satisfactory to the Lead Arrangers, either (i) a certificate
of FERC certifying such Initial Project as a Qualifying Facility, or (ii)
documentation evidencing the self-certification of such Initial Project as a
Qualifying Facility and a legal opinion of counsel to Borrower with respect to
the effectiveness of such documentation to qualify such Initial Project as a
Qualifying Facility or (b) be or be capable of becoming an Eligible Facility,
and the Lead Arrangers shall have received a legal opinion of counsel to
Borrower in form and substance satisfactory to the Lead Arrangers to the effect
that there exists no reasonable basis for FERC to deny an application filed by
Borrower pursuant to Section 5.12.1 for Exempt Wholesale Generator status.
3.1.29 Establishment of Accounts. The Accounts required under
Article 7 shall have been established to the satisfaction of the Lead Arrangers.
3.1.30 Representations and Warranties of Partners, Calpine and
Borrower. Each representation and warranty of the Partners and Calpine under the
Credit Documents and each representation and warranty of Borrower under the
Operative Documents shall be true and correct in all material respects.
3.1.31 Utilities. The Lead Arrangers shall have received evidence
acceptable to the Lead Arrangers that all necessary gas and electrical
interconnections and utility services are either contracted for, or will be
readily available on reasonable economic terms, at the Initial Projects.
3.1.32 Mechanics' Lien Indemnity. Calpine shall have executed and
delivered an indemnity or indemnities in favor of the Banks with respect to
mechanics' liens which (a) could gain priority over the Deeds of Trust with
respect to the Initial Projects and (b) are not insured against in the title
policies delivered pursuant to Section 3.1.27.
3.1.33 Payment of Bank and Consultants Fees. Borrower shall have
paid all outstanding amounts due and owing to (i) the Banks under any fee
letters and (ii) the Banks'
27
42
attorneys and consultants including, without limitation, the Independent
Consultants, for all services rendered and billed prior to the Closing Date.
3.2 Conditions Precedent to the Initial Funding of the Initial
Projects. The obligation of the Banks to make the initial Loans and/or issue the
initial Letter of Credit with respect to a particular Initial Project is subject
to the prior satisfaction of each of the following conditions:
3.2.1 Borrower Equity. Contributions required pursuant to
Sections 5.17.1 (including Section 5.17.1(b), if applicable) and 5.17.2 hereof
shall have been funded and applied in accordance with Section 5.1.
3.2.2 No Change in Tax Laws. No change shall have occurred, since
the Closing Date, in any law or regulation or interpretation thereof that would
subject any Bank to any material unreimbursed Tax or Other Tax.
3.2.3 Base Case Project Projections. Delivery of Base Case
Project Projections for the Initial Projects showing a projected Four-Quarter
Portfolio Interest Coverage Ratio that is not materially different than that
reflected in the Base Case Project Projections delivered pursuant to Section
3.1.24 over the same period.
3.2.4 Calpine Compliance. No "event of default" (as defined
therein) under any agreement or instrument documenting or evidencing any of
Calpine's Debt obligations shall have occurred and be continuing.
3.2.5 Schedule of Applicable Permits and Applicable Third Party
Permits. Delivery to the Lead Arrangers of Appendices G-3A through G-3D, as
applicable, the schedule(s) of Permits required to construct, own and operate
the Initial Project(s) for which Loans are requested, or required to be obtained
by any Person (other than Borrower) that is party to any Project Document with
respect to each such Initial Project in order to perform its obligations
thereunder, satisfactory in form and substance to the Lead Arrangers, together
with (i) copies of each Applicable Permit and Applicable Third Party Permit
listed on Parts I(A) and I(B) of Appendices G-3A through G-3D, as applicable,
each satisfactory in form and substance to the Lead Arrangers and (ii) legal
opinions of counsel to Borrower with respect to the matters described in the
next two sentences, in form and substance satisfactory to the Lead Arrangers.
Borrower shall have duly obtained or been assigned (or, in the case of Permits
not yet assigned to Borrower by an Affiliate of Calpine, shall have the right to
have assigned at a cost consistent with the applicable Project Budget without
material difficulty or delay as reasonably determined by Administrative Agent)
and there shall be (or will be upon assignment) in full force and effect in
Borrower's name, and, except as otherwise approved by the Lead Arrangers, not
subject to any current legal proceeding or to any unsatisfied condition that
could reasonably be expected to allow material modification or revocation of,
and, except as otherwise approved by the Lead Arrangers, all applicable appeal
periods shall have expired with respect to, the Applicable Permits set forth on
Parts I(A) and I(B) of Appendices G-3A through G-3D, respectively, constituting
in the Lead Arrangers' reasonable opinion all of the Applicable Permits as of
the Closing Date. Each Major Project Participant with respect to which
responsibility for an Applicable Third Party Permit is indicated in Part I(B) of
any such exhibit, shall have duly obtained or been assigned such
28
43
Applicable Third Party Permit and there shall be in full force and effect in
such Person's name, and, except as otherwise approved by the Lead Arrangers, not
subject to any current legal proceeding or to any unsatisfied condition that
could reasonably be expected to allow material modification or revocation of,
and, except as otherwise approved by the Lead Arrangers, all applicable appeal
periods shall have expired with respect to, each Applicable Third Party Permit
set forth on Part I(B) of Appendices G-3A through G-3D, constituting in the Lead
Arrangers' reasonable opinion all of the Applicable Third Party Permits as of
the Closing Date. Part II(A) of the applicable appendix shall list all other
Permits required by Borrower to construct, own and operate such Initial Project
as contemplated by the Operative Documents. Part II(B) of each of Appendices
G-3A through G-3D shall list all other material Permits required by any other
Major Project Participant to perform its obligations under the Operative
Documents with respect to the Initial Projects to which it is a party. The
Permits listed in Parts II(A) and II(B) of the applicable Appendix G-3A through
G-3D shall, in the Lead Arrangers' reasonable opinion, be timely obtainable at a
cost consistent with the applicable Project Budget without material difficulty
or delay by Borrower or the applicable other Major Project Participant,
respectively. Except as disclosed in the applicable Appendix G-3A through G-3D,
the Permits listed in Part I(A) and I(B) of such appendix shall not be subject
to any restriction, condition, limitation or other provision that could
reasonably be expected to have a Material Adverse Effect on such Project or
result in any of the Initial Projects being operated in a manner not
substantially as assumed in the Base Cost Project Projections.
3.2.6 Calpine Corporation Credit Rating. Calpine shall be rated
at least Ba3 and BB or Ba2 and BB- by Xxxxx'x and S&P, respectively.
3.2.7 Notice to Proceed. Each Contractor with respect to the
Initial Project(s) for which the Loans are requested shall have been given an
unconditional notice to proceed or otherwise been unconditionally directed to
begin performance under the Construction Contracts to which it is a party, and
shall have acknowledged receipt thereof, on or prior to the Closing Date.
3.2.8 Real Estate Rights. The Lead Arrangers shall be satisfied
that Borrower has obtained all real estate rights necessary for construction and
operation of the Initial Project(s) for which the Loans are requested other than
(i) such rights as can be obtained through eminent domain proceedings or (ii)
rights, the procurement of which, in the Lead Arrangers' reasonable judgment, is
not subject to the discretion of any third party, and in the case of either
clause (i) or (ii) above, the Lead Arrangers shall be satisfied that, any rights
which have not been obtained can be obtained without material difficulty or
delay by the time they are needed.
3.2.9 Project Pre-Funding Requirements. All of the Pre-Funding
Requirements applicable to such Initial Project shall have been satisfied;
provided, however, that notwithstanding that one or more Initial Projects has
not satisfied its Pre-Funding Requirements, Borrower shall be entitled, at the
time of the initial funding of Loans for the first Initial Project, to obtain
reimbursement of closing costs and fees paid on the Closing Date.
29
44
3.3 Conditions Precedent to the Initial Funding of the Subsequent
Projects. The obligation of the Banks to make the initial Loans with respect to
a particular Subsequent Project is subject to the prior satisfaction of each of
the following conditions:
3.3.1 Subsequent Project. In the case of a Subsequent Project
that is only partially owned by Borrower, (a) Administrative Agent on behalf of
the Banks shall have received all joint venture, joint tenancy or other
documents relating to the joint ownership or governance of such Subsequent
Project (collectively, the "Joint Venture Agreement"), in form and substance
satisfactory to the Technical Committee, including provisions (i) requiring all
parties to the Joint Venture Agreement (the "Joint Venturers") to fund their
respective obligations in connection with the development, construction and
operation of such Subsequent Project, providing reasonable remedies for a Joint
Venturer's failure to fund, and permitting Borrower to fund such obligations if
any of the Joint Venturers fail to do so, (ii) permitting Borrower to xxxxx x
Xxxx (including the Liens granted on the Closing Date pursuant to the Collateral
Documents) on its interest in the Subsequent Project in favor of the Banks
pursuant to this Agreement, and (iii) prohibiting any of the other Joint
Venturers from granting a Lien on or otherwise encumbering Borrower's interest
in the Subsequent Project and (b) such Joint Venture Agreement (or a memorandum
thereof) shall have been recorded or filed, as applicable, in the appropriate
public records in order to give third parties notice of such Joint Venture
Agreement.
3.3.2 Resolutions. Delivery to Administrative Agent on behalf of
the Banks of a copy of one or more resolutions or other authorizations of
Borrower and each of the Partners, Calpine and Affiliated Major Project
Participants with respect to such Subsequent Project, certified by the
appropriate officers of each such entity as being in full force and effect on
the Funding Date, authorizing, as applicable, the Borrowings herein provided for
with respect to such Subsequent Project and the execution, delivery and
performance of the Operative Documents with respect to such Subsequent Project
and any instruments or agreements required hereunder or thereunder to which such
entity is a party.
3.3.3 Incumbency. Delivery to Administrative Agent on behalf of
the Banks of a certificate satisfactory in form and substance to the Technical
Committee, from the Managing Partner of Borrower and from each of the Partners,
Calpine and Affiliated Major Project Participants with respect to such
Subsequent Project, signed by the appropriate authorized officer of each such
entity and dated the Funding Date, as to the incumbency of the natural persons
authorized to execute and deliver the Operative Documents with respect to such
Subsequent Project and any instruments or agreements required hereunder or
thereunder to which such entity is a party.
3.3.4 Formation Documents. Delivery to Administrative Agent on
behalf of the Banks of (a) copies of the articles of incorporation or
certificate of incorporation or charter or other state certified constituent
documents of each Major Project Participant with respect to such Subsequent
Project other than Borrower, certified, if requested by the Technical Committee,
by the secretary of state of the state of formation, and (b) copies of the
Bylaws or other comparable constituent documents of the Affiliated Major Project
Participants with respect to such Subsequent Project, certified by its secretary
or an assistant secretary.
30
45
3.3.5 Good Standing Certificates. For Borrower and each other
Major Project Participant with respect to such Subsequent Project, delivery to
Administrative Agent on behalf of the Banks of certificates issued by the
secretary of state of the state where such Subsequent Project is located and, if
other than such state, the state of formation of such Major Project Participant
certifying that such Major Project Participant is in good standing and is
qualified to do business in, and has paid all franchise taxes or similar taxes
due to, such states.
3.3.6 Satisfactory Proceedings. All corporate, partnership and
legal proceedings and all instruments in connection with the transactions
contemplated by this Agreement with respect to such Subsequent Project shall be
satisfactory in form and substance to the Technical Committee, and
Administrative Agent on behalf of the Banks shall have received all information
and copies of all documents, including records of corporate or partnership
proceedings and copies of any approval by any Governmental Authority required in
connection with any transaction herein contemplated, which the Technical
Committee may reasonably have requested in connection herewith, such documents
where appropriate to be certified by proper corporate or partnership officers or
Governmental Authorities.
3.3.7 Operative Documents.
(a) Delivery to Administrative Agent on behalf of the Banks
of executed originals of:
(i) amendments, supplements or modifications to each of
the Collateral Documents with respect to such Subsequent Project (or additional
Collateral Documents if reasonably requested by the Technical Committee)
considered necessary by the Technical Committee to ensure that all rights and
assets related to such Subsequent Project, including all real property (unless
such Subsequent Project is an Additional Subsequent Project) and personal
property comprising such Subsequent Project and all rights of Borrower under any
Joint Venture Agreement relating to such Subsequent Project, have been pledged
to Administrative Agent and the Banks.
(ii) Consents to assignment in substantially the form of
Exhibit E-1 or otherwise in form and substance reasonably satisfactory to the
Technical Committee from the counterparties to each Major Project Document
(Major Gas Supply Contracts and Major Power Purchase Agreements only to the
extent then in existence), electric transmission and interconnection agreements
and material water supply agreements in respect of such Subsequent Project.
(iii) Affiliated Subordination Agreements substantially
similar to the corresponding documents in respect of the Initial Projects with
conforming changes to address the specifics of such Subsequent Project or
otherwise in form and substance reasonably satisfactory to the Technical
Committee (or, if applicable, amendments to existing Affiliated Subordination
Agreements) executed by each Affiliate entering into Project Documents with
respect to such Subsequent Project considered necessary by the Technical
Committee to subordinate certain O&M Costs that Borrower may incur pursuant to
such Project Documents to the Obligations. Such O&M Costs shall only include
amounts payable to such Affiliate which do
31
46
not represent reimbursement of costs payable to third parties not Affiliates of
Borrower and be subordinated to the Obligations to the same extent as O&M Costs
are subordinated to the Obligations in the corresponding documents in respect of
the Initial Projects or otherwise to the extent satisfactory to the Technical
Committee.
(b) All actions shall have been taken to provide the Banks
with a valid and perfected first priority Lien on the Collateral in respect of
such Subsequent Project (except as otherwise approved by the Technical
Committee, including all personal property comprising such Subsequent Project)
including, without limitation, to the extent necessary, the filing of UCC-2 or
UCC-3 financing statements, as applicable, with respect to the Collateral with
the Secretary of State and/or other appropriate filing office in the state in
which such Subsequent Project is located or in which Borrower's principal place
of business is located.
(c) Delivery to Administrative Agent on behalf of the Banks
of a certified list of and true and correct copies of, each Project Document
with respect to such Subsequent Project then in effect, and any supplements or
amendments thereto.
(d) All the Major Project Documents (other than Major Gas
Supply Contracts (other than Affiliated Fuel Supply Agreements) and Major Power
Purchase Agreements), electric transmission and interconnection agreements and
material water supply agreements shall be substantially similar to the
corresponding documents in respect of the Initial Projects (to the extent there
are such corresponding documents) with counterparties reasonably acceptable to
the Technical Committee and conforming changes to address the specifics of the
Subsequent Project or otherwise in form and substance reasonably satisfactory to
the Technical Committee, shall have been duly authorized, executed and delivered
by the parties thereto, and all of which Project Documents described in clause
(c) above shall be certified by a Responsible Officer of Borrower as being true,
complete and correct and in full force and effect on the Funding Date pursuant
to the certificates delivered as provided in the following paragraph, which
certificates shall state that neither Borrower nor, to Borrower's knowledge, any
other party to any such Project Document is or, but for the passage of time or
giving of notice or both will be, in breach of any material obligation
thereunder, and that all conditions precedent to the performance of the parties
under such Project Documents then required to have been performed have been
satisfied.
3.3.8 Certificate of Borrower. Administrative Agent on behalf of
the Banks shall have received a certificate, dated as of the Funding Date,
signed by a Responsible Officer of Borrower, in substantially the form of
Exhibit F-1.
3.3.9 Legal Opinions. Delivery to Administrative Agent on behalf
of the Banks of legal opinions of counsel to Borrower, its respective Affiliates
that are party to Operative Documents relating to such Subsequent Project and
each Major Project Participant and each counterparty to a material water supply
agreement with respect to such Subsequent Project, substantially similar to the
corresponding opinions in respect of the Initial Projects delivered pursuant to
Section 3.1.8 with conforming changes to address the specifics of such
Subsequent Project or otherwise in form and substance satisfactory to the
Technical Committee.
32
47
3.3.10 Certificate of Insurance Consultant. Delivery to
Administrative Agent on behalf of the Banks of the Insurance Consultant's
certificate with respect to such Subsequent Project, in substantially the form
of Exhibit F-2, with the Insurance Consultant's report with respect to such
Subsequent Project, confirming the adequacy of the insurance described on
Exhibit K or otherwise in form and substance satisfactory to the Technical
Committee, attached thereto.
3.3.11 Insurance. Insurance with respect to such Subsequent
Project complying with Exhibit K (as the same may be modified to include such
Subsequent Project) shall be in full force and effect and Administrative Agent
on behalf of the Banks shall have received (a) a certificate from Borrower's
insurance broker(s), dated as of the Funding Date and identifying underwriters,
type of insurance, insurance limits and policy terms, listing the special
provisions required as set forth in Exhibit K, describing the insurance obtained
and stating that such insurance is in full force and effect and that all
premiums due thereon through the Loan Maturity Date have been paid and that, in
the opinion of such broker(s), such insurance complies with Exhibit K, and (b)
certified copies of all policies evidencing such insurance (or a binder,
commitment or certificates signed by the insurer or a broker authorized to bind
the insurer), in form and substance satisfactory to the Technical Committee.
3.3.12 Certificate of the Independent Engineer. Delivery to
Administrative Agent on behalf of the Banks of the Independent Engineer's
certificate with respect to such Subsequent Project, in substantially the form
of Exhibit F-3, with the Independent Engineer's report with respect to such
Subsequent Project attached thereto, confirming, in form and substance
satisfactory to the Technical Committee that the projected Project Costs, the
projected Project Schedule, the projected O&M Costs, the design and other
technical aspects of such Project, and the projected performance (output, heat
rate, environmental and Permit compliance, and availability) of such Subsequent
Project as reflected in the Base Case Project Projections delivered to
Administrative Agent on behalf of the Banks as contemplated in Section 3.3.26
hereof are reasonable and achievable in a manner consistent with the applicable
Project Budget and Project Schedule and that the revenue assumptions approved by
the Power Marketing Consultant in its report delivered to Administrative Agent
on behalf of the Banks pursuant to Section 3.3.15 and fuel price assumptions
approved by the Fuel Consultant in its report delivered to Administrative Agent
on behalf of the Banks pursuant to Section 3.3.14 have been properly
incorporated in to the Base Case Project Projections.
3.3.13 Reports of the Environmental Consultant. Delivery to
Administrative Agent on behalf of the Banks of Borrower's Environmental
Consultant's Phase I reports with respect to such Subsequent Project and, if a
Phase II environmental review is warranted by any of such Phase I reports, as
reasonably determined by the Technical Committee, delivery to Administrative
Agent on behalf of the Banks of a Phase II report, in each case, along with the
corresponding reliance letters from such Environmental Consultant, in form and
substance satisfactory to the Technical Committee, either (i) confirming that no
Hazardous Substances were found in, on or under the Site or Easements of such
Subsequent Project or (ii) disclosing matters that are otherwise satisfactory to
the Technical Committee.
33
48
3.3.14 Certificate of the Fuel Consultant. Delivery to
Administrative Agent on behalf of the Banks of the Fuel Consultant's certificate
with respect to such Subsequent Project, in substantially the form of Exhibit
F-4, with the Fuel Consultant's report with respect to such Subsequent Project
attached thereto, confirming, in form and substance satisfactory to the
Technical Committee that there is sufficient fuel available to such Subsequent
Project to operate such Subsequent Project in the manner contemplated by, and in
accordance with the fuel price assumptions incorporated in the Base Case Project
Projections delivered to Administrative Agent on behalf of the Banks as
contemplated in Section 3.3.26 and that the Fuel Plan delivered to
Administrative Agent on behalf of the Banks as contemplated in Section 3.3.17
for such Subsequent Project constitutes a reasonable plan for the supply and
transportation of fuel for such Subsequent Project under existing and expected
market conditions affecting such Subsequent Project and consistent with the
intended operation thereof.
3.3.15 Certificate of Power Marketing Consultant. Delivery to
Administrative Agent on behalf of the Banks of a Power Marketing Consultant's
certificate with respect to such Subsequent Project, in substantially the form
of Exhibit F-5, with a Power Marketing Consultant's report with respect to such
Subsequent Project attached thereto, confirming, in form and substance
satisfactory to the Technical Committee, that the revenue assumptions
incorporated in the Base Case Project Projections delivered to Administrative
Agent on behalf of the Banks as contemplated in Section 3.3.26 are reasonable in
light of existing and expected market conditions affecting such Subsequent
Project.
3.3.16 Power Marketing Plan. Delivery to Administrative Agent on
behalf of the Banks of a plan with respect to power marketing setting forth
Borrower's good faith assessment of the projected sales of power with respect to
such Subsequent Project, which plan shall not in any way be construed to modify
or limit Borrower's rights and obligations set forth herein, substantially in
the form of the Power Marketing Plans delivered in accordance with Section
3.1.15 and with such additional changes satisfactory in form and substance to
the Technical Committee as may be appropriate under the circumstances.
3.3.17 Fuel Plan. Delivery to Administrative Agent on behalf of
the Banks of a plan with respect to fuel setting forth Borrower's good faith
assessment of such Subsequent Project's projected fuel consumption needs and
fuel supply and transportation strategy, which plan shall not in any way be
construed to modify or limit Borrower's rights and obligations set forth herein,
substantially in the form of the Fuel Plans delivered pursuant to Section 3.1.16
and with such additional changes satisfactory in form and substance to the
Technical Committee and the Fuel Consultant as may be appropriate under the
circumstances.
3.3.18 Schedule of Applicable Permits and Applicable Third Party
Permits. Delivery to Administrative Agent on behalf of the Banks of a
supplemental appendix to Exhibit G-3 showing the schedule of Permits required to
construct, own and operate such Subsequent Project or required to be obtained by
any Person that is party to any Project Document with respect to such Subsequent
Project in order to perform its obligations thereunder, satisfactory in form and
substance to the Technical Committee, together with copies of each Applicable
Permit and Applicable Third Party Permit listed on Parts I(A) and I(B) of such
supplemental appendix, each satisfactory in form and substance to the Technical
Committee.
34
49
Borrower (or other Person responsible for constructing and operating such
Subsequent Project) shall have duly obtained or been assigned, either by itself
or jointly with its Joint Venturers (if applicable), and there shall be in full
force and effect in Borrower's (or other Person responsible for constructing and
operating such Subsequent Project's) name, either by itself or jointly with its
Joint Venturers (if applicable), and not subject to any current legal proceeding
or to any unsatisfied condition that could reasonably be expected to allow
material modification or revocation of, and all applicable appeal periods shall
have expired with respect to, the Applicable Permits for such Subsequent Project
set forth on Parts I(A) and I(B) of such supplemental appendix to Exhibit G-3,
constituting in the Technical Committee's reasonable opinion all of the
Applicable Permits for such Subsequent Project as of the Funding Date. Each
Major Project Participant with respect to such Subsequent Project with respect
to which responsibility for an Applicable Third Party Permit is indicated in
Part I(B) of such supplemental appendix, shall have duly obtained or been
assigned such Applicable Third Party Permit and there shall be in full force and
effect in such Person's name, and not subject to any current legal proceeding or
to any unsatisfied condition that could reasonably be expected to allow material
modification or revocation of, and all applicable appeal periods shall have
expired with respect to, each Applicable Third Party Permit for such Subsequent
Project set forth on Part I(B) of such supplemental appendix, constituting in
the Technical Committee's reasonable opinion all of the Applicable Third Party
Permits for such Subsequent Project as of the Funding Date. Part II(A) of such
supplemental appendix to Exhibit G-3 shall list all other Permits required by
Borrower (or Borrower and its Joint Venturers, if applicable) or other Person
responsible for constructing and operating such Subsequent Project to construct,
own and operate such Subsequent Project as contemplated by the Operative
Documents with respect to such Subsequent Project. Part II(B) of such
supplemental appendix to Exhibit G-3 shall list all other material Permits
required by any other Major Project Participant with respect to such Subsequent
Project to perform its obligations under the Operative Documents with respect to
such Subsequent Project to which it is a party. The Permits listed in Parts
II(A) and II(B) of such supplemental appendix to Exhibit G-3 in respect of such
Subsequent Project shall, in the Technical Committee's reasonable opinion, be
timely obtainable at a cost consistent with the applicable Project Budget
without material difficulty or delay by Borrower (or Borrower and its Joint
Venturers, if applicable) or the applicable other Major Project Participant,
respectively. Except as disclosed in such supplemental appendix the Permits
listed in Part I(A) and I(B) of such supplemental appendix shall not be subject
to any restriction, condition, limitation or other provision that could
reasonably be expected to have a Material Adverse Effect on such Subsequent
Project or result in such Subsequent Project being operated in a manner not
substantially as assumed in the Base Case Project Projections.
3.3.19 No Change in Tax Laws. No change shall have occurred,
since the date upon which this Agreement was executed and delivered, in any law
or regulation or interpretation thereof that would subject any Bank to any
material unreimbursed Tax or Other Tax.
3.3.20 Absence of Litigation. (a) No action, suit, proceeding or
investigation shall have been instituted or threatened against Borrower in
respect of such Subsequent Project and (b) except for the applicability of the
FPA solely by reason of Borrower being an Exempt Wholesale Generator, no order,
judgment or decree shall have been issued or proposed to be issued by any
Governmental Authority that, as a result of the construction, ownership, leasing
or
35
50
operation of such Subsequent Project, the sale of electricity or steam therefrom
or the entering into of any Operative Document with respect to such Subsequent
Project or any transaction contemplated hereby or thereby, would cause or deem
the Banks, Borrower or any Affiliate of any of them to be subject to, or not
exempted from, regulation under the FPA or PUHCA or under state laws and
regulations respecting the rates or the financial or organizational regulation
of electric utilities.
3.3.21 Payment of Filing Fees. All amounts required to be paid to
or deposited with the Banks including the Activation Fee in respect of such
Subsequent Project, and all taxes, fees and other costs payable in connection
with the execution, delivery, recordation and filing of the documents and
instruments referred to in this Section 3.3, shall have been paid in full or, as
approved by the Technical Committee, provided for.
3.3.22 Financial Statements. Administrative Agent on behalf of
the Banks shall have received the most recent annual financial statements
(audited if available) or Form 10-K and most recent quarterly financial
statements or Form 10-Q from Borrower and each other Major Project Participant
with respect to such Subsequent Project (or, their respective parent
corporations), together (in the case of Borrower and the Affiliated Major
Project Participants with respect to such Subsequent Project) with certificates
from the appropriate Responsible Officer thereof, stating that no material
adverse change in the consolidated assets, liabilities, operations or financial
condition of such Person has occurred from those set forth in the most recent
financial statements or the balance sheet, as the case may be, provided to
Administrative Agent on behalf of the Banks.
3.3.23 UCC Reports. Administrative Agent on behalf of the Banks
shall have received a UCC report of a date reasonably close to the Funding Date
for each of the jurisdictions in which any UCC-1 financing statements or
amendments thereto are intended to be filed in respect of the Collateral with
respect to such Subsequent Project, showing that upon due filing (assuming such
filing or recordation occurred on the date of such respective reports), the
security interests created under the Collateral Documents with respect to such
Subsequent Project will be prior to all other financing statements or other
security documents wherein the security interest is perfected by filing in
respect of such Collateral.
3.3.24 Project Budgets. Borrower shall have furnished
Administrative Agent on behalf of the Banks a budget in substantially the form
of the Project Budgets delivered pursuant to Section 3.1.22 but with such
changes as are required to address the specifics of such Subsequent Project for
all anticipated costs to be incurred in connection with the construction and
start-up of such Subsequent Project, including in such budget all construction
and non-construction costs, and including all interest, taxes and other carrying
costs, and such other information as the Technical Committee may require,
together with a balanced statement of sources (including an allocation between
Loan proceeds and Contributions) and uses of proceeds (and any other funds
necessary to complete such Subsequent Project), broken down as to separate
construction phases and components, which project budget shall be in form and
substance satisfactory to the Technical Committee.
36
51
3.3.25 Project Schedule. Borrower shall have furnished a project
schedule with respect to such Subsequent Project in substantially the form of
the Project Schedules delivered pursuant to Section 3.1.23 but with such changes
as are required to address the specifics of such Subsequent Project and showing
a guaranteed completion date for such Project that is on or before the Loan
Maturity Date and which is otherwise in form and substance satisfactory to the
Technical Committee and Independent Engineer.
3.3.26 Base Case Project Projections. Borrower shall have
furnished to Administrative Agent on behalf of the Banks the combined Base Case
Project Projections of operating expenses and cash flow for all the Projects
(including such Subsequent Project) showing a minimum projected annual
Four-Quarter Portfolio Interest Coverage Ratio of no less than [*] (which ratio
shall be supported by the projections set forth in the Independent Consultant's
reports delivered pursuant to Sections 3.3.12, 3.3.14 and 3.3.15) in
substantially the form (including the duration thereof) of those projections
delivered pursuant to Section 3.1.24 and in form and substance satisfactory to
the Technical Committee.
3.3.27 No Material Adverse Change. No event or circumstance
having a Material Adverse Effect with respect to Borrower or the Projects, taken
as a whole, has occurred since the Closing Date, and, with respect to the
relevant Subsequent Project, no event or circumstance having a Material Adverse
Effect with respect to such Subsequent Project shall have occurred.
3.3.28 A.L.T.A. Surveys. Administrative Agent on behalf of the
Banks shall (a) be satisfied that Borrower (or other Person who holds the direct
ownership interests in such Subsequent Project) shall have obtained all real
estate rights necessary for construction and operation of such Subsequent
Project other than (i) such rights as can be obtained through eminent domain
proceedings or (ii) rights, the procurement of which, in the Technical
Committee's reasonable judgment, is not subject to the discretion of any third
party, and in the case of either clause (i) or (ii) above, the Technical
Committee shall be satisfied that any rights which have not been obtained can be
obtained without material difficulty or delay by the time they are needed, and
(b) have received A.L.T.A. surveys of the Site and, unless not required by the
Technical Committee, the Easements with respect to such Subsequent Project in
existence on the Funding Date, satisfactory in form and substance to the
Technical Committee and the Title Insurer, reasonably current and certified to
the Technical Committee by a licensed surveyor satisfactory to the Technical
Committee, showing (i) as to such Site, the exact location and dimensions
thereof, including the location of all means of access thereto and all easements
relating thereto and showing the perimeter within which all foundations are or
are to be located; (ii) as to such Easements in existence on the Funding Date,
the exact location and dimensions thereof, including the location of all means
of access thereto, and all improvements or other encroachments in or on such
Easements in existence on the Funding Date; (iii) the existing utility
facilities servicing such Subsequent Project (including water, electricity, gas,
telephone, sanitary sewer and storm water distribution and detention
facilities); (iv) that such existing improvements do not encroach or interfere
with adjacent property or existing easements or other rights (whether on, above
or below ground), and that there are no gaps, gores, projections, protrusions or
other survey defects; (v) whether such Site or any portion thereof is located in
a special earthquake or flood hazard zone; and (vi) that there are no other
matters that could reasonably be expected to be disclosed by a survey
constituting a defect in title other than Permitted Encumbrances with
[*] Throughout this document, this symbol indicates that material has been
omitted pursuant to a request for confidential treatment. The request for
confidential treatment and the omitted material have been filed separately
with the Securities and Exchange Commission. Roughly 200 pages of material
have been omitted pursuant to the request for confidential treatment.
37
52
respect to such Subsequent Project; provided, however, that the matters
described in clause (v) may be shown by separate maps, surveys or other
information reasonably satisfactory to the Technical Committee.
3.3.29 Title Policies. Except if such Subsequent Project is an
Additional Subsequent Project, Borrower shall have delivered to Administrative
Agent on behalf of the Banks a lender's A.L.T.A. policy of title insurance,
together with such endorsements as are required by the Technical Committee, or
commitment to issue such policy, dated as of the Funding Date (x) in an amount
equal to 50% of the aggregate amount of Project Costs set forth in the Project
Budget for such Subsequent Project (or such other amount as is reasonably
acceptable to the Technical Committee) and (y) with such reinsurance as is
satisfactory to the Technical Committee, issued by the Title Insurer in form and
substance satisfactory to the Technical Committee, insuring (or agreeing to
insure) that:
(a) Borrower has a good, marketable and insurable fee or
leasehold title to or right to control, occupy and use the Site and the
Easements with respect to such Subsequent Project, free and clear of liens,
encumbrances or other exceptions to title except those satisfactory to the
Technical Committee and specified on such policy; and
(b) the Deed of Trust with respect to such Subsequent Project
is (or will be when recorded) a valid first lien on the Mortgaged Property with
respect to such Subsequent Project, free and clear of all liens, encumbrances
and exceptions to title whatsoever, other than those encumbrances permitted
pursuant to Section 3.3.29(a).
3.3.30 Regulatory Status. Such Subsequent Project shall (a) have
complied with the requirements of 18 C.F.R. Section 292.207 required to be
complied with as of the Funding Date and delivered to Administrative Agent on
behalf of the Banks, in form and substance satisfactory to the Technical
Committee, either (i) a certificate of FERC certifying such Subsequent Project
as a Qualifying Facility, or (ii) documentation evidencing the
self-certification of such Subsequent Project as a Qualifying Facility and a
legal opinion of counsel to Borrower with respect to the effectiveness of such
documentation to qualify such Subsequent Project as a Qualifying Facility or (b)
be or be capable of becoming an Eligible Facility, and (x) if Borrower has
previously filed an application with FERC for a determination that Borrower is
an Exempt Wholesale Generator, Borrower shall have delivered to the Technical
Committee a copy of an additional or supplemental application regarding Exempt
Wholesale Generator with respect to such Supplemental Project filed by Borrower
with FERC and (y) the Technical Committee shall have received a legal opinion of
counsel to Borrower in form and substance satisfactory to the Technical
Committee to the effect that (i) if FERC has previously determined that Borrower
is an Exempt Wholesale Generator, such Subsequent Project will not adversely
impact Borrower's status as an Exempt Wholesale Generator or (ii) if FERC has
not yet determined that Borrower is an Exempt Wholesale Generator, there exists
no reasonable basis for FERC to deny an application filed by Borrower pursuant
to Section 5.12.1 for Exempt Wholesale Generator status.
3.3.31 Notice to Proceed. Each Contractor with respect to such
Subsequent Project shall have been given an unconditional notice to proceed or
otherwise been
38
53
unconditionally directed to begin performance under the Construction Contract to
which it is a party, and shall have acknowledged receipt thereof, on or prior to
the Funding Date.
3.3.32 Representations and Warranties of Partners, Calpine and
Borrower. Each representation and warranty of the Partners and Calpine under the
Credit Documents and each representation and warranty of Borrower under the
Operative Documents shall be true and correct in all material respects as if
made on such date, unless such representation or warranty expressly relates
solely to another time.
3.3.33 Utilities. Administrative Agent on behalf of the Banks has
received evidence acceptable to the Technical Committee that all necessary gas
and electrical interconnections and utility services are either contracted for,
or will be readily available on reasonable economic terms, at such Subsequent
Project.
3.3.34 Mechanics' Lien Indemnity. Calpine shall have executed and
delivered an indemnity (in substantially similar form to the indemnity executed
pursuant to Section 3.1.32) in favor of the Banks with respect to mechanics'
liens which (a) could gain priority over the Deed of Trust with respect to such
Subsequent Project, if any, and (b) are not insured against in the title policy,
if any, delivered pursuant to Section 3.3.28.
3.3.35 Calpine Compliance. No "event of default" (as defined
therein) under any agreement or instrument documenting or evidencing any of
Calpine's Debt obligations shall have occurred and be continuing.
3.3.36 Calpine Guaranty. Calpine shall have executed (a) an
acknowledgment, in form and substance satisfactory to the Technical Committee,
that such Subsequent Project shall be included with the obligations undertaken
pursuant to the Completion Guaranty and (b) an Affiliated Party Agreement
Guaranty in respect of each Project Document entered into between Borrower and
an Affiliate of Borrower for such Project.
3.3.37 Debt to Capitalization Ratio. Borrower shall have paid
sufficient Project Costs for such Subsequent Project (which Project Costs are
consistent with the Project Budget delivered pursuant to Section 3.3.24) so that
Borrower's Debt to Capitalization Ratio (calculated without taking into account
the Contributions to Borrower with respect to Initial Projects which have not
satisfied their Pre-Funding Requirements) on the date of initial funding of
Loans for such Subsequent Project, and through the Loan Maturity Date (assuming
all further Project Costs for such Subsequent Project (and each other Subsequent
Project the initial funding of Loans for which has been made) are paid with the
proceeds of Loans), shall be no more than the Maximum Debt to Capitalization
Ratio.
3.3.38 Debt to Collateral Value Ratio. Borrower shall have paid
sufficient Project Costs for such Subsequent Project (which Project Costs are
consistent with the Project Budget delivered pursuant to Section 3.3.24) so that
Borrower's Debt to Collateral Value Ratio (calculated without taking into
account the Contributions to Borrower with respect to Initial Projects which
have not satisfied their Pre-Funding Requirements) on the date of initial
funding of Loans for such Subsequent Project, and through the Loan Maturity Date
(assuming all further
39
54
Project Costs for such Subsequent Project (and each other Subsequent Project for
which the initial funding of Loans has been made) are paid with the proceeds of
Loans), shall be no more than [*] to 1.00.
3.3.39 Updated Exhibits. Borrower shall have delivered to
Administrative Agent supplements to (a) Exhibit G-8 (Hazardous Substances)
referencing the environmental reports in respect of such Subsequent Project that
were delivered to Administrative Agent on behalf of the Banks pursuant to
Section 3.3.13, (b) Exhibit D-6 reflecting the filings and recordings required
to be made to perfect security interests in the Collateral in respect of such
Subsequent Project, and (c) Exhibit K reflecting any additional or revised
insurance policies or coverages required by the Insurance Consultant to account
for such Subsequent Project, in each case, reasonably satisfactory to the
Technical Committee.
3.3.40 Diversification Requirements. Such Subsequent Project
satisfies the Diversification Requirements.
3.3.41 Calpine Corporation Credit Rating. Calpine shall be rated
at least Ba3 and BB or Ba2 and BB- by Xxxxx'x and S&P, respectively.
3.4 Conditions Precedent to Each Credit Event. The obligation of the
Banks to make each Loan (including the initial Loans for each Initial Project
and each of the Subsequent Projects) (a "Credit Event"), is subject to the prior
satisfaction of each of the following conditions:
3.4.1 Monthly Drawdown Frequency. Loans shall be made no more
frequently than two times per month.
3.4.2 Notice of Borrowing. Borrower shall have delivered a Notice
of Borrowing to Administrative Agent in accordance with the procedures specified
in Section 2.1.
3.4.3 Drawdown Certificate and Engineer's Certificate. (i) At
least 10 Banking Days prior to each Credit Event, Borrower shall have provided
Administrative Agent with a certificate, dated the date of the proposed
occurrence of such Credit Event and signed by Borrower, substantially in the
form of Exhibit C-5, in respect of each Project for which a disbursement of
funds are being requested and (ii) at least four Banking Days prior to each
Credit Event, the Independent Engineer shall have provided Administrative Agent
with a certificate of the Independent Engineer, substantially in the form of
Exhibit C-6. Such certificates shall certify, among other things, that (A) the
aggregate amount of Project Costs for each Project for which the disbursement of
funds is being requested will not exceed 110% of the anticipated aggregate
amount of Project Costs for such Project as set forth in such Project's Project
Budget and (B) the aggregate amount of Project Costs for all Initial Projects
and Funded Subsequent Projects then under construction will not exceed 105% of
the anticipated aggregate amount of Project Costs for all such Projects as set
forth in the respective Project Budgets; provided, however, that if the
condition described in clause (A) above is not satisfied with respect to a
particular Project for which funds are being requested but (x) the Independent
Engineer confirms that the cost overruns with respect to such Project are not
reasonably likely to exceed a specific amount and (y) the condition described in
clause (B) is satisfied and will continue to be satisfied after giving effect to
40
55
any further anticipated overruns with respect to the Project experiencing such
overruns, then the Banks will not unreasonably withhold their consent to waive
the condition described in clause (A) above.
3.4.4 Amount. Loans shall be in such amounts as shall ensure that
uncommitted funds remaining in the Construction Account shall be disbursed to
the greatest extent possible, given the requirements of Section 2.1.1(b)(ii).
3.4.5 Title Policy Endorsement. Borrower shall provide, or
Administrative Agent shall be adequately assured that the Title Insurer is
committed at the time of each Credit Event to issue to Administrative Agent a
date-down endorsement of the relevant Title Policies, if any, to the date of
such Credit Event, insuring or otherwise establishing to the satisfaction of
Administrative Agent the continuing first priority of the relevant Deeds of
Trust (subject only to relevant Permitted Encumbrances and Permitted Liens
described in clause (a), (b) or (c) of the definition thereof) and otherwise in
form and substance reasonably satisfactory to Administrative Agent.
3.4.6 Lien Releases. If requested by Administrative Agent and
subject to Borrower's right to contest liens as described in the definition of
"Permitted Liens," Borrower shall have delivered to Administrative Agent duly
executed acknowledgments of payments and releases of mechanics' and
materialmen's liens, in form satisfactory to Administrative Agent, from each
relevant Major Contractor and Major Subcontractors thereof for all work,
services and materials, including equipment and fixtures of all kinds, done,
previously performed or furnished for the construction of the relevant Project,
and in respect of which Borrower has requested payment; provided, however, that
such releases may be conditioned upon receipt of payment with respect to work,
services and materials to be paid for with the proceeds of the requested Loan or
other Borrowing.
3.4.7 Applicable Permits. Except as disclosed in the Exhibit G-3
appendix applicable to the relevant Project, all Applicable Permits and
Applicable Third Party Permits with respect to the construction and operation of
the relevant Project required to have been obtained by Borrower (or Borrower and
its Joint Venturers, if applicable) or any other applicable Major Project
Participant by the date of such Credit Event from any Governmental Authority
shall have been issued and be in full force and effect and not subject to
current legal proceedings or to any unsatisfied conditions that could reasonably
be expect to allow material modification or revocation, and all applicable
appeal periods with respect thereto shall have expired. With respect to any of
such Permits not yet obtained and listed in Part II(A) or II(B) of the
applicable Exhibit G-3 appendix, no facts or circumstances exist which indicate
that any such Permit will not be timely obtainable at a cost consistent with the
applicable Project Budget without material difficulty or delay by Borrower (or
Borrower and its Joint Venturers, if applicable) or the applicable Major Project
Participant, respectively, prior to the time that it becomes an Applicable
Permit or Applicable Third Party Permit, as applicable. Except as disclosed in
the applicable Exhibit G-3 appendix, such Permits which have been obtained by
Borrower (or Borrower and its Joint Venturers, if applicable) or any applicable
Major Project Participant shall not be subject to any restriction, condition,
limitation or other provision that could reasonably be expected to have a
Material Adverse Effect with respect to Borrower or such Project.
41
56
3.4.8 Equity Contributions. Borrower shall be in compliance with
Section 5.17.
3.4.9 Additional Documentation. With respect to Additional Major
Project Documents and Applicable Permits with respect to the relevant Project
entered into or obtained, transferred or required (whether because of the status
of the construction or operation of the relevant Project or otherwise) since the
date of the most recent Credit Event, there shall be redelivery of such matters
as are described in Sections 3.1.1 through 3.1.4 and 3.1.6 or Sections 3.3.2
through 3.3.5 and 3.3.7, as the case may be, to the extent applicable to such
Additional Project Documents or Applicable Permits and, if reasonably requested
by Administrative Agent, Sections 3.1.8 and 3.1.20 or Sections 3.3.9 and 3.3.22,
as the case may be, from the counterparty to such Additional Project Document.
3.4.10 Acceptable Work; No Liens. All work that has been done on
the relevant Project shall have been done in a good and workmanlike manner and
in accordance with the Construction Contracts and Prudent Utility Practices and
there shall not have been filed with or served upon Borrower with respect to
such Project or any part thereof notice of any Lien, claim of Lien or attachment
upon or claim affecting the right to receive payment of any of the monies
payable to any of the Persons named on such request which has not been released
by payment or bonding or otherwise or which will not be released with the
payment of such obligation out of such Loan or other Borrowing, other than
Permitted Liens.
3.4.11 Casualty. If at the time of any Credit Event, any Project
for which a disbursement of funds is being requested shall have been materially
injured or damaged by flood, fire or other casualty, Administrative Agent shall
have received insurance proceeds or money or other assurances sufficient in the
reasonable judgment of Administrative Agent and the Independent Engineer to
assure restoration and Completion of such Project prior to the Loan Maturity
Date and each of the conditions set forth in Section 7.5.3 has been satisfied.
3.4.12 Absence of Litigation. No action, suit, proceeding or
investigation shall have been instituted against Borrower, any Partner or the
relevant Project which could reasonably be expected to have a Material Adverse
Effect on Borrower or the Project with respect to which a Loan is being
requested, except as approved by Administrative Agent with the consent of the
Required Banks.
3.4.13 Insurance. Insurance complying with the requirements of
Section 5.18 shall be in effect, and upon the request of Administrative Agent
evidence thereof shall be provided to Administrative Agent.
3.4.14 Available Construction Funds. Available Construction Funds
shall not be less than the aggregate unpaid amount of Project Costs required to
cause the Completion Date of all Initial Projects and Funded Subsequent Projects
that have not achieved Completion to occur in accordance with all Legal
Requirements and the Construction Contracts prior to the guaranteed completion
date with respect to each such Project set therefor in such Project's Project
Schedule and to pay or provide for all anticipated non-construction Project
Costs as to each such Project, all as set forth in the Project Budgets.
42
57
3.4.15 Representations and Warranties. Each representation and
warranty of the Partners and Calpine under the Credit Documents and each
representation and warranty of Borrower under the Operative Documents shall be
true and correct in all material respects as if made on such date, unless such
representation or warranty expressly relates solely to another time.
3.4.16 No Event of Default or Inchoate Default. No Event of
Default or Inchoate Default has occurred and is continuing or will result from
such Credit Event and no Non-Fundamental Project Default or Non-Fundamental
Project Inchoate Default in respect of the Project for which funds are being
requested has occurred and is continuing or will result from such Credit Event.
3.4.17 Operative Documents, Applicable Permits and Applicable
Third Party Permits in Effect. Each Credit Document, Major Project Document
(other than Major Gas Supply Contracts and Major Power Purchase Agreements),
electric transmission and interconnection agreement, material water supply
agreement, Additional Major Project Document, Applicable Permit and Applicable
Third Party Permit related to the Project for which Loans are then being
requested remains in full force and effect in accordance with its terms and no
material defaults have occurred thereunder.
3.4.18 No Material Adverse Effect. No event or circumstance
having a Material Adverse Effect with respect to Borrower or the Projects, taken
as a whole, has occurred since the Closing Date (except as is no longer
continuing), and no event or circumstance having a Material Adverse Effect with
respect to the Project for which a disbursement of funds is being requested has
occurred since the Closing Date (except as is no longer continuing).
3.4.19 Third Party Funding. For Projects which are not wholly
owned by Borrower, each Person (other than Borrower) who has an ownership
interest in such Project, has funded its pro rata share of all Project Costs
incurred through such date to such Project or any other Person (including
Borrower) has funded such costs on such Person's behalf.
3.4.20 Debt to Capitalization Ratio. Borrower's Debt to
Capitalization Ratio, calculated without taking into account the Contributions
to Borrower with respect to Initial Projects which have not satisfied all of
their Pre-Funding Requirements, shall be no more than the Maximum Debt to
Capitalization Ratio.
3.4.21 Debt to Collateral Value Ratio. Borrower's Debt to
Collateral Value Ratio, calculated without taking into account the Contributions
to Borrower with respect to Initial Projects which have not satisfied all of
their Pre-Funding Requirements, shall be no more than [*] to 1.00.
3.4.22 Interest Coverage Ratio. From and after the Final
Completion of the first Project to achieve Final Completion, Borrower's
Four-Quarter Portfolio Interest Coverage Ratio as of the most recent calendar
quarter shall equal or exceed [*] to 1.00.
43
58
3.5 Conditions Precedent to Final Completion. Final Completion with
respect to a Project shall not occur until the following conditions shall have
been satisfied:
3.5.1 Notice of Completion. Delivery to Administrative Agent, in
form and substance satisfactory to Administrative Agent, of evidence that all
work with respect to such Project requiring inspection by municipal and other
Governmental Authorities having jurisdiction has been duly inspected and
approved by such authorities, that Borrower (or other Person that directly owns
such Project) has duly recorded a notice of completion for such Project, that
all parties performing such work have been or will be paid for such work, and
that no mechanics' and/or materialmen's liens or application therefor have been
filed and all applicable filing periods for any such mechanics' and/or
materialmen's liens have expired; provided, however, that in the event Borrower
delivers to Administrative Agent either (i) a policy of title insurance or
endorsement thereto, in form and substance satisfactory to Administrative Agent,
insuring against loss arising by reason of any mechanics' or materialmen's lien
gaining priority over the relevant Deed of Trust or (ii) a bond, in form and
substance satisfactory to Administrative Agent, in the amount of all payments
owed to any contractor, subcontractor or any other person as to whom the filing
periods for mechanics' and materialmen's liens have not expired, and covering
Borrower's liability to such contractors, subcontractors or other persons,
Administrative Agent shall waive the applicable filing periods referred to
herein.
3.5.2 Completion. Completion with respect to such Project shall
have occurred and Administrative Agent shall have received a certification by
Construction Manager for such Project and by Borrower and the Independent
Engineer to such effect.
3.5.3 Annual Budget. Administrative Agent shall have received the
Annual Operating Budget with respect to such Project as required under Section
5.15.2 for the calendar year containing the date of Final Completion. In the
event that such Annual Operating Budget does not, in Administrative Agent's
opinion, properly reflect the operation of such Project during such calendar
year as a result of the actual date of Final Completion being different from the
date anticipated therefor and set forth in such Annual Operating Budget,
Administrative Agent shall have received an amendment to such Annual Operating
Budget properly reflecting the actual date of Final Completion.
3.5.4 Insurance. Insurance complying with the requirements of
Section 5.18 shall be in effect, and upon the request of Administrative Agent,
evidence thereof shall be provided to Administrative Agent.
3.5.5 Applicable Permits and Applicable Third Party Permits.
Borrower shall have obtained or caused to be obtained and delivered to
Administrative Agent all Applicable Permits with respect to such Project,
satisfactory in form and substance to Administrative Agent, together with copies
of each such Applicable Permit and a certificate of an authorized officer of
Borrower certifying that all such Applicable Permits have been obtained. Each
Major Project Participant with respect to such Project shall have obtained or
caused to be obtained all Applicable Third Party Permits applicable to such
Person with respect to such Project, satisfactory in form and substance to
Borrower and Administrative Agent, and Borrower shall have delivered or cause to
be delivered to Administrative Agent copies or other evidence of each
44
59
such Applicable Third Party Permit and a certificate of an authorized officer of
Borrower certifying that all such Applicable Third Party Permits have been
obtained. All such Applicable Permits and Applicable Third Party Permits shall
be in full force and effect, not subject to any then current legal proceeding or
to any unsatisfied condition that could reasonably be expected to allow material
modification or revocation, and all applicable appeal periods with respect
thereto shall have expired.
3.5.6 A.L.T.A. Surveys. Administrative Agent shall have received
as-built A.L.T.A. surveys of the Site and the Easements with respect to such
Project (or such other documentation acceptable to Administrative Agent),
reasonably satisfactory in form and substance to Administrative Agent and the
Title Insurer, certified to Administrative Agent as to completeness and accuracy
as of not more than four weeks prior to Final Completion by a licensed surveyor
reasonably satisfactory to Administrative Agent, showing (a) as to such Site,
the exact location and dimensions thereof, including the location of all means
of access thereto and all easements relating thereto and showing the perimeter
within which all foundations are located; (b) as to such Easements, the exact
location and dimensions thereof, including the location of all means of access
thereto, and all improvements or other encroachments in or on such Easements;
(c) the location and dimensions of all improvements, fences or encroachments
located in or on such Site or such Easements; (d) that the location of such
Project does not encroach on or interfere with adjacent property or existing
easements or other rights (whether on, above or below ground), and that there
are no gaps, gores, projections, protrusions or other survey defects; (e)
whether such Site or any portion thereof is located in a special earthquake or
flood hazard zone; and (f) that there are no other matters that could reasonably
be expected to be disclosed by a survey constituting a defect in title other
than relevant Permitted Encumbrances; provided, however, that the matters
described in clause (v) may be shown by separate maps, surveys or other
information reasonably satisfactory to Administrative Agent.
3.5.7 Title Policy. Except with respect to the Additional
Subsequent Projects, Administrative Agent shall have received (a) a lender's
A.L.T.A. policy of title insurance, together with such endorsements as are
reasonably required by Administrative Agent and are obtainable in the state
where such Project is located at reasonable costs, in the amount of an aggregate
principal amount reasonably satisfactory to Administrative Agent, not to exceed
the amount of the Title Policies delivered pursuant to Section 3.1.27 or Section
3.3.29, as applicable, with respect to such Project, issued by the Title
Insurer, in form and substance and with such reinsurance as is reasonably
satisfactory to Administrative Agent, and insuring Administrative Agent as to
all matters described in Section 3.1.27 or Section 3.3.29, as the case may be,
the continued first priority of the Lien on the relevant Mortgaged Property
evidenced by the relevant Deed of Trust (without a mechanics' and materialmen's
exception included in such title policy) and as to such other matters as
Administrative Agent may reasonably request, and containing only relevant
Permitted Encumbrances, such Permitted Liens as are junior and subordinate to
the relevant Deed of Trust and any other exceptions relating to the boundaries
of the relevant Site, encroachments and matters disclosed or discoverable by a
survey or inspection as are acceptable to Administrative Agent in its sole
discretion or (b) an endorsement to the A.L.T.A. Policy delivered to
Administrative Agent pursuant to Section 3.1.27 or Section 3.3.29, as the case
may be, reasonably satisfactory to Administrative Agent reflecting the items
referred to above.
45
60
3.5.8 Project Pre-Completion Requirements. All of the
Pre-Completion Requirements applicable to such Project, if any, shall have been
satisfied.
3.5.9 Operating Plans. Borrower shall have provided to
Administrative Agent a plan setting forth such Project's procedures for
operating the Project, fuel procurement and power marketing in form and
substance reasonably satisfactory to Administrative Agent.
3.6 Conditions Precedent to the Issuance of Letters of Credit.
The obligation of the LC Bank to issue, extend or increase the Stated Amount of
any Letter of Credit is subject to the prior satisfaction of each of the
following conditions:
3.6.1 Representations and Warranties True and Correct. Each
representation and warranty of the Partners and Calpine under the Credit
Documents and each representation and warranty of Borrower under the Operative
Documents shall be true and correct in all material respects as if made on such
date, unless such representation or warranty expressly relates solely to another
time.
3.6.2 No Event of Default or Inchoate Default. No Event of
Default or Inchoate Default has occurred and is continuing or will result from
such Credit Event and no Non-Fundamental Project Default or Non-Fundamental
Project Inchoate Default in respect of the Project for which the issuance,
extension or increase in Stated Amount of a Letter of Credit is requested has
occurred and is continuing or will result from such Credit Event.
3.6.3 Operative Documents, Applicable Permits and Applicable
Third Party Permits in Effect. Each Credit Document, Project Document,
Additional Project Document, Applicable Permit and Applicable Third Party Permit
related to the Project for which Letters of Credit are then being requested
remains in full force and effect in accordance with its terms and no material
defaults have occurred thereunder.
3.6.4 No Material Adverse Effect. No event or circumstance having
a Material Adverse Effect with respect to Borrower or the Projects, taken as a
whole, has occurred since the Closing Date (except as is no longer continuing)
and no event or circumstance having a Material Adverse Effect with respect to
the Project in respect of which the LC Bank is being requested to issue, extend
or increase the stated Amount of a Letter of Credit has occurred since the
Closing Date (except as is no longer continuing).
3.6.5 Interest Coverage Ratio. From and after the Final
Completion of the first Project to achieve Final Completion, Borrower's
Four-Quarter Portfolio Interest Coverage Ratio as of the most recent calendar
quarter shall equal or exceed [*] to 1.00.
3.6.6 Project Pre-Funding Requirements. All of the Pre-Funding
Requirements applicable to such Project, if any, shall have been satisfied.
3.6.7 Debt to Collateral Value Ratio. Borrower's Debt to
Collateral Value Ratio, calculated without taking into account the Contributions
to Borrower with respect to Initial Projects which have not satisfied all of
their Pre-Funding Requirements, shall be no more than [*] to 1.00.
46
61
3.6.8 Project Status. The Project with respect to which such
Letter of Credit is issued is an Initial Project or a Funded Subsequent Project.
3.7 Failure of Conditions Precedent to be Satisfied for a Particular
Project.
(a) In the event that Borrower requests a Borrowing with
respect to more than one Project, and the applicable conditions set forth in
this Article 3 for such Borrowing have not been satisfied for one or more of
such Projects, then such Borrowing shall be permitted to occur for the Projects
in respect of which all applicable conditions have been satisfied, unless (i)
the failure of any condition to be satisfied with respect to any Project has the
effect of causing an Event of Default or Inchoate Default to occur under this
Agreement, in which case the requested Borrowing shall not be permitted to occur
until such time as the Event of Default or Inchoate Default has been cured and
the applicable conditions have been satisfied, or (ii) a Non-Fundamental Project
Default or Non-Fundamental Project Inchoate Default has occurred and is
continuing with respect to any Project, in which case the provisions of Section
3.7(b) shall apply.
(b) In the event that a Non-Fundamental Project Default or
Non-Fundamental Project Inchoate Default has occurred and is continuing with
respect to a given Project but the conditions to the requested Borrowing in
respect of a different Project are otherwise satisfied, then:
(i) Borrower shall calculate the Four-Quarter Portfolio
Interest Coverage Ratio, the Debt to Capitalization Ratio and the Debt to
Collateral Value Ratio (A) without taking into account the EBITDA produced by
the Project or Borrower's Contributions with respect to the Project with respect
to which the Non-Fundamental Project Default or Non-Fundamental Project Inchoate
Default has occurred and (B) in the case of the Debt to Capitalization Ratio and
Debt to Collateral Value Ratio only, without taking into account Borrower's
Contributions with respect to any Initial Project which has not satisfied all of
its Pre-Funding Requirements.
(ii) In the event that (A) the Four-Quarter Portfolio
Interest Coverage Ratio calculated pursuant to clause (i) above yields a minimum
projected ratio of no less than [*] to 1.00 through the same term of the Base
Case Project Projections delivered pursuant to Section 3.1.24, (B) the Debt to
Capitalization Ratio calculated pursuant to clause (i) above yields a maximum
projected ratio that is no higher than the Maximum Debt to Capitalization Ratio
at any time through the Loan Maturity Date and (C) the Debt to Collateral Value
Ratio calculated pursuant to clause (i) above yields a maximum projected ratio
that is no higher than [*] to 1.00 at any time through the Loan Maturity Date,
then Borrower shall be permitted to obtain the requested Borrowing for a Project
with respect to which no Non-Fundamental Project Default or Non-Fundamental
Project Inchoate Default has occurred and is continuing and which otherwise
satisfied the required conditions of this Article 3.
(iii) In the event that (A) the Four-Quarter Portfolio
Interest Coverage Ratio calculated pursuant to clause (i) above yields a minimum
projected ratio of less than [*] to 1.00 through the same term of the Base Case
Project Projections delivered pursuant to Section 3.1.24, (B) the Debt to
Capitalization Ratio calculated pursuant to clause (i) above
47
62
yields a maximum projected ratio that is higher than the Maximum Debt to
Capitalization Ratio at any time through the Construction Loan Maturity Date or
(C) the Debt to Collateral Value Ratio calculated pursuant to clause (i) above
yields a maximum projected ratio that is higher than [*] to 1.00 at any time
through the Loan Maturity Date, then Borrower shall not be permitted to obtain
the requested Borrowing with respect to any Project unless and until such time
as (x) the Four-Quarter Portfolio Interest Coverage Ratio, the Debt to
Capitalization Ratio and the Debt to Collateral Value Ratio calculated pursuant
to clause (i) above meet the thresholds specified above or (y) the
Non-Fundamental Project Default or Non-Fundamental Project Inchoate Default is
no longer continuing and, in each case, the applicable conditions in this
Article 3 have been satisfied.
3.8 Funding of Equity. (a) Notwithstanding any other provision of
this Agreement to the contrary, Borrower shall have the right to, at any time,
make a Contribution into the Construction Account or any sub-account therein and
have such funds applied to the payments of Project Costs in accordance with
Section 7.1.2 so long as (i) at least 10 Banking Days prior to the requested
disbursement of funds from the Construction Account, Borrower shall have
provided Administrative Agent with a certificate, dated the date of the proposed
disbursement and signed by Borrower, substantially in the form of Exhibit C-5,
in respect of the Project for which the disbursement is being requested and (ii)
at least 4 Banking Days prior to the date of the requested disbursement of funds
from the Construction Account, the Independent Engineer shall have provided
Administrative Agent with a certificate, substantially in the form of Exhibit
C-6, relating to such disbursement; provided, however, that such certificates
need not certify as to whether the amount of Project Costs incurred by the
Project for which the disbursement is being requested are in excess of the
amounts set forth in the corresponding Project Budget, and the funds deposited
by Borrower into the Construction Account shall be released regardless of
whether or not the requested disbursement is in excess of the amounts set forth
in the corresponding Project Budget; provided, further, that until the funding
of the initial Loans with respect to a given Project, funds deposited by
Borrower into the Construction Account with respect to such Project shall be
released notwithstanding failure to satisfy the conditions set forth in Sections
3.2, 3.3, 3.4.5, 3.4.7, 3.4.8, 3.4.9, 3.4.11, 3.4.12, 3.4.14, 3.4.15, 3.4.17,
3.4.18 (as it relates to such Project), 3.4.19, 3.4.20, 3.4.21 and 3.4.22 with
respect to such Project.
(b) In the event that Borrower makes a Contribution as
contemplated in paragraph (a) above or otherwise which is in excess of the Base
Equity and Additional Borrower Equity which Borrower is required to contribute
or cause to be contributed under this Agreement, then Borrower shall, at any
time (i) after all Initial Projects have satisfied all of their respective
Pre-Funding Requirements, (ii) prior to the Completion of the Project for which
such funds were contributed, (iii) when no Non-Fundamental Project Default,
Non-Fundamental Project Inchoate Default, Event of Default or Inchoate Default
has occurred and is continuing, (iv) so long as Borrower's Four-Quarter
Portfolio Interest Coverage Ratio as of the end of the most recent calendar
quarter equaled or exceeded [*] to 1.00 and (v) so long as Borrower's Debt to
Collateral Value Ratio as of the end of the most recent calendar quarter was no
more than [*] to 1.00, obtain reimbursement of or repayment of, as the case may
be, such Contributions described in paragraph (a) above by satisfying the
conditions set forth in Section 3.4 with respect to such Project; provided,
however, that the difference between (x) the aggregate amount of Contributions
by Borrower to the Projects less (y) the sum of the amount of the requested
reimbursement or repayment, as the case may be, plus the aggregate amount of all
prior
48
63
reimbursements and repayments shall be no less than (z) [*] plus the
Contributions required pursuant to Section 5.17.1(b).
3.9 No Approval of Work. Neither the making of any Loan nor the
issuance of any Letter of Credit hereunder shall be deemed an approval or
acceptance by Administrative Agent or the Banks of any work, labor, supplies,
materials or equipment furnished or supplied with respect to any of the
Projects.
3.10 Waiver of Funding; Adjustment of Drawdown Requests.
Notwithstanding the foregoing, the Required Banks, without waiving any of the
Banks' rights hereunder, shall have the right to effect a Credit Event hereunder
without full compliance by Borrower with the conditions described in this
Article 3. In the event Administrative Agent determines that an item or items
listed in a Drawdown Certificate as a Project Cost is not properly included in
such Drawdown Certificate, Administrative Agent, in consultation with the
Independent Engineer, may in its reasonable discretion cause to be made a Loan
or Loans in the amount requested in such Drawdown Certificate less the amount of
such item or items or may reduce the amount of Loans made pursuant to any
subsequent Drawdown Certificate. In the event that Borrower prevails in any
dispute as to whether such Project Costs were properly included in such Drawdown
Certificate, Loans in the amount requested but not initially made shall
forthwith be made.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
Borrower makes the following representations and warranties to
and in favor of the Lead Arrangers, Administrative Agent, LC Bank and the other
Banks as of the Closing Date and as of the date of each Credit Event and each
date on which a Letter of Credit is issued, extended or increased in Stated
Amount. All of these representations and warranties shall survive the Closing
Date, the issuance of any Letters of Credit and the making of the Loans:
4.1 Organization.
4.1.1 Borrower is a limited partnership duly constituted, validly
existing and in good standing under the laws of the State of Delaware and is
duly qualified, authorized to do business and in good standing in all of the
states where the Projects are located and in each other jurisdiction where the
character of its properties or the nature of its activities makes such
qualification necessary. Borrower has all requisite power and authority to own
or hold under lease and operate the property it purports to own or hold under
lease and to carry on its business as now being conducted and as now proposed to
be conducted in respect of the Projects. On the Closing Date, Calpine CCFC GP,
Inc., a Delaware corporation, is the sole general partner of Borrower and the
limited partners of Borrower are the specific Persons identified by name under
the definition of "Limited Partners."
4.1.2 Calpine CCFC GP, Inc., a Delaware corporation (a) is a
corporation duly organized and validly existing and in good standing under the
laws of the State of Delaware with all requisite corporate power and authority
under the laws of the State of Delaware to enter into the Partnership Agreement
and as the general partner of Borrower to perform its obligations
49
64
thereunder and to consummate the transactions contemplated thereby, (b) is duly
qualified, authorized to do business and in good standing in each state where
the Projects are located and each other jurisdiction where the character of its
properties or the nature of its activities makes such qualification necessary,
(c) has the corporate power (i) to carry on its business as now being conducted
and as proposed to be conducted by it, (ii) to execute, deliver and perform each
Operative Document to which it is a party, in its individual capacity, and (iii)
to take all action as may be necessary to consummate the transactions
contemplated thereunder and (d) has the power and authority under the
Partnership Agreement to execute and deliver, on behalf of Borrower, each
Operative Document to which Borrower is a party.
4.2 Authorization; No Conflict. Borrower has duly authorized,
executed and delivered, or has been properly assigned, each Operative Document
to which Borrower is a party and neither Borrower's execution and delivery
thereof nor its consummation of the transactions contemplated thereby nor its
compliance with the terms thereof (a) does or will contravene the constituent
documents or any other Legal Requirement applicable to or binding on Borrower or
any of its properties, (b) does or will contravene or result in any breach of or
constitute any default under, or result in or require the creation of any Lien
(other than Permitted Liens) upon any of its properties under, any agreement or
instrument to which Borrower is a party or by which it or any of its properties
may be bound or affected or (c) does or will require the consent or approval of
any Person which has not already been obtained.
4.3 Enforceability. Each of the Operative Documents to which Borrower
is a party is a legal, valid and binding obligation of Borrower enforceable
against Borrower in accordance with its terms, except to the extent that
enforceability may be limited by applicable bankruptcy, insolvency, moratorium,
reorganization or other similar laws affecting the enforcement of creditors'
rights or by the effect of general equitable principles. None of the Operative
Documents to which Borrower is a party has been amended or modified except in
accordance with this Agreement.
4.4 Compliance with Law. There are no violations by Borrower, any
Partner or, to Borrower's knowledge, Calpine, of any Legal Requirement which
could reasonably be expected to have a Material Adverse Effect on Borrower or
any Initial Project or Funded Subsequent Project. Except as otherwise have been
delivered to Administrative Agent, no notices of violation of any Legal
Requirement relating to any Initial Project or Funded Subsequent Project or
related Site have been issued, entered or received by Borrower, any Partner or,
to Borrower's knowledge, Calpine.
4.5 Business, Debt, Contracts, Joint Ventures Etc.
4.5.1 Neither any Partner nor Borrower has conducted any business
other than the business contemplated by the Operative Documents, has any
outstanding Debt or other material liabilities other than pursuant to or allowed
by the Operative Documents. None of such Persons is party to or bound by any
material contract other than the Operative Documents to which it is a party.
50
65
4.5.2 Borrower is not (a) a general partner or a limited partner
in any general or limited partnership or a member in any limited liability
company or (b) a joint venturer in any joint venture, except (i) with respect to
Subsequent Projects which are at least fifty percent (50%) owned by Borrower or
(ii) as permitted pursuant to Section 6.4.2 hereof in connection with the Magic
Valley Project.
4.5.3 Neither Borrower nor any Partner thereof has any
subsidiaries (other than Borrower in the case of the Partners).
4.6 Adverse Change. With respect to each Initial Project and Funded
Subsequent Project, to the best of Borrower's knowledge, there has occurred no
material adverse change in the Project Budget, Project Schedule or Base Case
Project Projections, in the economics or feasibility of constructing and/or
operating such Project, or in the financial condition, business or property of
any Major Project Participant, or any other event or circumstance which is
reasonably likely to have a Material Adverse Effect on Borrower or such Project
(a) as of the Closing Date, since May 28, 1999 and (b) after the Closing Date,
except as disclosed to Administrative Agent in writing at the time the
representation in this Section 4.6 is being made, since the Closing Date (or,
with respect to a Subsequent Project, since such Subsequent Project's Funding
Date).
4.7 Investment Company Act, Etc. Neither Borrower nor any Partner is
an investment company or a company controlled by an investment company, within
the meaning of the Investment Company Act of 1940, and neither Borrower nor any
Partner is or has been determined by the Securities and Exchange Commission or
any other Governmental Authority to be subject to, or not exempt from,
regulation under PUHCA or the FPA (other than as provided by PURPA or as an
Exempt Wholesale Generator).
4.8 ERISA. Either (a) there are no ERISA Plans for Borrower or any
member of the Controlled Group or (b) Borrower and each member of the Controlled
Group have fulfilled their obligations (if any) under the minimum funding
standards of ERISA and the Code for each ERISA Plan, each ERISA Plan is in
compliance in all material respects with the currently applicable provisions of
ERISA and the Code and neither Borrower nor any Controlled Group member has
incurred any liability to the PBGC or any ERISA Plan under Title IV of ERISA
(other than liability for premiums due in the ordinary course). None of
Borrower's assets constitute assets of an employee benefit plan within the
meaning of 29 CFR Section 2510.3-101.
4.9 Permits. With respect to each Initial Project and Funded
Subsequent Project:
4.9.1 There are no Permits under existing law as such Project is
designed that are or will become Applicable Permits other than the Applicable
Permits described in the applicable appendix to Exhibit G-3 hereto. Except as
disclosed therein, each Applicable Permit listed in Part I(A) of the applicable
appendix to Exhibit G-3 is in full force and effect and is not subject to any
current legal proceeding or to any unsatisfied condition that could reasonably
be expected to have a Material Adverse Effect on such Project, and all
applicable appeal periods with respect thereto have expired. Each Permit listed
in Part II(A) of the applicable appendix to Exhibit G-3 is of a type that is
routinely granted upon application and that would not normally be obtained
before contemplated by Borrower. No fact or circumstance exists, to Borrower's
knowledge, which
51
66
indicates that any Permit identified in Part II(A) of the applicable appendix to
Exhibit G-3 shall not be timely obtainable at a cost consistent with the
applicable Project Budget without material difficulty or delay by Borrower
before it becomes an Applicable Permit. Borrower is in compliance in all
material respects with all Applicable Permits.
4.9.2 There are no Permits under existing law as such Project is
designed that are or will become Applicable Third Party Permits other than the
Applicable Third Party Permits described in the applicable appendix to Exhibit
G-3 hereto (other than those, the failure of which to obtain could not
reasonably be expected to have a Material Adverse Effect on Borrower or such
Project). Except as disclosed therein, each Applicable Third Party Permit listed
in Part I(B) of the applicable appendix to Exhibit G-3 is in full force and
effect and is not subject to current legal proceeding or to any unsatisfied
condition that could reasonably be expected to have a Material Adverse Effect on
Borrower or such Project, and all applicable appeal periods with respect thereto
have expired. No fact or circumstance exists, to Borrower's knowledge, which
indicates that any Permit identified in Part II(B) of the applicable appendix to
Exhibit G-3 shall not be timely obtainable at a cost consistent with the
applicable Project Budget without material difficulty or delay by the applicable
Major Project Participant before it becomes an Applicable Third Party Permit. To
the best knowledge of Borrower, each Major Project Participant is in compliance
in all material respects with its respective Applicable Third Party Permits,
each other Major Project Participant possesses all licenses, franchises,
patents, copyrights, trademarks and trade names, or rights thereto necessary to
perform its duties under the Operative Documents to which it is a party, and
such Person is not in violation of any valid rights of others with respect to
any of the foregoing which could reasonably be expected to have a Material
Adverse Effect on Borrower or such Project.
4.10 Qualifying Facility/Exempt Wholesale Generator. Each
Project, upon Completion of such Project, will be a Qualifying Facility or an
Eligible Facility and, from and after the commencement of commercial operations
of the first Project, Borrower will be an Exempt Wholesale Generator.
4.11 Hazardous Substance.
4.11.1 Except as set forth in Exhibit G-8: (a) neither Borrower
nor any Partner nor Calpine (the "Subject Companies"), with respect to the
Sites, Improvements or other Mortgaged Properties owned or leased by Borrower,
is or has in the past been in violation of any Hazardous Substance Law which
violation could reasonably be expected to result in a material liability to any
of the Subject Companies or their respective properties and assets or in an
inability of Borrower to perform its obligations under the Operative Documents;
(b) none of the Subject Companies nor, to the best knowledge of the Partners and
Borrower, any third party has used, released, discharged, generated,
manufactured, produced, stored, or disposed of in, on, under, or about the
Sites, Improvements or other Mortgaged Properties owned or leased by Borrower,
or transported thereto or therefrom, any Hazardous Substances that could
reasonably be expected to subject the Banks to liability or the Subject
Companies to liability, under any Hazardous Substance Law; (c) there are no
underground tanks, whether operative or temporarily or permanently closed,
located on the Sites, Improvements or other Mortgaged Properties owned or leased
by Borrower; (d) there are no Hazardous Substances used, stored or present at,
on or, to
52
67
the best knowledge of Borrower and the Partners, near the Sites, Improvements or
other Mortgaged Properties owned or leased by Borrower, except in compliance
with Hazardous Substance Laws and other Legal Requirements or as disclosed in
the Environmental Reports; and (e) to the best knowledge of Borrower and the
Partners, there neither is nor has been any condition, circumstance, action,
activity or event that could reasonably be expected to be a material violation
by the Subject Companies of any Hazardous Substance Law, or to result in
liability to the Banks or material liability to the Subject Companies under any
Hazardous Substance Law.
4.11.2 Except as set forth on Exhibit G-7 or Exhibit G-8, there
is no pending or, to the best knowledge of Borrower, threatened, action or
proceeding by any Governmental Authority (including, without limitation, the
U.S. Environmental Protection Agency) or any non-governmental third party with
respect to the presence or Release of Hazardous Substances in, on, from or to
the Sites, Improvements or other Mortgaged Properties owned or leased by
Borrower.
4.11.3 Neither Borrower nor any Partner nor Calpine has knowledge
of any past or existing violations of any Hazardous Substances Laws by any
Person relating in any way to the Sites, Improvements or other Mortgaged
Properties owned or leased by Borrower.
4.12 Litigation. Except as set forth on Exhibit G-7, there are no
pending or, to the best knowledge of Borrower, threatened actions or proceedings
of any kind, including actions or proceedings of or before any Governmental
Authority, to which Borrower, any Partner, Calpine, or, to the best knowledge of
Borrower, any other Major Project Participant or a Project is a party or is
subject, or by which any of them or any of their properties or a Project are
bound, which if adversely determined to or against Borrower, any other Major
Project Participant or a Project could reasonably be expected to have a Material
Adverse Effect on any Initial Project or Funded Subsequent Project or Borrower.
4.13 Labor Disputes and Acts of God. Neither the business nor the
properties of Borrower, any Partner, Calpine, or, to the best knowledge of
Borrower, any other Major Project Participant are affected by any fire,
explosion, accident, strike, lockout or other labor dispute, drought, storm,
hail, earthquake, embargo, act of God or of the public enemy, or other casualty
(whether or not covered by insurance), which could reasonably be expected to
have a Material Adverse Effect on any Initial Project or Funded Subsequent
Project or Borrower.
4.14 Project Documents.
4.14.1 Copies of all of the Project Documents in effect with
respect to the Initial Projects or the Funded Subsequent Projects as of such
date have been delivered to Administrative Agent by Borrower. Except as has been
previously disclosed in writing to Administrative Agent, as of the date of
delivery of such Project Documents relating to the Initial Projects and the
Funded Subsequent Projects none of the Project Documents has been amended,
modified or terminated.
53
68
4.14.2 To Borrower's knowledge, the representations and
warranties of the Major Project Participants contained in the Operative
Documents relating to the Initial Projects and the Funded Subsequent Projects
other than this Agreement are true and correct.
4.15 Disclosure. Neither this Agreement nor any certificate or other
documentation furnished to Administrative Agent, or to any consultant submitting
a report to Administrative Agent, by or, to the knowledge of Borrower, on behalf
of Borrower in connection with the transactions contemplated by this Agreement,
the other Project Documents or the design, description, testing or operation of
a Project, contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained herein or
therein not misleading under the circumstances in which they were made at the
time such statements are made. As of the Closing Date, there is no fact known to
Borrower which has had or could reasonably be expected to have a Material
Adverse Effect on Borrower or any Initial Project or Funded Subsequent Project
which has not been set forth in this Agreement or in the other documents,
certificates and written statements furnished to Administrative Agent and/or the
Independent Engineer, by or on behalf of Borrower in connection with the
transactions contemplated hereby. The documentation furnished to Administrative
Agent and to the Independent Engineer taken as a whole, including without
limitation written updated or supplemented information, is true and correct in
all material respects and all such documentation does not omit to state any fact
which would have a Material Adverse Effect on Borrower or any Initial Project or
Funded Subsequent Project.
4.16 Private Offering by Borrower. Assuming that the Banks are
acquiring the Notes for investment purposes only, and not for purposes of resale
or distribution thereof except for assignments or participations as provided in
Sections 10.13 and 10.14, no registration of the Notes under the Securities Act
of 1933, as amended, or under the securities laws of the State of New York,
Texas, California, Maine, Arizona, Delaware or any other state in which a
Project is located is required in connection with the offering, issuance and
sale of the Notes hereunder. Neither Borrower nor anyone acting on its behalf
has taken, or will take, any action which would subject the issuance or sale of
the Notes to Section 5 of the Securities Act of 1933, as amended.
4.17 Taxes. Borrower and each Partner has filed all federal, state
and local tax returns that it is required to file, has paid all taxes it is
required to pay to the extent due (other than those taxes that it is contesting
in good faith and by appropriate proceedings, with adequate, segregated reserves
or other security reasonably acceptable to Administrative Agent established for
such taxes) and, to the extent such taxes are not due, has established reserves
that are adequate for the payment thereof and are required by GAAP. For federal
income tax purposes, Borrower is a partnership and not an association taxed as a
corporation.
4.18 Governmental Regulation. Except to the extent that the FPA is
applicable solely by reason of Borrower being an Exempt Wholesale Generator or
the owner of a Qualifying Facility, none of Borrower, any Partner,
Administrative Agent, or the Banks, nor any Affiliate of any of them will,
solely as a result of the construction, ownership, leasing or operation of any
Project, the sale of electricity therefrom or the entering into any Operative
Document or any transaction contemplated hereby or thereby, be subject to, or
not exempt from, regulation under the FPA or PUHCA or under state laws and
regulations respecting the rates or the financial or organizational regulation
of electric utilities. Borrower is not subject to regulation under any
Governmental Rule as to securities, rates or financial or
54
69
organizational matters that would preclude any Loans, or the incurrence by
Borrower of any of the Obligations or the execution, delivery and performance by
Borrower of the Operative Documents. Borrower will not be deemed by any
Governmental Authority having jurisdiction to be subject to financial,
organizational or rate regulation as an "electric utility," "electric
corporation," "electrical company," "public utility," "public utility holding
company" or any similar entity under any existing law, rule or regulation of any
Governmental Authority.
4.19 Regulation U, Etc. Borrower is not engaged principally, or as
one of its principal activities, in the business of extending credit for the
purpose of purchasing or carrying margin stock (as defined in Regulations T, U
or X of the Federal Reserve Board), and no part of the proceeds of the Loans or
the Project Revenues will be used by Borrower to purchase or carry any such
margin stock or to extend credit to others for the purpose of purchasing or
carrying any such margin stock.
4.20 Project Budgets; Projections. Borrower has prepared the Project
Budget and the Base Case Project Projections and are responsible for developing
the assumptions on which the Project Budget and the Base Case Project
Projections are based; and the Project Budget and the Base Case Project
Projections for the Initial Projects and the Funded Subsequent Projects (a) are
based on reasonable assumptions as to all legal and factual matters material to
the estimates set forth therein, (b) as of the date delivered are consistent
with the provisions of the Project Documents and (c) indicate that the estimated
Project Costs with respect to such Project will not exceed funds available to
pay Project Costs with respect to such Project. In the reasonable opinion of
Borrower, as of the date delivered the textual material accompanying the Base
Case Project Projections for the Initial Projects and the Funded Subsequent
Projects discloses all information reasonably necessary for an understanding of
the Base Case Project Projections, and does not contain any material
misstatements or omit any information which, in conjunction with other
information given, would be necessary to make such information not materially
misleading.
4.21 Financial Statements. The financial statements of Borrower, the
Partners, Calpine, and any Affiliated Major Project Participants delivered
pursuant to Sections 3.1.20, 3.3.22 and 5.5 are true, complete and correct and
fairly present the financial condition of each such Person as of the date
thereof. Such financial statements have been prepared in accordance with GAAP.
Neither Borrower, the Partners, Calpine or such Affiliated Major Project
Participants has any material liabilities, direct or contingent, except as has
been disclosed in such financial statements.
4.22 Existing Defaults. Borrower is not in default under any material
term of any Operative Document relating to the Initial Projects and the Funded
Subsequent Projects or any agreement relating to any obligation of Borrower for
or with respect to borrowed money, and to the best of Borrower's knowledge, no
other party to any Project Document is in default thereunder.
4.23 No Default. No Event of Default, Inchoate Default,
Non-Fundamental Project Default or Non-Fundamental Project Inchoate Default has
occurred or is existing.
55
70
4.24 Offices, Location of Collateral.
4.24.1 The chief executive office or chief place of business (as
such term is used in Article 9 of the Uniform Commercial Code as in effect in
each state where the Projects are located and the State of California from time
to time) of Borrower is located in San Jose, California. Borrower's federal
employer identification number is 00-0000000.
4.24.2 With respect to each Project, all of the Collateral (other
than the Accounts and general intangibles), including the Mortgaged Properties
is, or when installed pursuant to the Project Documents will be, located on the
Site or the Easements or at the address set forth in Section 4.24.1.
4.24.3 Borrower's books of accounts and records are located at 00
Xxxx Xxx Xxxxxxxx Xxxxxx, Xxx Xxxx, Xxxxxxxxxx 00000.
4.25 Title and Liens. (a) With respect to each Initial Project and
Funded Subsequent Project (other than Projects in which Borrower holds a partial
undivided ownership interest), Borrower has good, marketable and insurable (as
to real property) title to such Project, and all of the Collateral relating to
such Project, and good, marketable and insurable (as to real property) title to,
or as applicable, a leasehold estate in, the Site and the Easements relating to
such Project in existence as of the date this representation is made (except
that title to certain of the Easements which are licenses may not be insurable),
in each case free and clear of all Liens, encumbrances or other exceptions to
title other than Permitted Liens.
(b) With respect to each Initial Project and Funded
Subsequent Project in which Borrower holds a partial undivided ownership
interest, Borrower has good, marketable and insurable (as to real property)
title to the applicable undivided portion of such Project, and all of the
Collateral relating to such Project, and good, marketable and insurable (as to
real property) title to, or as applicable, a leasehold estate in, the applicable
undivided portion of the Site and the Easements relating to such Project in
existence as of the date this representation is made (except that title to
certain of the Easements which are licenses may not be insurable), in each case
free and clear of all Liens, encumbrances or other exceptions to title other
than Permitted Liens.
(c) The Lien of the Collateral Documents constitutes a valid
lien on all Collateral relating to the Initial Projects and the Funded
Subsequent Projects. The Lien of the Collateral Documents constitutes a valid
and subsisting first priority Lien of record on all the Mortgaged Properties
relating to the Initial Projects and the Funded Subsequent Projects (other than
the Additional Subsequent Projects) described in the Deeds of Trust and, a first
priority perfected security interest in all the personal property relating to
the Initial Projects and the Funded Subsequent Projects described in the
Collateral Documents, subject to no Liens except Permitted Encumbrances and
Permitted Liens described in clauses (a), (b) and (c) of the definition thereof.
With respect to the Additional Subsequent Projects, no Lien exists on the real
property comprising such Projects, other than Permitted Liens.
4.26 Trademarks. Borrower owns or has the right to use all patents,
trademarks, service marks, trade names, copyrights, licenses and other rights,
which are necessary for the
56
71
operation of its business. Nothing has come to the attention of Borrower to the
effect that (a) any material product, process, method, substance, part or other
material presently contemplated to be sold by or employed by Borrower in
connection with its business will infringe any patent, trademark, service xxxx,
trade name, copyright, license or other right owned by any other Person, (b)
there is pending or threatened any claim or litigation against or affecting
Borrower contesting its right to sell or use any such product, process, method,
substance, part or other material or (c) there is, or there is pending or
proposed, any patent, invention, device, application or principle or any
statute, law, rule, regulation, standard or code relating to the use of
technology or intellectual property by Borrower which could reasonably have a
Material Adverse Effect on Borrower or such related Project.
4.27 Collateral. The security interests granted to Administrative
Agent pursuant to the Collateral Documents in the Collateral related to the
Initial Projects and Funded Subsequent Projects (a) constitute as to personal
property included in the Collateral and, with respect to subsequently acquired
personal property included in the Collateral, will constitute, a perfected
security interest under the UCC to the extent a security interest can be
perfected by filing or, in the case of the Accounts, by possession by or on
behalf of the secured party and (b) are, and, with respect to such subsequently
acquired personal property, will be, as to Collateral related to the Initial
Projects and Funded Subsequent Projects perfected under the UCC as aforesaid,
superior and prior to the rights of all third Persons now existing or hereafter
arising whether by way of mortgage, lien, security interests, encumbrance,
assignment or otherwise. Except to the extent possession of portions of such
Collateral is required for perfection, all such action as is necessary has been
taken to establish and perfect Administrative Agent's rights in and to such
Collateral to the extent Administrative Agent's security interest can be
perfected by filing, including any recording, filing, registration, giving of
notice or other similar action. No filing, recordation, re-filing or
re-recording other than those listed on Exhibit D-6 hereto is necessary to
perfect and maintain the perfection of the interest, title or Liens of the
Collateral Documents related to the Initial Project and Funded Subsequent
Projects, and all such filings or recordings will have been made to the extent
Administrative Agent's security interest can be perfected by filing. Borrower
has properly delivered or caused to be delivered to Administrative Agent all
such Collateral that requires perfection of the Lien and security interest
described above by possession.
4.28 Sufficiency of Project Documents.
4.28.1 With respect to each Initial Project and Funded Subsequent
Project, other than those that can be reasonably expected to be commercially
available when and as required, the services to be performed, the materials to
be supplied and the real property interests, the Easements and other rights
granted or to be granted pursuant to the Project Documents in effect as of such
date:
(a) comprise all of the property interests necessary to
secure any right material to the acquisition, leasing, development,
construction, installation, completion, operation and maintenance of such
Project in accordance with all Legal Requirements and in accordance with the
Project Schedule, all without reference to any proprietary information not owned
by Borrower;
57
72
(b) are sufficient to enable such Project to be located,
constructed and operated on its respective Site and the Easements, respectively;
and
(c) provide adequate ingress and egress from the Site for
such Project for any reasonable purpose in connection with the construction and
operation of such Project.
4.28.2 With respect to each Initial Project and Funded Subsequent
Project, there are no services, materials or rights required for the
construction or operation of such Project in accordance with the Construction
Contracts and the Base Case Project Projections, respectively, other than those
that can reasonably be expected to be commercially available at the Site for
such Project on commercially reasonable terms consistent with the Project Budget
and the Base Case Project Projections, respectively.
4.29 Utilities. With respect to each Initial Project and Funded
Subsequent Project, all gas and electrical interconnection and utility services
necessary for the construction and the operation of such Project for its
intended purposes are available at such Project or will be so available as and
when required upon commercially reasonable terms consistent with the Project
Budget, Project Schedule and the Base Case Project Projections.
4.30 Roads/Transmission Line. With respect to each Initial Project
and Funded Subsequent Project, other than those that can be reasonably expected
to be commercially available when and as required:
4.30.1 All roads necessary for the construction and full
utilization of such Project for its intended purposes have either been completed
or the necessary rights of way therefor have been acquired.
4.30.2 All necessary easements, rights of way, licenses,
agreements and other rights for the construction, interconnection and
utilization of the interconnection facilities have been acquired.
4.31 Proper Subdivision. With respect to each Project, at such time
as Borrower obtains any title or leasehold interests therein, the Site for such
Project has been properly subdivided or entitled to exception therefrom, and for
all purposes such Site may be mortgaged, conveyed and otherwise dealt with as
separate legal lots or parcels.
4.32 Flood Zone Disclosure. With respect to each Project, none of the
Collateral in respect of such Project includes improved real property that is or
will be located in an area that has been identified by the Director of the
Federal Emergency Management Agency as an area having special flood hazards and
in which flood insurance has been made available under the National Flood
Insurance Act of 1968, as amended.
4.33 Year 2000 Compliance. With respect to Borrower and each Initial
Project and Funded Subsequent Project, all equipment, products, systems or
computer programs that are part of such Project will be able to, without manual
intervention or interruption (a) correctly handle and process date information
before, during and after January 1, 2000 accepting date input, providing date
output and performing calculations, including sorting and sequencing, on dates
or
58
73
portions of dates; (b) function according to the documentation during and after
January 1, 2000, without changes in operation resulting from the advent of the
calendar year 2000; (c) where appropriate, respond to two-digit date input in a
way that resolves any ambiguity as to century in a disclosed, defined and
predetermined manner; and (d) store and provide input of date information in
ways that are unambiguous as to century.
4.34 Acquisition of Real Property. Borrower has not acquired or
leased any real property or other interest in real property (excluding the
acquisition (but not the exercise) of any options to acquire any such interests
in real property) except as otherwise permitted pursuant to Section 6.24.
ARTICLE 5
COVENANTS OF BORROWER
Borrower covenants and agrees that so long as this Agreement is in
effect, it will:
5.1 Use of Proceeds and Project Revenues.
5.1.1 Proceeds. With respect to each Initial Project and Funded
Subsequent Project, unless otherwise applied by Administrative Agent pursuant to
this Agreement, deposit the proceeds of the Loans advanced for such Project, the
Additional Borrower Equity and the other Contributions made pursuant to Section
3.8(a) in the relevant Construction Sub-Account, and except to the extent
permitted in Section 3.8(b), (a) hold such proceeds as a trust fund for the
payment of Project Costs of such Project, and (b) use them solely to pay Project
Costs of such Project.
5.1.2 Revenues. With respect to each Initial Project and Funded
Subsequent Project, unless otherwise applied by Administrative Agent pursuant to
Articles 7 and 8, (a) deposit all Project Revenues received or due Borrower
other than Insurance Proceeds, Eminent Domain Proceeds and damage payments
described in Section 7.7 received prior to Completion of such Project in the
relevant Construction Sub-Account for application toward Project Costs and
otherwise for application as set forth in Section 7.1, (b) deposit all Project
Revenues received or due Borrower other than Insurance Proceeds, Eminent Domain
Proceeds and damage payments described in Section 7.7 received after Completion
of such Project in the Revenue Account for application solely for the purposes
and in the order and manner provided in Section 7.2, and (c) deposit all
Insurance Proceeds, Eminent Domain, proceeds and damage payments described in
Section 7.7 received at any time in the Loss Proceeds Account for application
solely for the purposes, and in the order and manner, provided in Section 7.5.
5.2 Payment.
5.2.1 Credit Documents. Pay all sums due under this Agreement and
the other Credit Documents according to the terms hereof and thereof.
5.2.2 Project Documents. With respect to each Initial Project and
Funded Subsequent Project, pay all obligations due under the Project Documents,
howsoever arising, as and when due and payable, except (a) such as may be
contested in good faith or as to which a
59
74
bona fide dispute may exist, provided that Administrative Agent is satisfied in
its reasonable discretion that non-payment of such obligation pending the
resolution of such contest or dispute will not in any way endanger or materially
adversely affect such Project, the Banks' Liens in the Collateral, Borrower or
that provision is made to the satisfaction of Administrative Agent in its
reasonable discretion for the posting of security (other than the Collateral)
for or the bonding of such obligations or the prompt payment thereof in the
event that such obligation is payable and (b) Borrower's trade payables which
shall be paid in the ordinary course of business.
5.3 Warranty of Title. Maintain (a) with respect to each Initial
Project and Funded Subsequent Project, good, marketable and insurable leasehold
or fee title, as the case may be, to the Site and related Easements (or the
applicable undivided portion thereof), subject only to Permitted Liens and (b)
good, marketable and insurable title to all of its other respective properties
and assets (other than properties and assets disposed of in the ordinary course
of business).
5.4 Notices. Promptly, upon acquiring notice or giving notice, as the
case may be, or obtaining knowledge thereof, give written notice (with copies of
any such underlying notices) to Administrative Agent of:
5.4.1 Any litigation pending or, to the knowledge of Borrower,
threatened against Borrower and involving claims against Borrower or any Initial
Project or Funded Subsequent Project in excess of $2,000,000 in the aggregate
per calendar year or involving any injunctive, declaratory or other equitable
relief, such notice to include, if requested by Administrative Agent, copies of
all papers filed in such litigation and to be given monthly if any such papers
have been filed since the last notice given;
5.4.2 Any dispute or disputes which may exist between Borrower
and any Governmental Authority and which involve (a) claims against Borrower
which exceed $2,000,000 individually or $5,000,000 in the aggregate per calendar
year, (b) injunctive or declaratory relief, (c) revocation, modification,
failure to renew or the like of any Applicable Permit or Applicable Third Party
Permit relating to an Initial Project or a Funded Subsequent Project or
imposition of additional material conditions with respect thereto, or (d) any
Liens relating to an Initial Project or a Funded Subsequent Project for taxes
due but not paid;
5.4.3 Any Event of Default, Inchoate Default, Non-Fundamental
Project Default or Non-Fundamental Project Inchoate Default;
5.4.4 Any casualty, damage or loss, whether or not insured,
through fire, theft, other hazard or casualty, or any act or omission of
Borrower, its employees, agents, contractors, consultants or representatives, or
of any other Person if such casualty, damage or loss affects Borrower or any
Initial Project or Funded Subsequent Project, in excess of $500,000 for any one
casualty or loss or $2,000,000 in the aggregate in any policy period;
5.4.5 Any cancellation or material change in the terms, coverage
or amounts of any insurance described in Exhibit K;
60
75
5.4.6 Any matter which has had, or, in Borrower's reasonable
judgment, could reasonably be expected to have, a Material Adverse Effect on
Borrower or any Initial Project or Funded Subsequent Project, including any PUC
or FERC proceedings affecting any Initial Project or Funded Subsequent Project
which if adversely determined, reasonably could be expected to have a Material
Adverse Effect on such Project;
5.4.7 Any act by Borrower to become a surety, guarantor, endorser
or accommodation endorser for a third party other than endorsement of negotiable
instruments for collection purposes;
5.4.8 Any intentional withholding of compensation to any
Contractor, any engineer or Operator or any other Person under any Major
Construction Contract, any O&M Agreement, any Power Marketing Agreement or any
other construction or operating contract relating to any Initial Project or
Funded Subsequent Project, other than retention provided by the express terms of
any such contracts;
5.4.9 Any termination or material default or notice thereof
(including any notice of default) under any Project Document relating to an
Initial Project or a Funded Subsequent Project;
5.4.10 Any events of force majeure or change orders under any
Major Construction Contract or other Project Documents relating to any Initial
Project or Funded Subsequent Project and, to the extent requested by
Administrative Agent, copies of invoices or statements which are reasonably
available to Borrower under such Construction Contract, certified by an
authorized representative of Borrower, together with a copy of any supporting
documentation, schedule, data or affidavit delivered under such Construction
Contract or such other Project Document;
5.4.11 No later than the date upon which the Independent Engineer
is entitled to receive notice pursuant to any Major Construction Contract of the
proposed conduct of the initial Performance Tests under such Construction
Contract, promptly prior to the proposed conduct of any subsequent Performance
Tests pursuant to each such Construction Contract and promptly prior to the
conduct of any performance tests required under any other Project Document,
written notice of such proposed test;
5.4.12 Any (a) fact, circumstance, condition or occurrence at,
on, or arising from, any Site, Improvements, or other Mortgaged Property that
results in material noncompliance with any Hazardous Substance Law or any
Release of Hazardous Substances on or from such Site, Improvements or other
Mortgaged Property that has resulted or could reasonably be expected to result
in personal injury or material property damage or to have a Material Adverse
Effect on a Project, and (b) pending or, to Borrower's knowledge, threatened,
Environmental Claim against Borrower or to Borrower's knowledge any of its
Affiliates, contractors, lessees or any other Persons, arising in connection
with their occupying or conducting operations on or at any Project or any
related Site, Improvements or other Mortgaged Property;
61
76
5.4.13 Promptly, but in no event later than 30 days if consent of
Administrative Agent or the Banks is required, and 15 days otherwise, prior to
the time any Person will become a partner of Borrower or the occurrence of any
other change in or transfer of ownership interests in Borrower or any Project,
notice thereof, which notice shall identify such partner and such partner's
interest in Borrower and shall describe, in reasonable detail, such other change
or transfer;
5.4.14 Any material notices delivered to or received from, the
parties to the Project Documents relating to an Initial Project or a Funded
Subsequent Project;
5.4.15 Initiation of any condemnation proceedings involving any
Initial Project or Funded Subsequent Project or the related Site or material
portion thereof;
5.4.16 Promptly, but in no event later than 15 days after
Borrower has knowledge of the execution and delivery thereof, a copy of each
Additional Project Document relating to an Initial Project or a Funded
Subsequent Project; and
5.4.17 Promptly, but in no event later than 30 days after the
receipt thereof by Borrower, copies of (a) all Applicable Permits relating to an
Initial Project or a Funded Subsequent Project obtained by Borrower or any
Partner after the Closing Date, (b) any amendment, supplement or other
modification to any Applicable Permits relating to an Initial Project or a
Funded Subsequent Project received by Borrower after the Closing Date and (c)
all material notices relating to any Initial Project or Funded Subsequent
Project received by Borrower from any Governmental Authority.
5.5 Financial Statements.
5.5.1 Unless Administrative Agent otherwise consents, deliver or
cause to be delivered to Administrative Agent, in form and detail reasonably
satisfactory to Administrative Agent:
(a) As soon as practicable and in any event within 45 days
after the end of the first, second and third quarterly accounting periods of its
fiscal year (commencing with the quarter ending March 31, 1999), an unaudited
balance sheet of Borrower, the Partners, Calpine and each other Affiliated Major
Project Participant as of the last day of such quarterly period and the related
statements of income, cash flows, and partners' capital (where applicable) for
such quarterly period and (in the case of second and third quarterly periods)
for the portion of the fiscal year ending with the last day of such quarterly
period, setting forth in each case in comparative form corresponding unaudited
figures from the preceding fiscal year (such requirement may be satisfied with
respect to any party by delivery of the appropriate Form 10-Q filed with the
Securities and Exchange Commission); and
(b) As soon as available but no later than 120 days after the
close of each applicable fiscal year, audited (or, if not available with respect
to Persons who are not Calpine Affiliates, unaudited) financial statements of
Borrower, the Partners, Calpine, each other Affiliated Major Project
Participant, each Major Fuel Supplier and each Major Power Purchaser
62
77
relating to an Initial Project or a Funded Subsequent Project, including a
statement of equity, a balance sheet as of the close of such year, an income and
expense statement, reconciliation of capital accounts and a statement of sources
and uses of funds, all prepared in accordance with GAAP and in the case of
audited financial statements, certified by an independent certified public
accountant selected by the Person whose financial statements are being prepared
and satisfactory to Administrative Agent. Such certificate for Borrower, each
Partner, Calpine and each Affiliated Major Project Participant shall not be
qualified or limited because of restricted or limited examination by such
accountant of any material portion of the records of the applicable Person. Such
requirement may be satisfied with respect to any party by delivery of the
appropriate Form 10-K filed with the Securities and Exchange Commission.
5.5.2 Each time the financial statements are delivered under
Section 5.5.1(a) above for Borrower, the Partners, Calpine and each Affiliated
Major Project Participant, deliver or cause to be delivered, along with such
financial statements, a certificate signed by a Responsible Officer of such
Person, certifying that such officer has made or caused to be made a review of
the transactions and financial condition of such Person during the relevant
fiscal period and that such review has not, to the best of such Responsible
Officer's knowledge, disclosed the existence of any event or condition which
constitutes an Event of Default or Inchoate Default (or, in the case of
Borrower, a Non-Fundamental Project Default or Non-Fundamental Project Inchoate
Default), or if any such event or condition existed or exists, the nature
thereof and the corrective actions that such Person has taken or proposes to
take with respect thereto, and also certifying that such Person is in compliance
with all applicable material provisions of each Credit Document to which such
Person is a party or, if such is not the case, stating the nature of such
non-compliance and the corrective actions which such Person has taken or
proposes to take with respect thereto.
5.6 Books, Records, Access. Maintain or cause to be maintained
adequate books, accounts and records and prepare all financial statements
required hereunder in accordance with GAAP and in compliance with the
regulations of any Governmental Authority having jurisdiction thereof, and,
subject to requirements of Governmental Rules and safety requirements, after
pre-scheduling with the relevant Operator, permit employees or agents of
Administrative Agent and Independent Engineer at any reasonable times and upon
reasonable prior notice to inspect all of its properties, including the Sites,
to examine or audit all of its books, accounts and records and make copies and
memoranda thereof and to witness all Performance Tests.
5.7 Compliance with Laws, Instruments, Etc. Promptly comply, or cause
compliance, in all material respects, with all Legal Requirements relating to
Borrower, the Initial Projects or the Subsequent Projects, including Legal
Requirements relating to pollution control, environmental protection, equal
employment opportunity or employee benefit plans, ERISA Plans and employee
safety, with respect to Borrower and each such Project, and make such
alterations to such Projects and Sites as may be required for such compliance.
5.8 Reports. With respect to each Initial Project and Funded
Subsequent Project:
5.8.1 Deliver to Administrative Agent on the last Banking Day of
each month (if any) prior to Final Completion of such Project in which no Loan
is made to such Project a
63
78
certificate of an authorized officer of Borrower as to the matters required by
Section 3.2.4 in respect of such Project, substantially in the form of the
Drawdown Certificate.
5.8.2 Until Final Completion of such Project, deliver to
Administrative Agent at such times as Administrative Agent may reasonably
request (but not more frequently than monthly) a report describing in reasonable
detail the progress of the construction of such Project since the last prior
report hereunder.
5.8.3 Within 30 days following the completion of the major
foundations for such Project, provide to Administrative Agent a foundation
survey showing (a) the exact location and dimensions of such foundations, (b)
that such foundations comply with all applicable building and zoning codes and
set-back lines, and (c) that such foundations do not encroach or interfere with
existing property rights.
5.8.4 From and after the commercial operation date of such
Project, deliver to Administrative Agent within 30 days of the end of each
month, a summary operating report with respect to such Project which shall
include, with respect to the month most recently ended, (a) a monthly and
year-to-date numerical and narrative assessment of (i) such Project's compliance
with each material category in the Annual Operating Budget for such Project,
(ii) electrical production and delivery, (iii) fuel deliveries and use,
including heat rate, (iv) plant and unit availability, including trips and
scheduled and unscheduled outages, (v) cash receipts and disbursements and cash
balances, including distributions to the Partners, debt service payments and
balances in the Accounts, (vi) maintenance activity, (vii) staffing changes with
respect to project or construction managers, (viii) casualty losses of value in
excess of $500,000, (ix) replacement of equipment of value in excess of $500,000
and (x) material disputes with contractors, materialmen, suppliers or others and
any related claims against Borrower; (b) statistical data and reasonably
detailed commentary thereon; and (c) a comparison of year-to-date figures to
corresponding figures provided in the prior year.
5.8.5 Deliver to Administrative Agent within 60 days of the end
of each year after the Closing Date, a report setting forth a narrative summary
describing and assessing such Project's compliance with all Applicable Permits
and Legal Requirements.
5.8.6 Provide to Administrative Agent promptly upon request such
reports, statements, lists of property, accounts, budgets, forecasts and other
information concerning such Project and, to the extent reasonably available, the
Major Project Participants and at such times as Administrative Agent shall
reasonably require, including such reports and information as are reasonably
required by the Independent Consultants.
5.8.7 Provide to Administrative Agent promptly upon receipt by
Borrower any material notices, information or reports provided by (a) Power
Marketer under any Power Marketing Project Document, (b) any Fuel Supplier under
a Gas Contract or (c) any other purchaser under a Power Purchase Document.
5.8.8 Within 30 days of the end of each fiscal year after the
Closing Date, deliver to Administrative Agent a certificate, substantially in
the Form of Exhibit I hereto, and otherwise
64
79
in form and substance satisfactory to Administrative Agent in consultation with
the Insurance Consultant, certifying that the insurance requirements of Exhibit
K have been implemented and are being complied with in all material respects.
5.9 Existence, Conduct of Business, Properties, Etc. Except as
otherwise expressly permitted under this Agreement, (a) maintain and preserve
its existence as a limited partnership formed under the laws of the state of
Delaware and all material rights, privileges and franchises necessary or
desirable in normal conduct of its business, (b) perform (to the extent not
excused by force majeure events or the nonperformance of another party and not
subject to a good faith dispute) all of its contractual obligations under the
Project Documents to which it is party or by which it is bound, (c) maintain all
necessary Permits and licenses, including all Applicable Permits, with respect
to its business and each Initial Project and Funded Subsequent Project and cause
all Major Project Participants to maintain all Applicable Third-Party Permits
with respect to each such Project, (d) at or before the time that any Permit
becomes an Applicable Permit with respect to any Initial Project or Funded
Subsequent Project, obtain such Permit, (e) at or before the time that any
Permit required to be obtained by a Major Project Participant becomes an
Applicable Third-Party Permit with respect to any Initial Project or Funded
Subsequent Project, cause the relevant third party to obtain such Permit, (f)
engage only in the business contemplated by the Operative Documents and (g)
perform all of its contractual obligations under the Credit Documents.
5.10 Four-Quarter Portfolio Interest Coverage Ratio; Maximum Debt to
Capitalization Ratio.
(a) As promptly as practicable, but in no event later than 45
days after (a) the last Banking Day of each calendar quarter, calculate and
deliver to Administrative Agent the Four-Quarter Portfolio Interest Coverage
Ratio. Administrative Agent shall notify Borrower in writing of any suggested
corrections, changes or adjustments which should be made to such Four-Quarter
Portfolio Interest Coverage Ratio calculations within 20 days after receipt.
Borrower shall incorporate all such corrections, changes or adjustment as
Administrative Agent reasonably deems appropriate.
(b) (i) As promptly as practicable, but in no event later
than two Banking Days after delivery by Borrower of the financial statements of
Borrower required to be delivered pursuant to Section 5.5.1, calculate and
deliver to Administrative Agent the Debt to Capitalization Ratio based on the
financial statements so delivered. Administrative Agent shall notify Borrower in
writing of any suggested corrections, changes or adjustments which should be
made to such Debt to Capitalization Ratio calculation within five days after
receipt. Borrower shall incorporate all such corrections, changes or adjustments
as Administrative Agent reasonably deems appropriate.
(ii) Borrower shall maintain, as of the end of each
calendar quarter, a Debt to Capitalization Ratio of no more than the Maximum
Debt to Capitalization Ratio.
65
80
5.11 Indemnification.
5.11.1 Indemnify, defend and hold harmless Administrative Agent
and each Bank, and in their capacities as such, their respective officers,
directors, shareholders, controlling persons, employees, agents and servants
(collectively, the "Indemnitees") from and against and reimburse the Indemnitees
for:
(a) any and all claims, obligations, liabilities, losses,
damages, injuries (to person, property, or natural resources), penalties, stamp
or other similar taxes, actions, suits, judgments, costs and expenses (including
reasonable attorney's fees) of whatever kind or nature, whether or not well
founded, meritorious or unmeritorious, demanded, asserted or claimed against any
such Indemnitee (collectively, "Subject Claims") in any way relating to, or
arising out of or in connection with this Agreement, the other Operative
Documents, or any Project, except for claims by Borrower against an Indemnitee;
(b) any and all Subject Claims arising in connection with the
release or presence of any Hazardous Substances at any Project, whether
foreseeable or unforeseeable, including all costs of removal and disposal of
such Hazardous Substances, all reasonable costs required to be incurred in (i)
determining whether any Project is in compliance and (ii) causing each Project
to be in compliance, with all applicable Legal Requirements, all reasonable
costs associated with claims for damages to persons or property, and reasonable
attorneys' and consultants' fees and court costs; and
(c) any and all Subject Claims in any way relating to, or
arising out of or in connection with any claims, suits, liabilities against
Borrower, any Partner or any of their Affiliates.
5.11.2 The foregoing indemnities shall not apply with respect to
an Indemnitee, to the extent arising as a result of the gross negligence or
willful misconduct of such Indemnitee, but shall continue to apply to other
Indemnitees.
5.11.3 The provisions of this Section 5.11 shall survive
foreclosure of the Collateral Documents and satisfaction or discharge of
Borrower's obligations hereunder and under the other Credit Documents, and shall
be in addition to any other rights and remedies of the Banks.
5.11.4 In case any action, suit or proceeding shall be brought
against any Indemnitee, such Indemnitee shall notify Borrower of the
commencement thereof, and Borrower shall be entitled, at its expense, acting
through counsel reasonably acceptable to such Indemnitee, to participate in,
and, to the extent that Borrower desires, to assume and control the defense
thereof. Such Indemnitee shall be entitled, at its expense, to participate in
any action, suit or proceeding the defense of which has been assumed by
Borrower. Notwithstanding the foregoing, Borrower shall not be entitled to
assume and control the defenses of any such action, suit or proceedings if and
to the extent that, in the reasonable opinion of such Indemnitee and its
counsel, such action, suit or proceeding involves the potential imposition of
criminal liability upon such Indemnitee or a conflict of interest between such
Indemnitee and Borrower or between such
66
81
Indemnitee and another Indemnitee (unless such conflict of interest is waived in
writing by the affected Indemnitees), and in such event (other than with respect
to disputes between such Indemnitee and another Indemnitee) Borrower shall pay
the reasonable expenses of such Indemnitee in such defense.
5.11.5 Borrower shall report to such Indemnitee on the status of
such action, suit or proceeding as material developments shall occur and from
time to time as requested by such Indemnitee (but not more frequently than every
60 days). Borrower shall deliver to such Indemnitee a copy of each document
filed or served on any party in such action, suit or proceeding, and each
material document which Borrower possesses relating to such action, suit or
proceeding.
5.11.6 (a) Notwithstanding Borrower's rights hereunder to control
certain actions, suits or proceedings, if any Indemnitee reasonably determines
that failure to compromise or settle any Subject Claim made against such
Indemnitee is reasonably likely to have an imminent and Material Adverse Effect
on such Indemnitee, such Indemnitee shall be entitled to compromise or settle
such Subject Claim.
(b) Notwithstanding Borrower's rights hereunder to control
certain actions, suits or proceedings, if the Required Banks reasonably
determine that failure to compromise or settle any Subject Claim made against
such Indemnitee is reasonably likely to have an imminent and Material Adverse
Effect on Borrower or any Project, such Indemnitee or the Required Banks, as the
case may be, shall provide Borrower with written notice of a proposed compromise
or settlement of such claim specifying in detail the nature and amount of such
proposed settlement or compromise. Borrower shall be deemed to have approved
such proposed compromise or settlement unless, within 30 days after the date
Borrower receives such notice of intended compromise or settlement, Borrower
provides such Indemnitee or the Required Banks, as the case may be, with (i) a
written legal analysis from counsel reasonably acceptable to such Indemnitee or
Required Banks, as the case may be, reasonably concluding that, based on the
magnitude of the Subject Claim, the legal basis for such Subject Claim, and/or
the cost of defending such Subject Claim, the amount of such proposed settlement
or compromise is not within a reasonable range of settlements or compromises for
such Subject Claim, and indicating, based on such factors, such counsel's view
as to the appropriate amount of a reasonable settlement or compromise for such
Subject Claim (the "Settlement Amount"). If the Indemnitee or the Required
Banks, as the case may be, receives such legal analysis required by this Section
within such 30-day period, the Indemnitee or the Required Banks, as the case may
be, may elect to settle or compromise such Subject Claim and Borrower shall be
responsible for the payment of all amounts of such compromise or settlement up
to 125% of the Settlement Amount, such Indemnitee shall be responsible for
payment of all amounts of such compromise or settlement in excess of such 125%
limit and such compromise or settlement shall be binding upon Borrower. If
Borrower does not provide such legal analysis within such period, or if such
legal analysis is not reasonable, in the reasonable determination of such
Indemnitee or the Required Banks, as the case may be, such Indemnitee may settle
or compromise such Subject Claim and shall be fully indemnified by Borrower
therefor. Such Indemnitee or the Required Banks, as the case may be, shall not
otherwise settle or compromise any such Subject Claim other than at its own
expense.
67
82
5.11.7 Upon payment of any Subject Claim by Borrower pursuant to
this Section 5.11 or other similar indemnity provisions contained herein to or
on behalf of an Indemnitee, Borrower, without any further action, shall be
subrogated to any and all claims that such Indemnitee may have relating thereto,
and such Indemnitee shall cooperate with Borrower and give such further
assurances as are necessary or advisable to enable Borrower vigorously to pursue
such claims.
5.11.8 Any amounts payable by Borrower pursuant to this Section
5.11 shall be regularly payable within 30 days after Borrower receives an
invoice for such amounts from any applicable Indemnitee, and if not paid within
such 30-day period shall bear interest at the Default Rate.
5.11.9 Notwithstanding anything to the contrary set forth herein,
Borrower shall not, in connection with any one legal proceeding or claim, or
separate but related proceedings or claims arising out of the same general
allegations or circumstances, in which the interests of the Indemnitees do not
materially differ, be liable to the Indemnitees (or any of them) under any of
the provisions set forth in this Section 5.11 for the fees and expenses of more
than one separate firm of attorneys (which firm shall be selected by the
affected Indemnitees, or upon failure to so select, by Administrative Agent).
5.11.10 If, for any reason whatsoever, the indemnification
provided under this Section 5.11 is unavailable to any Indemnitee or is
insufficient to hold it harmless to the extent provided in this Section 5.11,
then provided such payment is not prohibited by or contrary to any applicable
Governmental Rule, Legal Requirement or public policy, Borrower shall contribute
to the amount paid or payable by such Indemnitee as a result of the Subject
Claim in such proportion as is appropriate to reflect the relative economic
interests of Borrower and its Affiliates on the one hand, and such Indemnitee on
the other hand, in the matters contemplated by this Agreement as well as the
relative fault of Borrower (and its Affiliates) and such Indemnitee with respect
to such Subject Claim, and any other relevant equitable considerations.
5.12 Qualifying Facility/Exempt Wholesale Generator.
5.12.1 On or before the earlier of: (x) 75 days prior to the
anticipated commencement of commercial operations of the first Project to
commence commercial operations and (y) January 4, 2001, file, in good faith, an
application with FERC requesting that FERC certify Borrower as an Exempt
Wholesale Generator.
5.12.2 With respect to each Project, take or cause to be taken
all necessary or appropriate actions (a) so that such Project will, from and
after commercial operations of the first Project to commence commercial
operations, either be a Qualifying Facility engaged exclusively in the
generation of electric energy exclusively for sale at wholesale or an Eligible
Facility until all Obligations due the Banks under the Credit Documents have
been paid in full unless such Project's failure to be a Qualifying Facility or
Eligible Facility, as the case may be, could not reasonably be expected to have
a Material Adverse Effect on such Project, and (b) except to the extent that the
FPA is applicable solely by reason of Borrower being the owner of a Qualifying
Facility or an Exempt Wholesale Generator, to maintain Borrower's and such
Project's
68
83
exemptions from regulation under the FPA (unless failure to so maintain such
exemptions could not reasonably be expected to have a Material Adverse Effect on
Borrower or such Project) and PUHCA (except regulations specifically applicable
to an Exempt Wholesale Generator or a Qualifying Facility) or, if Calpine or its
successor becomes a registered holding company under PUHCA, as a subsidiary of
such registered holding company.
5.13 Construction of Each Project. With respect to each Initial
Project and Funded Subsequent Project, cause such Project to be constructed and
equipped substantially in accordance with the Plans and Specifications,
Construction Contracts, other Project Documents, Project Budget and the Project
Schedule for such Project as the same may be amended from time to time pursuant
to Section 6.13.
5.14 Completion. With respect to each Initial Project and Funded
Subsequent Project, achieve Completion and Final Completion of such Project in a
timely and diligent manner in accordance with the Project Schedule, Project
Budget, Construction Contracts and Plans and Specifications of such Project as
the same may be extended and, in the case of Completion, in no event later than
the guaranteed completion date set therefor in such Project's Project Schedule
(which shall be extended as the result of the occurrence of events of force
majeure for additional periods up to an aggregate of 180 days).
5.15 Operation of Projects and Annual Operating Budget. With respect
to each Initial Project and Funded Subsequent Project:
5.15.1 (a) Keep such Project, after Completion thereof, or cause
the same to be kept, in good operating condition consistent with Prudent Utility
Practices, all Applicable Permits (and, if applicable, Applicable Third Party
Permits), Legal Requirements and the Operative Documents, and make or cause to
be made all repairs (structural and non-structural, extraordinary or ordinary)
necessary to keep such Project in such condition; and (b) operate such Project,
after Completion thereof, or cause the same to be operated, in a manner
consistent with Prudent Utility Practices and in compliance with the terms of
the Power Purchase Documents so as to assure, to the extent reasonably possible,
the maximum generation of net revenue for such Project consistent with the Power
Purchase Documents.
5.15.2 On or before 90 days prior to the beginning of each
calendar year, beginning with the calendar year in which Completion of such
Project occurs or is anticipated to occur, adopt an operating plan and a budget,
detailed by month for such Project, of anticipated revenues and anticipated
expenditures, such budget to include debt service (if applicable), proposed
distributions, maintenance, repair and operation expenses (including reasonable
allowance for contingencies), Major Maintenance, reserves and all other
anticipated O&M Costs for such Project for the ensuing calendar year and, in the
case of Major Maintenance in accordance with Section 5.15.3, to the conclusion
of the second full calendar year thereafter (each such annual operating plan and
budget with respect to each Project and for all the Projects as a whole, an
"Annual Operating Budget"). Each Annual Operating Budget shall be subject to the
reasonable approval of Administrative Agent and the Independent Engineer. Copies
of each draft Annual
69
84
Operating Budget shall be promptly furnished to Administrative Agent for its
review and reasonable approval. Failure by Administrative Agent to approve or
disapprove such draft Annual Operating Budget within 45 days after receipt
thereof shall be deemed to be an approval by Administrative Agent of such draft.
Borrower shall incorporate Administrative Agent's suggestions into a final
Annual Operating Budget, which, subject to the provisions of the last sentence
of this Section 5.15.2, shall be prepared no less than 45 days in advance of
each fiscal year. The O&M Costs in each Annual Operating Budget which are
subject to escalation limitations in the Project Documents shall not, absent
extraordinary circumstances, be increased by more than the amounts provided in
such Project Documents. Borrower shall continue to operate and maintain such
Project, or cause such Project to be operated and maintained, within amounts not
to exceed 115% of the aggregate amounts set forth in the applicable Annual
Operating Budget; provided, however, the costs for fuel shall not be limited by
the Annual Operating Budget. Pending approval of any Annual Operating Budget in
accordance with the terms of this Section 5.15.2, Borrower shall continue to
operate and maintain such Project, or cause such Project to be operated and
maintained, within the Annual Operating Budget for such Project then in effect;
provided that the amounts specified therein shall be increased by the amounts
specified in the Project Documents.
5.15.3 Replace the Operator of such Project if such Operator is
not operating such Project in accordance with the provisions hereof or the
applicable O&M Agreement, Power Purchase Documents or any other agreement or
instrument under which Borrower holds title, an easement or a leasehold to the
applicable Site, the Easements or the Collateral, and such failure could
reasonably be expected to have a Material Adverse Effect on such Project, upon
receipt of notice from Administrative Agent (after consultation with Borrower)
to the effect that, in the opinion of the Required Banks and the Independent
Engineer, said Operator has failed to perform any material obligations set forth
above; provided, however, that the Operator may have 30 days from Borrower's
receipt of notice to cure said failure (or to establish to the satisfaction of
the Required Banks that a failure does not exist); provided, further, that if
such failure cannot be corrected within such 30 days, the Required Banks will
not unreasonably withhold their consent to an extension of such time if
corrective action is promptly instituted by such Operator within the 30-day
period and thereafter diligently pursued until the failure is corrected and such
extension shall not have a Material Adverse Effect on such Project.
5.16 Preservation of Rights; Further Assurances.
5.16.1 Preserve, protect and defend the rights of Borrower under
each and every material Project Document relating to the Initial Projects and
the Funded Subsequent Projects, including prosecution of suits to enforce any
right of Borrower thereunder and enforcement of any claims with respect thereto;
provided, however, that upon the occurrence and during the continuance of an
Event of Default if Administrative Agent requests that certain actions be taken
and Borrower fails to take the requested actions within five Banking Days and
such failure reasonably could be expected to have a Material Adverse Effect on
Borrower or any Project, Administrative Agent may enforce in its own name or in
Borrower's name, such rights of Borrower.
5.16.2 From time to time, execute, acknowledge, record, register,
deliver and/or file all such notices, statements, instruments and other
documents (including any memorandum of lease or other agreement, financing
statement, continuation statement, certificate of title or
70
85
estoppel certificate), relating to the Loans stating the interest and charges
then due and any known defaults, and take such other steps as may be necessary
or advisable to render fully valid and enforceable under all applicable laws the
rights, liens and priorities of the Banks with respect to all Collateral and
other security from time to time furnished under this Agreement and the other
Credit Documents or intended to be so furnished, including (x) granting Liens,
subject to no other Liens other than Permitted Liens, in favor of Administrative
Agent, in any Project or portion thereof not part of the Collateral and (y)
causing its shareholders to grant a first priority Lien to Administrative Agent
in all the ownership interests in Borrower, in each case to the extent
permitted, without any waivers, and consistently with the characterization of
the Debt incurred and Liens granted hereunder and under the other Credit
Documents, under the Calpine Indenture, in each case in such form and at such
times as shall be satisfactory to Administrative Agent, and pay all fees and
expenses (including reasonable attorneys' fees) incident to compliance with this
Section 5.16.2.
5.16.3 Subject to Section 6.23, and to the extent permitted
without any waivers under the Calpine Indenture, if Borrower shall at any time
acquire any real property or leasehold or other interest in real property
related to an Initial Project or a Funded Subsequent Project not covered by the
Deeds of Trust, promptly upon such acquisition (or on the Closing Date if such
acquisition occurred prior thereto) execute, deliver and record a supplement to
the applicable Deed of Trust or execute, deliver and record a new Deed of Trust,
satisfactory in form and substance to Administrative Agent, subjecting the real
property or leasehold or other interests so acquired to a lien and security
interest in favor of Administrative Agent and the Banks, subject only to
Permitted Liens and other exceptions to title approved by Administrative Agent.
If requested by Administrative Agent, Borrower shall obtain an appropriate
endorsement or supplement to the applicable Title Policy or procure a new Title
Policy insuring the Lien of the Banks in such additional property, subject only
to Permitted Liens and other exceptions to title approved by Administrative
Agent, and shall obtain subordination and nondisturbance agreements from
applicable third parties to the extent reasonably requested by Administrative
Agent.
5.16.4 Perform, upon the request of Administrative Agent, such
reasonable acts as may be necessary to carry out the intent of this Agreement
and the other Credit Documents.
5.17 Project Equity.
5.17.1 (a) On or prior to the initial advance of Loans hereunder,
make or cause to be made, from time to time as and when needed to pay Project
Costs for a particular Project, Contributions in an aggregate amount equal to
[*] (including Contributions used to pay Project Costs incurred or paid prior to
the date upon which initial Loans are made pursuant to Section 3.2 and approved
as valid by the Independent Engineer), (b) in addition, in the event that
Calpine shall, at the time of funding of the initial Loans hereunder, not be
rated at least Ba2 by Xxxxx'x and BB by S&P, then on or prior to such initial
funding of Loans, make or cause to be made Contributions in an amount equal to
the difference between (i) [*] of the aggregate amount of Project Costs set
forth in the Project Budgets for the Initial Projects (after giving effect to
the amendment to the Project Budgets contemplated in Section 6.21(a)), less (ii)
[*] (all Contributions pursuant to clauses (a) and (b) above, the "Base
Equity"). Borrower may deposit some or all of the Base Equity with
Administrative Agent as provided in
71
86
Section 3.8. In such event, Administrative Agent shall deposit the Base Equity
into the relevant Construction Sub-Accounts at Administrative Agent's New York
office pursuant to the Depositary Agreement. From time to time following the
deposits of such amounts, Borrower shall have the right to request that
Administrative Agent transfer amounts from the relevant Construction
Sub-Accounts to pay Project Costs upon the satisfaction of the requirements set
forth in Section 3.8(a).
5.17.2 At such time, if ever, as the Available Construction Funds
are less than the remaining Project Costs to be incurred or paid to achieve
Final Completion of the Initial Projects and the Funded Subsequent Projects,
then promptly thereafter deposit or cause to be deposited with Administrative
Agent, Contributions in an amount equal to all such further Project Costs, such
Contributions to be made on or before the date such Project Costs are due to be
paid ("Additional Borrower Equity"). All such Additional Borrower Equity
proceeds shall be deposited in the relevant Construction Sub-Accounts
established pursuant to Section 7.1 hereof and applied, after satisfaction of
the requirements set forth in Section 3.8(a), to pay Project Costs.
5.18 Maintenance of Insurance. With respect to each Initial Project
and Funded Subsequent Project, without cost to the Banks, maintain or cause to
be maintained on its behalf in effect at all times the types of insurance
required pursuant to Exhibit K, in the amounts and on the terms and conditions
specified therein, with insurance companies rated "A-" or better, with a minimum
size rating of "VIII," by Best's Insurance Guide and Key Ratings, (or an
equivalent rating by another nationally recognized insurance rating agency of
similar standing if Best's Insurance Guide and Key Ratings shall no longer be
published) or other insurance companies of recognized responsibility
satisfactory to Administrative Agent.
5.19 Taxes and Other Government Charges. With respect to each Initial
Project and Funded Subsequent Project, pay, or cause to be paid, as and when due
and prior to delinquency, all taxes, assessments and governmental charges of any
kind that may at any time be lawfully assessed or levied against or with respect
to Borrower or such Project, including sales and use taxes and real estate
taxes, all other charges incurred in the operation, maintenance, use, occupancy
and upkeep of such Project other than utility charges, and all assessments and
charges lawfully made by any Governmental Authority for public improvements that
may be secured by a lien on such Project. In furtherance of the foregoing,
Borrower shall engage a qualified Person or Persons to confirm Borrower's
compliance with all tax laws and regulations and to implement any required
programs and procedures to ensure continued compliance with the same. Borrower
may contest in good faith any such taxes, assessments and other charges and, in
such event, may permit the taxes, assessments or other charges so contested to
remain unpaid during any period, including appeals, when Borrower is in good
faith contesting the same, so long as (a) reserves reasonably satisfactory to
Administrative Agent have been established in an amount sufficient to pay any
such taxes, assessments or other charges, accrued interest thereon and potential
penalties or other costs relating thereto, or other adequate provision for the
payment thereof shall have been made, (b) enforcement of the contested tax,
assessment or other charge is effectively stayed for the entire duration of such
contest, and (c) any tax, assessment or other charge determined to be due,
together with any interest or penalties thereon, is immediately paid after
resolution of such contest.
72
87
5.20 Event of Eminent Domain. With respect to each Project, if an
Event of Eminent Domain shall occur with respect to any Collateral, (a) promptly
upon discovery or receipt of notice of any such occurrence, provide written
notice of the same to Administrative Agent, (b) diligently pursue all its rights
to compensation against the relevant Governmental Authority in respect of such
Event of Eminent Domain, (c) not, without the written consent of Administrative
Agent and the Required Banks, which consent shall not be unreasonably withheld,
compromise or settle any claim against such Governmental Authority, (d) pay or
apply all Eminent Domain Proceeds in accordance with Section 7.10. Borrower
consents to the participation of Administrative Agent in any eminent domain
proceedings, and Borrower shall from time to time deliver to Administrative
Agent all documents and instruments requested by it to permit such
participation.
5.21 Power Marketing Plan; Fuel Plan. With respect to each Initial
Project and Funded Subsequent Project, comply in all material respects with the
provisions of the Power Marketing Plan and Fuel Plan delivered to and approved
by Administrative Agent and/or the Technical Committee as contemplated in
Article 3.
5.22 Utility Charges. With respect to each Initial Project and Funded
Subsequent Project, pay, or cause to be paid, as and when due and prior to
delinquency, all utility charges of any kind that may at any time be lawfully
assessed or levied against or with respect to Borrower or such Project.
5.23 Project Document Scope of Liability. Use good faith reasonable
efforts to include, or cause to be included, in each Major Project Document
entered into after the date hereof, provisions to the effect that the
counterparty's recourse against Borrower under such Project Document will be
limited to the Project, or Borrower's interest in the Project, to which such
Project Document relates.
5.24 Funded Subsequent Projects. Cause, within 24 months after the
Closing Date, not less than two wholly owned Subsequent Projects or three wholly
or partially owned Subsequent Projects to become Funded Subsequent Projects in
accordance with this Agreement. Of such Funded Subsequent Projects, (i) at least
two Funded Subsequent Projects (whether wholly owned or partially owned) may not
be Additional Subsequent Projects and (ii) the first Subsequent Project (whether
wholly owned or partially owned) to become a Funded Subsequent Project may not
be an Additional Subsequent Project.
ARTICLE 6
NEGATIVE COVENANTS
Borrower covenants and agrees that so long as this Agreement is
in effect, it will not:
6.1 Contingent Liabilities. Except as provided in this Agreement,
become liable as a surety, guarantor, accommodation endorser or otherwise, for
or upon the obligation of any other Person; provided, however, that this Section
6.1 shall not be deemed to prohibit (a) the acquisition of goods, supplies or
merchandise in the normal course of business or normal trade
73
88
credit; (b) the endorsement of negotiable instruments received in the normal
course of its business; (c) contingent liabilities required under any Applicable
Permit or Operative Document; or (d) joint liabilities incurred with respect to
any partially owned Project or pursuant to a Joint Venture Agreement.
6.2 Limitations on Liens. Create, assume or suffer to exist any Lien,
securing a charge or obligation on any Initial Project or Funded Subsequent
Project or on any related Collateral, real or personal, whether now owned or
hereafter acquired, except Permitted Liens.
6.3 Indebtedness. Incur, create, assume or permit to exist any Debt
except Permitted Debt.
6.4 Sale or Lease of Assets.
6.4.1 Except as permitted in Section 6.4.2 below, sell, lease,
assign, transfer or otherwise dispose of assets, whether now owned or hereafter
acquired except (a) in the ordinary course of its business as contemplated by
the Operative Documents, or (b) to the extent that such property is worn out or
no longer useful or usable in connection with the operation of a relevant
Project, and in each case at fair market value.
6.4.2 (a) Borrower shall be permitted to implement the
sale-leaseback financing contemplated in the South Point Lease on the conditions
that (i) at the time of the closing of such sale-leaseback financing, all the
Initial Projects shall have satisfied all of their Pre-Funding Requirements,
(ii) at least two wholly owned or three partially or wholly owned Subsequent
Projects have become Funded Subsequent Projects, (iii) concurrently with the
closing of such sale-leaseback financing Borrower use all of the net proceeds of
such financing and, to the extent necessary, make additional Contributions to
prepay the Loans in an amount equal to the greater of (A) the book value of the
South Point Project calculated in accordance with GAAP and (B) the net proceeds
of such sale-leaseback, (iv) no Inchoate Default or Event of Default has
occurred and is continuing and (v) Borrower's Four-Quarter Portfolio Interest
Coverage Ratio as of the most recent calendar quarter shall equal or exceed [*]
to 1.00. Upon satisfaction of each of the foregoing conditions Administrative
Agent shall execute and deliver to Borrower such documents and instruments,
including UCC-3 termination statements, as reasonably may be necessary to
release the Liens on the South Point Project Collateral granted to the Banks
pursuant to the South Point Deed of Trust and the other Collateral Documents.
(b) [*]
74
89
(c)[*]
75
90
[*]
(d) Borrower shall have the right in its sole discretion to
have any of the Designated Subsequent Projects released from the Liens of the
Collateral Documents and to transfer ownership of such Projects to another
Person at any time prior to such Project becoming a Funded Subsequent Project,
and the Banks shall promptly release any or all of the Designated Subsequent
Projects and shall consent to their transfer to another Person or Persons
without payment of additional consideration or any mandatory prepayment of
Loans, upon written notice to Administrative Agent from Borrower,
notwithstanding the existence of an Event of Default or Inchoate Default or any
other circumstance or condition whatsoever. Upon receipt of such notice
requesting the release of any or all of such Projects, Administrative Agent
shall promptly execute and deliver to Borrower such documents and instruments as
may be reasonably necessary to release such Projects from the Liens of the
Collateral Documents and to permit such transfer of ownership.
(e) Borrower shall have the right in its sole discretion to
have any Subsequent Project that is a Qualifying Facility where selling electric
capacity or energy on a wholesale basis is not economically advantageous to
Borrower or is not permitted by any Project Document and, as a consequence,
whose development or operation on a retail basis is reasonably likely to become
an Event of Default under Section 8.1.8 released from the Liens of the
Collateral
76
91
Documents and to transfer ownership of such Project to another Person at any
time prior to Commercial Operation of such Project, and the Banks shall consent
to such release and transfer, notwithstanding the existence of any other Event
of Default or Inchoate Default, except that, if such Project is a Funded
Subsequent Project, Borrower shall prepay Loans in a amount equal to the greater
of (i) the book value of such Project or (ii) the aggregate principal amount of
all Loans made hereunder to pay Project Costs related to such Project. Upon
satisfaction of such condition, Administrative Agent shall execute and deliver
to Borrower such documents and instruments as may be reasonably necessary to
release such Project from the Liens of the Collateral Documents and to permit
such transfer of ownership.
(f) In the event that Borrower is unable, after using
commercially reasonable efforts, (i) to obtain any consents, agreements or
undertakings with respect to an Unfunded Subsequent Project (A) from one or more
Joint Venturers with respect to a partially owned Unfunded Subsequent Project or
(B) from a steam or other thermal host, ground lessor or other Person with the
right, power or ability to compel or prevent construction of such Subsequent
Project, that in either case are necessary to satisfy the conditions precedent
for initial funding of such Subsequent Project under Section 3.3, or (ii) to
satisfy the conditions precedent for initial funding of a Subsequent Project
under Section 3.3 with respect to any Subsequent Project, and in the case of
either clause (i) or (ii) above the failure to satisfy the conditions precedent
for initial funding of such Subsequent Project is not otherwise waived in
accordance with this Agreement, Borrower shall have the right in its discretion
to have such Subsequent Project released from the Liens of the Collateral
Documents and to transfer ownership of such Subsequent Project to another Person
or Persons at any time prior to such Project becoming a Funded Subsequent
Project, and the Banks shall promptly release such Project and consent to its
transfer to another Person or Persons without payment of additional
consideration or any mandatory prepayment of Loans, upon written notice to
Administrative Agent, notwithstanding the existence of an Event of Default or
Inchoate Default or any other circumstance or condition whatsoever. Upon receipt
of such notice requesting the release of any such Project, Administrative Agent
shall promptly execute and deliver to Borrower such documents and instruments as
may be reasonably necessary to release such Subsequent Project from the Liens of
the Collateral Documents and to permit such transfer of ownership.
(g) Borrower shall have the right in its sole discretion
without payment of additional consideration or any mandatory prepayment of Loans
to have any Unfunded Subsequent Project released from the Liens of the
Collateral Documents and to transfer such Project to another Person, and the
Banks shall promptly release such Project and consent to the transfer of such
Project, on the conditions that (i) at the time of such release, all of the
Initial Projects have satisfied all of their Pre-Funding Requirements, (ii) no
Inchoate Default or Event of Default has occurred and is continuing, (iii)
Borrower's Four-Quarter Portfolio Interest Coverage Ratio as of the most recent
calendar quarter shall equal or exceed [*] to 1.00 and (iv) the Debt to
Collateral Value Ratio as of the most recent calendar quarter shall be no more
than [*] to 1.00. Upon satisfaction of the foregoing conditions, Administrative
Agent shall execute and deliver to Borrower such documents ad instruments as may
be reasonably necessary to release such Project from the Liens of the Collateral
Documents and to permit such transfer of ownership.
77
92
6.5 Changes. Change the nature of its business or expand its business
beyond the business contemplated in the Operative Documents, including without
limitation purchasing gas with the intention of reselling such gas.
6.6 Distributions. Directly or indirectly, make or declare any
distribution (in cash, property or obligation) on, repay any subordinated
indebtedness or make any other payment on account of, any interest in Borrower
(including any transfers of any tax benefits) unless:
(a) no Event of Default or Inchoate Default has occurred and
is continuing and such payment or distribution will not result in an Inchoate
Default or Event of Default;
(b) no Non-Fundamental Project Default or Non-Fundamental
Project Inchoate Default has occurred and is continuing with respect to the
Project to which the funds to be distributed are attributable, such payment or
distribution will not result in such Non-Fundamental Project Default or
Non-Fundamental Project Inchoate Default and such Project shall have achieved
Final Completion;
(c) such distribution is made at Waterfall Level 8;
(d) no Material Adverse Effect with respect to Borrower has
occurred and is continuing;
(e) the proceeds of such payment or distribution are in an
amount that is not greater than the Deemed Interest due, from time to time, on
the amount of Contributions to Borrower in excess of the sum of (x) [*] plus (y)
any Contributions required to be contributed to Borrower pursuant to Sections
5.17.1(b) and 5.17.2 plus (z) Contributions in connection with the release of
Collateral pursuant to Section 6.4.2;
(f) at the time of such proposed distribution or payment, all
the Initial Projects shall have satisfied all of their respective Pre-Funding
Requirements; and
(g) Borrower's Four-Quarter Portfolio Interest Coverage Ratio
as of the most recent calendar quarter shall equal or exceed [*] to 1.00.
6.7 Investments. Make any investments (whether by purchase of stocks,
bonds, notes or other securities, loan, extension of credit, advance or
otherwise) other than Permitted Investments.
6.8 Transactions With Affiliates. Except for (a) the Equity
Documents, the Project Documents in effect on the Closing Date or substantially
similar Additional Project Documents for Subsequent Projects and the
transactions permitted thereby, (b) arms-length transactions in the ordinary
course of business, and (c) as otherwise expressly permitted by this Agreement
and the other Credit Documents, directly or indirectly enter into any
transaction or series of transactions relating to an Initial Project or a Funded
Subsequent Project with or for the benefit of an Affiliate without the prior
written approval of Administrative Agent; provided, Borrower shall, subject to
Sections 3.1 and 3.3, cause (i) any Affiliate entering into a Project Document
with Borrower for
78
93
the supply of goods or services to any such Project to deliver to Administrative
Agent a duly executed Affiliated Subordination Agreement substantially similar
to the corresponding documents in respect of the Initial Projects with
conforming changes to address the specifics of such Project or otherwise in form
and substance reasonably satisfactory to Administrative Agent (or, if
applicable, amend an existing Affiliated Subordination Agreement) in order to
subordinate O&M Costs, to the same extent as O&M Costs are subordinated in the
corresponding documents in respect of the Initial Project or otherwise to the
extent satisfactory to Administrative Agent, that Borrower may incur pursuant to
such Project Document to the Obligations and (ii) Calpine to deliver to
Administrative Agent a duly executed Affiliated Party Agreement Guaranty (or, if
applicable, amend an existing Affiliated Party Agreement Guaranty) in order to
evidence Calpine's guaranty of such Affiliate's performance under such Project
Document in favor of Borrower.
6.9 Regulations. Directly or indirectly apply any part of the
proceeds of any Loan or other revenues to the purchasing or carrying of any
margin stock within the meaning of Regulations T, U or X of the Federal Reserve
Board, or any regulations, interpretations or rulings thereunder.
6.10 ERISA. Establish, maintain, contribute to or become obligated to
contribute to any ERISA Plan or suffer or permit any member of the Controlled
Group to do so.
6.11 Partnerships, etc. Become a general or limited partner in any
partnership, a member in any limited liability company or create and hold stock
in any subsidiary or, except as otherwise expressly permitted by this Agreement,
become a joint venturer in any joint venture.
6.12 Dissolution. Except as otherwise expressly permitted by this
Agreement, liquidate or dissolve, or sell or lease or otherwise transfer or
dispose of all or any substantial part of its property, assets or business or
combine, merge or consolidate with or into any other entity, or change its legal
form, or purchase or otherwise acquire all or substantially all of the assets of
any Person.
6.13 Amendments; Change Orders; Completion.
6.13.1 Directly or indirectly, amend, modify, supplement or
waive, or permit or consent to the amendment, modification, supplement or waiver
(including any waiver (or refund) of liquidated damages payable by any Major
Contractor under any Major Construction Contract) of, any of the provisions of,
or give any consent under, (a) any of the Major Project Documents (other than
Major Gas Supply Contracts, Major Gas Transportation Agreements and Major Power
Purchase Agreements) relating to an Initial Project or a Funded Subsequent
Project without first submitting to Administrative Agent a copy of such proposed
amendment, modification, supplement or waiver and if, in the reasonable judgment
of Administrative Agent, the amendment, modification, supplement or waiver could
reasonably be expected to have a Material Adverse Effect on Borrower or any
Initial Project or Funded Subsequent Project, obtaining the prior written
consent of the Required Banks thereto, which consent shall not be unreasonably
withheld or delayed or (b) any Project Document between Borrower and an
Affiliate thereof relating to an Initial Project or a Funded Subsequent Project
(but not including the amendment, modification, supplement or waiver of any
"Transactions" under any Power
79
94
Marketing Agreement or Gas Supply Contract between Borrower and such Affiliate)
without obtaining the prior written consent of the Required Banks thereto.
6.13.2 Without the prior written consent of Administrative Agent
direct or consent to any change order under any of the Major Construction
Contracts relating to an Initial Project or a Funded Subsequent Project if such
change order:
(a) will, individually or together with all previous change
orders, increase or decrease the Project Costs of a particular Initial Project
or Funded Subsequent Project by more than $1,000,000 in the aggregate (exclusive
of increases reimbursed by insurance awards, condemnation awards or contractual
damage awards);
(b) is reasonably likely to delay Completion of any Project
beyond the Loan Maturity Date;
(c) is reasonably likely to permit or result in any adverse
modification or impair the enforceability of any warranty under any Major
Construction Contract, any Maintenance Contract or any O&M Agreement relating to
an Initial Project or a Funded Subsequent Project if such modification or
impairment could reasonably be expected to have a Material Adverse Effect on
such Project;
(d) is reasonably likely, in the opinion of the Independent
Engineer, to impair or reduce the maximum capacity, value, efficiency, utility,
output, performance, reliability, durability or availability of any Initial
Project or Funded Subsequent Project, or increase O&M Costs associated with any
Initial Project or Funded Subsequent Project, or decrease Project Revenues from
any Initial Project or Funded Subsequent Project, in each case after accounting
for other favorable or unfavorable circumstances which may have affected such
Project;
(e) is not permitted by any Major Project Document relating
to an Initial Project or a Funded Subsequent Project or would (i) materially
diminish any obligation of any Major Project Participant or (ii) materially
increase any obligation of Borrower thereunder;
(f) is likely, in the reasonable opinion of Administrative
Agent, to present a significant risk of the revocation or material modification
of any Applicable Permit or Third Party Permit relating to an Initial Project or
a Funded Subsequent Project or jeopardize any Project's status as a Qualifying
Facility or an Eligible Facility, as the case may be;
(g) may cause any Initial Project or Funded Subsequent
Project not to comply or lessen any such Project's ability to comply with Legal
Requirements; or
(h) relates to a Major Construction Contract between Borrower
and an Affiliate of Borrower.
6.13.3 Declare "Completion", "Final Construction Completion",
"Final Project Completion" or "Mechanical Completion" (as such terms are defined
in the Construction Contracts) under the Construction Contracts relating to an
Initial Project or a Funded Subsequent Project or declare that the "Acceptance
Date" has occurred or approve the successful completion
80
95
of the "Acceptance Tests" relating to an Initial Project or a Funded Subsequent
Project (as such terms are defined in the Construction Contracts) without the
written approval of Administrative Agent acting in consultation with the
Independent Engineer, which approval shall not be unreasonably withheld or
delayed.
6.13.4 Consent, without Administrative Agent's prior approval, to
(a) any action taken by any Contractor to conform the equipment or services
provided by such Contractor to the intellectual property rights of others if
such action could reasonably be expected to materially and adversely affect
Borrower's continued use of any Initial Project or Funded Subsequent Project or
(b) to the settlement by any Contractor of any claim or proceeding which could
reasonably be expected to materially adversely affect Borrower's rights relating
to an Initial Project or a Funded Subsequent Project.
6.13.5 Direct any Major Contractor to suspend the work being
performed under any Construction Contract relating to an Initial Project or a
Funded Subsequent Project without Administrative Agent's prior consent.
Wherever Administrative Agent is required to approve or consent to any change
order under this Section 6.13, Administrative Agent shall use good faith efforts
to respond to each change order request as soon as possible and in all events
within 20 days. No change order shall be deemed approved by Administrative Agent
until expressly approved.
6.14 Compliance with Operative Documents. Do or permit (to the extent
within its control) to be done in, upon or about any Project or any part
thereof, or do or permit (to the extent within its control) to be done any act
under the Operative Documents, or omit or refrain from any act under the
Operative Documents, where such act done or permitted to be done, or such
omission of or refraining from action, could reasonably be expected to have a
Material Adverse Effect on Borrower or an Initial Project or a Funded Subsequent
Project.
6.15 Name and Location; Fiscal Year. Unless waived in writing by
Administrative Agent, change its name, the location of its principal place of
business or its federal employer identification number without notice to
Administrative Agent at least 45 days prior to such change, or change its fiscal
year without Administrative Agent's consent.
6.16 Use of Project Sites. Use, or permit to be used, any Site owned
or leased by Borrower for any purpose other than for the construction, operation
and maintenance of the Project situated thereon as contemplated by the Operative
Documents, without the prior written approval of Administrative Agent.
6.17 Assignment. Assign its rights hereunder or under any of the
other Credit Documents, or under any of the Project Documents relating to an
Initial Project or a Funded Subsequent Project, to any Person except as
permitted under this Agreement and the other Credit Documents.
6.18 Abandonment of Project. Voluntarily cease or abandon the
development, construction or operation of any Initial Project or Funded
Subsequent Project.
81
96
6.19 Hazardous Substance. Release, emit or discharge into the
environment any Hazardous Substances in violation of any Hazardous Substance
Laws, Legal Requirements or Applicable Permits.
6.20 Additional Project Documents. Except as contemplated under the
Power Marketing Plans and Fuel Plans, enter into or become a party to any
Project Document relating to an Initial Project or a Funded Subsequent Project
not in existence or specifically contemplated pursuant to this Agreement (with
the form of such contemplated agreement approved by Administrative Agent) on the
Closing Date (with respect to the Initial Projects) or the Funding Date (with
respect to Subsequent Projects), except (a) with the prior written consent of
Administrative Agent acting at the direction of the Required Banks, and (b) if
required by Administrative Agent, upon delivery to Administrative Agent of a
Consent from such third party in substantially the form of Exhibit E-1; provided
that the consent of Administrative Agent and the Required Banks shall not be
required for Borrower to enter into Additional Project Documents (i) with
Persons other than Affiliates of Borrower and (ii) pursuant to which Borrower
will incur obligations or liabilities with a value of not more than $1,000,000
individually, or $2,000,000 in the aggregate, per year. In the event that the
consent of Administrative Agent is required in connection with a proposed
Project Document pursuant to this Section 6.20, Administrative Agent shall have
20 days from the time at which it received such proposed Project Document to
approve or disapprove such proposed Project Document. No proposed Project
Document shall be deemed approved by Administrative Agent until expressly
approved.
6.21 Project Budget Amendments. Directly or indirectly, amend,
modify, allocate, re-allocate or supplement or permit or consent to the
amendment, modification, allocation, re-allocation or supplement of, any of the
provisions of any Project Budget relating to an Initial Project or a Funded
Subsequent Project, except that in the event that Calpine shall, at the time of
funding of the initial Loans hereunder, not be rated at least Ba2 by Xxxxx'x and
BB by S&P, then prior to such initial funding of Loans Borrower shall revise the
Project Budgets to increase the "contingency" Line Items thereof so that it
equals or exceeds 5% of the Project Costs with respect to the relevant Project.
6.22 Loan Proceeds; Project Revenues. Use, pay, transfer, distribute
or dispose of any Loan proceeds in any manner or for any purposes except as
provided in Section 5.1.1 or of any Project Revenues in any manner or for any
purposes except as provided in Sections 5.1.2, 7.1 and 7.2.
6.23 Acquisition of Real Property. Acquire or lease any real property
or other interest in real property (excluding the acquisition (but not the
exercise) of any options to acquire any such interests in real property) unless
Borrower shall have delivered to Administrative Agent on behalf of the Banks
Environmental Consultant's Phase I environmental report with respect to such
real property and, if Phase II environmental review is warranted, as reasonably
determined by the Technical Committee, by such Phase I report, delivered to
Administrative Agent on behalf of the Banks a Phase II environmental report, in
each case, along with a corresponding reliance letter from Environmental
Consultant, confirming, in form and substance satisfactory to Administrative
Agent, either (i) that no Hazardous Substances were found in, on or under such
real property or (ii) matters otherwise satisfactory to Administrative Agent.
82
97
ARTICLE 7
APPLICATION OF FUNDS
7.1 Construction Account.
7.1.1 Establishment of Account. On or prior to the Closing Date,
Borrower and Administrative Agent shall establish the Construction Account at
the Depositary Agent's New York office and within the Construction Account, a
sub-account for each Project. On or prior to the initial funding of Loans in
respect of a Subsequent Project, Borrower, and Administrative Agent shall
establish a sub-account within the Construction Account for such Subsequent
Project (each sub-account established pursuant to the two preceding sentences
being referred to as a "Construction Sub-Account"). There shall be deposited
into each Construction Sub-Account the proceeds of all Loans made hereunder in
respect of the corresponding Project and all amounts required to be deposited in
such Construction Sub-Account pursuant to Sections 3.8(a), 5.1.2 and 5.17.
7.1.2 Disbursements from Construction Account. Amounts shall be
disbursed from each Construction Sub-Account from time to time subject to the
satisfaction (or waiver) of the applicable provisions of Article 3 in respect of
the applicable Project and this Section 7.1. Borrower shall have the right to
cause Administrative Agent to disburse amounts from the Construction Sub-Account
of the corresponding Project to the accounts of each of the Contractors
performing work on such Project for amounts due and owing to such Contractors
under the Construction Contracts, or to any other materialmen, subcontractors,
Administrative Agent or any other Person performing work on such Project in
payment of amounts due and owing to such parties in respect of such Project in
accordance with a duly completed Drawdown Certificate. Borrower agrees that
Administrative Agent may transfer any or all of a Loan and other sums in the
applicable Construction Sub-Account directly into the account of any Contractor
for amounts due and owing to such Contractor under the relevant Construction
Contract, or any other materialmen or subcontractors in payment of amounts due
and owing to such parties in respect of the applicable Project without further
authorization from Borrower; provided, however, that if Borrower has notified
Administrative Agent that it is contesting a claim for payment by a Contractor
or a subcontractor or materialmen in accordance with the requirements of this
Agreement and the definition of "Permitted Liens," Administrative Agent will
not, except as described in the proviso to the next sentence, be entitled to pay
any amount being contested. Borrower hereby constitutes and appoints
Administrative Agent its true and lawful attorney-in-fact to make such direct
payments and this power of attorney shall be deemed to be a power coupled with
an interest and shall be irrevocable; provided that, except upon the occurrence
and continuation of an Event of Default or a Non-Fundamental Project Default
with respect to the relevant Project, Administrative Agent shall not exercise
its rights under this power of attorney except to make payments (a) as directed
by Borrower or (b) which Administrative Agent reasonably believes, if not
promptly made, are reasonably likely to have a Material Adverse Effect on the
applicable Project. No further direction or authorization from Borrower shall be
necessary to warrant or permit Administrative Agent to make such direct Loans in
accordance with the foregoing sentence, and all such direct Loans shall satisfy
pro tanto the obligations of Administrative Agent and the Banks hereunder, and
shall be secured by the Collateral Documents as fully as if made directly to
Borrower, regardless of the disposition thereof by any Contractor,
83
98
or any other subcontractors, materialmen, laborers or other parties. Upon
Completion of a Project, any amounts remaining in the applicable Construction
Sub-Account in excess of amounts necessary to pay for "punchlist" items for such
Project shall, at Borrower's option, (i) be transferred to the Construction
Sub-Account for another Project, (ii) be transferred to the Revenue Account,
and/or (iii) be applied to prepay Loans. Upon Final Completion of a Project, any
amounts remaining in the Construction Sub-Account for such Project shall be
transferred to the Revenue Account.
7.1.3 Rights of Administrative Agent. Administrative Agent will
have the right, but not the obligation, to (a) supply any missing endorsements
of Borrower, refuse any item for deposit except as required by the terms of this
Agreement, and pay and charge items payable by Administrative Agent pursuant to
Section 7.1.2 in any order convenient to Administrative Agent; (b) refuse to
honor any check drawn on the Construction Account or any sub-account therein
which is not consistent with this Agreement, or which has been improperly filled
out or endorsed; (c) create and charge to the Construction Account or the
applicable Construction Sub-Account overdrafts and all applicable charges; (d)
remit copies of checks and other items with statements instead of the originals
which may be retained by Administrative Agent; and (e) pay fees, interest and
other charges owing by Borrower.
7.2 Revenue Account.
7.2.1 Establishment of Account; Priority of Payments. On or prior
to the Closing Date, Borrower and Administrative Agent shall establish the
Revenue Account at the Depositary Agent's New York office and within the Revenue
Account, a sub-account for each Project. There shall be deposited into the
Revenue Account the amounts specified in Section 5.1.2 and the applicable
portion of withdrawals from time to time from the Working Capital Reserve
Account pursuant to Section 7.8.3. So long as no Event of Default has occurred
and is continuing, or will occur upon giving effect to the application described
below, funds in the Revenue Account shall be applied at the following times and
in the following order of priority by disbursement or internal account transfer
by the Depositary Agent, (a) on Administrative Agent's volition with respect to
Waterfall Levels 1 through 6 and 8 or if Administrative Agent reasonably
believes that failure to make any such payment could reasonably be expected to
have a Material Adverse Effect with respect to Borrower or a Project, or (b)
pursuant to a disbursement requisition executed by Borrower, directly to the
Person entitled thereto, in each case at the following times, commencing on the
date funds are first deposited in the Revenue Account, and in the following
order of priority (each, a "Waterfall Level"):
(1) from time to time, provided that Administrative Agent has
timely received and approved a Disbursement Requisition delivered pursuant to
Section 7.2.2, amounts in the Revenue Account shall be transferred to a
Project's Operating Account for payment of Senior O&M Costs incurred with
respect to such Project in an amount determined pursuant to Section 7.2.2 below;
(2) as and when due under the terms of this Agreement, from
the Revenue Account to the payment of all fees, costs, charges and any other
amounts due and
84
99
payable to Administrative Agent, LC Bank and the Banks in connection with this
Agreement and the other Credit Documents;
(3) as and when due, on a pro rata basis among the Banks,
from the Revenue Account to the payment of interest on the Loans and on
Reimbursement Obligations;
(4) as and when due, from the Revenue Account, to repayment
of the Reimbursement Obligations incurred in connection with Letters of Credit;
(5) on the last Banking Day of each calendar quarter, as and
to the extent requested by Borrower, from the Revenue Account to the Working
Capital Reserve Account as required by Section 7.8;
(6) on the last Banking Day of each calendar quarter, in the
event that the conditions to distributions set forth in Section 6.6 have been
satisfied, provided that Administrative Agent has timely received and approved a
Disbursement Requisition delivered pursuant to Section 7.2.2, and as and to the
extent requested by Borrower from the Revenue Account to the payment of
Subordinated O&M Costs in an amount determined pursuant to Section 7.2.4 below;
(7) on the last Banking Day of each calendar quarter, in the
event that the conditions to distributions set forth in Section 6.6 have been
satisfied, for payment of obligations owed to Persons that are not Affiliates of
Borrower and which obligations have been approved by the Technical Committee in
its sole discretion;
(8) on the last Banking Day of each calendar quarter, in the
event that the conditions to distributions set forth in Section 6.6 have been
satisfied, for payment to Borrower or distribution by Borrower in amounts
described in and for application in accordance with Section 6.6;
(9) on the last Banking Day of each calendar quarter, on a
pro rata basis among the Banks, to the prepayment of principal amounts of the
Loans outstanding; and
(10) on the last Banking Day of each calendar quarter,
provided no Loans are then outstanding, to Borrower.
7.2.2 O&M Costs. Sums shall be transferred to the Operating
Accounts for the payment of Senior O&M Costs as provided in this Section 7.2.2.
On or before the fifth Banking Day prior to the last Banking Day of each month
during which Borrower desires to transfer sums to the Operating Account for the
corresponding Project for the payment of Senior O&M Costs incurred in respect of
the corresponding Project, Borrower shall submit to Administrative Agent a
certificate in the form of Exhibit C-6 detailing the amounts to be so
transferred ("Disbursement Requisition"), which amounts shall not exceed the
Senior O&M Costs incurred in respect of the corresponding Project which have
become, or are anticipated to become, due and payable during such month.
Administrative Agent shall review such Disbursement Requisition within five
Banking Days following receipt thereof, and shall transfer the amounts specified
therein to the applicable Operating Account for application in accordance with
Waterfall Level 1 to the extent
85
100
that such expenditures are in accordance with the terms of the applicable Annual
Operating Budget and this Agreement, as such budget may be exceeded pursuant to
the terms hereof. Notwithstanding anything in this Section 7.2.2 to the
contrary, the transfers to, and expenditures from, the Revenue Account or a
sub-account therein for Senior O&M Costs (other than O&M Costs incurred in an
emergency and fuel costs) payable pursuant to Waterfall Level 1 shall not,
without Administrative Agent's consent, exceed 115% of the aggregate amounts
specified in such Annual Operating Budget. Notwithstanding anything to the
contrary in this Agreement, in no event shall the "Annual Base Fee" (as defined
in the O&M Agreements) be greater than the amount specified therefor in the
then-applicable Annual Operating Budget. Borrower shall promptly pay or cause to
be paid all Senior O&M Costs in excess of the amounts permitted under the
preceding sentence by Contributions of additional funds; provided, however, that
if Administrative Agent subsequently approves a variation in such Annual
Operating Budget which would have allowed the payment of such excess Senior O&M
Costs, Borrower shall be entitled to recover any such Senior O&M Costs
previously paid by Contributions of additional funds at Waterfall Level 1. Each
Disbursement Requisition shall reflect a reduction in the Senior O&M Costs for
which Borrower requests that funds be transferred to the Operating Account
during such month for any amounts which remain, or are expected to remain, in
the applicable Operating Account at the end of any month as a result of a
previous Disbursement Requisition.
7.2.3 Subordinated O&M Costs. On or before the fifth Banking Day
prior to the end of each calendar quarter on which Borrower desires to make
payments of Subordinated O&M Costs, Borrower shall include in the Disbursement
Requisition submitted pursuant to Section 7.2.2 on such date the amounts to be
so paid, which amounts shall not exceed the Subordinated O&M Costs which have
become due and payable. Administrative Agent shall review such Disbursement
Requisition within five Banking Days following receipt thereof, and, to the
extent funds exist in the Revenue Account after application of amounts in such
account to Waterfall Levels 1 through 5, make payment of the Subordinated O&M
Costs specified therein in accordance with Section 7.2.1 to the designated payee
thereof to the extent that such expenditures are in accordance with the terms of
the relevant Annual Operating Budget.
7.2.4 Mandatory Prepayment.
(a) If on the last Banking Day of any calendar quarter, an
Event of Default shall exist, Borrower shall use all amounts, if any, in the
Revenue Account and all sub-accounts thereof at such time after application of
amounts in such account to Waterfall Levels 1 through 5 (i) to prepay the Loans
(and the Reimbursement Obligations, pro rata), and (ii) upon repayment in full
of the Loans and the Reimbursement Obligations, to repay all other Obligations
of Borrower to the Banks, as designated by Administrative Agent and the Required
Banks.
(b) Nothing in this Section 7.2.4 shall limit in any manner
the rights and remedies of Administrative Agent and the Banks upon and during
the continuation of an Event of Default under this Agreement.
86
101
7.3 Operating Account.
7.3.1 Establishment of Account. On or prior to the Completion
Date for a Project, Borrower and Administrative Agent shall establish at a
mutually acceptable financial institution an account entitled "[Relevant]
Project -- Operating Account" (each, an "Operating Account" and collectively,
the "Operating Accounts").
7.3.2 Funding. From time to time, in accordance with the
provisions of the Waterfall Levels, Borrower shall cause to be transferred to
the Operating Accounts the amounts specified in Sections 7.2.1 and 7.2.2.
7.3.3 Withdrawals. Borrower shall be entitled to withdraw amounts
from an Operating Account to pay Senior O&M Costs for the corresponding Project
which have become due and payable in respect of such Project in accordance with
the Disbursement Requisition in which such Senior O&M Costs were described.
Amounts transferred to an Operating Account which are not, for any reason,
applied to payment of Senior O&M Costs in accordance with the Disbursement
Requisition pursuant to which such amounts were transferred, shall be retained
in such Operating Account for application to the following month's Senior O&M
Costs in accordance with Section 7.2.2.
7.3.4 Security Interest. Each Operating Account shall be
established in a state in which the Uniform Commercial Code as adopted in such
state governs the creation, perfection and priority of security interests in
"Deposit Accounts" (as defined in such Uniform Commercial Code), and each
Operating Account shall be maintained as a "Deposit Account" in accordance with
such Uniform Commercial Code. Borrower shall execute and deliver such documents
and instruments as Administrative Agent shall reasonably request in order to
grant Administrative Agent a perfected first priority Lien in each Operating
Account.
7.4 Loss Proceeds Account. On or prior to the Closing Date, Borrower
and Administrative Agent shall establish at the Depositary Agent's New York
Office the Loss Proceeds Account. All Insurance Proceeds, Eminent Domain
Proceeds and damage payments described in Section 7.7 shall be deposited in the
Loss Proceeds Account and applied (a) as specified in Sections 7.5 through 7.7
and (b) if no such application is specified, to the prepayment of the Loans, and
thereafter to payment of all other Obligations of Borrower.
7.5 Application of Insurance Proceeds.
7.5.1 General. Borrower shall notify Administrative Agent of
casualties as provided in Section 5.4.4 and any other casualty as to which
Insurance Proceeds have been made available. Borrower shall keep Administrative
Agent timely apprised of insurance claim proceedings. All amounts and proceeds
(including instruments) in respect of the proceeds of any insurance policy
required to be maintained by Borrower hereunder ("Insurance Proceeds") shall be
applied as provided in this Section 7.5. All Insurance Proceeds (or, in the case
of a Project that is not wholly owned by Borrower, Borrower's share of such
Insurance Proceeds) shall be paid by the insurers directly to Administrative
Agent (as loss payee or additional insured as provided in Exhibit K). If any
Insurance Proceeds required to be paid to Administrative Agent
87
102
pursuant to the preceding sentence are paid directly to Borrower, Calpine or any
other Person with respect to any Project by any insurer, such Insurance Proceeds
shall be received only in trust for Administrative Agent, shall be segregated
from other funds of Borrower, Calpine or such other Person, as the case may be,
and Borrower shall cause such amounts to be forthwith paid over to
Administrative Agent in the same form as received (with any necessary
endorsement). To the fullest extent that it effectively may do so under
applicable law, Administrative Agent shall apply all such Insurance Proceeds in
accordance with the provisions of this Section 7.5.
7.5.2 Delay in Start Up and Business Interruption Insurance. Any
delay in start up Insurance Proceeds received by Administrative Agent or
Borrower (i) prior to Completion of the Project to which such Insurance Proceeds
relate shall be deposited into the Construction Sub-Account for such Project for
application in accordance with Section 7.1 and (ii) on or after Completion of
the Project to which such Insurance Proceeds relate shall be deposited into the
Revenue Account for application in accordance with Section 7.2.
7.5.3 Applications; Mandatory Prepayments. All Insurance Proceeds
(other than those described in Sections 7.5.2 and 7.5.4) and all Eminent Domain
Proceeds shall be applied (a) to the prepayment of Loans and Reimbursement
Obligations, pro rata, and (b) to the payment of all other Obligations of
Borrower, unless each of the following conditions are satisfied or waived by
Administrative Agent, or the Required Banks, as required pursuant to Section
7.5.5 or 7.5.6, in which event such amounts shall be applied to the repair or
restoration of the Project to which such Insurance Proceeds or Eminent Domain
Proceeds relate in accordance with the terms of such subsections:
(a) such damage or destruction does not constitute the
destruction of all or substantially all of the man-made portion of the Project
to which such Insurance Proceeds or Eminent Domain Proceeds relate;
(b) neither a Non-Fundamental Project Default or a
Non-Fundamental Project Inchoate Default with respect to the damaged or
destroyed Project nor an Inchoate Default or an Event of Default has occurred
and is continuing and after giving effect to any proposed repair and
restoration, such damage or destruction or proposed repair and restoration will
not result in a Non-Fundamental Project Default or Non-Fundamental Project
Inchoate Default with respect to such Project or an Event of Default or an
Inchoate Default;
(c) Borrower and the Independent Engineer certify, and
Administrative Agent (with, if applicable, the consent of the Required Banks)
determines in its reasonable judgment, that repair or restoration of the Project
to which such Insurance Proceeds or Eminent Domain Proceeds relate is
technically and economically feasible within a twelve-month period and that a
sufficient amount of funds is or will be available to Borrower and, if
applicable, the Joint Venturer to make repairs and restorations; provided,
however, that if such Project is not wholly owned by Borrower, then the Joint
Venture Agreement shall require the other Persons owning an interest in such
Project to use their share of Insurance Proceeds or Eminent Domain Proceeds for
the repair or restoration of such Project;
88
103
(d) Borrower and the Independent Engineer certify, and
Administrative Agent (with, if applicable, the consent of the Required Banks)
determines in its reasonable judgment, that a sufficient amount of funds is or
will be available to Borrower to make all payments of Debt Service which will
become due during, if any, and following repair period and to maintain the
Four-Quarter Portfolio Interest Coverage Ratios set forth in the Base Case
Project Projections, unless the Required Banks agree otherwise;
(e) if such damage or destruction occurs prior to the
Completion of a Project, such repair or restoration will not adversely affect,
in the reasonable judgment of Administrative Agent in consultation with the
Independent Engineer, achievement of Completion in accordance with the terms and
conditions of this Agreement and the other Credit Documents;
(f) no Permit is necessary to proceed with the repair and
restoration of the Project to which such Insurance Proceeds or Eminent Domain
Proceeds relate and no material amendment to the Project Documents, or, except
with the consent of the Required Banks, this Agreement or any of the Credit
Documents, and no other instrument is necessary for the purpose of effecting the
repairs or restorations of the Project to which such Insurance Proceeds or
Eminent Domain Proceeds relate or subjecting the repairs or restorations to the
Liens of the applicable Collateral Documents and maintaining the priority of
such Liens or, if any of the above is necessary, Borrower will be able to obtain
the same as and when required;
(g) Administrative Agent shall receive an opinion of counsel
acceptable to Administrative Agent opining as to the Permits described in
paragraph (f) above, and an opinion to the effect that such repairs or
restoration (to the extent constituting Collateral) will be subject to the Liens
of the applicable Collateral Documents at the same level of priority as the
other Collateral; and
(h) Administrative Agent shall receive such additional title
insurance, title insurance endorsements, mechanic's lien waivers, certificates,
opinions or other matters as it may reasonably request as necessary or
appropriate in connection with such repairs or restoration of the Project to
which such Insurance Proceeds or Eminent Domain Proceeds relate or to preserve
or protect the Banks' interests hereunder and in the applicable Collateral.
7.5.4 Proceeds Less than $1,000,000. If there shall occur any
damage or destruction of a Project with respect to which Insurance Proceeds
received by Borrower for any single loss not in excess of $1,000,000 are
payable, such Insurance Proceeds received by Borrower shall be held by
Administrative Agent in the Loss Proceeds Account and released by Administrative
Agent to Borrower in accordance with Section 7.5.7.
7.5.5 Proceeds in Excess of $1,000,000, Not in Excess of
$10,000,000. Provided that the conditions set forth in Section 7.5.3 have been
waived by Administrative Agent and the Independent Engineer, or have been
acknowledged by such Persons as having been satisfied, if there shall occur any
damage or destruction of a Project with respect to which Insurance Proceeds
received by Borrower for any single loss in excess of $1,000,000, but not in
excess of $10,000,000, are payable, such Insurance Proceeds shall be held by
Administrative
89
104
Agent in the Loss Proceeds Account and released by Administrative Agent to
Borrower in accordance with Section 7.5.7.
7.5.6 Proceeds in Excess of $10,000,000. Provided that the
conditions set forth in Section 7.5.3 have been waived by Administrative Agent,
the Required Banks and the Independent Engineer, or have been acknowledged by
such Persons as having been satisfied, if there shall occur any damage or
destruction of a Project with respect to which Insurance Proceeds for any single
loss in excess of $10,000,000 are payable, such Insurance Proceeds shall be held
by Administrative Agent in the Loss Proceeds Account and released by
Administrative Agent to Borrower in accordance with Section 7.5.7.
7.5.7 Repair and Restoration Procedures. Amounts which are to be
applied to repair or restoration of a Project pursuant to this Section 7.5 shall
be disbursed by Administrative Agent from the Loss Proceeds Account in
accordance with the following procedures:
(a) Borrower shall cause any repairs or restoration to be
commenced and completed promptly and diligently either using Insurance Proceeds
as contemplated in paragraph (b) below or, to the extent such proceeds are not,
or have not yet been made, available, using Borrower's funds;
(b) From time to time (after Administrative Agent or the
Required Banks, if applicable, shall have duly approved the making of such
repairs or restoration), Administrative Agent's authorization of release of
Insurance Proceeds for application toward such repairs or restoration shall be
conditioned upon Borrower's written request and the presentation to
Administrative Agent of all documents, certificates and information with respect
to such Insurance Proceeds which would be required in order to obtain a Loan
under this Agreement, including a certificate from Borrower (i) describing in
reasonable detail the nature of the repairs or restoration to be effected with
such release, (ii) stating the cost of such repairs or restoration and the
specific amount requested to be paid over to or upon the order of Borrower and
that such amount is requested to pay the cost thereof, (iii) stating that the
aggregate amount requested by Borrower in respect of such repairs or restoration
(when added to any other Insurance Proceeds received by Borrower or otherwise
made available to a Project in respect of such damage or destruction) does not
exceed the cost of such repairs or restoration and that a sufficient amount of
funds is or will be available to Borrower to complete the applicable Project,
and (iv) stating that neither a Non-Fundamental Project Inchoate Default with
respect to the damaged or destroyed Project nor an Inchoate Default has occurred
and is continuing other than a Non-Fundamental Project Default with respect to
such Project or an Event of Default resulting solely from such damage or
destruction.
7.5.8 Excess Insurance Proceeds. If, after Insurance Proceeds
have been applied to the repair or restoration of a Project as provided in
Sections 7.5.4, 7.5.5 or 7.5.6, the Banks in consultation with the Independent
Consultants determine that such Project will be able to operate at a level
enabling Borrower to satisfy its obligations hereunder as well as before the
damage or destruction, any excess Insurance Proceeds shall be paid into the
Revenue Account. In the event that the Banks in consultation with the
Independent Engineer determine otherwise, such excess
90
105
Insurance Proceeds shall be applied (a) to the prepayment of Loans and
Reimbursement Obligations, pro rata, and (b) to the payment of all other
Obligations of Borrower.
7.5.9 Events of Default. If a Non-Fundamental Project Default
with respect to the damaged or destroyed Project or an Event of Default shall
have occurred and be continuing, then any provisions of this Sections 7.5 to the
contrary notwithstanding, the Insurance Proceeds (including any Permitted
Investments made with such proceeds, which shall be liquidated in such manner as
the Banks shall deem reasonable and prudent under the circumstances) may be
applied by Administrative Agent (a) to curing such Non-Fundamental Project
Default or Event of Default, and any Insurance Proceeds remaining thereafter
shall be applied as provided in this Section 7.5 or (b) if such Non-Fundamental
Project Default or Event of Default cannot be cured, toward payment of all other
Obligations of Borrower, in connection with exercise of the Banks' remedies
pursuant to Article 8.
7.6 Application of Eminent Domain Proceeds. All amounts and proceeds
(including instruments) received in respect of any Event of Eminent Domain
("Eminent Domain Proceeds") shall be subject to the same treatment as Insurance
Proceeds as provided in Section 7.5.
7.7 Application of Certain Damages Payments; Mandatory Prepayments.
7.7.1 Contractor. All delay related liquidated damages (or, in
the case of a Project that is not wholly owned by Borrower, Borrower's share of
such liquidated damages) shall (a) if received prior to Completion of the
Project in respect of which they were received, be deposited in the Construction
Account and applied pursuant to Section 7.1 or (b) if received after Completion
of such Project, be deposited in the Revenue Account and applied pursuant to
Section 7.2.1. All performance related liquidated damages (or, in the case of a
Project that is not wholly owned by Borrower, Borrower's share of such
liquidated damages), including all payments in lieu of performance related
liquidated damages payable by Calpine pursuant to clause (vii) of the definition
of "Completion", shall be applied be applied first to the prepayment of Loans
and Reimbursement Obligations, pro rata, in accordance with Section 2.1.6 and
thereafter to all other Obligations of Borrower.
7.7.2 Power Purchasers. All damage payments made by Power
Marketer or any other purchaser of the power generated by a Project in
satisfaction of such party's obligations under its purchase agreement (or, in
the case of a Project that is not wholly owned by Borrower, Borrower's share of
such damage payments,) shall (a) to the extent such damages are intended to
replace lost revenues, be deposited in the Revenue Account for application as
provided in Section 7.2, and (b) otherwise, applied to (i) the prepayment of
Loans and the Reimbursement Obligations, pro rata, and (ii) to the extent that
all such Loans and Reimbursement Obligations, as applicable, have been prepaid,
applied to the other Obligations of Borrower.
7.7.3 Other. Except as otherwise expressly permitted under this
Agreement, including this Section 7.7, Borrower shall apply the proceeds of any
other surety, performance or similar bonds and any other liquidated or other
damages paid in respect of damage payments or performance payments by any
contractors or subcontractors or other Persons involved in the construction and
operation of a Project (or in the case of a Project that is not wholly owned by
91
106
Borrower, Borrower's share of such proceeds), to the prepayment of the Loans and
Reimbursement Obligations, pro rata, and thereafter to the Obligations of
Borrower or, with the prior written consent of Administrative Agent acting in
consultation with the Independent Engineer, to such other application in
relation to a Project as Borrower may request.
7.8 Working Capital Reserve Account.
7.8.1 Establishment of Account. On or prior to the Closing Date,
Borrower and Administrative Agent shall establish the Working Capital Reserve
Account at the Depositary Agent's New York office.
7.8.2 Funding. On the last Banking Day of each calendar quarter,
Borrower shall cause such portion as Borrower may direct of the amounts then in
the Revenue Account in excess of the amounts applied through Waterfall Level 4
to be deposited into the Working Capital Reserve Account, until the amounts
deposited therein equal the Working Capital Reserve Requirement.
7.8.3 Withdrawals. Borrower shall be entitled to submit a duly
executed Reserve Account Disbursement Requisition in substantially the form of
Exhibit C-8 (a "Reserve Account Disbursement Requisition") in order to withdraw
amounts from the Working Capital Reserve Account, including for deposit into the
Revenue Account, to pay all Senior O&M Costs (a) that have become due and
payable for any Initial Project or Funded Subsequent Project, (b) for which
insufficient amounts are available in the Revenue Account or applicable
Operating Account and (c) which, unless Administrative Agent consents, do not,
together with all Senior O&M Costs previously paid during the same calendar year
with respect to such Project, exceed 115% of the amounts of Senior O&M Costs
(other than fuel costs) specified for such Project in the applicable Annual
Operating Budget for such calendar year, or as otherwise approved by
Administrative Agent and the Independent Engineer.
7.8.4 Earnings. All earnings on monies in the Working Capital
Reserve Account shall accrue to the Working Capital Reserve Account up to the
Working Capital Reserve Requirement and shall thereafter be deposited in the
Revenue Account.
7.9 Security Interest in Proceeds and Accounts. Borrower hereby
pledges, assigns and transfers to Administrative Agent on behalf of the Banks
and grants to Depositary Agent on behalf of the Banks a security interest in and
to all of its right, title and interest in and to all Insurance Proceeds and
Eminent Domain Proceeds (to the extent permitted under the Calpine Indenture)
(collectively, "Proceeds"), Accounts, Sub-Accounts and contents of Accounts and
Sub-Accounts, as security for the Loans and the full and faithful performance of
all of Borrower's obligations hereunder and under the other Credit Documents.
Borrower shall not have any rights or powers with respect to any Account except
to have funds on deposit therein applied or distributed in accordance with this
Agreement. Administrative Agent is hereby authorized to reduce to cash any
Permitted Investment (without regard to maturity) in order to make any
application required by any section of this Article 7 or otherwise pursuant to
the Credit Documents. Upon the occurrence and during the continuance of an Event
of Default, Administrative Agent shall have all rights and powers with respect
to Proceeds, the Accounts and
92
107
the contents of the Accounts as it has with respect to any other Collateral and
may apply such amounts to the payment of interest, principal, fees, costs,
charges or other amounts due or payable to Administrative Agent or the Banks
with respect to the Loans in such order as the Required Banks may elect in their
sole discretion. If such Event of Default occurs and is continuing, until such
time as the Required Banks so elect to exercise such rights and powers, amounts
in the Revenue Account shall continue to be applied by Administrative Agent to
the payment categories specified in Waterfall Levels 1 (to the extent of actual
Senior O&M Costs payable to third parties that are not Affiliates of Borrower)
and 2 through 5 and Xxxxx 0, and, to the extent that Administrative Agent, as
directed by the Required Banks acting in their sole discretion, so elects
Waterfall Levels 6, 7, 8 and 10. Borrower shall not have any rights or powers
with respect to such amounts except as expressly provided in this Article 7.
7.10 Permitted Investments. All amounts held by Borrower and/or
Administrative Agent in the Accounts or as Insurance Proceeds or Eminent Domain
Proceeds shall only be invested in Permitted Investments as provided in the
Depositary Agreement. Borrower shall not hold funds in any accounts other than
the Accounts; provided that Borrower shall be permitted to maintain the
Operating Accounts in accordance with Section 7.3.
7.11 Earnings on Accounts. Except as otherwise expressly provided
herein, including with respect to the Revenue Account and the Operating
Accounts, all earnings on funds in any Account maintained hereunder shall, on
the last day of each calendar quarter, be deposited in the Revenue Account.
7.12 Dominion and Control. Each of the Accounts and the amounts held
thereunder (including Permitted Investments therein) shall at all times be under
the exclusive dominion and control of the Depositary Agent.
7.13 Termination of Commitments. Upon repayment in full of all
Obligations and expiration or irrevocable termination of all Commitments,
Administrative Agent shall disburse any amounts on deposit in the Accounts to
Borrower, or, if applicable, as directed by a court of competent jurisdiction.
ARTICLE 8
EVENTS OF DEFAULT; REMEDIES
8.1 Events of Default. The occurrence of any of the following events
shall constitute an event of default ("Events of Default") hereunder:
8.1.1 Failure to Make Payments. Borrower shall fail to pay, in
accordance with the terms of this Agreement, (a) any principal on any Loan, or
any Reimbursement Obligation, on the date that such sum is due, (b) any interest
on any Loan or on any Reimbursement Obligation or any scheduled fee, cost,
charge or sum due hereunder or under the other Credit Documents, within three
days after the date that such sum is due, or (c) any other fee, cost, charge or
other sum due under this Agreement within five days after written notice that
such sum is due and has not been paid.
93
108
8.1.2 Judgments. A final judgment or judgments shall be entered
against (i) Calpine in the amount of $10,000,000 or more individually or in the
aggregate or (ii) Borrower or any Partner in the amount of $1,000,000 or more
individually or in the aggregate (other than, in the case of both clauses (i)
and (ii) above, (a) a judgment which is fully covered by insurance or discharged
within 30 days after its entry, or (b) a judgment, the execution of which is
effectively stayed within 30 days after its entry but only for 30 days after the
date on which such stay is terminated or expires) or, in the case of both
clauses (i) and (ii) above, which if left unstayed could reasonably be expected
to have a Material Adverse Effect on Borrower or the Projects, taken as a whole.
8.1.3 Misstatements; Omissions. Any financial statement,
representation, warranty or certificate made or prepared by, under the control
of or on behalf of Borrower and furnished to Administrative Agent, the Lead
Arrangers, the Technical Committee or any Bank pursuant to this Agreement, or in
any separate statement or document to be delivered to Administrative Agent or
any Bank hereunder or under any other Credit Document, shall contain an untrue
or misleading statement of a material fact or shall fail to state a material
fact necessary to make the statements therein not misleading as of the date
made, in either case, which could reasonably be expected to result in a Material
Adverse Effect on Borrower or the Projects, taken as a whole.
8.1.4 Bankruptcy; Insolvency. Any of Borrower, the Partners,
Calpine, any Construction Manager (so long as such Construction Manager has
outstanding or unperformed obligations under any Construction Management
Agreement), any Operator, any Project Manager, any Joint Venturer, Power
Marketer or any other purchaser of capacity or energy from a Project (so long as
Power Marketer or such other purchaser, as the case may be, has outstanding or
unperformed obligations under the Power Purchase Documents to which it is party
and such party's Bankruptcy Event could reasonably be expected to have a
Material Adverse Effect on Borrower or the Projects, taken as a whole), any Fuel
Supplier (so long as such party's Bankruptcy Event could reasonably be expected
to have a Material Adverse Effect on Borrower or the Projects, taken as a whole)
or any Major Contractor, Major Gas Transporter or counterparty to any electrical
transmission or interconnection agreement or material water supply agreement (so
long as such Major Contractor, Major Gas Transporter or counterparty has
outstanding or unperformed obligations under the Major Construction Contract,
Major Gas Transportation Agreement or other agreement to which it is a party and
such party's Bankruptcy Event could reasonably be expected to have a Material
Adverse Effect on Borrower or the Projects, taken as a whole) shall become
subject to a Bankruptcy Event; provided that, solely with respect to a
Bankruptcy Event affecting any entity other than Borrower, the Partners, and
Calpine, no Event of Default shall occur as a result of such Bankruptcy Event if
Borrower obtains a Replacement Obligor (or, in the case of the occurrence of a
Bankruptcy Event with respect to a Joint Venturer, if Borrower or another Person
acquired such Person's interest in such Project) for the affected party within
90 days thereafter and such Bankruptcy Event has not had and does not have prior
to so obtaining such Replacement Obligor (or purchaser of the Joint Venturer's
interest), a Material Adverse Effect on Borrower or the Projects, taken as a
whole.
8.1.5 Debt Cross Default. Borrower, Calpine or any other Calpine
Affiliate other than a Calpine Sole Purpose Entity shall default for a period
beyond any applicable grace
94
109
period (a) in the payment of any principal, interest or other amount due under
any agreement involving the borrowing of money or the advance of credit and the
outstanding amount or amounts payable under all such agreements equals or
exceeds $1,000,000 in the aggregate (or, in the case of Calpine only,
$10,000,000 in the aggregate), or (b) in the payment of any amount or
performance of any obligation due under any guarantee or other agreement if in
either case, pursuant to such default, the holder of the obligation concerned
has the right to accelerate the maturity of an indebtedness evidenced thereby
which equals or exceeds $1,000,000 (or, in the case of Calpine only, $10,000,000
in the aggregate). For purposes of this Section, the term "Calpine Sole Purpose
Entity" shall mean a Calpine Affiliate (i) whose sole purpose is the ownership
and maintenance of a power project (other than a Project) that has been financed
on a non-recourse basis and (ii) that is not directly connected to a Project or
responsible for actions materially and directly affecting a Project.
8.1.6 ERISA. If Borrower or any member of the Controlled Group
should establish, maintain, contribute to or become obligated to contribute to
any ERISA Plan and (a) a reportable event (under Section 4043(b) or (c) of ERISA
for which notice to the PBGC is not waived) shall have occurred with respect to
any ERISA Plan and, within 30 days after the reporting of such reportable event
to Administrative Agent by Borrower (or Administrative Agent otherwise obtaining
knowledge of such event) and the furnishing of such information as
Administrative Agent may reasonably request with respect thereto, Administrative
Agent shall have notified Borrower in writing that (i) Administrative Agent has
made a determination that, on the basis of such reportable event, there are
reasonable grounds for the termination of such ERISA Plan by the PBGC or for the
appointment by the appropriate United States District Court of a trustee to
administer such ERISA Plan and (ii) as a result thereof, an Event of Default
exists hereunder; or (b) a trustee shall be appointed by a United States
District Court to administer any ERISA Plan; or (c) the PBGC shall institute
proceedings to terminate any ERISA Plan; or (d) a complete or partial withdrawal
by Borrower or any member of the Controlled Group from any Multiemployer Plan
shall have occurred, or any Multiemployer Plan shall enter reorganization
status, become insolvent, or terminate (or notify Borrower or any member of the
Controlled Group of its intent to terminate) under Section 4041A of ERISA and,
within 30 days after the reporting of any such occurrence to Administrative
Agent by Borrower (or Administrative Agent otherwise obtaining knowledge of such
event) and the furnishing of such information as Administrative Agent may
reasonably request with respect thereto, Administrative Agent shall have
notified Borrower in writing that Administrative Agent has made a determination
that, on the basis of such occurrence, an Event of Default exists hereunder;
provided that any of the events described in this Section 8.1.6 shall involve
(A) one or more ERISA Plans that are single-employer plans (as defined in
Section 4001(a)(15) of ERISA) and under which the aggregate gross amount of
unfunded benefit liabilities (as defined in Section 4001(a)(16) of ERISA),
including vested unfunded liabilities which arise or might arise as the result
of the termination of such ERISA Plans, and/or (B) one or more Multiemployer
Plans to which the aggregate liabilities of Borrower and all members of the
Controlled Group, shall exceed $500,000.
95
110
8.1.7 Breach of Terms of Agreement.
(a) Borrower shall fail to perform or observe any of the
covenants set forth in Section 5.1, 5.9(a), 5.9(f), 5.10, 5.11, 5.17, 5.18, or
Article 6 (other than Section 6.7, 6.8, 6.14, 6.15 or 6.20).
(b) Borrower shall fail to perform or observe any of the
covenants set forth in Section 5.4 (unless the event with respect to which
notice is required to be given relates to one or more specific Projects), 5.5
(unless the party whose financial statements were not properly delivered is not
a Calpine Affiliate), 5.6 (unless the books, accounts or records in question
specifically relate to one or more Projects), 5.7 (unless the failure to comply
with the Legal Requirement in question specifically relates to one or more
Projects), 5.12, 5.16.2, 5.16.4, 5.19, 5.20, 5.24, 6.7, 6.8, 6.15, 6.19, or any
other covenant to be observed or performed by it hereunder or any other Credit
Document not otherwise specifically provided for in Section 8.1.7(a), elsewhere
in this Article 8 or in the definition of the term "Non-Fundamental Project
Default," and such failure shall continue unremedied for a period of 30 days
after Borrower becomes aware thereof or receives written notice thereof from
Administrative Agent provided, however, that, if (i) such failure cannot be
cured within such 30 day period, (ii) such failure is susceptible of cure, (iii)
Borrower is proceeding with diligence and in good faith to cure such failure,
(iv) the existence of such failure has not had and cannot after considering the
nature of the cure be reasonably expected to have a Material Adverse Effect on
Borrower or the Projects, taken as a whole and (v) Administrative Agent shall
have received an officer's certificate signed by a Responsible Officer of
Borrower to the effect of clauses (i), (ii), (iii) and (iv) above and stating
what action Borrower is taking to cure such failure, then such 30 day cure
period shall be extended to such date, not to exceed a total of 90 days, as
shall be necessary for Borrower diligently to cure such failure.
(c) Calpine shall be in breach of, or in default under, the
Completion Guarantee.
8.1.8 Loss of Qualifying Facility or Eligible Facility Status.
(a) If loss of Qualifying Facility or Eligible Facility
status of a Project could reasonably be expected to have a Material Adverse
Effect on Borrower or the Projects, taken as a whole (i) FERC shall have issued
an order determining that any Project has ceased to be a Qualifying Facility or
Eligible Facility, as the case may be, or (ii) any Project shall have failed to
meet the criteria for a Qualifying Facility or Eligible Facility, as the case
may be, and, subject to cure rights equivalent to those set forth in clause
(a)(i) of the definition of "Non-Fundamental Project Default", shall have failed
to obtain a waiver from FERC on account thereof within six months after the end
of any calendar year in which Borrower knows or should reasonably have known
that it has failed to meet such criteria.
(b) Borrower or any Partner shall lose the exemption from
regulation under PUHCA.
96
111
8.1.9 Abandonment.
(a) At any time prior to the Completion of any Initial
Project or Funded Subsequent Project, Borrower shall announce that it is
abandoning such Project or such Project shall be abandoned or work thereon shall
cease for a period of more than 30 consecutive days for any reason (which period
(i) shall be measured from the first occurrence of a work stoppage and
continuing until work of a substantial nature is resumed and thereafter
diligently continued, and (ii) shall not include delays caused by any event of
"force majeure" (as defined in the relevant Project Document) or default by a
Major Project Participant (other than Borrower or its Affiliates) under the
Construction Contracts) or any Project shall not be constructed substantially in
accordance with the Plans and Specifications (except as to changes therein
approved by Administrative Agent).
(b) At any time following the Completion of any Initial
Project or Funded Subsequent Project, Borrower shall announce that it is
abandoning such Project or such Project shall be abandoned or operation thereof
shall cease for a period of more than 30 consecutive days for any reason (other
than force majeure).
8.1.10 Security. Any of the Collateral Documents, once executed
and delivered, shall, except as the result of the acts or omissions of
Administrative Agent or the Banks, fail to provide the Banks the Liens, first
priority security interest, rights, titles, interest, remedies permitted by law,
powers or privileges intended to be created thereby or cease to be in full force
and effect with respect to Collateral relating to the Initial Projects and the
Funded Subsequent Projects, or the first priority or validity thereof or the
applicability thereof to the Loans, the Notes, the Reimbursement Obligations or
any other obligations purported to be secured or guaranteed thereby or any part
thereof shall be disaffirmed by or on behalf of Borrower.
8.1.11 Loss of Control. (a) Calpine shall cease to own directly
or indirectly 100% of the partnership interests in Borrower or (b) except for
(x) Subsequent Projects approved pursuant to Section 3.3 which are at least
fifty percent (50%) owned by Borrower, (y) Unfunded Subsequent Projects or (z)
as permitted in Section 6.4.2, Borrower shall cease to own 100% of any Project.
8.1.12 Loss of or Failure to Obtain Applicable Permits or
Applicable Third Party Permits.
(a) Borrower shall fail to obtain any Permit on or before the
date that such Permit becomes an Applicable Permit with respect to an Initial
Project or a Funded Subsequent Project, or any Major Project Participant shall
fail to obtain any Permit on or before the date that such Permit becomes an
Applicable Third Party Permit with respect to an Initial Project or a Funded
Subsequent Project, and such failure could reasonably be expected to have a
Material Adverse Effect on Borrower or the Projects, taken as a whole.
(b) Any Applicable Permit necessary for operation of any
Initial Project or Funded Subsequent Project shall be materially modified (other
than modifications requested by Borrower and approved in writing in advance of
such modification by Administrative Agent
97
112
acting at the direction of the Required Banks which approval shall not be
unreasonably withheld), revoked, canceled or not renewed by the issuing agency
or other Governmental Authority having jurisdiction and within 30 days
thereafter Borrower is not able to demonstrate to the reasonable satisfaction of
the Required Banks that such modification or loss of such Permit reasonably
could not be expected to have a Material Adverse Effect on Borrower and the
Projects, taken as a whole.
(c) Any Third Party Permit necessary for performance by the
applicable Major Project Participant with respect to an Initial Project or a
Funded Subsequent Project, shall be materially modified, revoked, canceled or
not renewed by the issuing agency or other Governmental Authority having
jurisdiction and within 90 days thereafter Borrower is not able to (i)
demonstrate to the reasonable satisfaction of the Required Banks that such
modification or loss of such Third Party Permit will not have a Material Adverse
Effect on Borrower or the Projects, taken as a whole, or (ii) obtain a
Replacement Obligor for such Major Project Participant, where prior to Borrower
obtaining such Replacement Obligor such breach or default has not had and could
not reasonably be expected to have, a Material Adverse Effect on Borrower or the
Projects, taken as a whole.
8.1.13 Loss of Collateral. Any substantial portion of Borrower's
property relating to an Initial Project or Funded Subsequent Project is damaged,
seized or appropriated without fair value being paid therefor so as to allow
replacement of such property and/or prepayment of Loans and to allow Borrower in
Administrative Agent's reasonable judgment to continue satisfying its
obligations hereunder and under the other Operative Documents.
8.1.14 Non-Fundamental Project Default. A Non-Fundamental Project
Default has occurred, is continuing, and could reasonably be expected to have a
Material Adverse Effect with respect to Borrower and the Projects, taken as a
whole.
8.1.15 Pledge of Borrower Ownership Interest. Any Lien in favor
of any Person other than Administrative Agent encumbers any direct ownership
interests in Borrower.
8.2 Remedies.
Upon the occurrence and during the continuation of an Event of
Default, but subject to Section 1(a) of the Completion Guaranty, Administrative
Agent, LC Bank and the Banks may, at the election of the Required Banks, without
further notice of default, presentment or demand for payment, protest or notice
of non-payment or dishonor, or other notices or demands of any kind, all such
notices and demands being waived, exercise any or all of the following rights
and remedies, in any combination or order that the Required Banks may elect, in
addition to such other rights or remedies as the Banks may have hereunder, under
the Collateral Documents or at law or in equity:
8.2.1 No Further Loans or Letters of Credit. Cancel all
commitments, refuse, and Administrative Agent, LC Bank and the Banks shall not
be obligated, to continue any Loans, make any additional Loans, issue, renew,
extend or increase the Stated Amount of any Letter of Credit, or make any
payments, or permit the making of payments, from any Account or any
98
113
Proceeds or other funds held by Administrative Agent under the Credit Documents
or on behalf of Borrower.
8.2.2 Cash Collateralization of Letters of Credit. Maintain in
the Accounts for payment of any Reimbursement Obligations or interest thereon
arising in connection with any outstanding Letter of Credit an amount of cash
equal to the Stated Amount of each such Letter of Credit (plus accrued interest
on the amounts in such Accounts).
8.2.3 Prepayment of Loans. Prepay Loans as set forth in Section
7.2.4.
8.2.4 Cure by Administrative Agent. Without any obligation to do
so, make disbursements or Loans to or on behalf of Borrower to cure any Event of
Default hereunder and to cure any default and render any performance under any
Project Documents as the Required Banks in their sole discretion may consider
necessary or appropriate, whether to preserve and protect the Collateral or the
Banks' interests therein or for any other reason, and all sums so expended,
together with interest on such total amount at the Default Rate (but in no event
shall the rate exceed the maximum lawful rate), shall be repaid by Borrower to
Administrative Agent on demand and shall be secured by the Credit Documents,
notwithstanding that such expenditures may, together with amounts advanced under
this Agreement, exceed the aggregate amount of the Total Loan Commitment and
Total Letter of Credit Commitment.
8.2.5 Acceleration. Declare and make all sums of accrued and
outstanding principal and accrued but unpaid interest remaining under this
Agreement together with all unpaid fees, costs (including Liquidation Costs and
charges due hereunder or under any other Credit Document, immediately due and
payable and require Borrower immediately, without presentment, demand, protest
or other notice of any kind, all of which Borrower hereby expressly waives, to
pay Administrative Agent or the Banks an amount in immediately available funds
equal to the aggregate amount of any outstanding Reimbursement Obligations,
provided that in the event of an Event of Default occurring under Section 8.1.4
with respect to Borrower, all such amounts shall become immediately due and
payable without further act of Administrative Agent or the Banks.
8.2.6 Cash Collateral. Apply or execute upon any amounts on
deposit in any Account or any Proceeds or any other monies of Borrower on
deposit with Administrative Agent or any Bank in the manner provided in the
Uniform Commercial Code and other relevant statutes and decisions and
interpretations thereunder with respect to cash collateral.
8.2.7 Possession of Projects. Enter into possession of any
Project and perform any and all work and labor necessary to complete such
Project substantially according to the Plans and Specifications or to operate
and maintain such Project, and all sums expended by Administrative Agent in so
doing, together with interest on such total amount at the Default Rate, shall be
repaid by Borrower to Administrative Agent upon demand and shall be secured by
the Credit Documents, notwithstanding that such expenditures may, together with
amounts advanced under this Agreement, exceed the aggregate amount of the Total
Loan Commitment and Total Letter of Credit Commitment.
99
114
8.2.8 Remedies Under Credit Documents. Exercise any and all
rights and remedies available to it under any of the Credit Documents, including
judicial or non-judicial foreclosure or public or private sale of any of the
Collateral pursuant to the Collateral Documents.
ARTICLE 9
SCOPE OF LIABILITY
Except as set forth in this Article 9, notwithstanding anything
in the Credit Agreement or the other Credit Documents to the contrary, the Banks
shall have no claims with respect to the transactions contemplated by the
Operative Documents against any Partners, Calpine or any of their respective
Affiliates (other than Borrower), shareholders, officers, directors or employees
(collectively the "Nonrecourse Persons"), and the Banks' recourse against
Borrower shall be limited to the Collateral, the Projects (and all portions
thereof and rights or appurtenances thereto), all Project Revenues, all
Proceeds, and all income or revenues of the foregoing; provided that (a) the
foregoing provision of this Article 9 shall not constitute a waiver, release or
discharge of any of the indebtedness, or of any of the terms, covenants,
conditions, or provisions of this Agreement, any other Security Document or
Credit Document and the same shall continue (but without personal liability to
the Nonrecourse Person or to Borrower except as provided herein and therein)
until fully paid, discharged, observed, or performed; (b) the foregoing
provision of this Article 9 shall not limit or restrict the right of
Administrative Agent and/or the Banks (or any assignee, beneficiary or successor
to any of them) to name Borrower or any other Person as a defendant in any
action or suit for a judicial foreclosure or for the exercise of any other
remedy under or with respect to this Agreement or any other Security Document or
Credit Document, or for injunction or specific performance, so long as no
judgment in the nature of a deficiency judgment shall be enforced against any
Nonrecourse Person, and recourse to Borrower shall be limited as provided above,
except as set forth in this Article 9, (c) the foregoing provision of this
Article 9 shall not in any way limit or restrict any right or remedy of
Administrative Agent and/or the Banks (or any assignee or beneficiary thereof or
successor thereto) with respect to, and each of the Nonrecourse Persons and
Borrower shall remain fully liable to the extent that it would otherwise be
liable for its own actions with respect to, any fraud (which shall not include
innocent or negligent misrepresentation), willful misrepresentation, or
misappropriation of Project Revenues, Proceeds or any other earnings, revenues,
rents, issues, profits or proceeds from or of the Collateral that should or
would have been paid as provided herein or paid or delivered to Administrative
Agent or any Bank (or any assignee or beneficiary thereof or successor thereto)
towards any payment required under this Agreement or any other Credit Document;
(d) the foregoing provision of this Article 9 shall not affect or diminish or
constitute a waiver, release or discharge of any specific written obligation,
covenant, or agreement in respect of any Project made by any of the Nonrecourse
Persons or any security granted by the Nonrecourse Persons in support of the
obligations of such persons under any Equity Document or as security for the
obligations of Borrower; and (e) nothing contained herein shall limit the
liability of (i) any Person who is a party to any Project Document or has issued
any certificate or other statement in connection therewith with respect to such
liability as may arise by reason of the terms and conditions of such Project
Document (but subject to any limitation of liability in such Project Document),
certificate or statement, or (ii) any Person rendering a legal opinion pursuant
to this Agreement, in each case under this clause (e) relating solely to such
liability of such Person as may arise under such referenced agreement,
instrument or opinion. The
100
115
limitations on recourse set forth in this Article 9 shall survive the
termination of this Agreement and the full payment and performance of the
Obligations hereunder and under the other Operative Documents.
ARTICLE 10
ADMINISTRATIVE AGENT; SUBSTITUTION; TECHNICAL COMMITTEE
10.1 Appointment, Powers and Immunities.
10.1.1 Each Bank hereby appoints and authorizes Administrative
Agent to act as its agent hereunder and under the other Credit Documents with
such powers as are expressly delegated to Administrative Agent by the terms of
this Agreement and the other Credit Documents, together with such other powers
as are reasonably incidental thereto. Administrative Agent shall not have any
duties or responsibilities except those expressly set forth in this Agreement or
in any other Credit Document, or be a trustee for any Bank. Notwithstanding
anything to the contrary contained herein Administrative Agent shall not be
required to take any action which is contrary to this Agreement or any other
Credit Documents or any Legal Requirement or exposes Administrative Agent to any
liability. Each of Administrative Agent, the Banks and any of their respective
Affiliates shall not be responsible to any other Bank for any recitals,
statements, representations or warranties made by Borrower, its Affiliates or
Partners contained in this Agreement or in any certificate or other document
referred to or provided for in, or received by Administrative Agent, or any Bank
under this Agreement, for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement, the Notes or any other document
referred to or provided for herein or for any failure by Borrower, its
Affiliates or its Partners to perform their respective obligations hereunder or
thereunder. Administrative Agent may employ agents and attorneys-in-fact and
shall not be responsible for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable care.
10.1.2 Administrative Agent and its respective directors,
officers, employees or agents shall not be responsible for any action taken or
omitted to be taken by it or them hereunder or under any other Credit Document
or in connection herewith or therewith, except for its or their own gross
negligence or willful misconduct. Without limiting the generality of the
foregoing, Administrative Agent (a) may treat the payee of any Note as the
holder thereof until Administrative Agent receives written notice of the
assignment or transfer thereof signed by such payee and in form satisfactory to
Administrative Agent; (b) may consult with legal counsel, independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken in good faith by them in accordance with the
advice of such counsel, accountants or experts; (c) makes no warranty or
representation to any Bank for any statements, warranties or representations
made in or in connection with any Project Document or Credit Document; (d) shall
not have any duty to ascertain or to inquire as to the performance or observance
of any of the terms, covenants or conditions of any Operative Document on the
part of any party thereto or to inspect the property (including the books and
records) of Borrower or any other Person; and (e) shall not be responsible to
any Bank for the due execution, legality, validity, enforceability, genuineness,
sufficiency or value of any Operative Document or any other instrument or
document furnished pursuant hereto. Except as otherwise provided under this
101
116
Agreement, Administrative Agent shall take such action with respect to the
Credit Documents as shall be directed by the Required Banks.
10.2 Reliance by Administrative Agent. Administrative Agent shall be
entitled to rely upon any certificate, notice or other document (including any
cable, telegram, telecopy or telex) believed by it to be genuine and correct and
to have been signed or sent by or on behalf of the proper Person or Persons, and
upon advice and statements of legal counsel, independent accountants and other
experts selected by Administrative Agent. As to any other matters not expressly
provided for by this Agreement, Administrative Agent shall not be required to
take any action or exercise any discretion, but shall be required to act or to
refrain from acting upon instructions of the Required Banks or, where expressly
provided, the Required Banks (except that Administrative Agent shall not be
required to take any action which exposes Administrative Agent to personal
liability or which is contrary to this Agreement, any other Credit Document or
any Legal Requirement) and shall in all cases be fully protected in acting, or
in refraining from acting, hereunder or under any other Credit Document in
accordance with the instructions of the Required Banks (or, where so expressly
stated, the Required Banks), and such instructions of the Required Banks (or
Required Banks, where applicable) and any action taken or failure to act
pursuant thereto shall be binding on all of the Banks.
10.3 Non-Reliance. Each Bank represents that it has, independently
and without reliance on Administrative Agent or any other Bank, and based on
such documents and information as it has deemed appropriate, made its own
appraisal of the financial condition and affairs of Borrower and decision to
enter into this Agreement and agrees that it will, independently and without
reliance upon Administrative Agent, or any other Bank, and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own appraisals and decisions in taking or not taking action under this
Agreement. Each of Administrative Agent and any Bank shall not be required to
keep informed as to the performance or observance by Borrower, its Affiliates or
Partners under this Agreement or any other document referred to or provided for
herein or to make inquiry of, or to inspect the properties or books of Borrower,
its Affiliates or Partners.
10.4 Defaults. Administrative Agent shall not be deemed to have
knowledge or notice of the occurrence of any Inchoate Default, Event of Default,
Non-Fundamental Project Default or Non-Fundamental Project Inchoate Default
unless Administrative Agent has received a notice from a Bank or Borrower,
referring to this Agreement, describing such Inchoate Default, Event of Default,
Non-Fundamental Project Default or Non-Fundamental Project Inchoate Default and
indicating that such notice is a notice of default. If Administrative Agent
receives such a notice of the occurrence of an Inchoate Default, Event of
Default, Non-Fundamental Project Default or Non-Fundamental Project Inchoate
Default, Administrative Agent shall give notice thereof to the Banks and
Borrower. Administrative Agent shall take such action with respect to any
Inchoate Default or Event of Default as is provided in Article 8 or if not
provided for in Article 8, as Administrative Agent shall be reasonably directed
by the Required Banks; provided, however, unless and until Administrative Agent
shall have received such directions, Administrative Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Inchoate Default or Event of Default as it shall deem advisable in the
best interest of the Banks.
102
117
10.5 Indemnification. Without limiting the Obligations of Borrower
hereunder, each Bank agrees to indemnify Administrative Agent, ratably in
accordance with their Proportionate Shares for any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may at any time
be imposed on, incurred by or asserted against Administrative Agent in any way
relating to or arising out of this Agreement or any documents contemplated by or
referred to herein or therein or the transactions contemplated hereby or thereby
or the enforcement of any of the terms hereof or thereof or of any such other
documents; provided, however, that no Bank shall be liable for any of the
foregoing to the extent they arise from Administrative Agent's gross negligence
or willful misconduct. Administrative Agent shall be fully justified in refusing
to take or to continue to take any action hereunder unless it shall first be
indemnified to its satisfaction by the Banks against any and all liability and
expense which may be incurred by it by reason of taking or continuing to take
any such action. Without limitation of the foregoing, each Bank agrees to
reimburse Administrative Agent promptly upon demand for its ratable share of any
out-of-pocket expenses (including counsel fees) incurred by Administrative Agent
in connection with the preparation, execution, administration or enforcement of,
or legal advice in respect of rights or responsibilities under, the Operative
Documents, to the extent that Administrative Agent is not reimbursed for such
expenses by Borrower.
10.6 Successor Administrative Agent. Administrative Agent
acknowledges that its current intention is to remain Administrative Agent
hereunder. Nevertheless, Administrative Agent may resign at any time by giving
written notice thereof to the Banks and Borrower. Administrative Agent may be
removed involuntarily only for a material breach of its duties and obligations
hereunder or under the other Credit Documents or for gross negligence or willful
misconduct in connection with the performance of its duties hereunder or under
the other Credit Documents and then only upon the affirmative vote of the
Required Banks (excluding Administrative Agent from such vote and Administrative
Agent's Proportionate Share of the Commitment from the amounts used to determine
the portion of the Commitment necessary to constitute the required Proportionate
Share of the remaining Banks). Upon any such resignation or removal, the
Required Banks shall have the right, with the consent of Borrower (such consent
not to be unreasonably withheld or delayed) to appoint a successor
Administrative Agent. If no successor Administrative Agent shall have been so
appointed by the Required Banks, and shall have accepted such appointment,
within 30 days after the retiring Administrative Agent's giving of notice of
resignation or the Banks' removal of the retiring Administrative Agent, the
retiring Administrative Agent may, on behalf of the Banks, with the consent of
Borrower (such consent not to be unreasonably withheld or delayed), appoint a
successor Administrative Agent, which shall be a Bank, if any Bank shall be
willing to serve, and otherwise shall be a commercial bank having a combined
capital and surplus of at least $500,000,000. Upon the acceptance of any
appointment as Administrative Agent under the Operative Documents by a successor
Administrative Agent, such successor Administrative Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Administrative Agent, and the retiring Administrative Agent
shall be discharged from its duties and obligations as Administrative Agent only
under the Credit Documents. After any retiring Administrative Agent's
resignation or removal hereunder as Administrative Agent, the provisions of this
103
118
Article 10 shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Administrative Agent under the Operative Documents.
10.7 Authorization. Administrative Agent is hereby authorized by the
Banks to execute, deliver and perform each of the Credit Documents to which
Administrative Agent is or is intended to be a party and each Bank agrees to be
bound by all of the agreements of Administrative Agent contained in the Credit
Documents. Administrative Agent is further authorized by the Banks to release
liens on property that Borrower is permitted to sell or transfer pursuant to the
terms of this Agreement, the other Credit Documents or the Operative Documents,
and to enter into agreements supplemental hereto for the purpose of curing any
formal defect, inconsistency, omission or ambiguity in this Agreement or any
Credit Document to which it is a party.
10.8 Administrative Agent, Co-Arrangers and Co-Documentation Agents.
With respect to its Commitment, the Loans made by it and any Note issued to it,
the financial institution acting as Administrative Agent shall have the same
rights and powers under the Operative Documents as any other Bank and may
exercise the same as though it were not Administrative Agent. The term "Bank" or
"Banks" shall, unless otherwise expressly indicated, include Administrative
Agent in its individual capacity. The financial institution acting as
Administrative Agent and its Affiliates may accept deposits from, lend money to,
act as trustee under indentures of, and generally engage in any kind of business
with Borrower or any other Person, without any duty to account therefor to the
Banks. The parties acknowledge and agree that the Co-Arrangers and the
Co-Documentation Agents shall not, in such capacities (but not in their
capacities as Banks), have any obligations or liability hereunder.
10.9 Amendments; Waivers. Subject to the provisions of this Section
10.9, unless otherwise specified in this Agreement or another Credit Document,
the Required Banks (or Administrative Agent with the consent in writing of the
Required Banks) and Borrower may enter into agreements supplemental hereto for
the purpose of adding, modifying or waiving any provisions to the Credit
Documents or changing in any manner the rights of the Banks or Borrower
hereunder or waiving any Inchoate Default or Event of Default; provided,
however, that no such supplemental agreement shall, without the consent of all
of the Banks:
(i) Modify Section 2.1.1(d), 2.7, 2.8, 2.9, 5.1, 5.17,
6.17, 6.22, 7.1 through 7.13, 8.1.10, 10.1, 10.13, 10.14 or 10.17; or
(ii) Increase the amount of the Commitment of any Bank
hereunder; or
(iii) Reduce the percentage specified in the definition
of Required Banks; or
(iv) Permit Borrower to assign its rights under this
Agreement except as provided in Section 6.17, or permit a transfer of ownership
of Borrower or a Project except as provided in Section 8.1.11, or
104
119
(v) Amend this Section 10.9; or
(vi) Release any Collateral from the Lien of any of the
Collateral Documents, except as permitted in Section 6.4, or allow release of
any funds from any Account otherwise than in accordance with the terms hereof;
or
(vii) Extend the maturity of any Loan or any of the
Notes or reduce the principal amount thereof, or reduce the rate or change the
time of payment of interest due on any Loan or any Notes; or
(viii) Extend the Loan Maturity Date; or
(ix) Reduce the amount or extend the payment date for
any amount due under Article 2, whether principal, interest, fees or other
amounts; or
(x) Reduce or change the time of payment of any fee due
or payable hereunder;
(xi) Terminate the Completion Guaranty except in
accordance with its terms; or
(xii) Subordinate the Loans to any other Indebtedness.
10.10 Withholding Tax.
10.10.1 Administrative Agent may withhold from any interest
payment to any Bank an amount equivalent to any applicable withholding tax. If
the forms or other documentation required by Section 2.6 are not delivered to
Administrative Agent, then Administrative Agent may withhold from any interest
payment to any Bank not providing such forms or other documentation, an amount
equivalent to the applicable withholding tax.
10.10.2 If the Internal Revenue Service or any authority of the
United States or other jurisdiction asserts a claim that Administrative Agent
did not properly withhold tax from amounts paid to or for the account of any
Bank (because the appropriate form was not delivered, was not properly executed,
or because such Bank failed to notify Administrative Agent of a change in
circumstances which rendered the exemption from, or reduction of, withholding
tax ineffective, or for any other reason) such Bank shall indemnify
Administrative Agent fully for all amounts paid, directly or indirectly, by
Administrative Agent as tax or otherwise, including penalties and interest,
together with all expenses incurred, including legal expenses, allocated staff
costs, and any out of pocket expenses.
10.10.3 If any Bank sells, assigns, grants participation in, or
otherwise transfers its rights under this Agreement, the purchaser, assignee,
participant or transferee, as applicable, shall comply and be bound by the terms
of Sections 2.6.7, 10.10.1 and 10.10.2 as though it were such Bank.
105
120
10.11 General Provisions as to Payments. Administrative Agent shall
promptly distribute to each Bank, subject to the terms of the assignment and
assumption agreement between Administrative Agent and such Bank, its pro rata
share of each payment of principal and interest payable to the Banks on the
Loans and of fees hereunder received by Administrative Agent for the account of
the Banks and of any other amounts owing under the Loans. The payments made for
the account of each Bank shall be made, and distributed to it, for the account
of (a) its domestic lending office in the case of payments of principal of, and
interest on, its Base Rate Loans, (b) its domestic or foreign lending office, as
each Bank may designate in writing to Administrative Agent, in the case of LIBOR
Loans, and (c) its domestic lending office, or such other lending office as it
may designate for the purpose from time to time, in the case of payments of fees
and other amounts payable hereunder. Banks shall have the right to alter
designated domestic lending offices upon notice to Administrative Agent and
Borrower.
10.12 Substitution of Bank. Should any Bank fail to make a Loan in
violation of its obligations under this Agreement (a "Non-Advancing Bank"),
Administrative Agent shall (a) in its sole discretion fund the Loan on behalf of
the Non-Advancing Bank or (b) cooperate with Borrower or any other Bank to find
another Person that shall be acceptable to Administrative Agent and that shall
be willing to assume the Non-Advancing Bank's obligations under this Agreement
(including the obligation to make the Loan which the Non-Advancing Bank failed
to make but without assuming any liability for damages for failing to have made
such Loan or any previously required Loan). Subject to the provisions of the
next following sentence, such Person shall be substituted for the Non-Advancing
Bank hereunder upon execution and delivery to Administrative Agent of an
agreement acceptable to Administrative Agent by such Person assuming the
Non-Advancing Bank's obligations under this Agreement, and all interest and fees
which would otherwise have been payable to the Non-Advancing Bank shall
thereafter be payable to such Person. Nothing in (and no action taken pursuant
to) this Section 10.12 shall relieve the Non-Advancing Bank from any liability
it might have to Borrower or to the other Banks as a result of its failure to
make any Loan.
10.13 Participation.
10.13.1 Nothing herein provided shall prevent any Bank from
selling a participation in one or more of its Commitments (and Loans made and
Letters of Credit issued thereunder); provided that (a) no such sale of a
participation shall alter such Bank's or Borrower's obligations hereunder, (b)
any agreement pursuant to which any Bank may grant a participation in its rights
with respect to its Commitment (Letters of Credit and Loans) shall provide that,
with respect to such Commitment (Letters of Credit and Loans), subject to the
following proviso, such Bank shall retain the sole right and responsibility to
exercise the rights of such Bank, and enforce the obligations of Borrower
relating to such Commitment (Letters of Credit and Loans), including the right
to approve any amendment, modification or waiver of any provision of this
Agreement or any other Bank Document and the right to take action to have the
Notes declared due and payable pursuant to Article 8; provided, however, that
such agreement may provide that the participant may have rights to approve or
disapprove decreases in Commitments, interest rates or fees, lengthening of
maturity of any Loans, extend the payment date for any amount due under Article
2 hereof or release of any material Collateral. No recipient of a participation
in any Commitment or Loans of any Bank shall have any rights under this
106
121
Agreement or shall be entitled to any reimbursement for Taxes, Other Taxes
increased costs or reserve requirements under Sections 2.6 or 2.8 or any other
indemnity or payment rights against Borrower (but shall be permitted to receive
from the Bank granting such participation a proportionate amount which would
have been payable to the Bank from whom such Person acquired its participation).
10.13.2 Notwithstanding anything to the contrary contained
herein, any Bank (a "Granting Bank") may grant to a special purpose funding
vehicle (a "SPC"), identified as such in writing from time to time by the
Granting Bank to Administrative Agent and Borrower, the option to provide to
Borrower all or any part of any Loan that such Granting Bank would otherwise be
obligated to make to Borrower pursuant to this Agreement; provided that (i)
nothing herein shall constitute a commitment by any SPC to make any Loan, (ii)
if an SPC elects not to exercise such option or otherwise fails to provide all
or any part of such Loan, the Granting Bank shall be obligated to make such Loan
pursuant to the terms hereof. The making of a Loan by an SPC hereunder shall
utilize the Commitment of the Granting Bank to the same extent, and as if, such
Loan were made by such Granting Bank. Each party hereto hereby agrees that no
SPC shall be liable for any indemnity or similar payment obligation under this
Agreement (all liability for which shall remain with the Granting Bank). In
furtherance of the foregoing, each party hereto hereby agrees (which agreement
shall survive the termination of this Agreement) that, prior to the date that is
one year and one day after the payment in full of all outstanding commercial
paper or other senior indebtedness of any SPC, it will not institute against, or
join any other person in instituting against, such SPC any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings under the
laws of the United States or any state thereof. In addition, notwithstanding
anything to the contrary contained in this Section 10.13, any SPC may (i) with
notice to, but without the prior written consent of, Borrower and Administrative
Agent and without paying any processing fee therefor, assign all or a portion of
its interests in any Loans to the Granting Bank or to any financial institutions
(consented to by Borrower and Administrative Agent) providing liquidity and/or
credit support to or for the account of such SPC to support the funding or
maintenance of Loans and (ii) disclose on a confidential basis any non-public
information relating to its Loans to any rating agency, commercial paper dealer
or provider of any surety, guarantee or credit or liquidity enhancement to such
SPC. This section may not be amended without the written consent of the SPC.
10.14 Transfer of Commitment. Notwithstanding anything else herein to
the contrary, any Bank, after receiving Borrower's prior written consent as to
the identity of the assignee, which consent shall not be unreasonably withheld
or delayed, may from time to time, at its option, sell, assign, transfer,
negotiate or otherwise dispose of a portion of one or more of its Commitments
(and Loans made and Letters of Credit issued thereunder) (including the Bank's
interest in this Agreement and the other Credit Documents) to any bank or other
lending institution which in such assigning Bank's judgment is reasonably
capable of performing the obligations of a Bank hereunder and reasonably
experienced in project financing; provided, however, that no Bank (including any
assignee of any Bank) may assign any portion of its Commitment (including Loans
and Letters of Credit) of less than $10,000,000 (unless to another Bank) and
provided, further, that assignments of any rights or obligations under any
Letter of Credit shall require the consent of the LC Bank; provided, further,
that any Bank may assign all or any portion of its Commitments to an Affiliate
of such Bank. In the event of any such assignment,
107
122
(a) the assigning Bank's Proportionate Share shall be reduced and its
obligations hereunder released by the amount of the Proportionate Share assigned
to the new lender, (b) the parties to such assignment shall execute and deliver
an appropriate agreement evidencing such sale, assignment, transfer or other
disposition, (c) at the assigning Bank's option, Borrower shall execute and
deliver to such new lender new Notes in the forms attached hereto as Exhibit B
in a principal amount equal to such new lender's Commitment, and Borrower shall
execute and exchange with the assigning Bank a replacement note for any Note in
an amount equal to the Commitment retained by the Bank, if any and (d)
Administrative Agent may amend Exhibit H attached hereto to reflect the
Proportionate Shares of the Banks following such assignment. Thereafter, such
new lender shall be deemed to be a Bank and shall have all of the rights and
duties of a Bank (except as otherwise provided in this Article 10), in
accordance with its Proportionate Share, under each of the Credit Documents.
10.15 Laws. Notwithstanding the foregoing provisions of this Article
10, no sale, assignment, transfer, negotiation or other disposition of the
interests of any Bank hereunder or under the other Credit Documents shall be
allowed if it would require registration under the federal Securities Act of
1933, as then amended, any other federal securities laws or regulations or the
securities laws or regulations of any applicable jurisdiction. Borrower shall,
from time to time at the request and expense of Administrative Agent, execute
and deliver to Administrative Agent, or to such party or parties as
Administrative Agent may designate, any and all further instruments as may in
the opinion of Administrative Agent be reasonably necessary or advisable to give
full force and effect to such disposition.
10.16 Assignability to Federal Reserve Bank. Notwithstanding any
other provision contained in this Agreement or any other Credit Document to the
contrary, any Bank may assign all or any portion of the Loans or Notes held by
it to any Federal Reserve Bank or the United States Treasury as collateral
security pursuant to Regulation A of the Board of Governors of the Federal
Reserve System and any Operating Circular issued by such Federal Reserve Bank,
provided that any payment in respect of such assigned Loans or Notes made by
Borrower to or for the account of the assigning and/or pledging Bank in
accordance with the terms of this Agreement shall satisfy Borrower's obligations
hereunder in respect of such assigned Loans or Notes to the extent of such
payment. No such assignment shall release the assigning Bank from its
obligations hereunder.
10.17 Technical Committee. Each Bank hereby appoints and authorizes
each of the Lead Arrangers and each of the Co-Documentation Agents to act as its
technical committee hereunder and under the other Credit Documents (the
"Technical Committee") with such powers as are expressly delegated to the
Technical Committee by the terms of this Agreement and the other Credit
Documents, together with such other powers as are reasonably incidental thereto.
The Technical Committee shall not have any duties or responsibilities except
those expressly set forth in this Agreement or in any other Credit Document, or
be a trustee for any Bank. Notwithstanding anything to the contrary contained
herein the Technical Committee shall not be required to take any action which is
contrary to this Agreement or any other Credit Documents or any Legal
Requirement or exposes the Technical Committee to any liability. All decisions
and determinations to be made by the Technical Committee hereunder and under the
other Credit Documents shall be made by unanimous consent of its members.
Borrower and each Bank hereby
108
123
agrees that the protective provisions set forth in Sections 10.1 through 10.5
shall apply to and protect, mutatis mutandis, each member of the Technical
Committee and all determinations, decisions, actions or inactions taken or
omitted to be taken by the Technical Committee. In the event that any member of
the Technical Committee at any time reduces its Commitment to less than
$10,000,000 ceases to be a Bank hereunder or otherwise resigns from the
Technical Committee, the remaining members of the Technical Committee shall
appoint a Bank as a successor member to the Technical Committee; provided (i)
such Bank shall be a Bank with one of the five largest Commitments at such time
among the Banks who are not then members of the Technical Committee and (ii)
Borrower does not reasonably disapprove of such Bank within two Banking Days of
receipt of notice of such Bank's appointment to the Technical Committee.
10.18 Notices to Technical Committee and Banks. Administrative Agent
promptly shall deliver all documents, instruments and notices that it receives
hereunder and under the other Operative Documents to the Technical Committee and
to each Bank that is not a member of the Technical Committee.
ARTICLE 11
INDEPENDENT CONSULTANTS
11.1 Removal and Fees. Administrative Agent, in its reasonable
discretion, may remove from time to time, any one or more of the Independent
Consultants and, after consulting with Borrower as to an appropriate Person,
appoint replacements as Administrative Agent may choose. Notice of any
replacement Independent Consultant shall be given by Administrative Agent to
Borrower, the Banks and to the Independent Consultant being replaced. All
reasonable fees and expenses of the Independent Consultants (whether the
original ones or replacements) shall be paid by Borrower.
11.2 Duties. Each Independent Consultant shall be contractually
obligated to Administrative Agent to carry out the activities required of it in
this Agreement and as otherwise requested by Administrative Agent and shall be
responsible solely to Administrative Agent. Borrower acknowledges that it will
not have any cause of action or claim against any Independent Consultant
resulting from any decision made or not made, any action taken or not taken or
any advice given by such Independent Consultant in the due performance in good
faith of its duties to Administrative Agent, except to the extent arising from
such Independent Consultant's gross negligence or willful misconduct.
11.3 Independent Consultants' Certificates.
11.3.1 Until the receipt by Administrative Agent of certificates
satisfactory to Administrative Agent from each Independent Consultant whom
Administrative Agent considers necessary or appropriate certifying Final
Completion, Borrower shall provide such documents and information to the
Independent Consultants as any of the Independent Consultants may reasonably
consider necessary in order for the Independent Consultants to deliver to
Administrative Agent the following certificates:
109
124
(a) certificates of the Insurance Consultant, Independent
Engineer, Fuel Consultant and Power Marketing Consultant delivered on and dated
as of the Closing Date as described in Section 3.1, respectively, and containing
the matters set out therein;
(b) after the Closing Date, all certificates to be delivered
pursuant to Sections 3.2, 3.3, 3.4, 3.5 and 3.6, if any, or, if no Loan has
taken place in any month, certificates delivered at the end of the month as to
the matters required by Exhibit C-8; and
(c) monthly after the Closing Date, a full report and status
of the progress of each Project to that date, a complete assessment of Project
Costs to Final Completion of such Project and such other information and
certification as Administrative Agent may reasonably require from time to time.
11.3.2 Following Final Completion, Borrower shall provide such
documents and information to the Independent Consultants (subject to the
execution by such Independent Consultants of confidentiality agreements
reasonably acceptable to Administrative Agent and Borrower) as they may
reasonably consider necessary in order for the Independent Consultants to
deliver annually to Administrative Agent a certificate setting forth a full
report on the status of each Project and such other information and
certification as Administrative Agent may reasonably require from time to time.
11.4 Certification of Dates. Administrative Agent will request that
the Independent Consultants act diligently in the issuance of all certificates
required to be delivered by the Independent Consultants hereunder, if their
issuance is appropriate. Borrower shall provide the Independent Consultants with
reasonable notice of the expected occurrence of any such dates or events.
ARTICLE 12
MISCELLANEOUS
12.1 Addresses. Any communications between the parties hereto or
notices provided herein to be given may be given to the following addresses:
If to Administrative Agent: The Bank of Nova Scotia
000 Xxxxxxxxx Xxxxxx, X.X., Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxxxx Xxxxxxxx
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
If to Borrower: Calpine Construction Finance Company, L.P.
00 Xxxx Xxx Xxxxxxxx Xxxxxx
Xxx Xxxx, Xxxxxxxxxx 00000
Attn: General Counsel
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
110
125
and 0000 Xxxx Xxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxxxx 00000
Attn: Corporate Asset Management
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
If to the Technical Committee: The Bank of Nova Scotia
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attn: Xxx Xxxxxxx
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
The Bank of Nova Scotia
000 Xxxxxxxxx Xxxxxx, X.X., Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxxxx Xxxxxxxx
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
Credit Suisse First Xxxxxx
Xxxxxx Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn: Portfolio Management
Telephone No.(000) 000-0000
Telecopy No.: (000) 000-0000
CIBC Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx Klaussmann
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
TD Securities (USA) Inc.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx Xxxxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
All notices or other communications required or permitted to be
given hereunder shall be in writing and shall be considered as properly given
(a) if delivered in person, (b) if sent by overnight delivery service (including
Federal Express, UPS, ETA, Xxxxx, DHL, AirBorne and
111
126
other similar overnight delivery services), (c) in the event overnight delivery
services are not readily available, if mailed by first class United States Mail,
postage prepaid, registered or certified with return receipt requested or (d) if
sent by prepaid telegram, or by telecopy confirmed by telephone. Notice so given
shall be effective upon receipt by the addressee, except that communication or
notice so transmitted by telecopy or other direct written electronic means shall
be deemed to have been validly and effectively given on the day (if a Banking
Day and, if not, on the next following Banking Day) on which it is transmitted
if transmitted before 4:00 p.m., recipient's time, and if transmitted after that
time, on the next following Banking Day; provided, however, that if any notice
is tendered to an addressee and the delivery thereof is refused by such
addressee, such notice shall be effective upon such tender. Any party shall have
the right to change its address for notice hereunder to any other location
within the continental United States by giving of 30 days' notice to the other
parties in the manner set forth hereinabove.
12.2 Additional Security; Right to Set-Off. Any deposits or other
sums at any time credited or due from Banks and any Project Revenues, securities
or other property of Borrower in the possession of Administrative Agent may at
all times be treated as collateral security for the payment of the Loans and the
Notes and all other obligations of Borrower to Banks under this Agreement and
the other Credit Documents, and Borrower hereby pledges to Administrative Agent
for the benefit of the Banks and grants Administrative Agent a security interest
in and to all such deposits, sums, securities or other property. Regardless of
the adequacy of any other collateral, Administrative Agent and only
Administrative Agent, may execute or realize on the Banks' security interest in
any such deposits or other sums credited by or due from Banks to Borrower, may
apply any such deposits or other sums to or set them off against Borrower's
obligations to Banks under the Notes and this Agreement at any time after the
occurrence and during the continuance of any Event of Default.
12.3 Delay and Waiver. No delay or omission to exercise any right,
power or remedy accruing to the Banks upon the occurrence of any Event of
Default or Inchoate Default or any breach or default of Borrower under this
Agreement or any other Credit Document shall impair any such right, power or
remedy of the Banks, nor shall it be construed to be a waiver of any such breach
or default, or an acquiescence therein, or of or in any similar breach or
default thereafter occurring, nor shall any waiver of any single Event of
Default, Inchoate Default or other breach or default be deemed a waiver of any
other Event of Default, Inchoate Default or other breach or default theretofore
or thereafter occurring. Any waiver, permit, consent or approval of any kind or
character on the part of Administrative Agent and/or the Banks of any Event of
Default, Inchoate Default or other breach or default under this Agreement or any
other Credit Document, or any waiver on the part of Administrative Agent and/or
the Banks of any provision or condition of this Agreement or any other Credit
Document, must be in writing and shall be effective only to the extent in such
writing specifically set forth. All remedies, either under this Agreement or any
other Credit Document or by law or otherwise afforded to Administrative Agent,
LC Bank and the Banks, shall be cumulative and not alternative.
12.4 Costs, Expenses and Attorneys' Fees; Syndication.
12.4.1 Borrower will pay to Administrative Agent all of its
reasonable costs and expenses in connection with the preparation, negotiation,
closing and administering this
112
127
Agreement and the documents contemplated hereby and any participation or
syndication of the Loans or this Agreement, including the reasonable fees,
expenses and disbursements of Xxxxxx & Xxxxxxx and other attorneys retained by
Administrative Agent in connection with the preparation of such documents and
any amendments hereof or thereof, or the preparation, negotiation, closing,
administration, enforcement, participation or syndication of the Loans or this
Agreement, the reasonable fees, expenses and disbursements of the Independent
Consultants and any other engineering, insurance and construction consultants to
Administrative Agent incurred in connection with this Agreement or the Loans
subsequent to the Closing Date, and the travel and out-of-pocket costs incurred
by Administrative Agent following the Closing Date, and Borrower further agrees
to pay Administrative Agent the out-of-pocket costs and travel costs incurred by
Administrative Agent in connection with syndication of the Loans or this
Agreement; provided, however, Borrower shall not be required to pay advertising
costs of any of the Banks or the fees of the Banks' (other than Administrative
Agent's) attorneys. Borrower will reimburse Administrative Agent for all costs
and expenses, including reasonable attorneys' fees, expended or incurred by
Administrative Agent in enforcing this Agreement or the other Credit Documents
in connection with an Event of Default or Inchoate Default, in actions for
declaratory relief in any way related to this Agreement or in collecting any sum
which becomes due Administrative Agent on the Notes or under the Credit
Documents.
12.4.2 In connection with syndication of the Loans and
Commitments, an information package containing certain relevant information
concerning Borrower, the Projects and the other Project participants has been
provided to potential Banks and participants. Borrower agrees to cooperate and
to cause the Partners and Calpine to cooperate in the syndication of the Loans
and Commitments in all respects reasonably requested by Administrative Agent,
including participation in bank meetings held in connection with such
syndication, and to provide, for inclusion in any additional package, all
information which Administrative Agent may request from it or which
Administrative Agent or Borrower may consider material to a lender or
participant, or necessary or appropriate for accurate and complete disclosure.
Upon request of Administrative Agent, Borrower shall represent to Administrative
Agent, and indemnify Administrative Agent for claims relating to, the accuracy
and completeness of such disclosure, upon terms acceptable to Administrative
Agent.
12.5 Entire Agreement. This Agreement and any agreement, document or
instrument attached hereto or referred to herein integrate all the terms and
conditions mentioned herein or incidental hereto and supersede all oral
negotiations and prior writings in respect to the subject matter hereof. In the
event of any conflict between the terms, conditions and provisions of this
Agreement and any such agreement, document or instrument, the terms, conditions
and provisions of this Agreement shall prevail. This Agreement and the other
Credit Documents may only be amended or modified by an instrument in writing
signed by Borrower, Administrative Agent and any other parties to such
agreements.
12.6 Governing Law. This Agreement, and any instrument or agreement
required hereunder (to the extent not otherwise expressly provided for therein),
shall be governed by, and construed under, the laws of the State of New York,
without reference to conflicts of laws (other than Section 5-1401 of the New
York General Obligations Law).
113
128
12.7 Severability. In case any one or more of the provisions
contained in this Agreement should be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
shall not in any way be affected or impaired thereby.
12.8 Headings. Paragraph headings have been inserted in this
Agreement as a matter of convenience for reference only and it is agreed that
such paragraph headings are not a part of this Agreement and shall not be used
in the interpretation of any provision of this Agreement.
12.9 Accounting Terms. All accounting terms not specifically defined
herein shall be construed in accordance with GAAP and practices consistent with
those applied in the preparation of the financial statements submitted by
Borrower to Administrative Agent, and all financial data submitted pursuant to
this Agreement shall be prepared in accordance with such principles and
practices.
12.10 Additional Financing. The parties hereto acknowledge that the
Banks have made no agreement or commitment to provide any financing except as
set forth herein.
12.11 No Partnership, Etc. The Banks and Borrower intend that the
relationship between them shall be solely that of creditor and debtor. Nothing
contained in this Agreement, the Notes or in any of the other Credit Documents
shall be deemed or construed to create a partnership, tenancy-in-common, joint
tenancy, joint venture or co-ownership by or between the Banks, Borrower or any
other Person. The Banks shall not be in any way responsible or liable for the
debts, losses, obligations or duties of Borrower or any other Person with
respect to any Project or otherwise. All obligations to pay real property or
other taxes, assessments, insurance premiums, and all other fees and charges
arising from the ownership, operation or occupancy of any Project and to perform
all obligations and other agreements and contracts relating to any Project shall
be the sole responsibility of Borrower.
12.12 Deed of Trust/Collateral Documents. The Loans are secured in
part by the Deeds of Trust encumbering certain properties in the States of
Alabama Arizona, California, Connecticut, Florida, Maine, Mississippi, New York,
Pennsylvania and Texas. Reference is hereby made to the Deeds of Trust and the
other Collateral Documents for the provisions, among others, relating to the
nature and extent of the security provided thereunder, the rights, duties and
obligations of Borrower and the rights of Administrative Agent and the Banks
with respect to such security.
12.13 Limitation on Liability. No claim shall be made by Borrower,
any Partner or any of their Affiliates against the Banks or any of their
Affiliates, directors, employees, attorneys or agents for any special, indirect,
consequential or punitive damages in respect of any breach or wrongful conduct
(whether or not the claim therefor is based on contract, tort or duty imposed by
law), in connection with, arising out of or in any way related to the
transactions contemplated by this Agreement or the other Operative Documents or
any act or omission or event occurring in connection therewith except to the
extent that any such claims are caused by the willful misconduct of the Banks;
and Borrower hereby waives, releases and agrees not to xxx upon any such claim
for any such damages, whether or not accrued and whether or not known or
suspected to exist in its favor.
114
129
12.14 Waiver of Jury Trial. THE BANKS AND 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 OR ANY OTHER CREDIT DOCUMENT, OR ANY COURSE OR
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), OR ACTIONS
OF THE BANKS OR BORROWER. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE BANKS
TO ENTER INTO THIS AGREEMENT.
12.15 Consent to Jurisdiction. The Banks and Borrower agree that any
legal action or proceeding by or against Borrower or with respect to or arising
out of this Agreement, the Notes, or any other Credit Document may be brought in
or removed to the courts of the State of New York, in and for the County of New
York, or of the United States of America for the Southern District of New York,
as Administrative Agent may elect. By execution and delivery of the Agreement,
the Banks and Borrower accept, for themselves and in respect of their property,
generally and unconditionally, the jurisdiction of the aforesaid courts. The
Banks and Borrower irrevocably consent to the service of process out of any of
the aforementioned courts in any manner permitted by law. Nothing herein shall
affect the right of Administrative Agent to bring legal action or proceedings in
any other competent jurisdiction, including judicial or non-judicial foreclosure
of the Deed of Trust. Notwithstanding the foregoing, service of process shall
not be deemed served or mailed to Administrative Agent or the Banks until a copy
of all matters to be served have be mailed to Xxxxxx & Xxxxxxx, 000 X Xxxxxx,
Xxxxx 0000, Xxx Xxxxx, Xxxxxxxxxx 00000, Attn: Sony Xxx-Xxxxx or such other
Person as Administrative Agent or the Banks may hereafter designate by notice
given pursuant to Section 12.1. The Banks and Borrower further agree that the
aforesaid courts of the State of New York and of the United States of America
shall have exclusive jurisdiction with respect to any claim or counterclaim of
Borrower based upon the assertion that the rate of interest charged by the Banks
on or under this Agreement, the Loans and/or the other Credit Documents is
usurious. The Banks and Borrower hereby waive any right to stay or dismiss any
action or proceeding under or in connection with any or all of any Project, this
Agreement or any other Credit Document brought before the foregoing courts on
the basis of forum non-conveniens.
12.16 Usury. Nothing contained in this Agreement or the Notes shall
be deemed to require the payment of interest or other charges by Borrower or any
other Person in excess of the amount which the holders of the Notes may lawfully
charge under any applicable usury laws. In the event that the holders of the
Notes shall collect moneys which are deemed to constitute interest which would
increase the effective interest rate to a rate in excess of that permitted to be
charged by applicable law, all such sums deemed to constitute interest in excess
of the legal rate shall, upon such determination, at the option of the holder of
the Notes, be returned to Borrower or credited against the principal balance of
the Notes then outstanding.
12.17 Knowledge and Attribution. References in this Agreement and the
other Credit Documents to the "knowledge," "best knowledge" or facts and
circumstances "known to" Borrower, and all like references, mean facts or
circumstances of which a Responsible Officer of Borrower or a Partner has actual
knowledge after due inquiry.
115
130
12.18 Successors and Assigns. The provisions of this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns. Borrower may not assign or otherwise transfer
any of its rights under this Agreement except as provided in Section 6.17, and
the Banks may not assign or otherwise transfer any of their rights under this
Agreement except as provided in Article 10.
12.19 Counterparts. This Agreement may be executed in one or more
duplicate counterparts and when signed by all of the parties listed below shall
constitute a single binding agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
116
131
IN WITNESS WHEREOF, the parties have caused this Credit Agreement
to be duly executed by their officers or partners thereunto duly authorized as
of the day and year first above written.
CALPINE CONSTRUCTION FINANCE COMPANY, L.P.,
a Delaware limited partnership
By: Calpine CCFC GP, Inc.,
a Delaware corporation, its General
Partner
By: /s/ XXXX XXXXXXXX
----------------------------------------
Name: XXXX XXXXXXXX
Title: VICE-PRESIDENT
CREDIT SUISSE FIRST BOSTON,
as Lead Arranger, Syndication Agent,
Bookrunner and Bank
By:
--------------------------------------------
Name:
Title:
By:
--------------------------------------------
Name:
Title:
THE BANK OF NOVA SCOTIA
as Lead Arranger, LC Bank, Administrative
Agent and Bank
By: /s/ XXXX XXXXXXX
--------------------------------------------
Name: XXXX XXXXXXX
Title: RELATIONSHIP MANAGER
CREDIT AGREEMENT S-1
132
IN WITNESS WHEREOF, the parties have caused this Credit Agreement to be
duly executed by their officers or partners thereunto duly authorized as of the
day and year first above written.
CALPINE CONSTRUCTION FINANCE
COMPANY, L.P.,
a Delaware limited partnership
By: CALPINE CCFC GP, INC.,
a Delaware corporation, its General
Partner
By:
---------------------------------
Name:
Title:
CREDIT SUISSE FIRST BOSTON,
as Lead Arranger, Syndication Agent,
Bookrunner and Bank
By: /s/ XXXXX X. XXXXXXXXX
-------------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: Vice President
By: /s/ XXXXXXX XXXXXX
-------------------------------------
Name: Xxxxxxx Xxxxxx
Title: Vice President
THE BANK OF NOVA SCOTIA,
as Lead Arranger, LC Bank,
Administrative Agent and Bank
By:
-------------------------------------
Name:
Title:
CREDIT AGREEMENT S-1
133
CIBC WORLD MARKETS CORP.
as Co-Arranger and Co-Documentation
Agent
By: /s/ XXXXX X. X'XXXXX
-------------------------------------
Name: Xxxxx X. X'Xxxxx
Title: Executive Director
CIBC World Markets Corp. As
Agent
CREDIT AGREEMENT
134
TD SECURITIES (USA) INC.
as Co-Arranger and Co-Documentation
Agent
By: /s/ XXXXXXX XXXXXXXXX
-------------------------------------
Name: Xxxxxxx Xxxxxxxxx
Title: Managing Director
CREDIT AGREEMENT
000
XXXX XX XXXXXXXX
/s/ CAHAL X. XXXXXXX
By: ________________________________________
Name: Cahal X. Xxxxxxx
Title: Director
CREDIT AGREEMENT X-0
000
XXXXXX XXXXXXXXX XX PARIS
By: /s/ XXXXX X. XXXXXXX
----------------------------------
Name: Xxxxx X. Xxxxxxx, CFA
Title: Assistant Vice President
By: /s/ XXXXXX X. XXXX
----------------------------------
Name: Xxxxxx X. Xxxx
Title: Vice President
CREDIT AGREEMENT X-0
000
XXXXXXXXXX XXXXXXXXXX
XXXXXX XXXXXXX BRANCH
By: /s/ XXXXXXXXXXX XXXXXXXXX
-------------------------------------
Name: Xxxxxxxxxxx Xxxxxxxxx
Title: Vice President
By: /s/ XXXXXXX XXXX
-------------------------------------
Name: Xxxxxxx Xxxx
Title: First Vice President
CREDIT AGREEMENT S-3
138
CIBC INC.
By: /s/ XXXXX X. X'XXXXX
-------------------------------------
Name: Xxxxx X. X'Xxxxx
Title: Executive Director
CIBC World Markets Corp.
As Agent
By:
-------------------------------------
Name:
Title:
CREDIT AGREEMENT X-0
000
XxXxxx, ACB
By: /s/ XXXX XXXXXXXXX
-------------------------------------
Name: Xxxx Xxxxxxxxx
Title: Vice President
CREDIT AGREEMENT S-5
140
CREDIT LYONNAIS NEW YORK BRANCH
By: /s/ XXXXXX X. XXXXXXXXXX
-------------------------------------
Name: Xxxxxx X. Xxxxxxxxxx
Title: Vice President
CREDIT AGREEMENT X-0
000
XX XXXX XXXXXXXX
GENOSSENSCHAFTSBANK AG,
CAYMAN ISLAND BRANCH
By: /s/ XXXXXXX X. XXXXXXXX
-------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Vice President
By: /s/ XXXXXX XXXXXXXX
-------------------------------------
Name: Xxxxxx Xxxxxxxx
Title: Assistant Vice President
CREDIT AGREEMENT S-7
142
DRESDNER BANK AG NEW YORK AND
GRAND CAYMAN BRANCHES
By: /s/ XXXXXXXX X. XXXXXX
-------------------------------------
Name: Xxxxxxxx X. Xxxxxx
Title: Assistant Vice President
By: /s/ KWON-KYUN XXXXX
-------------------------------------
Name: Kwon-Kyun Xxxxx
Title: Assistant Treasurer
CREDIT AGREEMENT S-8
143
EXPORT DEVELOPMENT CORPORATION
By: /s/ XXXXXXXX XXXXXXXX
-------------------------------------
Name: Xxxxxxxx Xxxxxxxx
Title: Project Finance
By: /s/ XXXXX XXXXX
-------------------------------------
Name: Xxxxx Xxxxx
Title: Mining & Power
CREDIT AGREEMENT X-0
000
XXXXXXXXXX XXXX-XXX XXXXXXXXXXX AG
--NEW YORK BRANCH
By: /s/ XXXXXX X. XXXXXXX
-------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Managing Director
By: /s/ XXXX X. XXXXXXXXXX
-------------------------------------
Name: Xxxx X. Xxxxxxxxxx
Title: Director
CREDIT AGREEMENT S-10
145
CITICORP USA, INC.
By: /s/ XXXX X. XXXXXXX
-------------------------------------
Name: Xxxx X. Xxxxxxx
Title: Attorney-In-Fact
CREDIT AGREEMENT S-11
146
ING (U.S.) CAPITAL LLC
By: /s/ XXXXX XXXXXX
-------------------------------------
Name: Xxxxx Xxxxxx
Title: Managing Director
By: /s/ DIEDERIK VAN DEN XXXX
-------------------------------------
Name: Diederik Van Den Xxxx
Title: Vice President
CREDIT AGREEMENT S-12
147
LANDESBANK HESSEN-THURINGEN
GIROZENTRALE
By: /s/ XXXXXXX X. XXXXXX
-------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Senior Vice President
By: /s/ XXXXXX XXXXXXXXXX
-------------------------------------
Name: Xxxxxx Xxxxxxxxxx
Title: Assistant Vice President
CREDIT AGREEMENT S-13
148
MEESPIERSON CAPITAL CORP.
By: /s/ XXXX X. XXXXXXX
-------------------------------------
Name: Xxxx X. Xxxxxxx
Title: Executive Vice President
By: /s/ XXXX X. XXXXXXX
-------------------------------------
Name: Xxxx X. Xxxxxxx
Title: President and
Chief Operating Officer
CREDIT AGREEMENT S-14
149
NEWCOURT CAPITAL USA INC.
By: /s/ XXXXXX X. XXXXXX
-------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Managing Director
By: /s/ XXX X. XXXXXX
-------------------------------------
Name: Xxx X. Xxxxxx
Title: Senior Director
CREDIT AGREEMENT S-15
000
XXXXXXX XXXXXXXX (XXXXX) INC.
By: /s/ XXXX XXXXXX
-------------------------------------
Name: Xxxx Xxxxxx
Title: Vice President
By:
-------------------------------------
Name:
Title:
CREDIT AGREEMENT S-16
000
XXXXX XXXX XX XXXXXXXXXX, N.A.
By: /s/ XXXXX X. PARK
-------------------------------------
Name: Xxxxx X. Park
Title: Senior Vice President
By: /s/ XXXXX XXXXXXX
-------------------------------------
Name: Xxxxx Xxxxxxx
Title: Vice President
CREDIT AGREEMENT S-17
152
EXHIBIT A
to Credit Agreement
DEFINITIONS
"Accounts" means the Construction Account, the Revenue Account, the
Operating Accounts, the Working Capital Reserve Account and the Loss Proceeds
Account, including any sub-accounts within such accounts.
"Activation Fee" has the meaning given in Section 2.4.3 of the Credit
Agreement.
"Additional Borrower Equity" has the meaning given in Section 5.17.2 of
the Credit Agreement.
"Additional Commitment" has the meaning given in Section 2.11.2 of the
Credit Agreement.
"Additional Major Project Document" means an Additional Project Document
that is a Major Project Document.
"Additional Project Documents" means any material contracts or agreements
related to the construction, testing, maintenance, repair, operation or use of
one or more of the Projects entered into by Borrower and any other Person, or
assigned to Borrower, subsequent to the Closing Date. Without in any way
limiting the foregoing, all such contracts and agreements providing for the
payment by Borrower of $1,000,000 or more, or the provision to Borrower of
$1,000,000 in value of goods or services, shall be deemed to constitute an
Additional Project Document, provided, however, that no agreement with respect
to a Subsequent Project that has been approved by the Technical Committee in
accordance with Section 3.3 of the Credit Agreement shall be deemed to be an
Additional Project Document.
"Additional Subsequent Projects" means, collectively, the Subsequent
Projects described on Appendices X-0X, X-0X, X-0X, G-1M and G-1N of the Credit
Agreement.
"Administrative Agent" means The Bank of Nova Scotia, acting in its
capacity as administrative agent for the Banks under the Credit Agreement, or
its successor appointed pursuant to the terms of the Credit Agreement.
"Affiliate" of a specified Person means any other Person that directly, or
indirectly through one or more intermediaries, controls, is controlled by or is
under common control with the Person specified, or who holds or beneficially
owns 10% or more of the equity interest in the Person specified or 10% or more
of any class of voting securities of the Person specified. When used with
respect to Borrower, "Affiliate" shall include each Partner, Calpine and any
Affiliate of any Partner or Calpine (other than Borrower).
"Affiliated Fuel Supplier" means any wholly owned Subsidiary of Calpine
approved by the Lead Arrangers or the Technical Committee in accordance with
Section 3.1 or
1
153
3.3, as the case may be, of the Credit Agreement in its capacity as fuel
supplier under an Affiliated Fuel Supply Agreement.
"Affiliated Fuel Supply Agreement" means, collectively, for each Project,
the contract or agreement approved by the Lead Arrangers or the Technical
Committee in accordance with Section 3.1 or Section 3.3, as the case may be, of
the Credit Agreement entered into by, or on behalf of, Borrower with an
Affiliated Fuel Supplier for the provision or supply of fuel for any Project,
including (a) the Magic Valley Gas Supply Agreement, (b) the South Point Gas
Supply Agreement, (c) the Xxxxxx Gas Supply Agreement, and (d) the Xxxxxxxxx Gas
Supply Agreement.
"Affiliated Fuel Supplier Subordination Agreement" means the Affiliated
Subordination Agreement dated as of October 20, 1999 in substantially the form
of Exhibit D-8A to the Credit Agreement between Administrative Agent and
Affiliated Fuel Supplier.
"Affiliated Major Project Participant" means Calpine and each Major
Project Participant (other than Borrower) that is an Affiliate of Calpine.
"Affiliated Party Agreement Guaranty" means, collectively, for each
Project, the contract or agreement approved by the Lead Arrangers or the
Technical Committee in accordance with Section 3.1 or 3.3, as the case may be,
of the Credit Agreement or as otherwise required thereby entered into by Calpine
in favor of Borrower guarantying the obligations of Affiliates pursuant to
Project Documents to which such Affiliates are party, including (a) the Magic
Valley Affiliated Party Agreement Guaranty, (b) the South Point Affiliated Party
Agreement Guaranty, (c) the Xxxxxx Affiliated Party Agreement Guaranty and (d)
the Xxxxxxxxx Affiliated Party Agreement Guaranty.
"Affiliated Subordination Agreement" means, collectively, for each
Affiliate of Borrower providing goods or services to a Project, the contract or
agreement approved by the Lead Arrangers or the Technical Committee in
accordance with Section 3.1 or 3.3, as the case may be, of the Credit Agreement
or as otherwise required thereby entered into by such Affiliate in favor of
Administrative Agent for the subordination of O&M Costs as provided therein,
including (a) the Calpine Eastern Corporation Subordination Agreement, (b) the
Calpine Central Subordination Agreement, (c) the Calpine Corporation
Subordination Agreement, (d) the CPSC Subordination Agreement, (e) the CPN
Central Fuels Subordination Agreement, (f) the CPN East Fuels Subordination
Agreement and (g) the CPN Gas Marketing Company Subordination Agreement.
"Aggregate LC Stated Amount" means, as of any time, the aggregate Stated
Amount of all Letters of Credit issued and outstanding under the Credit
Agreement.
"Annual Operating Budget" has the meaning given in Section 5.15.2 of the
Credit Agreement.
"Applicable Margin" shall mean, for all Loans, the amount set forth below
for the applicable Type of Loan (with (lambda) being Borrower's Debt to
Capitalization Ratio then in effect
2
154
without taking into account Contributions of Borrower with respect to Projects
which have not satisfied their Pre-Funding Requirements):
DEBT TO BASE RATE, LIBO RATE
LEVEL CAPITALIZATION RATIO (% P.A.) (% P.A.)
I (lambda)<50% 0.75% 1.50%
-
II 50%<(lambda)<60% 1.00% 1.75%
-
III 60%<(lambda) 1.375% 2.125%
"Applicable Permit" means any Permit, including any zoning, environmental
protection, pollution (including air, water or noise), sanitation, FERC, PUC,
import, export, safety, siting or building Permit (a) that is necessary to be
obtained by or on behalf of Borrower at any given time in light of the stage of
development, construction or operation of a Project (to the extent required by
Legal Requirements or the Operative Documents) to construct, test, operate,
maintain, repair, own or use a Project as contemplated by the Operative
Documents, to sell electricity and steam therefrom, for Borrower to enter into
any Operative Document or to consummate any transaction contemplated thereby, in
each case in accordance with all applicable Legal Requirements, (b) that is
necessary so that none of Borrower, Administrative Agent, Lead Arrangers,
Technical Committee or the Banks nor any Affiliate of any of them may be deemed
by any Governmental Authority to be subject to regulation under the FPA or PUHCA
or under any state laws or regulations respecting the rates of, or the financial
or organizational regulation of, electric utilities as a result of the
construction or operation of a Project or the sale of electricity or steam
therefrom, or (c) that is listed on Part I(A) of the Schedule of Applicable
Permits and Applicable Third Party Permits attached to the Credit Agreement as
Exhibit G-3 or any of its appendices.
"Applicable Third Party Permit" means any Permit, including any zoning,
environmental protection, pollution, sanitation, FERC, PUC, import, export,
safety, siting or building Permit (a) that is necessary to be obtained by any
Person (other than Borrower) that is a party to a Project Document, a Credit
Document or an Additional Project Document in order to perform such Person's
obligations under and as contemplated by the Operative Documents to which such
Person is a party, or in order to consummate any transaction contemplated
thereby, in each case in accordance with all applicable Legal Requirements or
(b) that is listed on Part I(B) of the Schedule of Applicable Permits and
Applicable Third Party Permits attached to the Credit Agreement as Exhibit G-3
or any of its appendices.
"Available Construction Funds" means, at any time and without duplication,
the sum of (a) amounts in the Construction Account and all subaccounts
thereunder (provided, however, that amounts in any given Construction
Sub-Account shall only be taken into account to the extent of the Project Costs
remaining to be paid in respect of the Project to which such Construction
Sub-Account relates), (b) the Available Loan Commitment, if any, (c) undisbursed
Insurance Proceeds which are available for payment of Project Costs, (d) any
delay liquidated
3
155
damages which Borrower has received under any Construction Contract, (e) any
other liquidated damages which Borrower has received under the other Project
Documents and which, by the terms of the Credit Agreement, are available for the
payment of Project Costs, and (f) any undisbursed amounts on deposit with
Administrative Agent or Depositary Agent constituting Base Equity or Additional
Borrower Equity or amounts deposited pursuant to Section 3.8(a) of the Credit
Agreement.
"Available Loan Commitment" means at any time and from time to time during
the Loan Availability Period, the Total Loan Commitment at such time minus the
sum of (a) the aggregate principal amount of all Loans outstanding at such time
plus (b) the aggregate Stated Amount of all Letters of Credit and outstanding
Reimbursement Obligations thereunder at such time.
"Bank" or "Banks" means the banks and other financial institutions that
are or become parties to the Credit Agreement and their successors and assigns
including each LC Bank.
"Banking Day" means any day other than a Saturday, Sunday or other day on
which banks are or Administrative Agent is authorized to be closed in the State
of New York or the State of California and, where such term is used in any
respect relating to a LIBOR Loan, which is also a day on which dealings in
Dollar deposits are carried out in the London interbank market.
"Bankruptcy Event" shall be deemed to occur, with respect to any Person,
if that Person shall institute a voluntary case seeking liquidation or
reorganization under the Bankruptcy Law, or shall consent to the institution of
an involuntary case thereunder against it; or such Person shall file a petition
or consent or shall otherwise institute any similar proceeding under any other
applicable Federal or state law, or shall consent thereto; or such Person shall
apply for, or by consent or acquiescence there shall be an appointment, of a
receiver, liquidator, sequestrator, trustee or other officer with similar powers
for itself or any substantial part of its assets; or such Person shall make an
assignment for the benefit of its creditors; or such Person shall admit in
writing its inability to pay its debts generally as they become due; or if an
involuntary case shall be commenced seeking liquidation or reorganization of
such Person under the Bankruptcy Law or any similar proceedings shall be
commenced against such Person under any other applicable Federal or state law
and (i) the petition commencing the involuntary case is not timely controverted,
(ii) the petition commencing the involuntary case is not dismissed within 60
days of its filing, (iii) an interim trustee is appointed to take possession of
all or a portion of the property, and/or to operate all or any part of the
business of such Person and such appointment is not vacated within 60 days, or
(iv) an order for relief shall have been issued or entered therein; or a decree
or order of a court having jurisdiction in the premises for the appointment of a
receiver, liquidator, sequestrator, trustee or other officer having similar
powers, of such Person or all or a part of its property shall have been entered;
or any other similar relief shall be granted against such Person under any
applicable Federal or state law.
"Bankruptcy Law" means Xxxxx 00, Xxxxxx Xxxxxx Code, and any other state
or federal insolvency, reorganization, moratorium or similar law for the relief
of debtors, or any successor statute.
4
156
"Base Case Project Projections" means a projection of operating results
for the Projects over a period ending no sooner than the Loan Maturity Date,
showing at a minimum Borrower's reasonable good faith estimates, as of the
Closing Date, of revenue, operating expenses, Four-Quarter Portfolio Interest
Coverage Ratios (on an annual basis), Debt to Capitalization Ratios projected to
exist from time to time and sources and uses of revenues over the forecast
period, which projections are attached as Exhibit G-5 to the Credit Agreement.
"Base Equity" has the meaning given in Section 5.17.1 of the Credit
Agreement.
"Base Rate" means the greater of (a) the prime commercial lending rate
announced by The Bank of Nova Scotia at its New York office or (b) the Federal
Funds Rate plus 0.50%.
"Base Rate Loan" has the meaning given in Section 2.1.1(b)(i) of the
Credit Agreement.
"Baytown Project" means the approximately 780 MW gas-fired combined cycle
cogeneration facility to be located in Baytown, Xxxxxxxx County, Texas.
"Beneficiary" has the meaning given in the granting clause of the Deed of
Trust.
"Borrower" means Calpine Construction Finance Company, L.P., a Delaware
limited partnership.
"Borrower's Environmental Consultant" means with respect to any Project,
the Person providing environmental consulting services and site assessment
report(s) to the Borrower and who provides a reliance letter in form and
substance reasonably acceptable to Administrative Agent.
"Borrowing" means a borrowing by Borrower of any Loan or the issuance,
renewal, extension or increase in the Stated Amount of any Letter of Credit.
"Calpine" means Calpine Corporation, a Delaware corporation.
"Calpine Central" means Calpine Central L.P., a Delaware limited
partnership.
"Calpine Central Subordination Agreement" means the Affiliated
Subordination Agreement dated as of October 20, 1999 in substantially the form
of Exhibit D-8A to the Credit Agreement between Administrative Agent and Calpine
Central.
"Calpine Corporation Subordination Agreement" means the Affiliated
Subordination Agreement dated as of October 20, 1999 in substantially the form
of Exhibit D-8B to the Credit Agreement between Administrative Agent and
Calpine.
"Calpine Eastern Corporation" means Calpine Eastern Corporation, a
Delaware corporation.
5
157
"Calpine Eastern Corporation Subordination Agreement" means the Affiliated
Subordination Agreement dated as of October 20, 1999 in substantially the form
of Exhibit D-8C to the Credit Agreement between Administrative Agent and Calpine
Eastern Corporation.
"Calpine Indenture" means, collectively, (a) that certain Indenture dated
February 17, 1994 relating to the principal amount of $105,000,000 9 1/4% Senior
Notes Due 2004 by and between Calpine and Shawmut Bank Connecticut, as trustee;
(b) that certain Indenture dated as of April 16, 1996 relating to the issuance
of the principal amount of $180,000,000 of 10 1/2% Senior Notes due 2006, by and
between Calpine and Fleet National Bank, as trustee; (c) that certain Indenture
dated as of July 8, 1997 relating to the issuance of a principal amount of
$275,000,000, 8 3/4% Senior Notes Due 2007, by and between Calpine and The Bank
of New York, as trustee, as supplemented by that certain First Supplemental
Indenture dated as of September 10, 1997, by and between Calpine and The Bank of
New York, a trustee; (d) that certain Indenture dated as of March 31, 1998
relating to the issuance of a principal amount of $400,000,000, 7 7/8% Senior
Notes Due 2008, by and between Calpine and the Bank of New York, as trustee, as
supplemented by that certain First Supplemental Indenture dated as of July 24,
1998, by and between Calpine Corporation and the Bank of New York, as trustee;
(e) that certain Indenture, dated as of March 26, 1999, relating to the issuance
of a principal amount of $250,000,000, 7 5/8% Senior Notes Due 2006 and the
issuance of a principal amount of $350,000,000, 7 3/4% Senior Notes Due 2009 by
and between Calpine and The Bank of New York as trustee; and (f) such additional
indentures relating to senior notes of Calpine issued after the date hereof.
"Capital Adequacy Requirement" has the meaning given in Section 2.8.4 of
the Credit Agreement.
"Capitalization" means, at any time, the sum of (x) the aggregate Debt of
Borrower at such time and (y) the Net Worth of Borrower at such time. The Debt
and Net Worth of Borrower with respect to partially owned Projects shall be
determined in accordance with GAAP.
"Change of Law" has the meaning given in Section 2.8.2 of the Credit
Agreement.
"Closing Date" means the date when each of the conditions precedent listed
in Section 3.1 of the Credit Agreement has been satisfied (or waived in
accordance with the terms of the Credit Agreement).
"COD" means, with respect to a Project, the date on which such Project has
achieved Commercial Operation.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" means all real and personal property which is subject or is
intended to become subject to the security interests or liens granted by any of
the Collateral Documents; provided, however, that, with respect to the
Additional Subsequent Projects the "Collateral" shall
6
158
not include any interest in real property (whether fee or leasehold) relating to
such Additional Subsequent Project.
"Collateral Documents" means the Deeds of Trust, the Depositary Agreement,
the Credit Agreement, the Security Agreement, the Consents, the Equity
Documents, the Affiliated Subordination Agreements, the Debt Subordination
Agreements, the Magic Valley Subordination Agreement, any security agreements
granting security interests in the Operating Accounts and any financing
statements, notices and the like filed, recorded or delivered in connection with
the foregoing.
"Collateral Value" means, as of any date, the aggregate Project Costs
incurred and paid to such date minus the aggregate Project Costs incurred and
paid to such date for assets which are not the subject of a security interest in
favor of the Banks.
"Commercial Operation" means, with respect to a Project, that such Project
is able to operate and produce electrical energy for commercial sale in
accordance with the Prudent Utility Practices and applicable laws.
"Commitment Fee" has the meaning given in Section 2.4.2 of the Credit
Agreement.
"Commitments" means, with respect to each Bank, such Bank's Loan
Commitment and Letter of Credit Commitment, and with respect to all Banks, the
Total Loan Commitment and the Total Letter of Credit Commitment.
"Completion" means, with respect to each Project, that (i) all work under
the applicable Major Construction Contracts (other than "punchlist" items and
work which is to be done after the Project has passed its "acceptance tests" or
"performance tests") has been completed substantially in accordance with the
applicable Plans and Specifications and the requirements of all Applicable
Permits, (ii) all necessary facilities for the transportation of natural gas to
such Project have been completed, (iii) all necessary electrical interconnection
facilities sufficient to transmit all power generated by such Project have been
completed, (iv) all necessary facilities for the procurement, transportation and
discharge of water to or from such Project have been completed, (v) with respect
to each Initial Project, all Pre-Completion Requirements applicable to such
Project have been satisfied, (vi) the "acceptance tests" or "performance tests"
(however defined) under the applicable Prime Construction Contract and the
applicable Power Island Supply Contract have been performed and the Project has
achieved the minimum levels specified in such contracts for such "acceptance
tests" or "performance tests," (vii) such "acceptance tests" or "performance
tests" either (A) have been successfully completed as provided in the Prime
Construction Contract and the Power Island Supply Contract, or (B) performance
liquidated damages as provided in such contracts have been paid by the
applicable Contractor under the applicable Major Construction Contract and/or by
Calpine under the Completion Guaranty in an amount which, in the aggregate, is
equal to the lesser of (1) the amount of performance liquidated damages required
to be paid in order to be deemed to have successfully completed such "acceptance
tests" or "performance tests" under the applicable Major Construction Contracts,
without regard to any limitations of liability in such contracts, or (2) the
7
159
EPC Equivalent Damages for such Project, and (viii) all real estate rights
necessary for the completion of the foregoing and the continued operation of
such Project shall have been obtained, all as satisfactorily certified by the
Independent Engineer to Administrative Agent in its reasonable discretion.
"Completion Date" means, with respect to a Project, the date on which
Completion of such Project occurs.
"Completion Guaranty" means the Completion Guaranty dated as of October
20, 1999 on substantially the form of Exhibit D-2E to the Credit Agreement
executed by Calpine in favor of Administrative Agent, on behalf of the Banks.
"Confirmation of Interest Period Selection" has the meaning given in
Section 2.1.2(b)(ii) of the Credit Agreement.
"Consents" means the consents specified on Exhibit E-2 to the Credit
Agreement and any other third party consents to the assignments contemplated by
the Credit Documents.
"Construction Account" has the meaning given in Section 1.1 of the
Depositary Agreement.
"Construction Contracts" means, collectively, for each Project, the Prime
Construction Contract, the Construction Management Agreement, the Power Island
Supply Contract and the Engineering Contract for such Project and any other
contract or agreement approved by the Lead Arrangers or the Technical Committee
in accordance with Section 3.1 or Section 3.3, as the case may be, of the Credit
Agreement entered into by, or on behalf of, Borrower with a Contractor for the
construction of all or any portion of any Project, or the supply or provision of
any goods or services relating to the construction of any Project, including (a)
the Magic Valley Construction Contracts, (b) the South Point Construction
Contracts, (c) the Xxxxxx Construction Contracts, and (d) the Xxxxxxxxx
Construction Contracts.
"Construction Management Agreement" means, collectively, for each Project,
the contract or agreement approved by the Lead Arrangers or the Technical
Committee in accordance with Section 3.1 or Section 3.3, as the case may be, of
the Credit Agreement entered into by, or on behalf of, Borrower with a
Construction Manager for the provision of construction management services for
any Project, including (a) the Magic Valley Construction Management Agreement,
(b) the South Point Construction Management Agreement, (c) the Xxxxxx
Construction Management Agreement, and (d) the Xxxxxxxxx Construction Management
Agreement.
"Construction Manager" means any wholly owned Subsidiary of Calpine
approved by the lead Arrangers or the Technical Committee in accordance with
Section 3.1 or 3.3, as the case may be, of the Credit Agreement in its capacity
as construction manager under a Construction Management Agreement.
8
160
"Construction Period" means, with respect to any Project, the period from
the commencement of construction of such Project through the Completion Date of
such Project.
"Construction Sub-Account" has the meaning given in Section 7.1.1 of the
Credit Agreement.
"Contractors" means, collectively, each Construction Manager, each Prime
Contractor, each Project Engineer, and any other Person who is providing goods
or services to a Project pursuant to a Construction Contract.
"Contribution" means either (i) a cash equity contribution or (ii) a
subordinated loan made pursuant to a Debt Subordination Agreement, or a
combination thereof, including, for purposes of Section 6.6 of the Credit
Agreement only, amounts considered to be Contributions pursuant to the
definition of Deemed Interest, in each case as permitted pursuant to the Credit
Agreement.
"Controlled Group" means all members of a controlled group of corporations
and all trades or businesses (whether or not incorporated) under common control
which, together with Borrower, are treated as a single employer under Sections
414(b), (c), (m) or (o) of the Code.
"CPN Central Fuels" means CPN Central Fuels, L.P., a Delaware limited
partnership.
"CPN Central Fuels Subordination Agreement" means the Affiliated
Subordination Agreement dated as of October 20, 1999 in substantially the form
of Exhibit D-8D to the Credit Agreement between Administrative Agent and CPN
Central Fuels.
"CPN East Fuels" means CPN East Fuels, LLC, a Delaware limited liability
company.
"CPN East Fuels Subordination Agreement" means the Affiliated
Subordination Agreement dated as of October 20, 1999 in substantially the form
of Exhibit D-8D to the Credit Agreement between Administrative Agent and CPN
East Fuels.
"CPN Gas Marketing Company" means CPN Gas Marketing Company, a Delaware
corporation.
"CPN Gas Marketing Company Subordination Agreement" means the Affiliated
Subordination Agreement dated as of October 20, 1999 in substantially the form
of Exhibit D-8D to the Credit Agreement between Administrative Agent and CPN Gas
Marketing Company.
"CPSC" means Calpine Power Services Company, a California corporation.
"CPSC Subordination Agreement" means the Affiliated Subordination
Agreement dated as of October 20, 1999 in substantially the form of Exhibit D-8G
to the Credit Agreement between Administrative Agent and CPSC, a California
corporation.
9
161
"Credit Agreement" means the Credit Agreement dated as of October 20, 1999
by and among Borrower, Administrative Agent, Lead Arrangers, LC Bank,
Co-Documentation Agents, Syndication Agent, Bookrunner and the Banks.
"Credit Documents" means the Credit Agreement, the Notes, the Collateral
Documents, the Letters of Credit and any other loan or security agreements or
letter agreement or similar document, entered into by Administrative Agent and
one or more Major Project Participants in connection with the transactions
contemplated by the Credit Documents.
"Credit Event" has the meaning given in Section 3.4 of the Credit
Agreement.
"Date Certain" means the fourth anniversary of the Closing Date, provided,
however, that the Date Certain may be extended up to the fifth anniversary of
the Closing Date in accordance with Section 2.11 of the Credit Agreement.
"Debt" of any Person at any date means, without duplication, (a) all
obligations of such Person for borrowed money, (b) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (c)
all obligations of such Person to pay the deferred purchase price of property or
services, except trade accounts payable arising in the ordinary course of
business, (d) all obligations of such Person under leases which are or should
be, in accordance with GAAP, recorded as capital leases in respect of which such
Person is liable, (e) all obligations of such Person to purchase securities (or
other property) which arise out of or in connection with the sale of the same or
substantially similar securities (or property), (f) all deferred obligations of
such Person to reimburse any bank or other Person in respect of amounts paid or
advanced under a letter of credit or other instrument, (g) all Debt of others
secured by a Lien on any asset of such Person, whether or not such Debt is
assumed by such Person, (h) all Debt (or other obligations) of others guaranteed
directly or indirectly by such Person or as to which such Person has an
obligation substantially the economic equivalent of a guaranty and (i)
obligations in respect of Hedge Transactions.
"Debt Service" means all fees of Administrative Agent and the Banks,
interest (including all interest accrued during the subject period) and
principal, Reimbursement Obligations and interest thereon and any other payments
due in connection with Letters of Credit, Liquidation Costs, Hedge Breaking
Fees, and net payments pursuant to Hedge Transactions.
"Debt to Capitalization Ratio" means the aggregate outstanding principal
amount of Debt of Borrower (except Debt consisting of Contributions made in the
form of subordinated loans) at a given time divided by the Capitalization of
Borrower at such time.
"Debt to Collateral Value Ratio" means the aggregate outstanding principal
amount of Debt of Borrower (except Debt consisting of Contributions made in the
form of subordinated loans) at a given time divided by the Collateral Value of
Borrower at such time.
"Debt Subordination Agreement" means a Subordination Agreement executed by
a Partner or Calpine, Borrower and Administrative Agent in substantially the
form of Exhibit D-7 to the Credit Agreement and otherwise in form and substance
satisfactory to Administrative Agent.
10
162
"Deeds of Trust" means, collectively, for each Project, other than each
Additional Subsequent Project, the deed of trust or mortgage encumbering any one
or more of the Sites and/or Easements as security for the Obligations, including
(a) the Magic Valley Deed of Trust, (b) the South Point Deed of Trust, (c) the
Xxxxxx Deed of Trust, and (d) the Xxxxxxxxx Deed of Trust.
"Deemed Interest" means interest accruing at an interest rate equal to 9%
per annum; provided, however, that with respect to Contributions made for a
Project prior to Completion thereof, Deemed Interest thereon shall accrue but
not be payable until Completion of such Project, at which time such accrued
interest shall be added to, and be considered part of, the principal amount of
such Contribution.
"Default Rate" means the interest rate per annum equal to the interest
rate then applicable plus two percent. Interest computed with reference to the
Default Rate shall be adjusted and calculated in the same manner as interest
computed with reference to the Base Rate.
"Depositary Agent" means The Bank of Nova Scotia, in its capacity as
depositary agent under the Depositary Agreement.
"Depositary Agreement" means the Depositary Agreement dated as of October
20, 1999 in substantially the form of Exhibit D-1 to the Credit Agreement among
Borrower, Administrative Agent and Depositary Agent.
"Designated Subsequent Projects" means, collectively, the Subsequent
Projects described in Appendices X-0X, X-0X, G-1R and G-1S to the Credit
Agreement.
"Disbursement Requisition" means a request for disbursement of funds
submitted by Borrower to Administrative Agent in the form of Exhibit C-6 to the
Credit Agreement.
"Diversification Requirements" means, with respect to any Subsequent
Project, that the fraction determined by dividing (A) the projected net capacity
of such Subsequent Project plus the net capacity of all other Initial Projects
and Funded Subsequent Projects located within the same NERC Region as such
Subsequent Project by (B) the aggregate net capacity of all Initial Projects and
Funded Subsequent Projects (including such Subsequent Project) is less than .50.
"Dollars" and "$" means United States dollars or such coin or currency of
the United States of America as at the time of payment shall be legal tender for
the payment of public and private debts in the United States of America.
"Drawdown Certificate" means a certificate delivered to Administrative
Agent substantially in the form of Exhibit C-5 to the Credit Agreement.
"Drawing Date" has the meaning given in Section 2.2.4 of the Credit
Agreement.
"Drawing Payment" means any payment by LC Bank honoring a drawing under a
Letter of Credit.
11
163
"Easements" means the easements appurtenant, easements in gross, license
agreements and other rights running in favor of Borrower and/or appurtenant to
any Site, including without limitation those certain easements and licenses
described in the Title Policies.
"EBITDA" means, for any period, Project Operating Revenues for such period
minus Senior O&M Costs for such period.
"Eligible Facility" means an eligible facility within the meaning of
PUHCA.
"Eminent Domain Proceeds" has the meaning given in Section 7.6 of the
Credit Agreement.
"Engineering Contracts" means, for each Project, the contract or agreement
approved by the Lead Arrangers or the Technical Committee in accordance with
Section 3.1 or Section 3.3, as the case may be, of the Credit Agreement entered
into by, or on behalf of, Borrower for the supply of engineering or design
services for a Project, including the Magic Valley Engineering Contract.
"Environmental Claim" means any and all liabilities, losses,
administrative, regulatory or judicial actions, suits, demands, decrees, claims,
liens, judgments, warning notices, notices of noncompliance or violation,
investigations, proceedings, removal or remedial actions or orders, or damages
(foreseeable and unforeseeable, including consequential and punitive damages),
penalties, fees, out-of-pocket costs, expenses, disbursements, attorneys' or
consultants' fees, relating in any way to any Hazardous Substance Law or any
Permit issued under any such Hazardous Substance Law (hereafter "Claims"),
including (a) any and all Claims by Governmental Authorities for enforcement,
cleanup, removal, response, remedial or other actions or damages pursuant to any
applicable Hazardous Substance Law, and (b) any and all Claims by any third
party seeking damages, contribution, indemnification, cost recovery,
compensation or injunctive relief resulting from Hazardous Substances or arising
from alleged injury or threat of injury to health, safety or the environment.
"Environmental Reports" means, for each Project, the environmental reports
delivered to Administrative Agent on behalf of the Banks with respect to such
Project, including (a) the Magic Valley Environmental Reports, (b) the South
Point Environmental Reports, (c) the Xxxxxx Environmental Reports, and (d) the
Xxxxxxxxx Environmental Reports.
"EPC Equivalent Damages" means, with respect to each Project, an amount
equal to [*] of the aggregate contract price under the Prime Construction
Contract, the Power Island Supply Contract and the Engineering Contract for such
Project.
"Equipment" has the meaning given in the granting clause of the Deeds of
Trust.
"Equity Documents" means the Completion Guaranty and any other guaranty
executed from time to time by an Affiliate of Borrower in favor of
Administrative Agent and the Banks.
12
164
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Plan" means any employee benefit plan (a) maintained by Borrower or
any member of the Controlled Group, or to which any of them contributes or is
obligated to contribute, for its employees and (b) covered by Title IV of ERISA
or to which Section 412 of the Code applies.
"Event of Default" has the meaning given in Article 8 of the Credit
Agreement.
"Event of Eminent Domain" means any compulsory transfer or taking by
condemnation, eminent domain or exercise of a similar power, or transfer under
threat of such compulsory transfer or taking, of any part of the Collateral or
any of the real property interests subject to the Deeds of Trust, by any agency,
department, authority, commission, board, instrumentality or political
subdivision of any state, the United States or another Governmental Authority
having jurisdiction.
"Exempt Wholesale Generator" means an exempt wholesale generator within
the meaning of PUHCA.
"Expiration Date" has the meaning given in each Letter of Credit.
"Federal Funds Rate" means, for any day, the weighted average of the per
annum rates on overnight Federal funds transactions with member banks of the
Federal Reserve System arranged by Federal funds brokers as published by the
Federal Reserve Bank of New York for such day (or, if such rate is not so
published for any day, the average rate charged by Administrative Agent on such
day on such transactions as determined by Administrative Agent).
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System.
"FERC" means the Federal Energy Regulatory Commission and its successors.
"Final Completion" means, with respect to any Project, that all conditions
to "Final Completion" shall have been satisfied as provided in Section 3.5 of
the Credit Agreement.
"Final Project Cost" means, with respect to any Project, the actual total
Project Costs through Final Completion of such Project, as determined by
Administrative Agent in consultation with Independent Engineer and Borrower.
"Four-Quarter Portfolio Interest Coverage Ratio" means, as of the last day
of each calendar quarter, the ratio of (a) EBITDA for the 12-month period ending
on such day for the Projects that have achieved (or, in the case of a projected
ratio calculation, are projected to achieve) Commercial Operation before such
day to (b) Borrower's interest expense allocated to such Projects in accordance
with GAAP for such 12-month period. In the event that a given Project achieved
(or, in the case of a projected ratio calculation, is projected to achieve)
Commercial Operation at any time during such 12-month period, such Project's
EBITDA and
13
165
allocated interest expense shall be calculated beginning on the date Commercial
Operation was achieved (or projected to be achieved).
"FPA" means the Federal Power Act, excluding Sections 1-18, 21-30, 202(c),
210, 211, 212, 305(c) and any necessary enforcement provision of Part III of the
Act with regard to the foregoing sections.
"Fuel Consultant" means, for each Project, the Person providing fuel
consulting services to the Banks with respect to such Project, including (i)
with respect to the Magic Valley, South Point, and Xxxxxx Projects, Navigant
Consulting, Inc. and (ii) with respect to the Xxxxxxxxx Project, XX Xxxx, or
their respective successors appointed pursuant to the Credit Agreement.
"Fuel Manager" means any wholly owned Subsidiary of Calpine approved by
the Lead Arrangers or the Technical Committee in accordance with Section 3.1 or
3.3, as the case may be, of the Credit Agreement in its capacity as fuel manager
under a Fuel Management Agreement.
"Fuel Manager Subordination Agreement" means the Affiliated Subordination
Agreement dated as of October 20, 1999 in substantially the form of Exhibit D-8F
to the Credit Agreement between Administrative Agent and Fuel Manager.
"Fuel Management Agreement" means, for each Project, the fuel management
agreement approved by the Lead Arrangers or the Technical Committee in
accordance with Section 3.1 or Section 3.3, as the case may be, of the Credit
Agreement and entered into by Borrower, including (a) the Magic Valley Fuel
Management Agreement, (b) the South Point Fuel Management Agreement, (c) the
Xxxxxx Fuel Management Agreement, and (d) the Xxxxxxxxx Fuel Management
Agreement.
"Fuel Plans" means, collectively, the fuel plans delivered by Borrower
pursuant to Sections 3.1.16 and 3.3.17 of the Credit Agreement.
"Fuel Supplier" means any Person who is supplying fuel and/or related
services to a Project pursuant to a Gas Supply Contract.
"Funded Subsequent Project" means a Subsequent Project that has qualified
for initial funding pursuant to Section 3.3 of the Credit Agreement.
"Funding Date" means each date of an initial funding of Loans for a
Subsequent Project pursuant to Section 3.3 of the Credit Agreement.
"GAAP" means generally accepted accounting principles in the United States
consistently applied.
"Gas Supply Contracts" means the contracts or agreements entered into in
accordance with the Credit Agreement by, or on behalf of, Borrower with a Fuel
Supplier for the supply of fuel and/or related services for a Project, including
(a) the Magic Valley Gas Supply
14
166
Contracts, (b) the South Point Gas Supply Contracts, (c), the Xxxxxx Gas Supply
Contracts, and (d) the Xxxxxxxxx Gas Supply Contracts.
"Gas Transportation Agreements" means the contracts or agreements entered
into in accordance with the Credit Agreement by, or on behalf of, Borrower with
a Gas Transporter for the supply of fuel transportation services for a Project,
including (a) the Magic Valley Gas Transportation Agreements, (b) the South
Point Gas Transportation Agreements, (c) the Xxxxxx Gas Transportation
Agreements, and (d) the Xxxxxxxxx Gas Transportation Agreements.
"Gas Transporter" means any Person that owns gathering systems and/or
transportation systems that are able to move fuel from its source of supply to a
point of interconnection that provides such services to a Project pursuant to a
Gas Transportation Agreement.
"General Partner" means any Person who is a general partner in the
Borrower.
"Governmental Authority" means any national, state or local government
(whether domestic or foreign), any political subdivision thereof or any other
governmental, quasi-governmental, judicial, public or statutory instrumentality,
authority, body, agency, bureau or entity, (including any zoning authority,
FERC, the PUC, the FDIC, the Comptroller of the Currency or the Federal Reserve
Board, any central bank or any comparable authority) or any arbitrator with
authority to bind a party at law.
"Governmental Rule" means any law, rule, regulation, ordinance, order,
code interpretation, treaty, judgment, decree, directive, guidelines, policy or
similar form of decision of any Governmental Authority.
"Granting Bank" has the meaning given in Section 10.13.2 of the Credit
Agreement.
"Hazardous Substances" means (statutory acronyms and abbreviations having
the meaning given them in the definition of "Hazardous Substances Laws")
substances defined as "hazardous substances," "pollutants" or "contaminants" in
Section 101 of the CERCLA; those substances defined as "hazardous waste,"
"hazardous materials" or "regulated substances" by the RCRA; those substances
designated as a "hazardous substance" pursuant to Section 311 of the CWA; those
substances defined as "hazardous materials" in Section 103 of the HMTA; those
substances regulated as a hazardous chemical substance or mixture or as an
imminently hazardous chemical substance or mixture pursuant to Sections 6 or 7
of the TSCA; those substances defined as "contaminants" by Section 1401 of the
SDWA, if present in excess of permissible levels; those substances regulated by
the Oil Pollution Act; those substances defined as a pesticide pursuant to
Section 2(u) of the FIFRA; those substances defined as a source, special nuclear
or by-product material by Section 11 of the AEA; those substances defined as
"residual radioactive material" by Section 101 of the UMTRCA; those substances
defined as "toxic materials" or "harmful physical agents" pursuant to Section 6
of the OSHA); those substances defined as hazardous wastes in 40 C.F.R. Part
261.3; those substances defined as hazardous waste constituents in 40 C.F.R.
Part 260.10, specifically including Appendix VII and VIII of Subpart D of 40
C.F.R. Part 261; those
15
167
substances designated as hazardous substances in 40 C.F.R. Parts 116.4 and
302.4; those substances defined as hazardous substances or hazardous materials
in 49 C.F.R. Part 171.8; those substances regulated as hazardous materials,
hazardous substances, or toxic substances in 40 C.F.R. Part 1910; in any other
Hazardous Substances Laws; and in the regulations adopted and publications
promulgated pursuant to said laws, whether or not such regulations or
publications are specifically referenced herein.
"Hazardous Substances Law" means any of:
(i) the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended (42 U.S.C. Section 9601 et seq.) ("CERCLA");
(ii) the Federal Water Pollution Control Act (33 U.S.C. Section 1251
et seq.) ("Clean Water Act" or "CWA");
(iii) the Resource Conservation and Recovery Act (42 U.S.C. Section
6901 et seq.) ("RCRA");
(iv) the Atomic Energy Act of 1954 (42 U.S.C. Section 2011 et seq.)
("AEA");
(v) the Clean Air Act (42 U.S.C. Section 7401 et seq.) ("CAA");
(vi) the Emergency Planning and Community Right to Know Act (42
U.S.C. Section 11001 et seq.) ("EPCRA");
(vii) the Federal Insecticide, Fungicide, and Rodenticide Act
(7 U.S.C. Section 136 et seq.) ("FIFRA");
(viii) the Oil Pollution Act of 1990 (P.L. 101-380, 104 Stat. 486);
(ix) the Safe Drinking Water Act (42 U.S.C. Sections 300f et seq.)
("SDWA");
(x) the Surface Mining Control and Reclamation Act of 1974
(30 U.S.C. Sections 1201 et seq.) ("SMCRA");
(xi) the Toxic Substances Control Act (15 U.S.C. Section 2601 et
seq.) ("TSCA");
(xii) the Hazardous Materials Transportation Act (49 U.S.C. Section
1801 et seq.) ("HMTA");
(xiii) the Uranium Mill Tailings Radiation Control Act of 1978
(42 U.S.C. Section 7901 et seq.) ("UMTRCA");
16
168
(xiv) the Occupational Safety and Health Act (29 U.S.C. Section 651
et seq.) ("OSHA");
(xv) all other Federal Governmental Rules which govern Hazardous
Substances; and
(xxi) and all state and local Governmental Rules which govern
Hazardous Substances in any state or local jurisdiction in which a Project is
located, and the regulations adopted and publications promulgated pursuant to
all such foregoing laws.
"Hedge Breaking Fees" means all reasonable costs, fees and expenses
incurred by Borrower in connection with any unwinding, breach or termination of
the Hedge Transactions, all to the extent provided in and calculated pursuant to
the applicable Interest Rate Agreements.
"Hedge Transaction" means any "Transaction" (such as swaps, caps, collars
or floors) entered into under an Interest Rate Agreement.
"Improvements" has the meaning given in the granting clause in the Deeds
of Trust.
"Inchoate Default" means any occurrence, circumstance or event, or any
combination thereof, which, with the lapse of time and/or the giving of notice,
would constitute an Event of Default.
"Independent Consultants" means, collectively, the Insurance Consultant,
the Fuel Consultant, the Independent Engineer, the Power Marketing Consultant or
their successors appointed pursuant to the Credit Agreement.
"Independent Engineer" means X.X. Xxxx, Inc., or its successor appointed
pursuant to the Credit Agreement.
"Information Memorandum" means the descriptive Information Memorandum with
respect to the Projects and Credit Agreement prepared by Lead Arrangers in
consultation with Borrower for use in connection with the syndication of the
Commitments.
"Initial Projects" means, collectively, the Magic Valley Project, the
South Point Project, Xxxxxx Project and the Xxxxxxxxx Project; each
individually, an "Initial Project."
"Insurance Consultant" means Xxxxxxxx Xxxxx or its successor appointed
pursuant to the Credit Agreement.
"Insurance Proceeds" has the meaning given in Section 7.5.1 of the Credit
Agreement.
"Interest Period" means, with respect to any LIBOR Loan, the time period
selected by Borrower which commences on the first day of such Loan or the
effective date of any
17
169
conversion (as the case may be) and ends on the last day of such time period,
provided that no single day shall be deemed to be a part of two Interest
Periods.
"Interest Rate" means the Base Rate or the LIBO Rate, as the case may be.
"Interest Rate Agreements" means any ISDA Master Agreement and the
schedules thereto between Borrower and the counterparty(ies) thereto and the
transaction confirmations thereunder.
"Inventory" means "inventory," as defined in the UCC, of Borrower.
"Joint Venture Agreement" has the meaning given in Section 3.3.1 of the
Credit Agreement.
"Joint Venturers" has the meaning given in Section 3.3.1 of the Credit
Agreement.
"LC Bank" means The Bank of Nova Scotia or, from time to time, the Bank
approved by such Bank, Borrower and Administrative Agent that issues the Letters
of Credit, in its capacity as such issuer.
"LC Beneficiary" means the account beneficiary under a Letter of Credit,
or any assignee or transferee of such beneficiary with respect to the rights of
such beneficiary under such Letter of Credit.
"Lead Arrangers" means each of Credit Suisse First Boston and The Bank of
Nova Scotia as the lead arrangers of the Commitments.
"Leases" mean all contracts or agreements approved by the Lead Arrangers
or the Technical Committee in accordance with Section 3.1 or Section 3.3, as the
case may be, of the Credit Agreement entered into by or on behalf of Borrower
for the leasing of a Site for a Project, including the South Point Lease.
"Legal Requirements" means, as to any Person, the articles of
incorporation, bylaws or other organizational or governing documents of such
Person, and any requirement under a Permit, and any Governmental Rule in each
case applicable to or binding upon such Person or any of its properties or to
which such Person or any of its property is subject.
"Lending Office" means, with respect to any Bank, the office designated as
such beneath the name of such Bank on Exhibit H of the Credit Agreement or such
other office of such Bank as such Bank may specify from time to time to
Administrative Agent and Borrower.
"Letter of Credit" means a letter of credit issued by LC Bank pursuant to
Section 2.2 of the Credit Agreement in substantially the format of letters of
credit generally issued by LC Bank.
"Letter of Credit Commitment" means, at any time with respect to each
Bank, such Bank's Proportionate Share of the Total Letter of Credit Commitment
at such time.
18
170
"Letter of Credit Fee" has the meaning given in Section 2.5.1 of the
Credit Agreement.
"LIBO Rate" means, for any LIBOR Loan, a rate per annum (rounded upwards
if necessary, to the nearest 1/16th of 1%) determined by Administrative Agent
(which determination shall, absent manifest error, be conclusive) to be equal to
(a)(i) the offered rate for deposits in Dollars (in the approximate amount and
having approximately the same maturity as the LIBOR Loan to be made) in the
London Interbank Market at approximately 11:00 a.m. (London time), which appears
on the Telerate Screen, or, (ii) if such rate does not appear on the Telerate
Screen, such rate as determined in good faith by Administrative Agent, two
Banking Days prior to the first day of the Interest Period for such LIBOR Loan,
divided by (b) 100% minus (c) the Reserve Requirement (expressed as a
percentage) for such LIBOR Loan for such Interest Period.
"LIBOR Loan" has the meaning given in Section 2.1.1(b)(i) of the Credit
Agreement.
"Lien" on any asset means any mortgage, deed of trust, lien, pledge,
charge, security interest, or easement or encumbrance of any kind in respect of
such asset, whether or not filed, recorded or otherwise perfected or effective
under applicable law, as well as the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title retention agreement
relating to such asset.
"Limited Partners" means (i) Calpine CCFC LP, Inc., a Delaware
corporation, (ii) Calpine Magic Valley Generation, Inc., a Delaware corporation,
(iii) Calpine MVG, Inc., a Delaware corporation, (iv) CPN Xxxxxxxxx I, Inc., a
Delaware corporation, (v) Calpine Xxxxxxxxx, Inc., a Delaware corporation, (vi)
Calpine Xxxxxx, Inc., a Delaware corporation, (vii) Calpine South Point, Inc., a
Delaware corporation, and (viii) any other entity that becomes a limited partner
in Borrower in accordance with the Credit Agreement.
"Liquidation Costs" has the meaning given in Section 2.9 of the Credit
Agreement.
"Loan" has the meaning given in Section 2.1.1(a) of the Credit Agreement.
"Loan Availability Period" means the period from the Closing Date to the
Loan Maturity Date.
"Loan Commitment" means, at any time with respect to each Bank, such
Bank's Proportionate Share of the Total Loan Commitment at such time.
"Loan Maturity Date" means the date that is the earliest to occur of (a)
the acceleration of the Obligations upon and during the occurrence and
continuance of an Event of Default and (b) the Date Certain.
"Loss Proceeds Account" has the meaning given in Section 1.1 of the
Depositary Agreement.
19
171
"Magic Valley Affiliated Party Agreement Guaranty" means the Affiliated
Party Agreement Guaranty dated as of October 20, 1999 in substantially the form
of Exhibit D-2A to the Credit Agreement executed by Calpine in favor of
Borrower.
"Magic Valley Construction Contracts" means, collectively, (a) the Magic
Valley Construction Management Agreement, (b) the Magic Valley Prime
Construction Contract for Construction Services, (c) the Magic Valley
Engineering Contract, (d) the Magic Valley Power Island Supply Contract, and (e)
any other contract or agreement entered into by, or on behalf of Borrower for
the construction of all or any portion of the Magic Valley Project, or the
supply or provision of any goods or services relating to the construction of the
Magic Valley Project.
"Magic Valley Construction Management Agreement" means that certain Magic
Valley Construction Management Agreement, dated as of October 20, 1999 between
Borrower and Calpine Central.
"Magic Valley Deed of Trust" means the Deed of Trust, Assignment of Rents
and Security Agreement dated as of October 20, 1999 in substantially the form of
Exhibit D-3 to the Credit Agreement executed by Borrower, as trustor, to Xxxxxxx
Title Company, as trustee, in favor of Administrative Agent, as beneficiary.
"Magic Valley Engineering Contract" means the Contract for Professional
Services dated as of December 8, 1998 between Borrower and Xxxxxxx & Xxxxx,
L.L.C.
"Magic Valley Environmental Report" means (a) the Phase I Environmental
Site Assessment at the proposed Magic Valley combined-cycle facility located at
Xxxxxxx County, Texas, dated April 1999, prepared by Environmental Consulting
Technology.
"Magic Valley Electric Interconnection Documents" means, collectively, (a)
the Electric Interconnection Agreement dated as of February 25, 1999 between
Central Power and Light Company and Borrower, (b) the Letter of Authorization to
Proceed with Engineering and Construction of Transmission Line Relocation dated
December 17, 1998 between Central and South West Services, Inc. and Borrower,
(c) the Letter of Authorization to Proceed with Engineering and Procurement and
Construction of Interconnection Facilities Dated February 25, 0000 xxxxxxx
Xxxxxxx xxx Xxxxx Xxxx Services, Inc. and Borrower and (d) any other contract or
agreement entered into by, or on behalf of, Borrower for electrical
interconnection services to the Magic Valley Project.
"Magic Valley Fuel Management Agreement" means the Magic Valley Fuel
Management Agreement dated as of October 20, 1999, between Borrower and CPN
Central Fuels.
"Magic Valley Gas Supply Agreement" means that certain Magic Valley Gas
Supply Agreement, dated as of October 20, 1999 between Borrower and CPN Central
Fuels.
"Magic Valley Gas Supply Contracts" means, collectively, (a) the Magic
Valley Gas Supply Agreement, (b) the Fuel Management Services Agreement, dated
as of May 1, 1998
20
172
between CCNG, Inc. and Borrower and (c) and any other agreement or document
entered into by or on behalf of Borrower for the supply of fuel to the Magic
Valley Project.
"Magic Valley Gas Transportation Agreements" means any agreement or
document entered into by or on behalf of Borrower for the supply of fuel
transportation services to the Magic Valley Project.
"Magic Valley Maintenance Contract" means the Maintenance Contract dated
as of June 30, 1998, between Borrower and Westinghouse Power Generation, a
division of CBS Corporation, a Pennsylvania corporation.
"Magic Valley Operating and Maintenance Agreement" means the Magic Valley
Operation and Maintenance Agreement dated as of October 20, 1999 between
Borrower and Calpine Central.
"Magic Valley Power Island Supply Contract" means the Purchase Contract
dated as of June 30, 1998 between Borrower and Westinghouse Power Generation, a
division of CBS Corporation, a Pennsylvania corporation.
"Magic Valley Power Marketing Agreement" means the Magic Valley Power
Marketing Agreement dated as of October 20, 1999, between Borrower and CPSC.
"Magic Valley Power Purchase Agreement" means the Power Purchase and Sale
Agreement, dated as of May 22, 1998 between Borrower and Magic Valley Electric
Cooperative, Inc., a Texas corporation.
"Magic Valley Power Purchase Documents" means (a) the Magic Valley Power
Purchase Agreement, and (b) any other contracts or agreements entered into by
Borrower for the sale of electric energy and/or capacity from the Magic Valley
Project.
"Magic Valley Prime Construction Contract" means the Contract for
Construction dated as of March 26, 1999 between Borrower and Xxxxxx Construction
Corporation.
"Magic Valley Project" means, the approximately 700 MW (gross) combined
cycle facility located on the Magic Valley Site, all as further described in
Appendix G-1A to the Credit Agreement, together with all buildings, structures
or improvements erected on the Magic Valley Site and the Easements with respect
to the Magic Valley Site, all alterations thereto or replacements thereof, all
fixtures, attachments, appliances, equipment, machinery and other articles
attached thereto or used in connection therewith and all Parts which may from
time to time be incorporated or installed in or attached thereto, all contracts
and agreements for the purchase or sale of commodities or other personal
property related thereto, all leases of real or personal property related
thereto, and all other real and tangible and intangible personal property owned
by Borrower and placed upon or used in connection with the electric and steam
generation plant located upon the Magic Valley Site and the Easements with
respect to the Magic Valley Site.
21
173
"Magic Valley Project Documents" means, collectively, the Magic Valley
Construction Contracts, the Magic Valley Gas Supply Contracts, the Magic Valley
Power Purchase Documents, the Magic Valley Operating and Maintenance Agreement,
the Magic Valley Project Management Agreement, the Magic Valley Maintenance
Contract, the Magic Valley Power Marketing Agreement, the Magic Valley Gas
Transportation Agreements, the Magic Valley Fuel Management Agreement, the Magic
Valley Affiliated Party Agreement Guaranty, the Magic Valley Water Documents,
the Magic Valley Electric Interconnection Documents, the Franchise Agreement,
dated as of May 14, 1999, by and between the City of Edinburg, Texas and the
Borrower and any other agreement or document relating to the development,
construction or operation of the Magic Valley Project to which Borrower is a
party.
"Magic Valley Project Management Agreement" means that certain Magic
Valley Project Management Agreement dated as of October 20, 1999 between the
Borrower and Calpine Central.
"Magic Valley Site" has the meaning given in the Magic Valley Deed of
Trust (as it may be amended from time to time).
"Magic Valley Subordination Agreement" means that certain Lien
Subordination Agreement, dated as of October 20, 1999, between Administrative
Agent and Magic Valley Electric Cooperative, Inc.
"Magic Valley Water Contracts" means, collectively, (a) the Agreement for
Purchase of Treated Effluent Water, dated as of April 21, 1998 between the City
of Edinburg, Texas and Borrower, (b) the Water Delivery Contract dated as of
July 19, 1999 between the Xxxxxxxx County Irrigation District No. 1 and
Borrower, (c) the Agreement to Purchase Water dated as of June 17, 1999 between
the Xxxxxxxx County Irrigation District No. 2 and Borrower, (d) the Xxxxxxx
Money Contract dated as of August 4, 1999 between Bayview Irrigation District
No. 11 and Borrower and (e) any other contract or agreement entered into by, or
on behalf of, Borrower for the supply or transportation of water to the Magic
Valley Project.
"Maintenance Contracts" means, collectively, the contracts or agreements
approved by the Lead Arrangers or the Technical Committee in accordance with
Section 3.1 or Section 3.3, as the case may be, of the Credit Agreement entered
into by, or on behalf of, Borrower for the supply of maintenance services for a
Project, including (a) the Magic Valley Maintenance Contract, (b) the South
Point Maintenance Contract, (c) the Xxxxxx Maintenance Contract, and (d) the
Xxxxxxxxx Maintenance Contract.
"Maintenance Provider" means any entity approved by the Lead Arrangers or
the Technical Committee in accordance with Section 3.1 or 3.3, as the case may
be, of the Credit Agreement in its capacity as maintenance provider under a
Maintenance Contract.
"Major Construction Contracts" means, collectively, the Construction
Management Agreement, the Prime Construction Contract, the Engineering Contract
and the Power Island Supply Contract for the Project to which it relates.
22
174
"Major Contractors" means, collectively, with respect to a given Project,
the Construction Manager, the Prime Contractor, the Project Engineer and the
Power Island Supplier, if any, for such Project.
"Major Fuel Supplier" means the Fuel Supplier under a Major Gas Supply
Contract.
"Major Gas Supply Contract" means, collectively, (i) one or more Gas
Supply Contracts, with the same Fuel Supplier for the same Project, for more
than 17,000 MMBtu/day in the aggregate (calculated on a yearly average basis)
for a given Project with a term of more than two years or (ii) any Gas Supply
Contract with an Affiliate of Borrower.
"Major Gas Transportation Agreement" means, collectively, (i) one or more
Gas Transportation Agreements, with the same Fuel Transporter for the same
Project, for more than 17,000 MMBtu/day in the aggregate (calculated on a yearly
average basis) for a given Project with a term of more than two years and (ii)
any Gas Transportation Agreement with an Affiliate of Borrower.
"Major Gas Transporter" means the Gas Transporter under a Major Gas
Transportation Agreement.
"Major Maintenance" means labor, materials and other direct expenses for
any overhaul of, or major maintenance procedure for, the Projects which requires
significant disassembly or shutdown of any of the Projects pursuant to
manufacturers' guidelines or recommendations, engineering or operating
considerations or the requirements of any applicable Legal Requirement,
including, without limitation, fees payable under the Maintenance Contracts.
"Major Power Purchase Agreement" means one or more Power Purchase
Documents, with the same power purchaser for the same Project, for more than 100
MW in the aggregate (calculated on a yearly average basis) of capacity and/or
firm energy from a given Project with a term of more than two years.
"Major Power Purchaser" means the Power Purchaser under a Major Power
Purchase Agreement.
"Major Project Documents" means, collectively, with respect to a given
Project, the Major Construction Contracts, the Project Management Agreement, the
Power Marketing Agreement, the Fuel Management Agreement, the Maintenance
Contract, any Major Gas Supply Contracts, the Affiliated Party Agreement
Guaranty, any Major Gas Transportation Agreements, any Major Power Purchase
Agreements, the Lease, if any, of the applicable Site, the O&M Agreement and any
Joint Venture Agreement, if any, for such Project.
"Major Project Participants" means Borrower, each General Partner,
Calpine, and, with respect to each Project, the Operator, the Project Manager,
the Power Marketer, the Fuel Manager, the Maintenance Provider, the lessor under
the Lease, if any, of the applicable Site, each
23
175
Major Contractor, each Major Power Purchaser, each Major Fuel Supplier, each
Major Gas Transporter and each Joint Venturer, if any, for such Project.
"Major Subcontractor" means any subcontractor party to a subcontract with
a Major Contractor providing for the payment to such subcontractor of $100,000
or more.
"Managing Partner" has the meaning given the term "Managing General
Partner" in the Partnership Agreement.
"Mandatory Prepayment" has the meaning specified in Section 2.1.6 of the
Credit Agreement.
"Material Adverse Effect" means
(a) a material adverse change (i) with respect to Borrower, in the
business, property, results of operation or financial condition of
Borrower, the Projects taken as a whole, or Calpine and (ii) with
respect to an individual Initial Project or Funded Subsequent
Project, in the business, property, results of operating or
financial condition of such Project; provided that a change in any
Bank's or the Power Marketing Consultant's or Fuel Consultant's view
of future price of electricity or gas is not a Material Adverse
Effect; or
(b) any event or occurrence of whatever nature (but specifically
excluding a change in any Bank's or the Power Marketing Consultant's
or the Fuel Consultant's view of the future price of electricity or
gas) which could reasonably be expected to materially and adversely
affect:
(i) Borrower's ability to perform its obligations under the Credit
Documents or, with respect to an individual Initial Project or
Funded Subsequent Project, the ability of such Project or a
Major Project Participant to perform its obligations under a
Project Document where such inability to perform will have a
material and adverse effect on the completion of the
construction or operation of such Project, or
(ii) the Banks' security interests in the Collateral.
"Maturity" or "maturity" means, with respect to any Loan, Borrowing,
interest, fee or other amount payable by Borrower under the Credit Agreement or
the other Credit Documents, the date such Loan, Borrowing, interest, fee or
other amount becomes due, whether upon the stated maturity or due date, upon
acceleration or otherwise.
"Maximum Debt to Capitalization Ratio" means a Debt to Capitalization
Ratio of no more than [*] to 1.00; provided, however, that if immediately prior
to the initial funding of Loans for the Initial Projects pursuant to Section 3.2
of the Credit Agreement, Calpine is not
24
176
rated at least Ba2 by Moody's and BB by S&P, then for so long as such ratings
are not increased to Ba2 and BB, respectively, the Maximum Debt to
Capitalization Ratio shall be a Debt to Capitalization Ratio of no more than
[*] to 1.00.
"Minimum Notice Period" means at least three Banking Days before the date
of any Borrowing or conversion of Type of Loan resulting in whole or in part of
LIBOR Loans and at least one Banking Day before any Borrowing or conversion of
Type of Loan resulting in whole of Base Rate Loans.
"Moody's" means Xxxxx'x Investors Service, Inc.
"Mortgaged Properties" has the meaning given in the granting clauses of
the Deeds of Trust.
"Multiemployer Plan" means any multiemployer plan (as defined in Section
3(37) of ERISA).
"NERC Region" means one of the ten geographic areas within the United
States, Canada and a portion of Baja California Norte designated as a "region"
by the North American Electric Reliability Counsel.
"Net Worth" means, at any time, the net equity of Borrower set forth in
the balance sheet of Borrower, prepared in accordance with GAAP.
"Non-Advancing Bank" has the meaning given in Section 10.12 of the Credit
Agreement.
"Non-Fundamental Project Default" with respect to any Initial Project or
Funded Subsequent Project means the occurrence of any of the following events
with respect to such Project:
(a) Breach of Project Documents.
(i) Borrower. Borrower shall be in breach of any term, condition,
provision, covenant, representation, warranty or obligation, or in default,
under a Project Document relating to an Initial Project or a Funded Subsequent
Project, and such breach or default shall not be remediable or, if remediable,
shall continue unremedied for a period of 30 days; provided that, except with
respect to a breach or default under the South Point Lease, if (A) such breach
cannot be cured within such 30 day period, (B) such breach is susceptible of
cure within 90 days, (C) Borrower is proceeding with diligence and in good faith
to cure such breach, (D) the existence of such breach has not had and could not
after considering the nature of the cure, be reasonably expected to give rise to
termination by the counterparty to the Project Document which is subject to
breach or to otherwise have a Material Adverse Effect on such Project and (E)
Administrative Agent shall have received an officer's certificate signed by a
Responsible Officer of Borrower to the effect of clauses (A), (B), (C) and (D)
above and stating what action Borrower is taking to cure such breach, then such
30 day cure period shall be
25
177
extended to such date, not to exceed a total of 90 days, as shall be necessary
for Borrower diligently to cure such breach.
(ii) Third Party. A party other than Borrower shall be in breach
of, or in default under, a Project Document relating to an Initial Project or a
Funded Subsequent Project or any Consent, or any Equity Document (other than the
Equity Contribution and Completion Guarantee), such breach could reasonably be
expected to have a Material Adverse Effect on such Project, and such breach or
default shall not be remediable or, if remediable, shall continue unremedied for
a period of 30 days; provided that if (A) such breach cannot be cured within
such 30 day period, (B) such breach is susceptible of cure within 90 days, (C)
the breaching party is proceeding with diligence and in good faith to cure such
breach, and (D) the existence of such breach has not had and could not after
considering the nature of the cure, be reasonably expected to have a Material
Adverse Effect on such Project then, such 30 day cure period shall be extended
to such date, not to exceed a total of 90 days, as shall be necessary for such
third party diligently to cure such breach; provided further that, no Event of
Default shall be declared as a result of any such action if Borrower obtains a
Replacement Obligor for the affected party within the 90 day cure period
referred to in this paragraph (or within the 30 day cure period, if no extension
is given) and such action has not had and does not have prior to so obtaining
such Replacement Obligor a Material Adverse Effect on such Project.
(iii) Termination. Any material provision in any Project Document
relating to an Initial Project or a Funded Subsequent Project shall for any
reason cease to be valid and binding on any party thereto (other than Borrower)
except upon fulfillment of such party's obligations thereunder (or any such
party shall so state in writing), or shall be declared null and void, or the
validity or enforceability thereof shall be contested by any party thereto
(other than Administrative Agent and the Banks) or any Governmental Authority,
or any such party shall deny that it has any liability or obligation thereunder,
except upon fulfillment of its obligations thereunder, and such occurrence could
reasonably be expected to have a Material Adverse Effect on such Project;
provided that no Event of Default shall occur as a result of such breach or
default if Borrower obtains a Replacement Obligor for the affected party within
90 days thereafter and, such breach or default has not had and does not have
prior to so obtaining such Replacement Obligor, a Material Adverse Effect on
such Project.
(b) Breach of Covenants. Borrower shall fail to perform or observe any
of the covenants set forth in Section 5.2.2, 5.3, 5.4 (if the event with respect
to which notice is required to be given relates to an Initial Project or a
Funded Subsequent Project), 5.5 (if the party whose financial statements were
not properly delivered is not a Calpine Affiliate), 5.6 (with respect to books,
records and accounts of an Initial Project or a Funded Subsequent Project), 5.7
(if the failure to comply with the Legal Requirement relates to an Initial
Project or a Funded Subsequent Project), 5.8, 5.9(b), (c), (d) or (e) 5.13,
5.14, 5.15, 5.16.1, 5.16.3, 5.21, 5.22, 5.23, 6.14 or 6.20 and such failure
shall continue unremedied for a period of 30 days after Borrower becomes aware
thereof or receives written notice thereof from Administrative Agent provided,
however, that, if (i) such failure cannot be cured within such 30 day period,
(ii) such failure is susceptible of cure, (iii) Borrower is proceeding with
diligence and in good faith to cure such failure, (iv) the existence of such
failure has not had and cannot after considering the nature of the cure be
26
178
reasonably expected to have a Material Adverse Effect on a Project and (v)
Administrative Agent shall have received an officer's certificate signed by a
Responsible Officer of Borrower to the effect of clauses (i), (ii), (iii) and
(iv) above and stating what action Borrower is taking to cure such failure, then
such 30 day cure period shall be extended to such date, not to exceed a total of
90 days, as shall be necessary for Borrower diligently to cure such failure.
(c) Material Adverse Effect. The occurrence of any event or circumstance
having a Material Adverse Effect on an Initial Project or a Funded Subsequent
Project.
(d) Omissions. Any financial statement, representation, warranty or
certificate made or prepared by, under the control of or on behalf of Borrower
and furnished to Administrative Agent, the Lead Arrangers, the Technical
Committee or any Bank pursuant to this Agreement, or in any separate statement
or document to be delivered to Administrative Agent or any Bank hereunder or
under any other Credit Document, shall contain an untrue or misleading statement
of a material fact or shall fail to state a material fact necessary to make the
statements therein not misleading as of the date made, in either case, which
could reasonably be expected to result in a Material Adverse Effect on an
Initial Project or a Funded Subsequent Project.
"Non-Fundamental Project Inchoate Default" means, with respect to any
Initial Project or Funded Subsequent Project, any occurrence, circumstance or
event, or any combination thereof, which, with the lapse of time or giving of
notice, would constitute a Non-Fundamental Project Default with respect to such
Project.
"Nonrecourse Persons" has the meaning given in Article 9 of the Credit
Agreement.
"Note" has the meaning given in Section 2.1.3 of the Credit Agreement.
"Notice of Borrowing" has the meaning given in Section 2.1.1(b) of the
Credit Agreement.
"Notice of Conversion of Loan Type" has the meaning given in Section 2.1.5
of the Credit Agreement.
"Notice of LC Activity" has the meaning given in Section 2.2.3 of the
Credit Agreement.
"O&M Agreement" means the contracts or agreements approved by the Lead
Arrangers or the Technical Committee in accordance with Section 3.1 or Section
3.3, as the case may be, of the Credit Agreement entered into by, or on behalf
of, Borrower for the operation or maintenance of any Project, including (a) the
Magic Valley Operation and Maintenance Agreement, (b) the South Point Operation
and Maintenance Agreement, (c) the Xxxxxx Operation and Maintenance Agreement,
and (d) the Xxxxxxxxx Operation and Maintenance Agreement.
"O&M Costs" means all actual cash maintenance and operation costs incurred
and paid for any Project in any particular calendar or fiscal year or period to
which said term is
27
179
applicable, including payments for fuel, additives or chemicals and
transportation costs related thereto, replacement energy, capacity and other
products or services required to be obtained by Borrower under any Power
Purchase Agreement, Major Maintenance costs, local, sales and real estate taxes,
insurance, consumables, payments made in connection with the requirements of any
Permit or Legal Requirement, payments under any lease, payments pursuant to the
agreements for the management, operation and maintenance of the applicable
Project, payments for goods or services, including project management, power
marketer and fuel management services, provided or rendered to the owner of such
Project, legal, accounting and consulting fees and expenses paid by the owner of
such Project in connection with the management, maintenance or operation of
Project, fees paid in connection with obtaining, transferring, maintaining or
amending any Permits and reasonable general and administrative expenses, but
exclusive in all cases of non-cash charges, including depreciation or
obsolescence charges or reserves therefor, amortization of intangibles or other
bookkeeping entries of a similar nature, and also exclusive of all interest
charges and charges for the payment or amortization of principal of indebtedness
of the owner of the applicable Project. O&M Costs shall not include (a)
distributions of any kind (as opposed to payments for goods or services) to
Borrower or its Affiliates, (b) depreciation, (c) capital expenditures other
than those incurred in an emergency included in and approved as part of an
Annual Operating Budget or (d) payments for restoration or repair of such
Project from the Loss Proceeds Account in accordance with the terms of the
Credit Agreement. In the case of Projects that are not wholly owned by Borrower,
O&M Costs shall consist of a pro rata portion (based on Borrower's ownership
percentage in such Project) of the amounts of costs described above.
"Obligations" means and includes, with respect to any Person, all loans,
advances, debts, liabilities, and obligations, howsoever arising, owed by such
Person to Administrative Agent, LC Bank, Lead Arrangers, Technical Committee or
the Banks of every kind and description (whether or not evidenced by any note or
instrument and whether or not for the payment of money), direct or indirect,
absolute or contingent, due or to become due, now existing or hereafter arising,
pursuant to the terms of the Credit Agreement or any of the other Credit
Documents, including all interest, fees, charges, expenses, attorneys' fees and
accountants fees chargeable to such Person and payable by such Person hereunder
or thereunder.
"Operating Account" has the meaning given in Section 7.3.1 of the Credit
Agreement.
"Operative Documents" means the Credit Documents, the Project Documents
and any Additional Project Documents.
"Operator" means any wholly owned Subsidiary of Calpine approved by the
Lead Arrangers or the Technical Committee in accordance with Section 3.1 or 3.3,
as the case may be, of the Credit Agreement in its capacity as operator under an
O&M Agreement.
"Other Taxes" has the meaning given in Section 2.6.4(a) of the Credit
Agreement.
"Outstanding Committed Credit" means, as of a given date, the total of the
aggregate principal amount of all Loans then outstanding.
28
180
"Partners" means the General Partner and the Limited Partners, and any
other partner of Borrower permitted by the Credit Agreement.
"Partnership Agreement" means the Limited Partnership Agreement dated as
of August 23, 1999 and amended as of September 9, 1999 for Calpine Construction
Finance Company, L.P.
"Parts" means any part, appliance, instrument, appurtenance, accessory or
other property of any nature necessary or useful to the operation, maintenance,
service or repair of a Project.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under Title IV of ERISA.
"Performance Tests" means, for any Project, the "acceptance tests" or
"performance tests" (however defined) under the Major Construction Contracts for
such Project.
"Permit" means any action, approval, consent, waiver, exemption, variance,
franchise, order, permit, authorization, right or license of or from a
Governmental Authority.
"Permitted Debt" means: (a) indebtedness incurred under the Credit
Documents, (b) indebtedness to any party pursuant to the terms of an Operative
Document, not more than 90 days past due or being contested in good faith and by
appropriate proceedings, (c) trade or other similar indebtedness incurred in the
ordinary course of business (but not for borrowed money) (i) not more than 90
days past due, or (ii) being contested in good faith and by appropriate
proceedings, (d) contingent liabilities permitted pursuant to Section 6.1 of the
Credit Agreement, (e) indebtedness incurred pursuant to a Contribution, (f)
Interest Rate Agreements with an aggregate notional amount not to exceed at any
time the Outstanding Committed Credit, and (g) Contributions in the form of
subordinated debt.
"Permitted Encumbrances" means (a) with respect to the Initial Projects
and the Funded Subsequent Projects, those liens, encumbrances or other
exceptions to title satisfactory to Lead Arrangers or Technical Committee, as
the case may be, and specified on a Title Policy pursuant to Sections 3.1.27(a)
and 3.3.29(a) of the Credit Agreement, and (ii) with respect to the Unfunded
Subsequent Projects, those liens, encumbrances, or other exceptions to title
which do not result in a Material Adverse Effect on Borrower or the Projects
taken as a whole.
"Permitted Investments" means (i) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof) having a maturity not exceeding
one year from the date of issuance, (ii) time deposits and certificates of
deposit of any Bank or any domestic commercial bank rated at least A-1 or the
equivalent thereof by S&P or at least P-1 or the equivalent thereof by Moody's
having capital and surplus in excess of $500,000,000, (iii) commercial paper of
any domestic corporation rated at least A-1 or the equivalent thereof by S&P or
at least P-1 or the equivalent thereof by Moody's and, in each case, having a
maturity not exceeding 90 days from the date of acquisition, (iv) fully secured
repurchase
29
181
obligations with a term of not more than seven (7) days for underlying
securities of the types described in clause (i) above entered into with any bank
meeting the qualifications established in clause (ii) above and (v) money market
mutual funds.
"Permitted Liens" means (a) the rights and interests of the Banks as
provided in the Credit Documents, (b) Liens for any tax, assessment or other
governmental charge, either secured by a bond or other security reasonably
acceptable to Administrative Agent or not yet due or being contested in good
faith and by appropriate proceedings, so long as (i) such proceedings shall not
involve any substantial danger of the sale, forfeiture or loss of an Initial
Project or a Funded Subsequent Project, or the related Site or any related
Easements, as the case may be, title thereto or any interest therein and shall
not interfere in any material respect with the use or disposition of such
Project, Site or any Easements, or (ii) a bond or other security reasonably
acceptable to Administrative Agent has been posted or provided in such manner
and amount as to assure Administrative Agent that any taxes, assessments or
other charges determined to be due will be promptly paid in full when such
contest is determined, (c) materialmen's, mechanics', workers', repairmen's,
employees' or other like Liens, junior in right of payment to the Lien of the
Collateral Documents or for which the Banks are otherwise indemnified, arising
in the ordinary course of business or in connection with the construction of an
Initial Project or a Funded Subsequent Project, either for amounts not yet due
or for amounts being contested in good faith and by appropriate proceedings, so
long as (i) such proceedings shall not involve any substantial danger of the
sale, forfeiture or loss of such Project or the related Site or any related
Easements, as the case may be, title thereto or any interest therein and shall
not interfere in any material respect with the use or disposition of such
Project, Site or any Easements, or (ii) a bond or other security reasonably
acceptable to Administrative Agent has been posted or provided in such manner
and amount as to assure Administrative Agent that any amounts determined to be
due will be promptly paid in full when such contest is determined, (d) Liens
arising out of judgments or awards so long as an appeal or proceeding for review
is being prosecuted in good faith and for the payment of which adequate
reserves, bonds or other security reasonably acceptable to Administrative Agent
have been provided or are fully covered by insurance, (e) Permitted
Encumbrances, (f) Liens, deposits or pledges to secure statutory obligations or
performance of bids, tenders, contracts (other than for the repayment of
borrowed money) or leases, or for purposes of like general nature in the
ordinary course of its business, not to exceed $2,000,000 in the aggregate at
any time, and with any such Lien to be released as promptly as practicable, (g)
other Liens incident to the ordinary course of business that are not incurred in
connection with the obtaining of any loan, advance or credit and that do not in
the aggregate materially impair the use of the property or assets of Borrower or
the value of such property or assets for the purposes of such business, (h)
involuntary Liens as contemplated by the Operative Documents (including a lien
of an attachment, judgment or execution) securing a charge or obligation, on
Borrower's property, either real or personal, whether now or hereafter owned in
the aggregate sum of less than $1,000,000, (i) the Lien granted by Borrower to
Magic Valley Electric Cooperative, Inc. pursuant to the Magic Valley Power
Purchase Agreement, which shall be subordinated to the Lien of the Collateral
Documents pursuant to the Magic Valley Subordination Agreement and (j) provided
there exists at least one Funded Subsequent Project, the Lien in favor of Bayer
Chemical Corporation or its Affiliates requiring any subsequent owner
30
182
of the Baytown Project to assume the energy services agreement and related
agreements between Borrower and Bayer Chemical Corporation or such Affiliates.
"Person" means any natural person, corporation, partnership, limited
liability company, firm, association, Governmental Authority or any other entity
whether acting in an individual, fiduciary or other capacity.
"Plans and Specifications" means, collectively, the plans and
specifications for the construction and design of the Projects, including any
document describing the scope of work performed by the Contractors under the
Construction Contracts or any other contract for the construction of the
Projects and any transmission or other interconnection facilities, all work
drawings, engineering and construction schedules, project schedules, project
monitoring systems, specifications status lists, material and procurement
ledgers, drawings and drawing lists, manpower allocation documents, management
and project procedures documents, project design criteria, and any other
document referred to in the Construction Contracts or any of the documents
referred to in this definition.
"Power Island Supplier" means any entity approved by the Lead Arrangers or
the Technical Committee in accordance with Section 3.1 or 3.3, as the case may
be, of the Credit Agreement in its capacity as power island supplier under a
Power Island Supply Contract.
"Power Island Supply Contract" means, collectively, the contracts or
agreements for the purchase or supply of the "power island" (combustion
turbines, steam turbine, HRSGs, etc.) for a Project between Borrower and the
Power Island Supplier for such Project and approved by the Lead Arrangers or the
Technical Committee pursuant to Section 3.1 or Section 3.3, as the case may be,
of the Credit Agreement, including (a) the Magic Valley Power Island Supply
Contract, (b) the South Point Power Island Supply Contract and (c) the Xxxxxx
Power Island Supply Contract.
"Power Marketer" means any wholly owned Subsidiary of Calpine approved by
the Lead Arrangers or the Technical Committee in accordance with Section 3.1 or
3.3, as the case may be, of the Credit Agreement in its capacity as power
marketer under a Power Marketing Agreement.
"Power Marketing Agreement" means, collectively, for each Project, the
power marketing agreement approved by the Lead Arrangers or the Technical
Committee in accordance with Section 3.1 or Section 3.3, as the case may be, of
the Credit Agreement and entered into by Borrower, including (a) the Magic
Valley Power Marketing Agreement, (b) the South Point Power Marketing
Agreement, (c) the Xxxxxx Power Marketing Agreement, and (d) the Xxxxxxxxx
Power Marketing Agreement.
"Power Marketing Consultants" means for each Project, the nationally
recognized independent power marketing consultants providing power marketing
consulting services with respect to such Project to the Banks or their
representatives.
31
183
"Power Marketing Plan" means, collectively, the power marketing plans
delivered by Borrower pursuant to Sections 3.1.15 and 3.3.16 of the Credit
Agreement.
"Power Purchase Documents" means, collectively, for each Project,
contracts or agreements entered into by, or on behalf of, Borrower in accordance
with the Credit Agreement for the sale of electrical and/or steam energy or
capacity or any ancillary or other related services, including transmission
services, from any Project, including (a) the Magic Valley Power Purchase
Documents, (b) the South Point Power Purchase Documents, (c) the Xxxxxx Power
Purchase Documents, and (d) the Xxxxxxxxx Power Purchase Documents.
"Power Purchaser" means any Person who is purchasing electrical and/or
steam energy or capacity or ancillary or other related services pursuant to any
Power Purchase Document.
"Pre-Completion Requirements" means, (a) with respect to the Magic Valley
Project, each of the items set forth in Exhibit P to the Credit Agreement, (b)
with respect to the South Point Project, each of the items set forth in Exhibit
Q to the Credit Agreement, (c) with respect to the Xxxxxx Project, each of the
items set forth in Exhibit R to the Credit Agreement, and (d) with respect to
the Xxxxxxxxx Project, each of the items set forth in Exhibit S to the Credit
Agreement,
"Pre-Funding Requirements" means, (a) with respect to the Magic Valley
Project, each of the items set forth in Exhibit L to the Credit Agreement, (b)
with respect to the South Point Project, each of the items set forth in Exhibit
M to the Credit Agreement, (c) with respect to the Xxxxxx Project, each of the
items set forth in Exhibit N to the Credit Agreement, and (d) with respect to
the Xxxxxxxxx Project, each of the items set forth in Exhibit O to the Credit
Agreement.
"Prime Construction Contract" means, collectively, for each Project, the
construction contract with the Prime Contractor for such Project for either (i)
the design and construction of the entire Project on a "turnkey" basis or (ii)
the construction of that portion of the Project not included within the scope of
the Power Island Supply Contract pursuant to plans or designs prepared by the
Project Engineer for such Project, including (a) the Magic Valley Prime
Construction Contract, (b) the South Point Prime Construction Contract, (c) the
Xxxxxx Prime Construction Contract and (d) the Xxxxxxxxx Turnkey Contract.
"Prime Contractor" means any entity approved by the Lead Arrangers or the
Technical Committee in accordance with Section 3.1 or 3.3, as the case may be,
of the Credit Agreement in its capacity as prime contractor under a Prime
Construction Contract.
"Proceeds" has the meaning given in Section 7.9 of the Credit Agreement.
"Prohibited Transaction" means any transaction set forth in Section 406 of
ERISA or Section 4975 of the Code which is not exempt under Section 408 of ERISA
or Section 4975 of the Code.
32
184
"Project Budget" means, collectively, the project budgets delivered by
Borrower pursuant to Sections 3.1.22 and 3.3.24 of the Credit Agreement.
"Project Costs" means, with respect to any Project, the cost of the
development, design, engineering, acquisition, equipping, construction,
assembly, inspection, testing, completion, and start-up of such Project,
including: (a) all amounts payable under the Construction Contracts, any
contractor bonuses, site acquisition and preparation costs, any interconnection
and transmission upgrade costs payable by Borrower pursuant to the Power
Purchase Documents, all steam and water interconnection costs, all costs related
to water clarification facilities and/or water treatment facilities and all
costs of acquisition and construction of natural gas fuel handling and
processing equipment (if any) and interconnection expenses payable pursuant to
the Gas Supply Contracts and the Gas Transportation Agreements after the Closing
Date; (b) financing, advisory, legal and other fees; (c) all other costs,
including fuel-related costs and prepaid fuel costs, management services fees
and expenses and expenses to complete the acquisition, construction and
financing of such Project; (d) interest and fees payable on or in respect of any
Note or Loan Commitments pursuant to the Credit Agreement prior to Final
Completion of such Project; and (e) payments and fees under the Interest Rate
Agreements; provided, however, that "Project Costs" shall not include any
contingency. Except as otherwise set forth in Section 3.3.1 of the Credit
Agreement, in the case of Projects that are not wholly owned by Borrower,
Project Costs shall consist of a pro rata portion (based on Borrower's ownership
percentage in such Project) of the amounts of costs described above.
"Project Documents" means, collectively, agreements or documents relating
to the development, construction or operation of any Project entered into by
Borrower and approved by the Lead Arrangers or the Technical Committee in
accordance with and to the extent required under Section 3.1 or Section 3.3, as
the case may be, of the Credit Agreement, including (a) the Magic Valley Project
Documents, (b) the South Point Project Documents, (c) the Xxxxxx Project
Documents, and (d) the Xxxxxxxxx Project Documents.
"Project Engineer" means any entity approved by the Lead Arrangers or the
Technical Committee in accordance with Section 3.1 or 3.3, as the case may be,
of the Credit Agreement in its capacity as project engineer under an Engineering
Contract.
"Project Management Agreement" means, collectively, each agreement or
document relating to the provision of management services to a Project, entered
into by Borrower and approved by the Lead Arrangers or the Technical Committee
in accordance with Section 3.1 or Section 3.3, as the case may be, of the Credit
Agreement, including (a) the Magic Valley Project Management Agreement, (b) the
South Point Project Management Agreement, (c) the Xxxxxx Project Management
Agreement, and (d) the Xxxxxxxxx Project Management Agreement.
"Project Manager" means any wholly owned Subsidiary of Calpine approved by
the Lead Arrangers or the Technical Committee in accordance with Section 3.1 or
3.3, as the case may be, of the Credit Agreement in its capacity as project
manager under a Project Management Agreement.
33
185
"Project Operating Revenues" means all payments received by Borrower under
the Power Purchase Documents (excluding damages, liquidated damages and certain
other payments described in Section 7.7 of the Credit Agreement to the extent
deposited in the Loss Proceeds Account), proceeds of any business interruption
insurance, income derived from the sale or use of electric or thermal capacity
or energy transmitted or distributed by any Project, payments for remarketing of
fuel or transportation rights relating thereto, and net payments, if any,
received by Borrower under Hedge Transactions, all as determined in conformity
with cash accounting principles, and the investment income on amounts in the
Accounts (but solely to the extent deposited in the Revenue Account).
"Project Revenues" means all income and receipts of Borrower derived from
the ownership or operation of the Projects, including payments received by
Borrower under the Power Purchase Documents, Construction Contracts and O&M
Agreements (including damages, liquidated damages and certain other payments
described in Section 7.7 of the Credit Agreement), proceeds of any delay in
start up or business interruption or other insurance, income derived from the
sale or use of electric or thermal capacity or energy transmitted or distributed
by any Project, payments for remarketing of fuel or transportation rights
relating thereto, and net payments, if any, received by Borrower under Hedge
Transactions, together with any receipts derived from the sale of any property
pertaining to any Project or incidental to the operation of any Project, all as
determined in conformity with cash accounting principles, the investment income
on amounts in the Accounts (but solely to the extent deposited in the Revenue
Account), the proceeds of any condemnation awards relating to any Project and
proceeds from the Collateral Documents.
"Projects" means, collectively, the Initial Projects and the Subsequent
Projects; each individually a "Project".
"Project Schedules" means, collectively, the project schedules delivered
by Borrower pursuant to Sections 3.1.23 and 3.3.25 of the Credit Agreement.
"Proportionate Share" means, with respect to each Bank, the percentage
participation of such Bank in the Total Loan Commitment or the Total Letter of
Credit Commitment, respectively, as set forth on Exhibit H to the Credit
Agreement. Upon any transfer by a Bank of all or part of its Commitments,
Administrative Agent may revise Exhibit H to reflect the Banks' Proportionate
Shares after giving effect to such transfer.
"Prudent Utility Practices" means those practices, methods, equipment,
specifications and standards of safety and performance, as the same may change
from time to time, as are commonly used by gas fired electric generation
stations in the state where a Project is located, as applicable, of a type and
size similar to the applicable Project as good, safe and prudent engineering
practices in connection with the design, construction, operation, maintenance,
repair and use of electrical and other equipment, facilities and improvements of
such electrical station, with commensurate standards of safety, performance,
dependability, efficiency and economy. Prudent Utility Practices does not
necessarily mean one particular practice, method, equipment specification or
standard in all cases, but is instead intended to encompass a broad range of
acceptable practices, methods, equipment specifications and standards.
34
186
"PUC" means, with respect to a Project, the Public Utility Commission,
Public Service Commission, or equivalent Government Authority in the state where
a Project is located.
"PUHCA" means the Public Utility Holding Company Act of 1935 and all rules
and regulations adopted thereunder.
"PURPA" means the Public Utility Regulatory Policies Act of 1978 and all
rules and regulations adopted thereunder.
"Qualifying Facility" means a qualifying facility within the meaning of
PURPA.
"Receivables" means "accounts" and "general intangibles", as such terms
are defined in Section 9-106 of the UCC, of Borrower and any chattel paper,
document or instrument relating to any such account or general intangible and
any security agreement, lease or other contract securing any of the foregoing.
"Regulation D" means Regulation D of the Board of Governors of the Federal
Reserve System (or any successor).
"Regulatory Change" means any change after the date of the Credit
Agreement in federal, state, local or foreign laws, regulations, Legal
Requirements or requirements under Applicable Permits, or the adoption or making
after such date of any interpretations, directives or requests of or under any
federal, state, local or foreign laws, regulations, Legal Requirements or
requirements under Applicable Permits (whether or not having the force of law)
by any Governmental Authority charged with the interpretation or administration
thereof.
"Reimbursement Obligation" means Borrower's obligation to repay Drawing
Payments under any of the Letters of Credit as provided in Sections 2.2.4 and
2.2.5 of the Credit Agreement.
"Reimbursement Payment" means a payment made by or on behalf of Borrower
in partial or complete satisfaction of a Reimbursement Obligation, including any
interest payment obligation in connection therewith.
"Release" means disposing, discharging, injecting, spilling, leaking,
leaching, dumping, pumping, pouring, emitting, escaping, emptying, seeping,
placing and the like, into or upon any land or water or air, or otherwise
entering into the environment.
"Renewal Notice" has the meaning given in Section 2.11.2 of the Credit
Agreement.
"Renewing Bank" has the meaning given in Section 2.11.2 of the Credit
Agreement.
"Replacement Bank" has the meaning given in Section 2.11.3 of the Credit
Agreement.
35
187
"Replacement Obligor" means, with respect to any Person party to a Project
Document, any Person satisfactory to the Required Banks and having credit, or
acceptable credit support, equal to or greater than that of the replaced Person
on the date that the applicable Project Document was entered into (or otherwise
acceptable to the Required Banks) who, pursuant to any definitive agreement,
definitive guaranty or definitive backup arrangement, in each case reasonably
satisfactory to the Required Banks, assumes the obligation of providing the
services and/or products on terms and conditions no less favorable to Borrower
than those which such Person is obligated to provide pursuant to the applicable
Project Document.
"Required Banks" means, at any time, Banks having Proportionate Shares
which in the aggregate exceed 66.67%.
"Reserve Requirement" means, for LIBOR Loans, the maximum rate (expressed
as a percentage) at which reserves (including any marginal, supplemental or
emergency reserves) are required to be maintained during the Interest Period
therefor under Regulation D by member banks of the Federal Reserve System in New
York City with deposits exceeding $1,000,000,000 against "Eurocurrency
liabilities" (as such term is used in Regulation D). Without limiting the effect
of the foregoing, the Reserve Requirement shall reflect any other reserves
required to be maintained by such member banks by reason of any Regulatory
Change against (i) any category of liabilities which includes deposits by
reference to which the LIBO Rate or LIBOR Loans is to be determined, (ii) any
category of liabilities or extensions of credit or other assets which include
LIBOR Loans or (iii) any category of liabilities or extensions of credit which
are considered irrevocable commitments to lend.
"Responsible Officer" means, as to any Person, its president, chief
executive officer, any vice president, treasurer, or secretary or any managing
general partner (or any of the preceding with regard to such managing general
partner).
"Revenue Account" has the meaning given in Section 1.1 of the Depositary
Agreement.
"S&P" means Standard & Poor's Corporation.
"Secured Obligations" has the meaning given in the granting clause of the
Deed of Trust.
"Security Agreement" means the Security Agreement executed by Borrower in
favor of Administrative Agent and the Banks in the form of Exhibit D-4 to the
Credit Agreement.
"Senior O&M Costs" means all O&M Costs except Subordinated O&M Costs.
"Settlement Amount" has the meaning given in Section 5.11.6 of the Credit
Agreement.
"Site" means, as applicable, (a) the Magic Valley Site, (b) the South
Point Site, (c) the Xxxxxx Site, (d) the Xxxxxxxxx Site and (e) the site of any
Subsequent Project.
36
188
"South Point Affiliated Party Agreement Guaranty" means the Affiliated
Party Agreement Guaranty dated as of October 20, 1999 in substantially the form
of Exhibit D-2B to the Credit Agreement executed by Calpine in favor of
Borrower.
"South Point Construction Contracts" means, collectively, (a) the South
Point Construction Management Agreement, (b) the South Point Prime Construction
Contract, (c) the South Point Power Island Supply Contract and (d) any other
contract or agreement entered into by, or on behalf of, Borrower for the
construction of all or any portion of the South Point Project, or the supply or
provision of any goods or services relating to the construction of the South
Point Project.
"South Point Construction Management Agreement" means that certain South
Point Construction Management Agreement, dated as of October 20, 1999 between
the Borrower and Calpine.
"South Point Deed of Trust" means the Deed of Trust, Assignment of Rents
and Security Agreement dated as of October 20, 1999 in substantially the form of
Exhibit D-3 to the Credit Agreement executed by Borrower, as trustor, to First
American Title Company, as trustee, in favor of Administrative Agent, as
beneficiary.
"South Point Electric Interconnection Documents" means, collectively, (a)
Topock Substation Construction and Interconnection Agreement, dated as of July
14, 1999, by and between Arizona Electric Power Cooperative, Inc. and Borrower,
(b) Contract No. 99-DSR-11008 for the Construction of the South Point
Transmission Project, dated as of June 25, 1999, by and between United States
Department of Energy Western Area Power Administration and Borrower, (c)
Contract for Design, Construction and Maintenance Services, dated as of May 17,
1999, by and between Aha Macav Power Service and Borrower, (d) Contract No.
99-DSR-11050 for Long-Term Firm Point-To-Point Transmission Service, dated
August 5, 1999, by and between United States Department of Energy Western Area
Power Administration and Borrower, (e) Contract No. 99-DSR-11049 for Service
Agreement for Non-Firm-Point-To-Point Transmission Service, by and between
United States Department of Energy Western Area Power Administration and
Borrower, (f) Integration of the Proposed South Point Generation to Desert
Southwest Region Transmission System Facility Study, dated as of May 6, 1999,
and prepared by Department of Energy Western Area Power Administration and (g)
any other contract or agreement entered into by, or on behalf of, Borrower for
electrical interconnection services to the South Point Project.
"South Point Environmental Report" means (a) the Phase I Environmental
Site Assessment at the proposed South Point combined-cycle facility located at
Mojave County, Arizona, dated August 13, 1999, prepared by Xxxxxxx & Gross.
"South Point Fuel Management Agreement" means the South Point Fuel
Management Agreement dated as of October 20, 1999, between Borrower and CPN Gas
Marketing Company.
37
189
"South Point Gas Supply Agreement" means that certain South Point Gas
Supply Agreement, dated as of October 20, 1999 between Borrower and CPN Gas
Marketing Company.
"South Point Gas Supply Contracts" means, collectively, (a) the South
Point Gas Supply Agreement and (b) any other agreement or document entered into
by or on behalf of Borrower for the supply of fuel to the South Point Project.
"South Point Gas Transportation Agreements" means, collectively, (a) the
Letter Agreement for the Construction, Operation and Connection of the South
Point Delivery Point, dated as of July 12, 1999, by and between El Paso Natural
Gas and Borrower, (b) Delivery Point Construction and Operating Agreement, dated
as of July 16, 1999, by and between Transwetern Pipeline Company and Borrower
and (c) any other agreement or document entered into by or on behalf of Borrower
for the supply of fuel transportation services to the South Point Project.
"South Point Lease" means that certain Amended and Restated Ground Lease
Agreement, executed as of August 4, 1999 and approved as BIA Lease B1778-FM on
August 19, 1999 between the Fort Mojave Indian Tribe, a federally recognized
Indian Tribe, and Borrower.
"South Point Maintenance Contract" means the Maintenance Contract dated as
of March 19, 1999 between Borrower and Siemens Westinghouse Power Corporation, a
Delaware corporation.
"South Point Operating and Maintenance Agreement" means the South Point
Operation and Maintenance Agreement dated as of October 20, 1999 between
Borrower and Calpine.
"South Point Power Island Supply Contract" means the Purchase Contract for
Power Island Equipment dated as of March 15, 1998 between Borrower and Siemens
Westinghouse Power Corporation, a Delaware corporation.
"South Point Power Marketing Agreement" means the South Point Power
Marketing Agreement dated as of October 20, 1999 between Borrower and CPSC.
"South Point Power Purchase Documents" means any contracts or agreements
entered into by Borrower for the sale of electric energy and/or capacity from
the South Point Project.
"South Point Prime Construction Contract" means the Contract for
Engineering, Procurement and Construction dated as of October 20, 1999 between
Borrower and the South Point Joint Venture, a general partnership by and between
TIC-The Industrial Company, a Delaware corporation, and Utility Engineering
Corporation, a Texas corporation.
"South Point Project" means, the approximately 500 MW (gross) combined
cycle facility located on the South Point Site, all as further described in
Appendix G-1B to the Credit Agreement, together with all buildings, structures
or improvements erected on the South Point Site and the Easements with respect
to the South Point Site, all alterations thereto or
38
190
replacements thereof, all fixtures, attachments, appliances, equipment,
machinery and other articles attached thereto or used in connection therewith
and all Parts which may from time to time be incorporated or installed in or
attached thereto, all contracts and agreements for the purchase or sale of
commodities or other personal property related thereto, all leases of real or
personal property related thereto, and all other real and tangible and
intangible personal property owned by Borrower and placed upon or used in
connection with the electric and steam generation plant located upon the South
Point Site and the Easements with respect to the South Point Site.
"South Point Project Documents" means, collectively, the South Point
Construction Contracts, the South Point Gas Supply Contracts, the South Point
Power Purchase Documents, the South Point Operating and Maintenance Agreement,
the South Point Project Management Agreement, the South Point Maintenance
Contract, the South Point Power Marketing Agreement, the South Point Gas
Transportation Agreements, the South Point Fuel Management Agreement, the South
Point Affiliated Party Agreement Guaranty, the South Point Lease, the South
Point Water Documents, the South Point Electric Interconnection Documents, the
Guaranty dated March 25, 1999, by Siemens Corporation in favor of Borrower and
any other agreement or document relating to the development, construction or
operation of the South Point Project to which Borrower is a party.
"South Point Project Management Agreement" means that certain South Point
Project Management Agreement dated as of October 20, 1999 between Borrower and
Calpine.
"South Point Site" has the meaning given in the South Point Deed of Trust
(as it may be amended from time to time).
"South Point Water Contracts" means any contract or agreement entered into
by, or on behalf of, Borrower for the supply or transportation of water to the
South Point Project.
"SPC" has the meaning given in Section 10.13.2 of the Credit Agreement.
"Stated Amount" means with respect to each Letter of Credit, the total
amount available to be drawn thereunder at the time in question in accordance
with the terms of such Letter of Credit.
"Subject Companies" has the meaning given in Section 4.11 of the Credit
Agreement.
"Subordinated O&M Costs" means all of the O&M Costs that are payable to
Affiliates of Borrower to the extent such amounts are subordinated pursuant to
the applicable Affiliate Subordination Agreements.
"Subsequent Projects" means, collectively, the combined-cycle power
generating facilities (or other generating facilities approved by the Required
Banks) described in Appendices G- 1E through G-1S to the Credit Agreement owned
or partially owned by Borrower and which use modern, commercially accepted
gas-fired technology, together with all buildings, structures or improvements
and Easements with respect thereto, all alterations thereto or replacements
thereof,
39
191
all fixtures, attachments, appliances, equipment, machinery and other articles
attached thereto or used in connection therewith and all parts which may from
time to time be incorporated or installed in or attached thereto, all contracts
and agreements for the purchase or sale of commodities or other personal
property related thereto, all leases of real or personal property related
thereto, and all other real and tangible and intangible personal property; each
individually, a "Subsequent Project."
"Subsidiary" means, with respect to any Person, (i) any corporation,
association, or other business entity (other than a partnership) of which more
than 50% of the total voting power of shares of capital stock entitled (without
regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time of determination owned or
controlled, directly or indirectly, by such Person or one or more of the other
Subsidiaries of that Person of a combination thereof and (ii) any partnership or
limited liability company of which more than 50% of the partnership's or limited
liability company's, as the case may be, capital accounts, distribution rights
or general or limited partnership interests or limited liability company
membership interests, as the case may be, are owned or controlled, directly or
indirectly, by such Person or one or more of the other Subsidiaries of that
Person or a combination thereof.
"Xxxxxx Affiliated Party Agreement Guaranty" means the Affiliated Party
Agreement Guaranty dated as of October 20, 1999 in substantially the form of
Exhibit D-2C to the Credit Agreement executed by Calpine in favor of Borrower.
"Xxxxxx Construction Contracts" means, collectively, (a) the Sutter
Construction Management Agreement, (b) the Xxxxxx Prime Construction Contract,
(c) the Xxxxxx Power Island Supply Contract and (d) any other contract or
agreement entered into by, or on behalf of, Borrower for the construction of all
or any portion of the Xxxxxx Project, or the supply or provision of any goods or
services relating to the construction of the Sutter Project.
"Xxxxxx Construction Management Agreement" means that certain Xxxxxx
Construction Management Agreement, dated as of October 20, 1999 between Borrower
and Calpine.
"Xxxxxx Deed of Trust" means the Deed of Trust, Assignment of Rents and
Security Agreement dated as of October 20, 1999 in substantially the form of
Exhibit D-3 to the Credit Agreement executed by Borrower, as trustor, to Xxxxxxx
Title Company, as trustee, in favor of Administrative Agent, as beneficiary.
"Xxxxxx Electric Interconnection Documents" means, collectively, (a) the
Design and Engineering Services for the Calpine Corporation, dated as of August
2, 1999 between United States Department of Energy Western Area Power
Administration Central Valley Project, the State of California and Borrower, (b)
Contract No. 99-SNR-00210 for Service Agreement for Long-Term Firm
Point-To-Point Transmission Service, dated as of August 30, 1999 between United
States Department of Energy Western Area Power Administration and Borrower, (c)
Xxxxxx Powerplant - Western Area Power Administration Interconnection
Feasibility Study, dated as of July 29, prepared by Western Area Power
Administration, Sierra Nevada Region and
00
000
(x) any other contract or agreement entered into by, or on behalf of, Borrower
for electrical interconnection services to the Sutter Project.
"Xxxxxx Environmental Report" means (a) the Phase I Environmental Site
Assessment at the proposed Sutter combined-cycle facility located at Xxxxxx
County, California, dated August 1999, prepared by Xxxxxx Xxxxxxx.
"Sutter Fuel Management Agreement" means the Xxxxxx Fuel Management
Agreement dated as of October 20, 1999, between Borrower and CPN Marketing
Company.
"Xxxxxx Gas Supply Agreement" means that certain Xxxxxx Gas Supply
Agreement, dated as of October 20, 1999 between Borrower and CPN Marketing
Company.
"Xxxxxx Gas Supply Contracts" means, collectively, (a) the Xxxxxx Gas
Supply Agreement and (b) and any other agreement or document entered into by or
on behalf of Borrower for the supply of fuel to the Xxxxxx Project.
"Xxxxxx Gas Transportation Agreements" means any agreement or document
entered into by or on behalf of Borrower for the supply of fuel transportation
services to the Sutter Project.
"Xxxxxx Maintenance Contract" means the Maintenance Contract dated as of
December 12, 1998 between Borrower and Siemens Westinghouse Power Corporation, a
Delaware corporation.
"Xxxxxx Operating and Maintenance Agreement" means the Xxxxxx Operation
and Maintenance Agreement dated as of October 20, 1999 between Borrower and
Calpine.
"Xxxxxx Power Island Supply Contract" means the Purchase Contract dated as
of December 16, 1998 between Borrower and Siemens Westinghouse Power
Corporation, a Delaware corporation.
"Sutter Power Marketing Agreement" means the Xxxxxx Power Marketing
Brokering and Services Agreement dated as of October 20, 1999 between Borrower
and CPSC.
"Xxxxxx Power Purchase Documents" means any contracts or agreements
entered into by Borrower for the sale of electric energy and/or capacity from
the Sutter Project.
"Xxxxxx Prime Construction Contract" means the Contract for Engineering,
Procurement and Construction dated as of June 1, 1999 between Borrower and
Xxxxxxx Power Corporation, a Nevada corporation.
"Xxxxxx Project" means, the approximately 500 MW (gross) combined cycle
facility located on the Xxxxxx Site, all as further described in Appendix G-1D
to the Credit Agreement, together with all buildings, structures or improvements
erected on the Xxxxxx Site and the Easements with respect to the Xxxxxx Site,
all alterations thereto or replacements thereof, all fixtures, attachments,
appliances, equipment, machinery and other articles attached thereto or
41
193
used in connection therewith and all Parts which may from time to time be
incorporated or installed in or attached thereto, all contracts and agreements
for the purchase or sale of commodities or other personal property related
thereto, all leases of real or personal property related thereto, and all other
real and tangible and intangible personal property owned by Borrower and placed
upon or used in connection with the electric and steam generation plant located
upon the Xxxxxx Site and the Easements with respect to the Xxxxxx Site.
"Xxxxxx Project Documents" means, collectively, the Sutter Construction
Contracts, the Xxxxxx Gas Supply Contracts, the Sutter Power Purchase Documents,
the Xxxxxx Operating and Maintenance Agreement, the Sutter Project Management
Agreement, the Xxxxxx Maintenance Contract, the Sutter Power Marketing
Agreement, the Xxxxxx Gas Transportation Agreements, the Sutter Fuel Management
Agreement, the Xxxxxx Affiliated Party Agreement Guaranty, the Xxxxxx Water
Documents, the Xxxxxx Electric Interconnection Documents, the Memorandum of
Understanding, dated as of March 30, 1999 between the County of Xxxxxx, the
State of California and Borrower, the Letter of Agreement No. 99-SNR-00184,
dated as of June 4, 1999 between United States Department of Energy Western Area
Power Administration and Borrower and any other agreement or document relating
to the development, construction or operation of the Xxxxxx Project to which
Borrower is a party.
"Xxxxxx Project Management Agreement" means that certain Xxxxxx Project
Management Agreement dated as of October 20, 1999 between Borrower and Calpine.
"Xxxxxx Site" has the meaning given in the Xxxxxx Deed of Trust (as it may
be amended from time to time).
"Xxxxxx Water Contracts" means any contract or agreement entered into by,
or on behalf of, Borrower for the supply or transportation of water to the
Xxxxxx Project.
"Taxes" has the meaning given in Section 2.6.4(a) of the Credit Agreement.
"Technical Committee" has the meaning given in Section 10.17 of the Credit
Agreement.
"Telerate Screen" means the display designated as Page 3750 on the Dow
Xxxxx Market Screen (or such page as may replace such page for the purpose of
displaying London Interbank offered rates of major banks, or, if discontinued,
any replacement service designated by Administrative Agent).
"Title Insurer" means, with respect to a Project, the title company
issuing a Title Policy pursuant to Section 3.1.27 or Section 3.3.29 of the
Credit Agreement.
"Title Policy" means, collectively, the title policies delivered by
Borrower pursuant to Sections 3.1.27 and 3.3.29 of the Credit Agreement.
"Total Letter of Credit Commitment" has the meaning given in Section 2.3.2
of the Credit Agreement.
42
194
"Total Loan Commitment" has the meaning given in Section 2.3.1 of the
Credit Agreement.
"Type" means the type of Loan, whether a Base Rate Loan or LIBOR Loan.
"UCC" means the Uniform Commercial Code of the jurisdiction the law of
which governs the document in which such term is used.
"Unfunded Subsequent Project" means a Subsequent Project other than a
Funded Subsequent Project.
"Waterfall Level" has the meaning given in Section 7.2.1 of the Credit
Agreement.
"Xxxxxxxxx Affiliated Party Agreement Guaranty" means the Affiliated Party
Agreement Guaranty dated as of October 20, 1999 in substantially the form of
Exhibit D-2D to the Credit Agreement executed by Calpine in favor of Borrower.
"Xxxxxxxxx Construction Contracts" means, collectively, (a) the Xxxxxxxxx
Turnkey Contract, (b) the Xxxxxxxxx Construction Management Agreement and (c)
any other contract or agreement entered into by, or on behalf of, Borrower for
the construction of all or any portion of the Xxxxxxxxx Project, or the supply
or provision of any goods or services relating to the construction of the
Xxxxxxxxx Project.
"Xxxxxxxxx Construction Management Agreement" means that certain Xxxxxxxxx
Construction Management Agreement, dated as of October 20, 1999 between Borrower
and Calpine Eastern Corporation.
"Xxxxxxxxx Deed of Trust" means the Deed of Trust, Assignment of Rents and
Security Agreement dated as of October 20, 1999 in substantially the form of
Exhibit D-3 to the Credit Agreement executed by Borrower, as trustor, to Land
America, as trustee, in favor of Administrative Agent, as beneficiary.
"Xxxxxxxxx Electric Interconnection Documents" means, collectively, (a)
Contract for Professional Services dated as of September 22, 1999 between E-PRO
Engineering & Environmental Consulting L.L.C. and Borrower and (b) any other
contract or agreement entered into by, or on behalf of, Borrower for electrical
interconnection services to the Xxxxxxxxx Project.
"Westbrook Environmental Report" means (a) the Phase I Environmental Site
Assessment at the proposed Westbrook combined-cycle facility located at
Cumberland County, Maine, dated June 1999, and (b) if one is prepared, the Phase
II Environmental Site Assessment at the proposed Westbrook combined-cycle
facility located at Cumberland County, Maine, dated April 1999, prepared by
Xxxxxxx Engineering.
"Westbrook Fuel Management Agreement" means the Westbrook Fuel Management
Agreement dated as of October 20, 1999 between Borrower and CPN East Fuels.
43
195
"Xxxxxxxxx Gas Supply Agreement" means that certain Xxxxxxxxx Gas Supply
Agreement, dated as of October 20, 1999 between Borrower and CPN East Fuels.
"Xxxxxxxxx Gas Supply Contracts" means, collectively, (a) the Xxxxxxxxx
Gas Supply Agreement and (b) any other agreement or document entered into by or
on behalf of Borrower for the supply of fuel to the Xxxxxxxxx Project.
"Xxxxxxxxx Gas Transportation Agreements" means, collectively, (a) the
Negotiated Service Agreement for Natural Gas Transportation Service, dated as of
July 9, 1999 between CMP Natural Gas, L.L.C. and Borrower and (b) any agreement
or document entered into by or on behalf of Borrower for the supply of fuel
transportation services to the Xxxxxxxxx Project.
"Xxxxxxxxx Maintenance Contract" means the Long Term Parts and Long Term
Service Contract dated as of February 5, 1999 between Borrower and General
Electric International.
"Xxxxxxxxx Operating and Maintenance Agreement" means the Xxxxxxxxx
Operation and Maintenance Agreement dated as of October 20, 1999 between
Borrower and Calpine Eastern Corporation.
"Xxxxxxxxx Power Marketing Agreement" means the Xxxxxxxxx Power Marketing
Agreement dated as of October 20, 1999 between Borrower and CPSC.
"Xxxxxxxxx Power Purchase Documents" means any contracts or agreements
entered into by Borrower for the sale of electric energy and/or capacity from
the Xxxxxxxxx Project.
"Xxxxxxxxx Project" means, the approximately 540 MW (gross) combined cycle
facility located on the Xxxxxxxxx Site, all as further described in Appendix
G-1C to the Credit Agreement, together with all buildings, structures or
improvements erected on the Xxxxxxxxx Site and the Easements with respect to the
Xxxxxxxxx Site, all alterations thereto or replacements thereof, all fixtures,
attachments, appliances, equipment, machinery and other articles attached
thereto or used in connection therewith and all Parts which may from time to
time be incorporated or installed in or attached thereto, all contracts and
agreements for the purchase or sale of commodities or other personal property
related thereto, all leases of real or personal property related thereto, and
all other real and tangible and intangible personal property owned by Borrower
and placed upon or used in connection with the electric and steam generation
plant located upon the Xxxxxxxxx Site and the Easements with respect to the
Xxxxxxxxx Site.
"Xxxxxxxxx Project Documents" means, collectively, the Xxxxxxxxx
Construction Contracts, the Xxxxxxxxx Gas Supply Contracts, the Xxxxxxxxx Power
Purchase Documents, the Xxxxxxxxx Operating and Maintenance Agreement, the
Xxxxxxxxx Project Management Agreement, the Xxxxxxxxx Maintenance Contract, the
Xxxxxxxxx Power Marketing Agreement, the Xxxxxxxxx Gas Transportation
Agreements, the Xxxxxxxxx Fuel Management Agreement, the Xxxxxxxxx Affiliated
Party Agreement Guaranty, the Xxxxxxxxx Water Documents, the
44
196
Westbrook Electric Interconnection Documents, the Joint Development Agreement,
dated as of December 29, 1997 between the City of Xxxxxxxxx, the State of Maine
and Borrower, the Credit Enhancement Agreement, dated as of June 28, 1999
between the City of Xxxxxxxxx, the State of Maine and Borrower and any other
agreement or document relating to the development, construction or operation of
the project to which Borrower is a party.
"Xxxxxxxxx Project Management Agreement" means that certain Xxxxxxxxx
Project Management Agreement dated as of October 20, 1999 between Borrower and
Calpine Eastern Corporation.
"Xxxxxxxxx Site" has the meaning given in the Xxxxxxxxx Deed of Trust (as
it may be amended from time to time).
"Xxxxxxxxx Water Contracts" means, collectively, (a) the Agreement (Sewage
Treatment), dated as of February 2, 1999 between the City of Xxxxxxxxx and
Borrower, (b) the Agreement (Water Supply), dated as of February 25, 1999, by
and between the Portland Water Authority and Borrower and (c) any other contract
or agreement entered into by, or on behalf of, Borrower for the supply or
transportation of water to the Xxxxxxxxx Project.
"Xxxxxxxxx Turnkey Contract" means that certain Contract Agreement, dated
as of February 5, 1999 between General Electric Company, a New York corporation
and Borrower.
"Working Capital Reserve Account" has the meaning given in Section 1.1 of
the Depositary Agreement.
"Working Capital Reserve Requirement" means an amount equal to the
anticipated O&M Costs (including fuel costs) for all Initial Projects and Funded
Subsequent Projects then in operation for a 45-day period.
45
197
RULES OF INTERPRETATION
1. The singular includes the plural and the plural includes the singular.
2. "or" is not exclusive.
3. A reference to a Governmental Rule includes any amendment or
modification to such Governmental Rule, and all regulations, rulings and other
Governmental Rules promulgated under such Governmental Rule.
4. A reference to a Person includes its permitted successors and permitted
assigns.
5. Accounting terms have the meanings assigned to them by GAAP, as applied
by the accounting entity to which they refer.
6. The words "include," "includes" and "including" are not limiting.
7. A reference in a document to an Article, Section, Exhibit, Schedule,
Annex or Appendix is to the Article, Section, Exhibit, Schedule, Annex or
Appendix of such document unless otherwise indicated. Exhibits, Schedules,
Annexes or Appendices to any document shall be deemed incorporated by reference
in such document. In the event of any conflict between the provisions of the
Credit Agreement (exclusive of the Exhibits, Schedules, Annexes and Appendices
thereto) and any Exhibit, Schedule or Annex thereto, the provisions of this
Credit Agreement shall control. A reference to any Exhibit, Schedule, Annex or
Appendix of the Credit Agreement shall mean such Exhibit, Schedule, Annex or
Appendix as, amended, modified or supplemented from time to time in accordance
with the Credit Agreement; provided, that no Exhibit, Schedule, Annex or
Appendix may be amended, modified or supplemented by Borrower except to the
extent specifically permitted in the Credit Agreement.
8. References to any document, instrument or agreement (a) shall include
all exhibits, schedules and other attachments thereto, (b) shall include all
documents, instruments or agreements issued or executed in replacement thereof,
and (c) shall mean such document, instrument or agreement, or replacement or
predecessor thereto, as amended, modified and supplemented from time to time and
in effect at any given time.
9. The words "hereof," "herein" and "hereunder" and words of similar
import when used in any document shall refer to such document as a whole and not
to any particular provision of such document.
10. References to "days" shall mean calendar days, unless the term
"Banking Days" shall be used. References to a time of day shall mean such time
in New York, New York, unless otherwise specified.
11. The Credit Documents are the result of negotiations between, and have
been reviewed by Borrower, Administrative Agent, the Lead Arrangers,
Co-Documentation Agents, LC Bank, Syndication Agent, Bookrunner each Bank and
their respective counsel.
46
198
Accordingly, the Credit Documents shall be deemed to be the product of all
parties thereto, and no ambiguity shall be construed in favor of or against
Borrower, Administrative Agent, the Lead Arrangers, Co-Arrangers,
Co-Documentation Agents, LC Bank, Syndication Agent, Bookrunner or any Bank
solely as a result of any such party having drafted or proposed the ambiguous
provision.
47
199
EXHIBIT B
to Credit Agreement
Note No. __
FORM OF NOTE
$______________ New York, New York
---------------
For value received, the undersigned CALPINE CONSTRUCTION FINANCE
COMPANY, L.P., a Delaware limited partnership ("Borrower"), promises to pay to
___________________ (the "Bank"), or order, at the office of _______ located at
______________________, Attn: ___________________, in lawful money of the United
States of America and in immediately available funds, the principal amount of
______________________ DOLLARS ($______________), or if less, the aggregate
unpaid and outstanding principal amount of Loans advanced by the Bank to
Borrower pursuant to that certain Credit Agreement, dated as of October 20, 1999
(the "Credit Agreement"), by and among Borrower, the financial institutions
listed on Exhibit H thereto, Credit Suisse First Boston, as Lead Arranger,
Syndication Agent and Bookrunner and The Bank of Nova Scotia, as Lead Arranger,
LC Bank and Administrative Agent, as the same may be amended from time to time,
and all other amounts owed by Borrower to the Bank hereunder.
This is one of the Notes referred to in the Credit Agreement and is
entitled to the benefits thereof and is subject to all terms, provisions and
conditions thereof. Capitalized terms used and not defined herein shall have the
meanings set forth in the Credit Agreement.
This Note is made in connection with and is secured by, among other
instruments, the provisions of the Collateral Documents. Reference is hereby
made to the Credit Agreement and the Collateral Documents for the provisions,
among others, with respect to the custody and application of the Collateral, the
nature and extent of the security provided thereunder, the rights, duties and
obligations of Borrower and the rights of the holder of this Note.
The principal amount hereof is payable in accordance with the Credit
Agreement, and such principal amount may be prepaid solely in accordance with
the Credit Agreement, including without limitation any prepayment fees and
premiums provided for therein.
Borrower further agrees to pay, in lawful money of the United States of
America and in immediately available funds, interest from the date hereof on the
unpaid and outstanding principal amount hereof until such unpaid and outstanding
principal amount shall become due and payable (whether at stated maturity, by
acceleration or otherwise) at the rates of interest and at the times set forth
in the Credit Agreement and Borrower agrees to pay other fees and costs as
stated in the Credit Agreement.
If any payment on this Note becomes due and payable on a date which is
not a Banking Day, such payment shall be made on the first succeeding, or next
preceding, Banking Day, in accordance with the terms of the Credit Agreement.
All Loans made by the Bank pursuant to the Credit Agreement and other
Credit Documents, and all payments and prepayments made on account of the
principal balance hereof shall be recorded by the Bank on the grid attached
hereto, provided that failure to make such a notation shall not affect or
diminish Borrower's obligation to repay all amounts due on this Note, as and
when due.
200
Upon the occurrence of any one or more Events of Default, all amounts
then remaining unpaid on this Note may become or be declared to be immediately
due and payable as provided in the Credit Agreement and other Credit Documents,
without notice of default, presentment or demand for payment, protest or notice
of nonpayment or dishonor, or notices or demands of any kind, all of which are
expressly waived by Borrower.
Recourse under this Note shall be limited as provided in Article 9 of
the Credit Agreement.
Borrower agrees to pay costs and expenses, including without limitation
attorneys' fees, incurred in connection with the interpretation or enforcement
of this Note, in accordance with the Credit Agreement.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
201
This Note has been executed and delivered in and shall be construed and
interpreted in accordance with and governed by the laws of the State of New
York, without reference to conflicts of laws (other than Section 5-1401 of the
New York General Obligations Law).
CALPINE CONSTRUCTION FINANCE COMPANY, L.P.,
a Delaware limited partnership
By: CALPINE CCFC GP, INC.,
a Delaware corporation,
its General Partner
By:
-----------------------------------
Name:
Title:
202
Prepayment or Outstanding
Date Advance Repayment Balance
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
203
EXHIBIT C-1
to Credit Agreement
FORM OF NOTICE OF BORROWING
---------------------------
(Delivered pursuant to Section 2.1.1(b)
of the Credit Agreement)
[Date]
Bank of Nova Scotia,
as Administrative Agent for the Banks
Xxx Xxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Manager, Project Finance
Re: CALPINE CONSTRUCTION FINANCE COMPANY PROJECTS
This Notice of Borrowing is delivered to you pursuant to Section
2.1.1(b) of the Credit Agreement dated as of October 20, 1999 ("Credit
Agreement"), among Calpine Construction Finance Company, L.P., a Delaware
limited partnership, as Borrower ("Borrower"), the financial institutions listed
on Exhibit H thereto (the "Banks"), Credit Suisse First Boston, as Lead
Arranger, Syndication Agent and Bookrunner and The Bank of Nova Scotia, as Lead
Arranger, LC Bank and Administrative Agent ("Administrative Agent"). All
capitalized terms used herein shall have the respective meanings specified in
Exhibit A to the Credit Agreement unless otherwise defined herein or unless the
context requires otherwise.
This Notice of Borrowing constitutes a request for a Borrowing of Loans
as set out below:
1. The requested date of the Borrowing is __________, ______, which
is a Banking Day.
2. The total amount of the requested Loans is $____________.
3. Borrower requests the following funding options:
a. Base Rate Loans amount: $_______________.
b. LIBOR Loans:
Amount Requested Initial Interest Period
$______ ________ months
$______ ________ months
$______ ________ months
204
The undersigned further confirms and certifies to Administrative Agent
and each Bank that (i) the requested Loans, when aggregated with all Loans and
Reimbursement Obligations then outstanding and the current Aggregated LC Stated
Amount, will not exceed the Total Loan Commitment, and (ii) the conditions set
forth in Article 3 of the Credit Agreement have been satisfied or waived in
accordance with the terms thereof.
CALPINE CONSTRUCTION FINANCE COMPANY, L.P.,
a Delaware limited partnership
By: CALPINE CCFC GP, INC.,
a Delaware corporation,
its General Partner
By:
----------------------------------
Name:
Title:
2
205
EXHIBIT C-2
to Credit Agreement
FORM OF CONFIRMATION OF INTEREST PERIOD SELECTION
-------------------------------------------------
(Delivered pursuant to Section 2.1.2(b)(ii)
of the Credit Agreement)
[Date]
The Bank of Nova Scotia
as Administrative Agent for the Banks
Xxx Xxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Manager, Project Finance
Re: Calpine Construction Finance Company Projects
This Confirmation of Interest Period Selection is delivered to you
pursuant to Section 2.1.2(b)(ii) of the Credit Agreement dated as of October 20,
1999 ("Credit Agreement"), among Calpine Construction Finance Company, L.P., a
Delaware limited partnership, as Borrower ("Borrower"), the financial
institutions listed on Exhibit H thereto (the "Banks"), Credit Suisse First
Boston, as Lead Arranger, Syndication Agent and Bookrunner and The Bank of Nova
Scotia, as Lead Arranger, LC Bank and Administrative Agent ("Administrative
Agent"). All capitalized terms used herein shall have the respective meanings
specified in Exhibit A to the Credit Agreement unless otherwise defined herein
or unless the context requires otherwise.
This Confirmation of Interest Period Selection relates to $ __________
of the LIBOR Loans with an Interest Period ending on ________. This Confirmation
of Interest Period Selection constitutes a confirmation that effective
__________, (which shall be the last day of an Interest Period):
1. The requested Interest Period for ___________ of such LIBOR
Loans shall be __ months.
This notice shall be effective only if delivered to Administrative Agent
as a Confirmation of Interest Period Selection made pursuant to Section
2.1.2(b)(ii) of the Credit Agreement.
206
The undersigned confirms and certifies to each Bank that as of the date
of this Confirmation of Interest Period Selection, no Event of Default or
Inchoate Default exists under the Credit Agreement.
CALPINE CONSTRUCTION FINANCE COMPANY, L.P.,
a Delaware limited partnership
By: CALPINE CCFC GP, INC.,
a Delaware corporation,
its General Partner
By:
---------------------------------
Name:
Title:
The undersigned acknowledges receipt of a copy of this
Confirmation of Interest Period Selection:
THE BANK OF NOVA SCOTIA, Date: __________, _____
as Administrative Agent for the Banks
By:
-------------------------------------------
Name:
Title:
207
EXHIBIT C-3
to Credit Agreement
FORM OF NOTICE OF CONVERSION OF LOAN TYPE
-----------------------------------------
(Delivered pursuant to Section 2.1.5
of the Credit Agreement)
[Date]
The Bank of Nova Scotia,
as Administrative Agent for the Banks
Xxx Xxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Manager, Project Finance
Re: Calpine Construction Finance Company Projects
1. Reference is hereby made to that certain Credit Agreement dated
as of October 20, 1999 ("Credit Agreement"), among Calpine Construction Finance
Company, L.P., a Delaware limited partnership, as Borrower ("Borrower"), the
financial institutions listed on Exhibit H thereto (the "Banks"), Credit Suisse
First Boston, as Lead Arranger, Syndication Agent and Bookrunner and The Bank of
Nova Scotia, as Lead Arranger, LC Bank and Administrative Agent ("Administrative
Agent"). All capitalized terms used herein shall have the respective meanings
specified in Exhibit A to the Credit Agreement unless otherwise defined herein
or unless the context requires otherwise.
2. Pursuant to Section 2.1.5 of the Credit Agreement, Borrower
hereby notifies Administrative Agent:
(a) the conversion of $_______________ of such Loans from a
[BASE RATE/LIBOR] Loan to a [LIBOR/BASE RATE] Loan;
(b) that the effective date of the conversion shall be
___________, which is a Banking Day and which shall be the first day
after the last day of an Interest Period if converting from LIBOR Loans;
(c) if converting to LIBOR Loans, the following Interest
Periods are selected:
Amount Requested Initial Interest Period
$_________ ________ months
$_________ ________ months
$_________ ________ months
208
IN WITNESS WHEREOF, Borrower has executed this Notice of Conversion of
Loan Type on the date set forth above.
CALPINE CONSTRUCTION FINANCE COMPANY, L.P.,
a Delaware limited partnership
By: CALPINE CCFC GP, INC.,
a Delaware corporation,
its General Partner
By:
----------------------------------
Name:
Title:
The undersigned acknowledges receipt of a copy of this Notice of
Conversion of Loan Type:
THE BANK OF NOVA SCOTIA, Date: __________, _____
as Administrative Agent for the Banks
By:
----------------------------------------
Name:
Title:
209
EXHIBIT C-4
to Credit Agreement
FORM OF NOTICE OF LC ACTIVITY
-----------------------------
(Delivered pursuant to Section 2.2.3
of the Credit Agreement)
[Date]
Bank of Nova Scotia,
as Administrative Agent for the Banks
Xxx Xxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Manager, Project Finance
Re: Calpine Construction Finance Company Projects
This Notice of LC Activity is delivered to you pursuant to Section 2.2.3
of the Credit Agreement dated as of October 20, 1999 ("Credit Agreement"), among
Calpine Construction Finance Company, L.P., a Delaware limited partnership, as
Borrower ("Borrower"), the financial institutions listed on Exhibit H thereto
(the "Banks"), Credit Suisse First Boston, as Lead Arranger, Syndication Agent
and Bookrunner and The Bank of Nova Scotia, as Lead Arranger, LC Bank and
Administrative Agent ("Administrative Agent"). All capitalized terms used herein
shall have the respective meanings specified in Exhibit A to the Credit
Agreement unless otherwise defined herein or unless the context requires
otherwise.
1. We request that a/the [SPECIFY LETTER OF CREDIT] be [ISSUED]
[EXTENDED] [INCREASED] as provided below.
2. The Letter of Credit relates to the _______ Project.
3. The issue date of the Letter of Credit is __________________,
and the [EXTENDED] Expiration Date of the Letter of Credit is ________________,
neither of which is later than the Loan Maturity Date.
4. [THE STATED AMOUNT OF THE LETTER OF CREDIT IS $_____________] or
[WE REQUEST THAT THE STATED AMOUNT OF THE LETTER OF CREDIT BE INCREASED FROM
$________ TO $_________] which, together with the Aggregate LC Stated Amount and
all outstanding Reimbursement Obligations thereunder, does not exceed the lesser
of (i) the Total Letter of Credit Commitment and (ii) an amount equal to the
excess, if any, of (a) the amount of the Total Loan Commitment at such time over
(b) the aggregate principal amount of all Loans then outstanding plus the
Aggregate LC Stated Amount and all outstanding Reimbursement Obligations.
210
5. The Available Construction Funds, after taking into effect the
issuance of the Letter of Credit requested hereby, will be equal to or exceed
the remaining Project Costs of all Initial Projects and Funded Subsequent
Projects then under construction.
6. Administrative Agent is instructed to deliver the [LETTER OF
CREDIT] [NOTICE OF EXTENSION] [NOTICE OF INCREASE IN STATED AMOUNT] to ________,
[THE LC BENEFICIARY] [BORROWER], at [ADDRESS].
The undersigned further confirms and certifies to Administrative Agent
and each Bank that the Letter of Credit requested hereby shall only be used in
the manner and for the purposes specified and permitted by the Credit Agreement,
and that, as of the date of the issuance of such Letter of Credit, the
conditions set forth in Section 3.6 of the Credit Agreement have all been
satisfied or waived in accordance with the terms thereof.
CALPINE CONSTRUCTION FINANCE COMPANY, L.P.,
a Delaware limited partnership
By: CALPINE CCFC GP, INC.,
a Delaware corporation,
its General Partner
By:
-----------------------------------
Name:
Title:
211
EXHIBIT C-5
to Credit Agreement
FORM OF DRAWDOWN CERTIFICATE
(Delivered pursuant to Section 3.4.3
of the Credit Agreement)
Date: [__________, ____]
Drawdown Date: [__________, ____]
The Bank of Nova Scotia,
as Administrative Agent for the Banks
Xxx Xxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Manager, Project Finance
Ladies and Gentlemen:
1. This Drawdown Certificate is delivered to you pursuant to
Section 3.4.3 of that certain Credit Agreement dated as of October 20, 1999
("Credit Agreement"), among Calpine Construction Finance Company, L.P., a
Delaware limited partnership, as Borrower ("Borrower"), the financial
institutions listed on Exhibit H thereto (the "Banks"), Credit Suisse First
Boston, as Lead Arranger, Syndication Agent and Bookrunner and The Bank of Nova
Scotia, as Lead Arranger, LC Bank and Administrative Agent ("Administrative
Agent"). Unless otherwise defined herein, all capitalized terms used herein
shall have the respective meanings specified in Exhibit A to the Credit
Agreement.
2. We have read the provisions of the Credit Agreement which are
relevant to the furnishing of this Drawdown Certificate. To the extent that this
Drawdown Certificate evidences, attests or confirms compliance with any
covenants or conditions precedent provided for in the Credit Agreement, we have
made such examination or investigation as was, in our opinion, necessary to
enable us to express an informed opinion as to whether such covenants or
conditions have been complied with. This Drawdown Certificate relates to a
Borrowing or other disbursement to take place on the Drawdown Date.
3. This Drawdown Certificate relates to the
________________________ Project (the "Project").
4. BORROWER HEREBY CERTIFIES THAT, as of the date hereof:
4.1 The Project Costs for the Project incurred through the
immediately preceding Drawdown Date by or on behalf of Borrower and for which a
Drawdown Certificate has previously been submitted by Borrower are $__________,
segregated by major categories as described in Column A of Appendix I hereto.
212
4.2 The Project Costs for the Project to be paid with the
funds requested by this Drawdown Certificate for the current month are
$___________, segregated by major categories as described in Column B of
Appendix I hereto. Of such Project Costs, $__________ will be paid through the
application of Contributions pursuant to Section 3.8 of the Credit Agreement,
$__________ will be paid through the application of Contributions pursuant to
Section 5.17.1 of the Credit Agreement, $___________ will be paid through the
application of Additional Borrower Equity and $_________ will be paid through
the application of Loans. All items shown in Column B represent work that has
been satisfactorily performed in a good and workmanlike manner and in
conformance with the Project's Construction Contracts or materials that have
been supplied and delivered to the Project's Site prior to the date of this
Certificate, or Borrower's best estimate of fuel and other O&M Costs related to
startup and testing of the Project which will become due and payable on the
Drawdown Date or within thirty (30) days thereafter.
4.3 The estimated dates of Completion and Final Completion
for the Project are set forth on Appendix II hereto.
4.4 The estimated Project Costs to Final Completion for the
Project are _________, segregated by major categories and described in Column N
of Appendix I hereto. The aggregate amount of Project Costs for the Project will
not exceed 110% of the anticipated aggregate amount of such Project Costs for
the Project as set forth in the Project's Project Budget. The aggregate amount
of Project Costs for all Initial Projects and Funded Subsequent Projects under
construction as of the date hereof will not exceed 105% of the anticipated
aggregate amount of Project Costs for such Projects as set forth in such
Projects' Project Budgets. [MODIFY THIS CERTIFICATION IF NECESSARY IN ACCORDANCE
WITH THE LAST CLAUSE OF SECTION 3.4.3 OF THE CREDIT AGREEMENT.]
4.5 A detailed description of the variances from the
estimated Project Costs for the Project as of the date of the Credit Agreement
is summarized in Appendix III hereto.
4.6 The Available Construction Funds are sufficient to pay
all remaining Project Costs for all Initial Projects and Funded Subsequent
Projects under construction as of the date hereof (after giving effect to any
other Drawdown Certificates delivered as of the date hereof).
4.7 There has not occurred any development which materially
adversely affects the likelihood of the Project achieving Completion on or
before the Loan Maturity Date.
4.8 No Event of Default or Inchoate Default or, with respect
to the Project, Non-Fundamental Project Default or Non-Fundamental Project
Inchoate Default has occurred and is continuing.
4.9 All proceeds of all Loans and other amounts deposited
into the Project's Construction Sub-Account on or prior to the date hereof,
except for $_________ remaining in the Project's Construction Sub-Account since
the date of the last Drawdown Certificate, have been expended and have been
applied to Project Costs for the Project in accordance with the applicable
Construction Contracts, the applicable Project Documents or the Credit
Agreement.
4.10 All insurance required under the Credit Agreement is in
place, in good standing and in full force and effect and all premiums due
thereon have been paid.
2
213
4.11 Except for the Permits detailed in Part II(A) or II(B)
of Exhibit G-3_________ to the Credit Agreement, and Permits identified in any
previous Drawdown Certificates, no other Permits on the part of Borrower or any
Major Project Participant are presently required in connection with the
construction and operation of the Project (other than any which have been
obtained).
4.12 Except as set forth in Exhibit G-3__, each Applicable
Permit and Applicable Third Party Permit with respect to the Project has been
issued, is in full force and effect and is not subject to any current legal
proceedings, or to any unsatisfied condition that could allow modification or
revocation and all applicable appeal periods have expired with respect thereto.
4.13 With respect to any of the Permits not yet obtained and
listed in Part II(A) or II(B) of Exhibit G-3________, to Borrower's knowledge,
no facts or circumstances exist which indicate that any such Permit will not be
timely obtainable at a cost consistent with the Project's Project Budget without
material difficulty or delay by Borrower or the applicable Major Project
Participant, respectively, prior to the time that it becomes an Applicable
Permit or an Applicable Third Party Permit, as applicable.
4.14 All of the Operative Documents executed and delivered
with respect to the Project on or prior to the date of the Borrowing requested
by this Drawdown Certificate are in full force and effect without change or
amendment since the respective dates of their execution and delivery in a form
which was approved by Administrative Agent, except as consented to in writing by
Administrative Agent to the extent required under the Credit Agreement or as
otherwise permitted by the Credit Agreement. Borrower is not in default under
any term of any Project Document with respect to the Project and, to the best of
Borrower's knowledge, no other party to such a Project Document is in default
thereunder except, in either case, where such default could not reasonably be
expected to have a Material Adverse Effect on the Project.
4.15 The Project has not been abandoned or terminated.
4.16 Borrower has not incurred or permitted to exist any
Liens (other than Permitted Liens) on the Project or the Mortgaged Property with
respect to the Project or any part thereof or on any other assets of Borrower,
except as permitted under the Credit Agreement. No Liens, claims of Lien,
attachments or similar claims (including without limitation mechanic's and
materialman's liens) have been recorded or filed with respect to the Project or
the Mortgaged Property with respect to the Project or any part thereof, except
Permitted Liens or Permitted Encumbrances, as the case may be, and such Liens,
claims of Lien, attachments or similar claims as will be released, removed and
discharged from the funds requested by this Drawdown Certificate and the
corresponding Notice of Borrowing.
4.17 There are no pending or, to the best knowledge of
Borrower, threatened actions or proceedings of any kind, including actions or
proceedings of or before any Governmental Authority, to which Borrower, any
Partner, Calpine, Construction Manager, Project Manager or Operator or, to the
best knowledge of Borrower, any other Major Project Participant with respect to
the Project, or by which any of them or any of their properties or the Project
are bound, which if adversely determined to or against Borrower, any Partner,
Calpine, any other such Major Project Participant or the Project could
reasonably be expected to have a Material Adverse Effect on Borrower or the
Project, except as permitted pursuant to the terms of the Credit Agreement.
3
214
4.18 Borrower has not waived performance or released from
liability any party to any Operative Document with respect to the Project except
with the consent of Administrative Agent or as otherwise permitted by the Credit
Agreement.
4.19 Attached to this Drawdown Certificate as Appendix IV are
complete and accurate listings of all material contracts entered into by
Borrower from the last day of the month preceding the date of the last Drawdown
Certificate to the last day of the month preceding the date hereof with respect
to the Project.
4.20 Borrower has obtained and is delivering to
Administrative Agent concurrently herewith a datedown endorsement to the Title
Policy with respect to the Project to the date the Loans requested hereby are to
be made, extending the coverage of Title Policy to such date, including all
Borrowings and extensions of credit made to and including such date, insuring
that the Lien of the Deed of Trust with respect to the Project on the Mortgaged
Property with respect to the Project is prior to any liens, encumbrances or
other matters except Permitted Encumbrances and Permitted Liens described in
clauses (a), (b) or (c) of the definition thereof.
4.21 All property, rights and assets acquired for the Project
are free and clear of all encumbrances except for Permitted Liens or as
otherwise permitted by the Credit Agreement.
4.22 All of the representations of Borrower contained in the
Credit Agreement are true and correct to the extent provided therein on and as
of the Drawdown Date with the same effect as if given on the date hereof (except
to the extent such representations and warranties relate to a prior date).
4.23 A list of all approved, pending and proposed change
orders to the Construction Contracts since the previous Drawdown Certificate
pertaining to the Project, together with copies of all such change orders not
previously delivered to the Administrative Agent, is attached hereto as Appendix
V.
4.24 Attached hereto (if funds are being requested with
respect to any Construction Contract) as Attachment A and delivered herewith is
a duly executed and completed Contractor's Certificate and a copy of the
information delivered to Borrower pursuant to [INSERT PROVISIONS OF APPLICABLE
CONSTRUCTION CONTRACT], including the Monthly Progress Report prepared
thereunder for the month to which this Drawdown Certificate relates.
4.25 The conditions set forth in Section 3.4 of the Credit
Agreement are satisfied or have been waived in writing by Administrative Agent
as of the date hereof and as of the date of the requested draw.
4
215
IN WITNESS WHEREOF, Borrower has executed this Drawdown
Certificate as of the date hereof.
CALPINE CONSTRUCTION FINANCE COMPANY, L.P.,
a Delaware limited partnership
By: CALPINE CCFC GP, INC.,
a Delaware corporation,
its General Partner
By:
----------------------------------
Name:
Title:
216
Appendix I
to Exhibit C-5
(Millions $)
Current
Bank
Prior This Cum. Scheduled Closing Approved
Req. Req. Req. Req. Variance Budget Budget
--- ---- ---- --- -------- ------ ------
A B C=(A+B) D E=(C-D) F G
[Example Only - Actuals to
Conform to Operating
Budget]
SYSTEM COSTS
Interest on Draw
Sales Tax
Subtotal
--------------------------------------------------------------------------------
OWNER COSTS
Financing & Legal
Engineering
Administration
Working Capital
Total Owner Costs
--------------------------------------------------------------------------------
OTHER OWNER COSTS
Insurance
Interconnection Costs
Start-Up Cost &
Inventory
Taxes
Other Costs
Interest During
Construction
Bonuses
Contingency
Total Other Owner Costs
TOTAL FACILITY COSTS
LETTERS OF CREDIT
TOTAL
--------------------------------------------------------------------------------
Current
Estimated Expected
Prior Equity Scheduled Total Balance
Equity This Cum. Equity Equity Project to
Req. Month Equity Req. Var. Cost Completion
--- ----- ------ ---- ---- ---- ----------
H I J K L=(J-K) M N=M-(J+C)
[Example Only - Actuals to
Conform to Operating
Budget]
SYSTEM COSTS
Interest on Draw
Sales Tax
Subtotal
--------------------------------------------------------------------------------
OWNER COSTS
Financing & Legal
Engineering
Administration
Working Capital
Total Owner Costs
--------------------------------------------------------------------------------
OTHER OWNER COSTS
Insurance
Interconnection Costs
Start-Up Cost &
Inventory
Taxes
Other Costs
Interest During
Construction
Bonuses
Contingency
Total Other Owner Costs
TOTAL FACILITY COSTS
LETTERS OF CREDIT
TOTAL
--------------------------------------------------------------------------------
I-1
217
Appendix II
to Exhibit C-5
Estimated Dates of Completion and Final Completion
Completion: _________
Final Completion: _________
II-1
218
Appendix III
to Exhibit C-5
Summary description of variances from estimated Project Costs.
Variation Amount
--------- ------
0 0
TOTAL $0
III-1
219
Appendix IV
to Exhibit C-5
Material Contracts entered into by Borrower and property,
rights and assets acquired from date of previous Drawdown Certificate to the
date hereof.
IV-1
220
Appendix V
to Exhibit C-5
List of Change Orders
V-1
221
ATTACHMENT A TO
BORROWER'S DRAWDOWN CERTIFICATE
CONTRACTOR'S CERTIFICATE
Pursuant to Section ____ of that certain ________________________
Contract (the "Contract") by and between Calpine Construction Finance Company,
L.P., a Delaware limited partnership, and ______________________ ("Contractor"),
Contractor hereby certifies, to the Contractor's knowledge as of the date
hereof, that (all capitalized terms have the meanings ascribed in the Contract
unless otherwise indicated):
1. This attachment refers to the __________________________ Project
(the "Project").
2. The Work performed to date has, unless otherwise stated by
Contractor, been performed in accordance with the Contract and
the schedule in effect on the date hereof as referenced in
Article ____ of the Contract. Invoices submitted, including the
current invoice, are in accordance with Section ___ and Exhibit
____ of the Contract.
3. To the Contractor's knowledge, no event currently exists with
respect to the Contract which reasonably could be expected to
delay the [MECHANICAL COMPLETION DATE BEYOND THE SCHEDULED
MECHANICAL COMPLETION DATE].
4. To the Contractor's knowledge, all insurance required from
Contractor under the Contract has been bound and is in place and
is in full force and effect.
5. Schedule I hereto is a list of each first tier
Subcontractor/Supplier engaged or employed by Contractor in
connection with the construction of the Project whose contract
or contracts with the Contractor require payments totaling at
least $______________.
6. Contractor has been paid all amounts due to it under the
Contract and all Subcontractor/Suppliers engaged or employed by
Contractor have been paid to the extent that such amounts are
due or such payment (or a portion thereof) is subject to a good
faith contest which is being diligently pursued by the
Contractor (in each case, other than amounts to be paid with the
proceeds of the drawdown related to this certificate).
7. There is no material adverse change in the condition of the
Contractor which in the reasonable judgment of the Contractor
would be likely to materially adversely affect the Contractor's
ability to perform the Work.
8. To the Contractor's knowledge, the Project has not been
abandoned or terminated.
By furnishing this Contractor's Certificate, Contractor assumes no
independent liability to recipients of the same. Any liability of the
undersigned arising from this Contractor's Certificate shall be governed
exclusively by the terms of the Contract including any limitations of liability
and exclusive remedy provisions therein.
A-1
222
IN WITNESS WHEREOF, the undersigned have executed this Contractor's
Certificate as of the ___ of _______________, 199__.
-----------------------------------
By:
--------------------------------
Name:
Its:
Attachments:
Schedule I -- List of Subcontractor/Suppliers
A-2
223
EXHIBIT C-6
to Credit Agreement
FORM OF ENGINEER'S CERTIFICATE
[LETTERHEAD OF X.X. XXXX, INC.]
(Delivered pursuant to Section 3.4.3)
The Bank of Nova Scotia, Date: _____________________
as Administrative Agent for the Banks Drawdown Date: _________________
Xxx Xxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Manager, Project Finance
Re: Calpine Construction Finance Company Projects
Ladies and Gentlemen:
X.X. Xxxx, Inc. ("Independent Engineer"), pursuant to Section 3.4.3 of
the Credit Agreement dated as of October 20, 1999 ("Credit Agreement"), among
Calpine Construction Finance Company, L.P., a Delaware limited partnership, as
Borrower ("Borrower"), the financial institutions listed on Exhibit H thereto
(the "Banks"), Credit Suisse First Boston, as Lead Arranger, Syndication Agent
and Bookrunner and The Bank of Nova Scotia, as Lead Arranger, LC Bank and
Administrative Agent ("Administrative Agent"), hereby makes the following
statements, with respect to the _______ Project (the "Project") as of
___________________.
1. We have read the provisions of Section 3.4.3 of the Credit
Agreement as it identifies the responsibilities of the Independent
Engineer related to providing this Independent Engineer's
Certificate.
2. All defined terms set forth in this Independent Engineer's
Certificate shall have respective meanings specified in Exhibit A
to the Credit Agreement unless otherwise defined herein.
3. We have reviewed the material and data made available to us by the
Contractors with respect to the Project and Borrower since the
date of the last Drawdown Certificate with respect to the Project,
consisting of: the Drawdown Certificate with respect to the
Project, dated ________________, and the Appendices and other
items attached thereto; drawings and specifications prepared by
________________ and ________________; and work progress documents
consisting of ________________. We have also observed the status
of construction progress and startup activities at the Project's
Site (the "Site"). Our review and observations were performed in
accordance with generally accepted consulting practices consisting
of a walk-through of such Site conducted on ____________, _____,
observation of installed equipment and material, observation of
work procedures, review of ["QA"] and ["QC"] reports as made
available by the Contractors with respect to the Project and
attendance of the construction monthly progress review meeting
with respect to the Project. We have reviewed paragraphs 4.1
through 4.7, 4.9, 4.11 through 4.13 and 4.15 of the Drawdown
Certificate with respect
224
to the Project (the "Current Drawdown Certificate"), dated
________________ (the "Drawdown Date"), and we have previously
reviewed the corresponding paragraphs of all previous Drawdown
Certificates with respect to the Project. We have also reviewed
the materials attached to the Current Drawdown Certificate as
Attachment A, including each monthly progress report submitted
pursuant to each Construction Contract with respect to the Project
(the "Current Contractor Certificates"), and we have reviewed the
contractor certificates submitted with all previous Drawdown
Certificates with respect to the Project. We have also reviewed
the following additional material:___________________.
4. To the extent practical, we have periodically reviewed the
progress of engineering, procurement and construction for the
Project and in the course of this review we have not discovered
any errors or omissions in the claims for materials that have been
procured and work performed under this and all previous
Borrowings.
5. Based on our review of the aforementioned information, and of data
provided to us by others which we have not independently verified,
we are of the opinion that, as of Drawdown Date:
a. The estimated Project Costs to Final Completion [are/are
not] as set forth in the Current Drawdown Certificate. [IF
NOT, CONTINUE AS FOLLOWS: IN OUR OPINION, THE ESTIMATED
PROJECT COSTS TO FINAL COMPLETION VARY FROM THE ESTIMATED
PROJECT COSTS SET FORTH IN THE CURRENT DRAWDOWN CERTIFICATE
BECAUSE: [(STATE REASONS)];
b. THE AGGREGATE AMOUNT OF PROJECT COSTS FOR THE PROJECT WILL
NOT EXCEED 110% OF THE ANTICIPATED AGGREGATE AMOUNT OF SUCH
PROJECT COSTS FOR THE PROJECT AS SET FORTH IN THE PROJECT'S
PROJECT BUDGET.
c. THE AGGREGATE AMOUNT OF PROJECT COSTS FOR ALL INITIAL
PROJECTS AND FUNDED SUBSEQUENT PROJECTS UNDER CONSTRUCTION
AS OF THE DATE HEREOF WILL NOT EXCEED 105% OF THE
ANTICIPATED AGGREGATE AMOUNT OF PROJECT COSTS FOR ALL SUCH
PROJECTS AS SET FORTH IN SUCH PROJECTS' PROJECT BUDGETS.
[IF THE AGGREGATE AMOUNT OF PROJECT COSTS FOR THE PROJECT
EXCEEDS 110% OF THE ANTICIPATED AGGREGATE AMOUNT OF SUCH
PROJECT COSTS, THEN CONTINUE AS FOLLOWS:]
[__. WE CONFIRM THAT THE COST OVERRUNS WITH RESPECT TO THE
PROJECT ARE NOT REASONABLY LIKELY TO EXCEED $______.]
[__. THE AGGREGATE AMOUNT OF PROJECT COSTS FOR ALL INITIAL
PROJECTS AND FUNDED SUBSEQUENT PROJECTS UNDER CONSTRUCTION
AS OF THE DATE HEREOF, AFTER GIVING EFFECT TO ANY FURTHER
CONTEMPLATED OVERRUNS WITH RESPECT TO THE PROJECT, WILL NOT
EXCEED 105% OF THE ANTICIPATED AGGREGATE AMOUNT OF PROJECT
COSTS FOR ALL SUCH PROJECTS AS SET FORTH IN SUCH PROJECTS'
PROJECT BUDGETS.]
d. Completion with respect to the Project will occur on or
before the Date Certain.
2
225
e. Our scope of review [has/has not] brought to our actual
attention any errors in the information contained in the
paragraphs of the Current Drawdown Certificate or in the
Current Contractor Certificate referred to in paragraph 3
of this Independent Engineer's Certificate. [SPECIFY ALL
PARAGRAPHS CONSIDERED CORRECT. IF ANY PARAGRAPH IN THE
CURRENT DRAWDOWN CERTIFICATE OR INFORMATION IN THE CURRENT
CONTRACTOR CERTIFICATE IS INCORRECT, LIST AND SPECIFY
REASONS.]
f. Except for the Applicable Permits detailed in Exhibit
G-3_____, to our knowledge, no other Permits or
governmental authorizations are required in connection with
the construction and operation of the Project;
g. The quality of construction performed with respect to the
Project during the period covered by this Independent
Engineer's Certificate is [SATISFACTORY/UNSATISFACTORY] and
[APPEARS TO HAVE BEEN/DOES NOT APPEAR TO HAVE BEEN]
performed in a good and workmanlike manner and in
conformance with the Construction Contracts with respect to
the Project; [IF UNSATISFACTORY, SPECIFY REASONS.]
h. The work accomplished with respect to the Project during
the period covered by this Independent Engineer's
Certificate [IS/IS NOT] in accordance with the Project's
Project Schedule; and [IF NOT IN ACCORDANCE WITH SCHEDULE,
SPECIFY REASONS.]
i. After giving effect to the Borrowings requested by the
Current Drawdown Certificate, we estimate Available
Construction Funds to be sufficient to pay remaining
Project Costs for all Initial Projects and Funded
Subsequent Projects under construction as of the date
hereof (after giving effect to any other Drawdown
Certificates delivered to Administrative Agent as of the
date hereof).
6. To the best of our knowledge, there are no approved or material
proposed change orders which are not listed on Appendix V to the
Current Drawdown Certificate or that have not been listed in a
previous Drawdown Certificate.
7. Without having specifically reviewed the matter, the undersigned
does not know of any pending or proposed changes in any codes or
regulations affecting the design, construction or use of the
Project which would affect completion of the Project or the
ability to obtain any certificates or permits necessary for the
use and operation of the Project.
Except as specified above, the undersigned has not discovered any error
in the matters set forth in the Current Drawdown Certificate or Current
Contractor Certificate that are within its scope of work.
3
226
The information contained herein is for the benefit of Administrative
Agent and the Banks and may be relied upon for the purposes of making Loans
pursuant to the Credit Agreement.
X.X. XXXX, INC.,
a Washington corporation
By:
---------------------------------
Name:
Title:
227
EXHIBIT C-7
to Credit Agreement
FORM OF DISBURSEMENT REQUISITION
(Delivered pursuant to Section 7.2.2 [AND SECTION 7.2.3]
of the Credit Agreement)
[Date]
The Bank of Nova Scotia
as Administrative Agent for the Banks
Xxx Xxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Manager, Project Finance
Re: Calpine Construction Finance Company Projects
This Disbursement Requisition is delivered to you pursuant to Section
7.2.2 [AND SECTION 7.2.3] of the Credit Agreement dated as of October 20, 1999
("Credit Agreement"), among Calpine Construction Finance Company, L.P., a
Delaware limited partnership, as Borrower ("Borrower"), the financial
institutions listed on Exhibit H thereto (the "Banks"), Credit Suisse First
Boston, as Lead Arranger, Syndication Agent and Bookrunner and The Bank of Nova
Scotia, as Lead Arranger, LC Bank and Administrative Agent ("Administrative
Agent"). All capitalized terms used herein shall have the respective meanings
specified in Exhibit A to the Credit Agreement unless otherwise defined herein
or unless the context requires otherwise.
This Disbursement Requisition constitutes, with respect to the _______
Project (the "Project"), [(a)] a request for a transfer of Senior O&M Costs from
the Revenue Account to the Operating Account as described in Section 7.2.2 of
the Credit Agreement [AND (b) A REQUEST FOR PAYMENT OF SUBORDINATED O&M COSTS AS
DESCRIBED IN SECTION 7.2.3 OF THE CREDIT AGREEMENT], [EACH] as further described
below:
1. DISBURSEMENT DATE
1.1 [IF THE DISBURSEMENT REQUISITION IS FOR SENIOR O&M COSTS ONLY,
INSERT: THE DISBURSEMENT DATE IS [LAST BANKING DAY OF EACH MONTH].]
[IF THE DISBURSEMENT REQUISITION INCLUDES PAYMENT OF
SUBORDINATED O&M COSTS, INSERT: [THE DISBURSEMENT DATE IS THE LAST DAY OF A
CALENDAR QUARTER].]
2. AMOUNT
2.1 Amount of Senior O&M Costs to be transferred to the Project's
Operating Sub-Account: $___________.
2.2 [AMOUNT OF SUBORDINATED O&M COSTS: $___________.]
228
3. BORROWER HEREBY CONFIRMS AND CERTIFIES THAT, as of the date hereof:
3.1 The O&M Costs with respect to the Project incurred during
the present fiscal year of the Borrower through the
immediately preceding date of disbursement from the Revenue
Account pursuant to Sections 7.2.2 and 7.2.3 of the Credit
Agreement by or on behalf of Borrower are $___________,
segregated by major categories as described in Column 1 on
Appendix I hereto.
3.2 The O&M Costs with respect to the Project expected to be
paid with this disbursement are $__________, segregated by
major categories as described in Column 5 on Appendix I
hereto. All items shown in Column 5 represent Borrower's
best estimate of O&M Costs with respect to the Project
which have become, or are anticipated to become, due and
payable during the calendar month to which this
Disbursement Requisition relates. [OF THE AMOUNTS SHOWN IN
COLUMN 5, ALL REPRESENT WORK OR AMOUNTS INCLUDED IN THE
PROJECT'S ANNUAL OPERATING BUDGET/$___________ REPRESENT
WORK OR AMOUNTS NOT INCLUDED IN THE PROJECT'S ANNUAL
OPERATING BUDGET].
3.3 No Event of Default or Inchoate Default or, with respect to
the Project, Non-Fundamental Project Default or
Non-Fundamental Project Inchoate Default has occurred and
is continuing or will occur upon giving effect to the
application of the disbursement requested hereby.
3.4 Except as specified below, all proceeds of all
disbursements from the Project's Revenue Sub-Account made
prior to the date hereof for O&M Costs with respect to the
Project have been expended and have been applied to O&M
Costs with respect to the Project in accordance with the
Credit Agreement. [LIST ANY EXCEPTIONS]
3.5 Attached to this Disbursement Requisition as Appendix II
are true, complete and correct listings of all Additional
Project Documents with respect to the Project and all
material property, rights and assets acquired by Borrower
with respect to the Project since the date of the last
Disbursement Requisition with respect to the Project to the
date hereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
2
229
IN WITNESS WHEREOF, the undersigned has executed and delivered this
Disbursement Requisition on the date shown above.
CALPINE CONSTRUCTION FINANCE COMPANY, L.P.,
a Delaware limited partnership
By: CALPINE CCFC GP, INC.,
a Delaware corporation,
its General Partner
By:
-----------------------------------
Name:
Title:
230
APPENDIX I
To Exhibit C-7
CALPINE CONSTRUCTION FINANCE COMPANY, L.P., a Delaware limited partnership
Disbursement Request for the month of _____________, 19__
with respect to the _______ Project
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)
[Example Only - the lesser of (5) + (1) (2 + 4) (7)-(8)
Actuals to CURRENT 4 or 5-3
Conform to EXPENDITURES DISBURSEMENTS O&M BUDGET MONTH'S (<= (4))*
Categories Set TO LAST TO LAST REMAINING AMOUNT FOR EXPENDITURES NET TOTAL O&M TOTAL O&M OVER %
Forth in DISBURSEMENT DISBURSEMENT RESIDUAL/ CURRENT DUE AND DISBURSEMENT COSTS O&M (UNDER) OVER/
Operating Budget] DATE DATE (SHORTFALL) MONTH PAYABLE REQUEST TO DATE BUDGET RUN (UNDER)
O&M Labor
Fuel
Water
Supplies
General &
Administrative
Management Fee
Routine
Maintenance
Ground Lease
Payments
[ ]
[ ]
[ ] Facility
Operating Expense
Facility Expense
Insurance
Property Taxes
Sales Tax
Parcel Tax
Contingency
[CONFORM ABOVE TO
OPERATING
BUDGET LINE ITEMS]
---- ---- ---- ----- ---- ---- ---- ---- ----
TOTAL
==== ==== ==== ==== ==== ==== ==== ==== ====
----------
* Subject to variation as permitted under Section 5.15.2 of the Credit
Agreement.
I-1
231
APPENDIX II
to Exhibit C-7
CALPINE CONSTRUCTION FINANCE COMPANY L.P., a Delaware limited partnership
Additional Project Documents with respect to the _______ Project to be
executed from date of previous disbursement request to the date hereof.
Item Cost
---- ----
TOTAL $[____________]
II-1
232
EXHIBIT C-8
to Credit Agreement
FORM OF RESERVE ACCOUNT DISBURSEMENT REQUISITION
(Delivered pursuant to Section 7.8.3 of the Credit Agreement)
[Date]
The Bank of Nova Scotia,
as Administrative Agent for the Banks
Xxx Xxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Manager, Project Finance
Re: Calpine Construction Finance Company Projects
This Reserve Account Disbursement Requisition is delivered to you
pursuant to Section 7.8.3 of the Credit Agreement dated as of October 20, 1999
("Credit Agreement"), among Calpine Construction Finance Company, L.P., a
Delaware limited partnership, as Borrower ("Borrower"), the financial
institutions listed on Exhibit H thereto (the "Banks"), Credit Suisse First
Boston, as Lead Arranger, Syndication Agent and Bookrunner and The Bank of Nova
Scotia, as Lead Arranger, LC Bank and Administrative Agent ("Administrative
Agent"). All capitalized terms used herein shall have the respective meanings
specified in Exhibit A to the Credit Agreement unless otherwise defined herein
or unless the context requires otherwise.
This Reserve Account Disbursement Requisition relates to the
__________________ Project (the "Project").
Borrower hereby requests a withdrawal from the Working Capital Reserve
Account in the amount of $____________ for the payment of Senior O&M Costs that
have become due and payable for the Project as described and to the Persons
specified on Schedule 1 attached hereto.
Borrower hereby confirms and certifies that, as of the date hereof:
(a) Insufficient amounts are available in the Revenue Account and the
Project's Operating Account for the payment of Senior O&M Costs
with respect to the Project;
[CHOOSE ONE ALTERNATIVE (b) BELOW, AS APPLICABLE]
[(b) THE AMOUNT REQUESTED DOES NOT, TOGETHER WITH ALL SENIOR O&M COSTS
WITH RESPECT TO THE PROJECT PREVIOUSLY PAID DURING THE SAME CALENDAR YEAR
AS THE DATE OF THIS REQUISITION, EXCEED 115% OF THE AMOUNTS OF SENIOR O&M
COSTS SPECIFIED FOR THE PROJECT IN THE PROJECT'S ANNUAL OPERATING BUDGET
FOR SUCH CALENDAR YEAR.]
233
[(b) ADMINISTRATIVE AGENT, AS EVIDENCED BY ITS SIGNATURE BELOW, CONSENTS
TO SUCH WITHDRAWAL.]
(c) No Event of Default or Inchoate Default or, with respect to the
Project, Non-Fundamental Project Default or Non-Fundamental Project Inchoate
Default has occurred and is continuing or will occur upon giving effect to the
application of the withdrawal requested hereby; and
(d) Except as specified below, all proceeds of all withdrawals from the
Working Capital Reserve Account made prior to the date hereof have been expended
and have been applied in accordance with the Credit Agreement. [LIST ANY
EXCEPTIONS].
The undersigned hereby certifies that the undersigned is an officer of
Borrower and, as such, is authorized to execute this Reserve Account
Disbursement Requisition on behalf of Borrower.
IN WITNESS WHEREOF, the undersigned has executed and delivered this
Reserve Account Disbursement Requisition on the date shown above.
CALPINE CONSTRUCTION FINANCE COMPANY, L.P.,
a Delaware limited partnership
By: CALPINE CCFC GP, INC.,
a Delaware corporation,
its General Partner
By:
---------------------------------
Name:
Title:
The undersigned acknowledges receipt of a copy of this Reserve Account
Disbursement Requisition:
THE BANK OF NOVA SCOTIA, Date: __________, _____
as Administrative Agent for the Banks
By:
----------------------------------
Name:
Title:
234
Schedule 1
To Exhibit C-8
Description of Payees and Uses of Funds Withdrawn
From the Working Capital Reserve Account
I-1
235
EXHIBIT D-1
to the Credit Agreement
--------------------------------------------------------------------------------
FORM OF DEPOSITARY AGREEMENT
dated as of ______, 1999
among
CALPINE CONSTRUCTION FINANCE COMPANY, L.P.,
a Delaware limited partnership,
as Borrower,
THE BANK OF NOVA SCOTIA,
as Administrative Agent for the Banks,
and
THE BANK OF NOVA SCOTIA,
as Depositary Agent
--------------------------------------------------------------------------------
236
TABLE OF CONTENTS
ARTICLE 1 Definitions; Rules of Interpretation ....................... 1
Section 1.1 Definitions ........................................ 1
Section 1.2 Rules of Interpretation ............................ 2
ARTICLE 2 Appointment of Depositary Agent; Establishment of Accounts . 3
Section 2.1 Appointment of Depositary Agent .................... 3
Section 2.2 Security Interest; Control ......................... 3
Section 2.3 Accounts Maintained as UCC "Securities Accounts" ... 3
Section 2.4 Borrower's Rights .................................. 4
Section 2.5 Creation of Accounts ............................... 4
ARTICLE 3 Deposits into Accounts ..................................... 5
Section 3.1 Deposits ........................................... 5
ARTICLE 4 Payments from Accounts ..................................... 5
Section 4.1 Withdrawals by Administrative Agent ................ 5
Section 4.2 Withdrawals from Construction Account .............. 6
Section 4.3 Withdrawals from the Revenue Account ............... 6
Section 4.4 Withdrawals from the Loss Proceeds Account ......... 6
Section 4.5 Withdrawals from the Working Capital Reserve
Account .......................................... 6
ARTICLE 5 Investment ................................................. 7
Section 5.1 Permitted Investments .............................. 7
ARTICLE 6 Depositary Agent ........................................... 7
Section 6.1 Rights, Duties, etc ................................ 7
Section 6.2 Resignation or Removal ............................. 8
ARTICLE 7 Determinations ............................................. 9
Section 7.1 Sales of Permitted Investments ..................... 9
Section 7.2 Available Cash ..................................... 9
ARTICLE 8 Miscellaneous .............................................. 9
Section 8.1 Fees and Indemnification of Depositary Agent ....... 9
Section 8.2 Waiver of Right of Set-Off ......................... 9
Section 8.3 Termination ........................................ 10
Section 8.4 Severability ....................................... 10
Section 8.5 Counterparts ....................................... 10
Section 8.6 Amendments ......................................... 10
Section 8.7 Applicable Law ..................................... 10
Section 8.8 Notices, etc ....................................... 10
i
237
Section 8.9 Further Information ................................ 11
Section 8.10 Benefit of Agreement .............................. 12
ii
238
THIS DEPOSITARY AGREEMENT (this "Agreement"), dated as of _____, 1999, is
among CALPINE CONSTRUCTION FINANCE COMPANY, L.P., a Delaware limited partnership
("Borrower"), THE BANK OF NOVA SCOTIA, acting in its capacity as Administrative
Agent ("Administrative Agent") for the Banks under the Credit Agreement (as
defined below), and THE BANK OF NOVA SCOTIA, acting in its capacity as
Depositary Agent (the "Depositary Agent").
RECITALS
A. Borrower has entered into that certain Credit Agreement, dated as of
October 20, 1999 (as the same may be amended, supplemented or otherwise modified
from time to time, the "Credit Agreement"), among Borrower, the financial
institutions listed on Exhibit H thereto (the "Banks"), Credit Suisse First
Boston, as Lead Arranger, Syndication Agent and Bookrunner and The Bank of Nova
Scotia, as Lead Arranger, LC Bank and Administrative Agent, whereby the Banks
have agreed to advance to Borrower certain loans to finance the construction and
operation by Borrower of the Projects.
B. In order to give effect to (a) the security interest in the Accounts
(as defined herein) granted by Borrower to Administrative Agent and (b) the
deposit of funds into the Accounts and the application of funds in connection
with the construction and operation of the Projects, each as contemplated in the
Credit Agreement, the parties have agreed that all amounts to be paid over to
Administrative Agent for deposit into, and disbursement from, the Accounts under
of the Credit Agreement shall be paid to Depositary Agent, as agent for
Administrative Agent, to be held by Depositary Agent in pledge as collateral
security for Borrower's obligations under the Credit Agreement and distributed
by Depositary Agent as provided herein.
C. Depositary Agent has agreed to act as depositary agent for
Administrative Agent pursuant to the terms of this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants contained in this Agreement and for other good and valuable
consideration, receipt of which is hereby acknowledged, the parties hereto
hereby agree as follows:
ARTICLE 1
Definitions; Rules of Interpretation
Section 1.1 Definitions. Capitalized terms used but not defined herein
shall have the respective meanings given them in Exhibit A to the Credit
Agreement. The following terms when used herein shall have the following
meanings:
"Accounts" shall mean the collective reference to the Construction
Account, the Revenue Account, the Loss Proceeds Account, the Working Capital
Reserve Account and any
1
239
and all other accounts hereinafter established under the Credit Agreement and/or
this Agreement, including any sub-accounts within such accounts.
"Account Withdrawal Certificate" shall mean a certificate of an
Authorized Representative of Borrower countersigned by Administrative Agent
substantially in the form of Exhibit A hereto, stating (i) the specific amount
requested to be withdrawn from a specific Account and transferred, applied or
paid over to another Account or Person, (ii) the purpose for which such payment
shall be made, (iii) that no Event of Default and, with respect to withdrawals
from the Construction Account or the Loss Proceeds Account of the Project to
which such withdrawal relates, no Non-Fundamental Project Default shall have
occurred and be continuing or will occur after giving effect to the withdrawal
of funds so requested and (iv) that all other conditions to distributions from
such account set forth in the Credit Agreement have been satisfied.
"Construction Account" shall mean, collectivley, the special account
designated by that name established by the Depositary Agent pursuant to Section
2.5, the Construction Sub-Accounts and all sub-accounts therein.
"Disbursement Instruction" shall mean a notice from Administrative Agent,
substantially in the form of Exhibit B hereto, instructing Depositary Agent to
transfer a specific amount of funds from any of the Accounts to such other
account or recipient identified by Administrative Agent in accordance therewith.
"Loss Proceeds Account" shall mean the special account designated by that
name established by Depositary Agent pursuant to Section 2.5.
"Revenue Account" shall mean the special account designated by that name
established by the Depositary Agent pursuant to Section 2.5.
"UCC" shall mean the Uniform Commercial Code as adopted in the State of
New York.
"Working Capital Reserve Account" shall mean the special account
designated by that name established by the Depositary Agent pursuant to Section
2.5.
Section 1.2 Rules of Interpretation. The rules of interpretation set
forth in Exhibit A to the Credit Agreement shall apply to this Agreement.
ARTICLE 2
Appointment of Depositary Agent;
Establishment of Accounts
Section 2.1 Appointment of Depositary Agent. Depositary Agent is hereby
appointed by Borrower and by Administrative Agent as depositary agent hereunder,
and Depositary Agent hereby agrees to act as such and to accept all cash,
payments, other amounts
2
240
and Permitted Investments to be delivered to or held by Depositary Agent
pursuant to the terms of this Agreement. Depositary Agent shall hold and
safeguard the Accounts (and the cash, instruments and securities on deposit
therein) during the term of this Agreement and shall treat the cash,
instruments, and securities in the Accounts as funds, instruments and securities
pledged by Borrower to Administrative Agent for the ratable benefit of the
Banks, to be held by Depositary Agent, as agent of Administrative Agent, in
trust in accordance with the provisions hereof.
Section 2.2 Security Interest; Control. In order to secure the
performance by Borrower of all of its covenants, agreements and obligations
under the Credit Agreement and the other Credit Documents and the payment and
performance by Borrower of all Obligations, this Agreement is intended to
create, and Borrower hereby pledges to and creates in favor of Administrative
Agent, for the benefit of the Banks, a security interest in and to, the
Accounts, all cash, cash equivalents, instruments, investments and other
securities at any time on deposit in the Accounts, and all proceeds of any of
the foregoing (collectively, the "Collateral"). All moneys, cash equivalents,
instruments, investments and securities at any time on deposit in any of the
Accounts shall constitute collateral security for the payment and performance by
Borrower of the Obligations, and shall at all times be subject to the control of
Administrative Agent, acting through Depositary Agent in respect of the Accounts
and shall be held in the custody of Depositary Agent in trust for the purposes
of, and on the terms set forth in, this Agreement.
Section 2.3 Accounts Maintained as UCC "Securities Accounts." Depositary
Agent hereby agrees and confirms that it has established the Accounts as set
forth and defined in this Agreement. Each of Depositary Agent and Borrower
agrees that (i) Depositary Agent is acting as "securities intermediary" (within
the meaning of Section 8-102(14) of the UCC) with respect to the Accounts and
the "financial assets" (within the meaning of Section 8-102(a)(9) of the UCC,
the "Financial Assets") credited to the Accounts; (ii) each such Account
established by Depositary Agent is and will be maintained as a "securities
account" (within the meaning of Section 8-501 of the UCC); (iii) Borrower is an
"entitlement holder" (within the meaning of Section 8-102(a)(7) of the UCC) in
respect of the Financial Assets credited to such Accounts and with respect to
such Accounts and Depositary Agent shall so note in its records pertaining to
such Financial Assets and Accounts; and (iv) all Financial Assets in registered
form or payable to or to order of and credited to any such Account shall be
registered in the name of, payable to or to the order of, or specially endorsed
to, Depositary Agent or in blank, or credited to another securities account
maintained in the name of Depositary Agent, and in no case will any Financial
Asset credited to any such Account be registered in the name of, payable to or
to the order of, or endorsed to, Borrower except to the extent the foregoing
have been subsequently endorsed by Borrower to Depositary Agent or in blank.
Each item of property (including a security, security entitlement, investment
property, instrument or obligation, share, participation, interest or other
property whatsoever) credited to any Account shall be treated as a Financial
Asset. Until this Agreement shall terminate in accordance with the terms hereof,
Administrative Agent shall have "control" (within the meaning of Section
8-106(d)(2) of the UCC) of Borrower's "security entitlements" (within the
meaning of Section 8-102(a)(17) of the UCC, "Security Entitlements") with
respect to the Accounts and the Financial Assets credited to the Accounts. All
property delivered to Depositary Agent pursuant to this Agreement will be
promptly credited to the
3
241
Accounts and shall be treated as Financial Assets. If at any time Depositary
Agent shall receive from Administrative Agent any "entitlement order" (within
the meaning of Section 8-102(8) of the UCC, an "Entitlement Order") relating to
the Accounts or Financial Assets credited to the Accounts, Depositary Agent
shall comply with such Entitlement Order without further consent by Borrower or
any other Person. In the event that Depositary Agent receives conflicting
Entitlement Orders relating to the Accounts or Financial Assets credited to the
Accounts from Administrative Agent and any other Person (including, without
limitation, Borrower), Depositary Agent shall comply with the Entitlement Orders
originated by Administrative Agent. Each of Borrower and Depositary Agent agrees
that it has not and will not execute and deliver, or otherwise become bound by,
any agreement under which it agrees with any Person other than Administrative
Agent to comply with Entitlement Orders originated by such Person relating to
the Accounts or Financial Assets credited to the Accounts. Except for the claims
and interests of Administrative Agent and Borrower in the Accounts and the
Financial Assets credited to the Accounts, neither Depositary Agent nor Borrower
knows of any claim to, or interest in, any Account or Financial Assets credited
to the Accounts. If either Depositary Agent or Borrower obtains knowledge that
any Person has asserted a lien, encumbrance or adverse claim against any or the
Accounts or Financial Assets credited to the Accounts, such party will promptly
notify Administrative Agent thereof. In the event that the Depositary Agent has
or subsequently obtains by agreement, operation of law or otherwise a Lien or
security interest in any Account, any Security Entitlement carried therein or
credited thereto or any Financial Asset that is the subject of any such Security
Entitlement, Depositary Agent agrees that such Lien or security interest shall
be subordinate to the Lien and security interest of the Administrative Agent.
The Financial Assets standing to the credit of the Accounts will not be subject
to deduction, set-off, banker's lien or any other right, and Depositary Agent
shall not grant, permit or consent to any other right or interest in such
Financial Assets, in favor of any Person (including the Depositary Agent) other
than Administrative Agent.
Section 2.4 Borrower's Rights. Borrower shall not have any rights or
powers with respect to any amounts in the Accounts or any part thereof except
(i) as provided in Article 5 hereof and (ii) the right to have such amounts
applied in accordance with the provisions hereof and of the Credit Agreement.
Section 2.5 Creation of Accounts. Depositary Agent hereby establishes at
its office located in New York, New York, the following four special, segregated
and irrevocable money collateral accounts and sub-accounts within such accounts
which shall be maintained at all times until the termination of this Agreement,
unless earlier termination is otherwise provided for herein or in the Credit
Agreement:
(1) The Construction Account (Acc. # 2480-10);
(2) The Construction Sub-Account (Magic Valley) (Acc. # 2481-18);
(3) The Construction Sub-Account (South Point) (Acc. # 2483-12);
(4) The Construction Sub-Account (Xxxxxx) (Acc. # 2485-17);
4
242
(5) The Construction Sub-Account (Xxxxxxxxx) (Acc. # 2486-14);
(6) The Revenue Account (Acc. # 2487-11);
(7) The Loss Proceeds Account (Acc. # 2488-19); and
(8) The Working Capital Reserve Account (Acc. # 2490-17).
All moneys, investments and securities at any time on deposit in any of the
Accounts shall constitute trust funds to be held in the custody of Depositary
Agent for the purposes and on the terms set forth in this Agreement.
ARTICLE 3
Deposits into Accounts
Section 3.1 Deposits. Each of Borrower and Administrative Agent covenants
and agrees that all amounts required by the Credit Agreement or the other Credit
Documents to be delivered or deposited in any of the Accounts, shall be paid
over to Depositary Agent directly for deposit into the appropriate Account. Any
deposit made to any Account under this Agreement shall be irrevocable and the
amount of such deposit and any instrument or security held in such Account and
all income or gain earned on such deposits shall be held in trust by Depositary
Agent and applied solely as provided in this Agreement.
ARTICLE 4
Payments from Accounts
Section 4.1 Withdrawals by Administrative Agent. As soon as practicable,
and in all events within three Banking Days after receipt of a Disbursement
Instruction, executed by Administrative Agent, Depositary Agent shall distribute
or apply monies on deposit in the Accounts specified in such notice, in the
manner, in the amount and to the Person or Account specified in such
Disbursement Instruction. Notwithstanding anything to the contrary in this
Agreement, from and after Depositary Agent's receipt of notice from
Administrative Agent or Borrower that an Event of Default exists until such time
as Depositary Agent receives notice from Administrative Agent that such Event of
Default no longer exists, Depositary Agent shall only withdraw or transfer
amounts in the Construction Account or the Loss Process Account at the direction
of Administrative Agent. Notwithstanding anything to the contrary in this
Agreement, from and after Depositary Agent's receipt of notice from
Administrative Agent or Borrower that a Non-Fundamental Project Default exists
until such time as Depositary Agent receives notice from Administrative Agent
that such Non-Fundamental Project Default no longer exists, Depositary Agent
shall only withdraw or transfer amounts in the Construction Account or the Loss
Proceeds Account for the Project to which such Non-Fundamental Project Default
relates at the direction of Administrative Agent. In the event that funds on
deposit in any Account exceed the amounts required to be deposited therein, and
such excess funds are required to be transferred to the Revenue Account pursuant
to the Credit Agreement, Administrative
5
243
Agent shall, as soon as practicable, deliver a Disbursement Instruction to the
Depositary Agent requesting that such excess funds be transferred to the Revenue
Account.
Section 4.2 Withdrawals from Construction Account. On the same Banking
Day on which Depositary Agent receives an Account Withdrawal Certificate from
Borrower, duly executed by Borrower and acknowledged and agreed to by
Administrative Agent, requesting that funds be withdrawn and/or transferred from
the Construction Account, Depositary Agent shall distribute or apply monies on
deposit in the Construction Account in the manner, in the amount and to the
Person or Account specified in such Account Withdrawal Certificate; provided,
however, that in the event that Depositary Agent receives such Account
Withdrawal Certificate after 12:00 p.m. eastern standard time of any Banking
Day, then Depositary Agent may take the actions specified therein on the next
Banking Day.
Section 4.3 Withdrawals from the Revenue Account. As soon as practicable
and in all events within three Banking Days after receipt of an Account
Withdrawal Certificate from Borrower, duly executed by Borrower and acknowledged
and agreed to by Administrative Agent, requesting that funds be withdrawn and/or
transferred from the Revenue Account, Depositary Agent shall distribute or apply
monies on deposit in the Revenue Account in the manner, in the amount and to the
Person or Account specified in such Account Withdrawal Certificate.
Section 4.4 Withdrawals from the Loss Proceeds Account. As soon as
practicable, and in all events within three Banking Days after receipt of an
Account Withdrawal Certificate from Borrower, duly executed by Borrower and
acknowledged and agreed to by Administrative Agent, requesting that funds be
withdrawn and/or transferred from the Loss Proceeds Account, Depositary Agent
shall distribute or apply monies on deposit in the Loss Proceeds Account in the
manner, in the amount and to the Person or Account specified in such Account
Withdrawal Certificate.
Section 4.5 Withdrawals from the Working Capital Reserve Account. As soon
as practicable, and in all events within three Banking Days after receipt of an
Account Withdrawal Certificate from Borrower, duly executed by Borrower and
acknowledged and agreed to by Administrative Agent, requesting that funds be
withdrawn and/or transferred from the Working Capital Reserve Account,
Depositary Agent shall distribute or apply monies on deposit in the Working
Capital Reserve Account in the manner, in the amount and to the Person or
Account specified in such Account Withdrawal Certificate.
ARTICLE 5
Investment
Section 5.1 Permitted Investments. Depositary Agent shall invest any
money held in any Account in such Permitted Investments as directed in writing
by Borrower from time to time (or, if Administrative Agent shall have notified
Depositary Agent that Administrative Agent is exercising its power of attorney
to direct investments, by and at the discretion of Administrative Agent). In the
event that Depositary Agent has not received any such written
6
244
directions, Depositary Agent shall be under no obligation to invest any such
money. Any income or gain realized as a result of any such investment shall be
held as part of the applicable Account and reinvested as provided in this
Agreement until released in compliance with Article 4. Any income tax payable on
account of any such income or gain shall be paid by Borrower. Depositary Agent
shall have no liability for any loss resulting from any such investment other
than solely by reason of its willful misconduct or gross negligence or bad faith
or from failure to exercise such care in the custody of any such investments as
it does for accounts held by other customers or in the custody of its own
investments. Any such investment may be sold (without regard to maturity date)
by Depositary Agent whenever necessary to make any distribution required by this
Agreement. In addition, if an Event of Default has occurred and is continuing,
any investment shall be liquidated and sold by Depositary Agent if so directed
by Administrative Agent.
ARTICLE 6
Depositary Agent
Section 6.1 Rights, Duties, etc. The acceptance by Depositary Agent of
its duties under this Agreement is subject to the following terms and conditions
which the parties to this Agreement hereby agree shall govern and control with
respect to Depositary Agent's rights, duties, liabilities and immunities:
(a) Depositary Agent shall act as an agent only and shall not be
responsible or liable in any manner for soliciting any funds or for the
sufficiency, correctness, genuineness or validity of any funds or securities
deposited with or held by it, except as set forth in Section 6.1(c) hereof;
(b) Depositary Agent shall be protected in acting or refraining from
acting upon any written notice, certificate, instruction, request or other paper
or document, as to the due execution thereof and the validity and effectiveness
of the provisions thereof and as to the truth of any information contained
therein, which Depositary Agent in good faith believes to be genuine;
(c) Depositary Agent shall not be liable for any error of judgment or
for any act done or step taken or omitted except in the case of its gross
negligence, willful misconduct or bad faith;
(d) Depositary Agent may consult with and obtain advice from counsel
in the event of any dispute or question as to the construction of any provision
of this Agreement;
(e) Depositary Agent shall have no duties as Depositary Agent except
those which are expressly set forth in this Agreement and in any modification or
amendment hereof; provided, however, that no such modification or amendment
shall affect Depositary Agent's duties unless Depositary Agent shall have given
its prior written consent to such modification or amendment;
7
245
(f) Depositary Agent may execute or perform any duties under this
Agreement either directly or through agents or attorneys;
(g) Depositary Agent may engage or be interested in any financial or
other transactions with any party to this Agreement and may act on, or as
depositary, trustee or agent for, any committee or body of holders of
obligations of such Persons as freely as if it were not Depositary Agent
hereunder; and
(h) Depositary Agent shall not be obligated to take any action which
in its reasonable judgment would involve it in expense or liability unless it
has been furnished with reasonable indemnity.
Section 6.2 Resignation or Removal.
(a) Depositary Agent may at any time resign by giving notice to each
other party to this Agreement, such resignation to be effective upon the
appointment of a successor Depositary Agent as provided below.
(b) Administrative Agent may remove Depositary Agent at any time by
giving notice to each other party to this Agreement, such removal to be
effective upon the appointment of successor Depositary Agent as provided below.
(c) In the event of any resignation or removal of Depositary Agent, a
successor Depositary Agent, which shall be a bank or trust company organized
under the laws of the United States America or of the State of New York, having
a corporate trust office in New York and a capital and surplus of not less than
$50,000,000, shall be appointed by Administrative Agent after consultation with
Borrower. If a successor Depositary Agent shall not have been appointed and
accepted its appointment as Depositary Agent within 45 days after such notice of
resignation of Depositary Agent or such notice of removal of Depositary Agent,
Depositary Agent, Administrative Agent or Borrower may apply to any court of
competent jurisdiction to appoint a successor Depositary Agent to act until such
time, if any, as a successor Depositary Agent shall have accepted its
appointment as provided above. A successor Depositary Agent so appointed by such
court shall immediately and without further act be superseded by any successor
Depositary Agent appointed by Administrative Agent as provided above. Any such
successor Depositary Agent shall be capable of acting as a "securities
intermediary" (within the meaning of Section 8-102(14) of the UCC) and shall
deliver to each party to this Agreement a written instrument accepting such
appointment and thereupon such successor Depositary Agent shall succeed to all
the rights and duties of Depositary Agent under this Agreement and shall be
entitled to receive the Accounts from the predecessor Depositary Agent.
ARTICLE 7
Determinations
Section 7.1 Sales of Permitted Investments. Depositary Agent will use its
best efforts to sell Permitted Investments so that actual money is available, on
each date on which a
8
246
distribution is to be made pursuant to this Agreement, for Depositary Agent to
make such distribution in money on such date.
Section 7.2 Available Cash. In determining the amount of deposit or
available money in any Account at any time, in addition to any money then on
deposit in such Account, Depositary Agent shall treat as on deposit or as
available money the net amount which, in the reasonable opinion of Depositary
Agent, would have been received by Depositary Agent on such day if Depositary
Agent had liquidated all the Permitted Investments (at then prevailing market
prices) then on deposit in such Account.
ARTICLE 8
Miscellaneous
Section 8.1 Fees and Indemnification of Depositary Agent. Borrower agrees
to pay the fees of Depositary Agent as compensation for its services under this
Agreement. In addition, Borrower assumes liability for, and agrees to indemnify,
protect, save and keep harmless Depositary Agent, Administrative Agent, each
Bank and their respective successors, assigns, agents and servants from and
against any and all claims, liabilities, obligations, losses, damages,
penalties, costs and expenses, including, without limitation, all reasonable
fees and expenses of counsel to Depositary Agent, Administrative Agent or any
Bank, that may be imposed on, incurred by, or asserted against, at any time,
Depositary Agent, Administrative Agent or any Bank, and in any way relating to
or arising out of the execution and delivery of this Agreement, the
establishment of the Accounts, the acceptance of deposits, the purchase or sale
of Permitted Investments, the retention of money and Permitted Investments or
the proceeds thereof and any payment, transfer or other application of money or
Permitted Investments by Depositary Agent, Administrative Agent or any Bank in
accordance with the provisions of this Agreement, or as may arise by reason of
any act, omission or error of Depositary Agent made in good faith in the conduct
of its duties. Borrower shall not, however, be required to indemnify, protect,
save and keep harmless Depositary Agent, Administrative Agent or any Bank
against its own gross negligence or willful misconduct. The indemnities
contained in this Section 8.1 shall survive the termination of this Agreement.
All payments made by Borrower hereunder shall be made without setoff or
counterclaim.
Section 8.2 Waiver of Right of Set-Off. Depositary Agent waives, with
respect to all of its existing and future claims against Borrower or any
Affiliate thereof, all existing and future rights of set-off and banker's liens
against the Accounts and all items (and proceeds thereof) that come into its
possession in connection with the Accounts.
Section 8.3 Termination. Subject to Section 8.1, the provisions of this
Agreement shall terminate on the date on which all Obligations shall have been
paid in full and the Credit Documents have terminated in accordance with their
terms. The termination of this Agreement shall have been deemed to have occurred
upon receipt by Depositary Agent of a certificate to such effect executed by
Administrative Agent. Promptly after receipt of such certificate by Depositary
Agent, Depositary Agent shall distribute all amounts contained in the Accounts
to the Borrower and shall be discharged of all obligations hereunder.
9
247
Section 8.4 Severability. If any one or more of the covenants or
agreements provided in this Agreement on the part of the parties to this
Agreement to be performed should be determined by a court of competent
jurisdiction to be contrary to law, such covenant or agreement shall be deemed
and construed to be severable from the remaining covenants and agreements of
this Agreement and shall in no way affect the validity of the remaining
provisions.
Section 8.5 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be an original and all of which taken together
shall constitute but one and the same instrument.
Section 8.6 Amendments This Agreement may not be modified or amended
without the prior written consent of each of the parties to this Agreement.
Section 8.7 Applicable Law. This Agreement and any instrument or
agreement required hereunder (to the extent not expressly provided for therein)
shall be governed by, and construed in accordance with, the laws of the State of
New York, without reference to conflicts of laws (other than Section 5-1401 of
the New York General Obligations Law).
Section 8.8 Notices, etc.. Except as otherwise provided in this
Agreement, notices and other communications under this Agreement shall be in
writing and shall be delivered, or mailed by first-class mail, postage prepaid,
to the following addresses:
(a) If to Administrative Agent:
The Bank of Nova Scotia
000 Xxxxxxxxx Xxxxxx, X.X., Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx Xxxxxxxx
Telephone Number: (000) 000-0000
Telecopier Number: (000) 000-0000
(b) If to Borrower:
Calpine Construction Finance Company, L.P.
c/o Calpine Corporation
00 Xxxx Xxx Xxxxxxxx Xxxxxx
Xxx Xxxx, Xxxxxxxxxx 00000
Attention: General Counsel
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
and
0000 Xxxxx Xxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxxxx 00000
Attention: Corporate Asset Management
10
248
Telephone Number: (000) 000-0000
Telecopier Number: (000) 000-0000
(c) If to Depositary Agent:
The Bank of Nova Scotia
Xxx Xxxxxxx Xxxxx, 00xx Xxxxx
000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxxxx
Telephone Number: (000) 000-0000
Telecopier Number: (000) 000-0000
All notices or other communications required or permitted to be delivered
hereunder, shall be in writing and shall be considered as properly delivered (a)
if delivered in person, (b) if sent by overnight delivery service (including
Federal Express, Xxxxx, DHL, Air Borne and other similar overnight delivery
services), (c) in the event overnight delivery services are not readily
available, if mailed by first class United States Mail, postage prepaid,
registered or certified with return receipt requested or (d) if sent by prepaid
telegram, or by telecopy confirmed by telephone. Notice so delivered shall be
effective upon receipt by the addressee, except that communication or notice so
transmitted by telecopy or other direct written electronic means shall be deemed
to have been validly and effectively delivered on the day (if a Banking Day and,
if not, on the next following Banking Day) on which it is transmitted if
transmitted before 4:00 p.m., recipient's time, and if transmitted after that
time, on the next following Banking Day; provided, however, that if any notice
is tendered to an addressee and the delivery thereof is refused by such
addressee, such notice shall be effective upon such tender. Any party shall have
the right to change its address for notice hereunder to any other location
within the continental United States by giving of 30 days' notice to the other
parties in the manner set forth hereinabove.
Section 8.9 Further Information. Depositary Agent shall promptly provide
Administrative Agent and Borrower with any information reasonably requested by
Administrative Agent or Borrower concerning balances in the Accounts and
payments from such Accounts.
Section 8.10 Benefit of Agreement. This Agreement shall inure to the
benefit of, and be enforceable by, the parties to this Agreement and their
respective successors and permitted assigns.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
11
249
IN WITNESS WHEREOF, the parties hereto have each caused this Depositary
Agreement to be duly executed by their duly authorized officers, all as of the
day and year first above written.
CALPINE CONSTRUCTION FINANCE COMPANY, L.P.,
a Delaware limited partnership
By CALPINE CCFC GP, INC., a Delaware
corporation, its General Partner
By:
---------------------------------
Name:
Title:
THE BANK OF NOVA SCOTIA,
as Administrative Agent for the Banks
By:
----------------------------------------
Name:
Title:
THE BANK OF NOVA SCOTIA,
as Depositary Agent
By:
----------------------------------------
Name:
Title:
12
250
Exhibit A
Form of Account Withdrawal Certificate
[LETTERHEAD OF [BORROWER] [AUTHORIZED REPRESENTATIVE OF BORROWER]]
[Date]
[The language in brackets represents alternative drawing events and the
certificate presented should recite only the applicable alternative.]
Dear Sirs:
Reference is made to that certain Depositary Agreement (the "Depositary
Agreement") dated as of October 20, 1999, among Calpine Construction Finance
Company, L.P., a Delaware limited partnership ("Borrower"), The Bank of Nova
Scotia, as Depositary Agent ("Depositary Agent"), and The Bank of Nova Scotia,
as Administrative Agent ("Administrative Agent") for the Banks named in that
certain Credit Agreement dated as of October 20, 1999, among Borrower, the
financial institutions listed on Exhibit H thereto (the "Banks"), Credit Suisse
First Boston, as Lead Arranger, Syndication Agent and Bookrunner, The Bank of
Nova Scotia, as Lead Arranger, LC Bank and Administrative Agent, TD Securities
(USA) Inc., as Co-Arranger and Co-Documentation Agent and CIBC Inc., as
Co-Arranger and Co-Documentation Agent. Capitalized terms used herein without
definition shall have the respective meanings specified in the Depositary
Agreement.
Please liquidate investments held in the [Name of Account] under the
Depositary Agreement in an amount sufficient to yield proceeds of
$_____________, to be used for the payment of [________ costs] as set forth in
the [Drawdown Certificate] [Disbursement Requisition] [specify any other
purposes for the withdrawal], attached hereto as Schedule 1. Please [pay]
[transfer] such amounts [by [official bank check] [wire transfer]] to [the
________ Account(s)] [the Person(s) specified on Schedule 2 attached hereto at
the addresses set forth therein].
The undersigned hereby certifies that:
(a) the undersigned is an officer of the [Borrower] [Authorized
Representative of Borrower] and, as such, is authorized to execute this Account
Withdrawal Certificate on behalf of [Borrower] [Authorized Representative of
Borrower];
(b) the amounts paid or applied pursuant to this Account Withdrawal
Certificate shall be used for the purpose(s) set forth on Schedule 1 attached
hereto;
(c) no Event of Default and, with respect to withdrawls from the
Construction Account or the Loss Proceeds Account for the Project to which such
withdrawal relates, no Non-Fundamental Project Default (as such terms are
defined in the Credit Agreement) has occurred and is continuing or will occur
after giving effect to the withdrawal of funds requested by this Account
Withdrawal Certificate; and
Exhibit A
251
(d) all other conditions to distributions from the [Name of Account] set
forth in the Credit Agreement have been satisfied.
Very truly yours,
CALPINE CONSTRUCTION FINANCE COMPANY, L.P.,
a Delaware limited partnership
By CALPINE CCFC GP, INC., a Delaware
corporation, its General Partner
By:
---------------------------------
Name:
Title:
ACKNOWLEDGED AND AGREED:
THE BANK OF NOVA SCOTIA,
as Administrative Agent for the Banks
By:
----------------------------------------
Name:
Title:
Exhibit A
252
Schedule 1 to Account Withdrawal Certificate
Use of Proceeds of Withdrawal from [Name of Account]
Exhibit A - Schedule 1
253
Schedule 2 to Account Withdrawal Certificate
Payees of Proceeds of Withdrawal from [Name of Account]
Exhibit A - Schedule 2
254
Exhibit B
Form of Disbursement Instruction
[LETTERHEAD OF ADMINISTRATIVE AGENT]
[Date]
[The language in brackets represents alternative drawing events and the
certificate presented should recite only the applicable alternative.]
Dear Sirs:
Reference is made to that certain Depositary Agreement (the "Depositary
Agreement") dated as of October 20, 1999, among Calpine Construction Finance
Company, L.P., a Delaware limited partnership ("Borrower"), The Bank of Nova
Scotia, as Depositary Agent ("Depositary Agent"), and The Bank of Nova Scotia,
as Administrative Agent ("Administrative Agent") for the Banks named in that
certain Credit Agreement dated as of October 20, 1999, among Borrower, the
financial institutions listed on Exhibit H thereto (the "Banks"), Credit Suisse
First Boston, as Lead Arranger, Syndication Agent and Bookrunner, The Bank of
Nova Scotia, as Lead Arranger, LC Bank and Administrative Agent, TD Securities
(USA) Inc., as Co-Arranger and Co-Documentation Agent and CIBC Inc., as
Co-Arranger and Co-Documentation Agent. Capitalized terms used herein without
definition shall have the respective meanings specified in the Depositary
Agreement.
Please liquidate investments held in the [Name of Account] under the
Depositary Agreement in an amount sufficient to yield proceeds of
$_____________. Please [pay] [transfer] such amounts [by [official bank check]
[wire transfer]] to [the _________ Account(s)] [the Person(s) specified on
Schedule 1 attached hereto at the addresses set forth therein].
The undersigned hereby certifies that the undersigned is an officer of
the Administrative Agent and, as such, is authorized to execute this
Disbursement Instruction on behalf of Administrative Agent. Very truly yours,
THE BANK OF NOVA SCOTIA,
as Administrative Agent for the
Banks
By:
---------------------------------
Name:
Title:
Exhibit B
255
Schedule 1 to Disbursement Instruction
Payees of Proceeds of Withdrawal from [Name of Account]
Exhibit B -- Schedule 1
256
EXHIBIT D2-A
to the Credit Agreement
AFFILIATED PARTY AGREEMENT GUARANTY
This AFFILIATED PARTY AGREEMENT GUARANTY (this "Guaranty") dated
as of __________, 1999 is made by CALPINE CORPORATION, a Delaware corporation
("Guarantor"), in favor of Calpine Construction Finance Company, L.P., a
Delaware limited partnership ("CCFC").
RECITALS
A. _____________, a _____________ ("______"), and CCFC are
parties to that certain ______________ dated as of ____________, 1999 (the
"______"), that certain _______________ dated as of ___________, 1999 (the " ")
and that certain _________ dated as of ______________, 1999 (the "_____").
_____________, a _____________ ("______"), and CCFC are parties to that certain
______________ dated as of ____________, 1999 (the "_____"), that certain
_______________ dated as of ___________, 1999 (the "______") and that certain
_________ dated as of ______________, 1999 (the "_____"). Collectively, the
______, the ______, the _______, and the _________ are referred to as the
"Relevant Documents". Collectively, ______, ______ and ______ are referred to as
the "Affiliated Parties". [RELEVANT DOCUMENTS TO INCLUDE CONSTRUCTION MANAGEMENT
AGREEMENT, PROJECT MANAGEMENT AGREEMENT, O&M AGREEMENT, FUEL MANAGEMENT
AGREEMENT, FUEL SUPPLY AGREEMENT AND POWER MARKETING AGREEMENT]
B. Guarantor owns, either directly or indirectly, all the
outstanding capital stock or other equity interests of each of the Affiliated
Parties; and
C. CCFC has agreed to enter into the Relevant Documents on the
condition that Guarantor guarantee certain of the Affiliated Parties'
obligations thereunder as provided herein; and
D. Guarantor acknowledges that it will benefit, directly and
indirectly, if CCFC enters into the Relevant Documents; and
E. The obligations of Guarantor hereunder are being incurred
concurrently with the obligations of the Affiliated Parties under the Relevant
Documents; and
F. Capitalized terms used but not defined herein shall have the
respective meanings given them in Exhibit A to that certain Credit Agreement
dated as of October 20, 1999 among CCFC, as Borrower, the financial institutions
listed on Exhibit H thereto, Credit Suisse First
1
257
Boston, as Lead Arranger, Syndication Agent and Bookrunner and The Bank of Nova
Scotia, as Lead Arranger, LC Bank and Administrative Agent. The Rules of
Interpretations contained in said Exhibit A shall apply hereto.
AGREEMENT
NOW, THEREFORE, in consideration of the premises set forth above
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, and as an inducement to CCFC to enter into the Relevant
Documents with the Affiliated Parties, Guarantor hereby consents and agrees as
follows:
1. Guaranty.
(a) The undersigned Guarantor, as primary obligor and not
merely as surety, unconditionally and irrevocably guarantees to CCFC payment and
performance when due, whether by acceleration or otherwise, of any and all
obligations and liabilities of each of the Affiliated Parties under the Relevant
Documents, together with all expenses incurred by CCFC in enforcing any of such
obligations and liabilities or the terms hereof, including, without limitation,
reasonable fees and expenses of legal counsel (collectively, the "Obligations"),
and agrees that if for any reason any of the Affiliated Parties shall fail to
pay or perform when due any of such Obligations, Guarantor will pay or perform
the same forthwith (it being understood that Guarantor's liability hereunder
shall be subject to the same limitations of liability as the Affiliated Parties'
liability under the Relevant Documents). Guarantor waives notice of acceptance
of this Guaranty and of any obligation to which it applies or may apply under
the terms hereof, and waives diligence, presentment, demand of payment, notice
of dishonor or non-payment, protest, notice of protest, of any such obligations,
suit or taking other action by CCFC against, and giving any notice of default or
other notice to, or making any demand on, any party liable thereon (including
Guarantor).
(b) This Guaranty is a primary obligation of the Guarantor
and is an absolute, unconditional, continuing and irrevocable guaranty of
payment and performance and not of collectibility and is in no way conditioned
on or contingent upon any attempt to enforce in whole or in part any of the
Affiliated Parties' liabilities and obligations to CCFC. If any of the
Affiliated Parties shall fail to pay or perform any of the Obligations to CCFC
as and when they are due, Guarantor shall forthwith pay or perform, as
applicable, such Obligations. Any and all payments by Guarantor hereunder shall
be in immediately available funds. Each failure by any of the Affiliated Parties
to pay or perform any Obligations shall give rise to a separate cause of action
herewith, and separate suits may be brought hereunder as each cause of action
arises.
(c) CCFC may, at any time and from time to time (whether or
not after revocation or termination of this Guaranty) without the consent of or
notice to Guarantor, except such notice as may be required by the Relevant
Documents or applicable law which cannot be waived, without incurring
responsibility to Guarantor, without impairing or releasing the obligations of
Guarantor hereunder, upon or without any terms or conditions and in whole or in
part, (i) change the manner, place and terms of payment or performance or change
or extend the
2
258
time of payment of, renew, or alter any Obligation, or any obligations and
liabilities (including any of those hereunder) incurred directly or indirectly
in respect thereof or hereof or in any manner modify, amend or supplement the
terms of the Relevant Documents, any documents, instruments or agreements
executed in connection therewith, in each case with the consent of the relevant
Affiliated Parties, if required by the Relevant Documents, and the guaranty
herein made shall apply to the Obligations, changed, extended, renewed,
modified, amended, supplemented or altered in any manner; (ii) exercise or
refrain from exercising any rights against any of the Affiliated Parties or
others (including Guarantor) or otherwise act or refrain from acting; (iii) add
or release any other guarantor from its obligations without affecting or
impairing the obligations of Guarantor hereunder; (iv) settle or compromise any
Obligations and/or any obligations and liabilities (including any of those
hereunder) incurred directly or indirectly in respect thereof or hereof, and may
subordinate the payment of all or any part thereof to the payment of any
obligations and liabilities which may be due to CCFC or others; (v) sell,
exchange, release, surrender, realize upon or otherwise deal with in any manner
or in any order any property by whomsoever pledged or mortgaged to secure or
howsoever securing the Obligations or any liabilities or obligations (including
any of those hereunder) incurred directly or indirectly in respect thereof or
hereof and/or any offset thereagainst; (vi) apply any sums by whomsoever paid or
howsoever realized to any obligations and liabilities of any of the Affiliated
Parties to CCFC under the Relevant Documents in the manner provided therein
regardless of what obligations and liabilities remain unpaid; (vii) consent to
or waive any breach of, or any act, omission or default under, the Relevant
Documents or otherwise amend, modify or supplement (with the consent of the
relevant Affiliated Parties, if required by the Relevant Documents) the Relevant
Documents or any of such other instruments or agreements; and/or (viii) act or
fail to act in any manner referred to in this Guaranty which may deprive
Guarantor of its right to subrogation against any of the Affiliated Parties to
recover full indemnity for any payments made pursuant to this Guaranty or of its
right of contribution against any other party.
(d) No invalidity, irregularity or unenforceability of the
obligations or liabilities hereby guaranteed shall affect, impair, or be a
defense to this Guaranty, which is a primary obligation of Guarantor.
(e) This is a continuing Guaranty and all obligations to
which it applies or may apply under the terms hereof shall be conclusively
presumed to have been created in reliance hereon. In the event that,
notwithstanding the provisions of Section 1(a) hereof, this Guaranty shall be
deemed revocable in accordance with applicable law, then any such revocation
shall become effective only upon receipt by CCFC of written notice of revocation
signed by Guarantor. No revocation or termination hereof shall affect in any
manner rights arising under this Guaranty with respect to Obligations (i)
arising prior to receipt by CCFC of written notice of such revocation or
termination and the sole effect of revocation and termination hereof shall be to
exclude from this Guaranty Obligations thereafter arising which are unconnected
with Obligations theretofore arising or transactions theretofore entered into or
(ii) arising as a result of a default under the Relevant Documents occurring by
reason of the revocation or termination of this Guaranty.
3
259
(f) (i) Except as otherwise required by law, each payment
required to be made by Guarantor to CCFC hereunder shall be made without
deduction or withholding for or on account of Taxes. If such deduction or
withholding is so required, Guarantor shall, upon notice thereof from CCFC, (A)
pay the amount required to be deducted or withheld to the appropriate
authorities before penalties attach thereto or interest accrues thereon, (B) on
or before the 60th day after payment of such amount, forward to CCFC an official
receipt evidencing such payment (or a certified copy thereof), and (C) in the
case of any such deduction or withholding, forthwith pay to CCFC such additional
amount as may be necessary to ensure that the net amount actually received by
CCFC is free and clear of such Taxes, including any Taxes on such additional
amount, is equal to the amount that CCFC would have received had there been no
such deduction or withholding.
(ii) As used herein, the term "Tax" means any present or
future tax, levy, impost, duty, charge, assessment or fee of any nature
(including interest, penalties and additions thereto) that is imposed by any
government or other taxing authority in respect of any payment under this
Guaranty other than any income, franchise or similar tax imposed upon the gross
or net income of CCFC by the United States or any State or any jurisdiction
where CCFC is organized and/or the jurisdiction in which is located.
2. Representations and Warranties. Guarantor makes the
representations and warranties set forth below to CCFC as of the date hereof:
(a) Guarantor is duly formed, validly existing and in good
standing under the laws of the State of Delaware and has the power and authority
to execute and deliver this Guaranty and to perform its obligations hereunder.
(b) Guarantor has taken all necessary corporate action to
authorize the execution and delivery of this Guaranty and the performance of its
obligations hereunder.
(c) All governmental authorizations and actions necessary in
connection with the execution and delivery by Guarantor of this Guaranty and the
performance of its obligations hereunder have been obtained or performed and
remain valid and in full force and effect.
(d) This Guaranty has been duly executed and delivered by
Guarantor and constitutes the legal, valid and binding obligation of Guarantor,
enforceable against Guarantor in accordance with the terms of this Guaranty,
subject to applicable bankruptcy, insolvency and other similar laws affecting
creditors' rights generally.
(e) The execution, delivery and performance of this Guaranty
(i) do not and will not contravene any provisions of Guarantor's certificate of
incorporation or bylaws, or any law, rule, regulation, order, judgment or decree
applicable to or binding on Guarantor or any of its Affiliates or properties;
(ii) do not and will not contravene, or result in any breach of or constitute
any default under, any agreement or instrument to which Guarantor is a party or
by which Guarantor or any of its properties may be bound or affected; and (iii)
do not and will not
4
260
require the consent of any Person under any existing law or agreement which has
not already been obtained.
(f) There is no pending or, to the best of Guarantor's
knowledge, threatened action or proceeding affecting Guarantor before any court,
governmental agency or arbitrator, which might reasonably be expected to
materially and adversely affect the financial condition, results of operations,
business or prospects of Guarantor or the ability of Guarantor to perform its
obligations under this Guaranty.
(g) Guarantor possesses all franchises, certificates,
licenses, permits and other governmental authorizations and approvals necessary
for it to own its properties, conduct its businesses and perform its obligations
under this Guaranty.
(h) Guarantor is not an investment company or a company
controlled by an investment company, within the meaning of the Investment
Company Act of 1940, and is not subject to, or is exempt from, regulation under
the Public Utility Holding Company Act of 1935 and the Federal Power Act.
(i) Guarantor has established adequate means of obtaining
financial and other information pertaining to the businesses, operations and
condition (financial and otherwise) of each of the Affiliated Parties and their
respective properties on a continuing basis, and Guarantor now is and hereafter
will be completely familiar with the businesses, operations and condition
(financial and otherwise) of each of the Affiliated Parties and their respective
properties.
(j) (i) Guarantor is not, and will not as a result of the
execution and delivery of this Guaranty, be rendered insolvent, (ii) Guarantor
does not intend to incur, or believe it is incurring, obligations beyond its
ability to pay and (iii) Guarantor's property remaining after the delivery and
performance of this Guaranty will not constitute unreasonably small capital.
3. Covenants. So long as any Obligations are outstanding,
Guarantor agrees that:
(a) It will maintain in full force and effect all consents of
any governmental or other authority that are required to be obtained by it with
respect to this Guaranty and will obtain any that may become necessary in the
future;
(b) It will comply in all material respects with all
applicable laws and orders to which it may be subject if failure so to comply
would materially impair its ability to perform its obligations under this
Guaranty;
(c) Promptly, and in any event within 30 Banking Days after
the General Counsel of Guarantor obtains knowledge thereof, Guarantor will give
to CCFC notice of the occurrence of any event or of any litigation or
governmental proceeding pending (i) against
5
261
Guarantor or any of its Affiliates which could affect the business, operations,
property, assets or condition (financial or otherwise) of Guarantor so as to
materially and adversely affect the ability of Guarantor to perform its
obligations hereunder or (ii) with respect to this Guaranty, which event or
pending proceeding is likely to materially and adversely affect the business,
operations, property, assets or condition (financial or otherwise) of Guarantor
and its Affiliates taken as a whole;
(d) It will deliver such other documents and other
information reasonably requested by CCFC; and
(e) It will comply in all material respects with its
certificate of incorporation.
4. Waiver. Guarantor hereby waives and relinquishes all rights
and remedies accorded by applicable law to sureties or guarantors and agrees not
to assert or take advantage of any such rights or remedies, including without
limitation (a) any right to require CCFC to proceed against any of the
Affiliated Parties or any other person or to proceed against or exhaust any
security held by CCFC at any time or to pursue any other remedy in CCFC's power
before proceeding against Guarantor, (b) any defense that may arise by reason of
the incapacity, lack of power or authority, death, dissolution, merger,
termination or disability of any of the Affiliated Parties or any other Person
or the failure of CCFC to file or enforce a claim against the estate (in
administration, bankruptcy or any other proceeding) of any of the Affiliated
Parties or any other Person, (c) demand, presentment, protest and notice of any
kind, including without limitation notice of the existence, creation or
incurring of any new or additional indebtedness or obligation or of any action
or non-action on the part of any of the Affiliated Parties, CCFC, any endorser
or creditor of any of the Affiliated Parties or Guarantor or on the part of any
other person under this or any other instrument in connection with any
obligation or evidence of indebtedness held by CCFC as collateral or in
connection with any Obligations, (d) any defense based upon an election of
remedies by CCFC, including without limitation an election to proceed by
non-judicial rather than judicial foreclosure, which destroys or otherwise
impairs the subrogation rights of Guarantor, the right of Guarantor to proceed
against any of the Affiliated Parties for reimbursement, or both, (e) any
defense based on any offset against any amounts which may be owed by any Person
to Guarantor for any reason whatsoever, (f) any defense based on any act,
failure to act, delay or omission whatsoever on the part of any of the
Affiliated Parties or the failure by any of the Affiliated Parties to do any act
or thing or to observe or perform any covenant, condition or agreement to be
observed or performed by it under the Relevant Documents, (g) any defense based
upon any statute or rule of law which provides that the obligation of a surety
must be neither larger in amount nor in other respects more burdensome than that
of the principal provided, that, upon payment in full of the Obligations, this
Guaranty shall no longer be of any force or effect, (h) any defense, setoff or
counterclaim which may at any time be available to or asserted by any of the
Affiliated Parties against CCFC or any other Person under the Relevant
Documents, (i) any duty on the part of CCFC to disclose to Guarantor any facts
CCFC may now or hereafter know about any of the Affiliated Parties, regardless
of whether CCFC have reason to believe that any such facts materially increase
the risk beyond that which Guarantor intends to assume, or have reason to
believe that such facts are unknown to Guarantor,
6
262
or have a reasonable opportunity to communicate such facts to Guarantor, since
Guarantor acknowledges that Guarantor is fully responsible for being and keeping
informed of the financial condition of any of the Affiliated Parties and of all
circumstances bearing on the risk of non-payment of any obligations and
liabilities hereby guaranteed, (j) the fact that Guarantor may at any time in
the future dispose of all or part of its direct or indirect interest in any of
the Affiliated Parties, (k) any defense based on any change in the time, manner
or place of any payment under, or in any other term of, the Relevant Documents
or any other amendment, renewal, extension, acceleration, compromise or waiver
of or any consent or departure from the terms of the Relevant Documents, (l) any
defense arising because of CCFC's election, in any proceeding instituted under
the Federal Bankruptcy Code, of the application of Section 1111(b)(2) of the
Federal Bankruptcy Code, and (m) any defense based upon any borrowing or grant
of a security interest under Section 364 of the Federal Bankruptcy Code.
5. Subordination. Except as otherwise specifically provided in
this Guaranty, all existing and future indebtedness of any of the Affiliated
Parties to Guarantor (except to the extent such indebtedness is incurred in the
ordinary course of business and relates to costs of materials or services
provided pursuant to or consistent with the Relevant Documents) and the right of
Guarantor to withdraw any capital invested by Guarantor in any of the Affiliated
Parties, is hereby subordinated to all obligations and liabilities hereby
guaranteed. Without the prior written consent of CCFC or Administrative Agent,
such subordinated indebtedness shall not be paid or withdrawn in whole or in
part, nor shall Guarantor accept any payment of or on account of any such
indebtedness or as a withdrawal of capital while this Guaranty is in effect. Any
payment by any of the Affiliated Parties in violation of this Guaranty shall be
received by Guarantor in trust for CCFC, and Guarantor shall cause the same to
be paid to CCFC immediately upon demand by CCFC on account of the relevant
Affiliated Parties' obligations and liabilities hereby guaranteed. Guarantor
shall not assign all or any portion of such indebtedness while this Guaranty
remains in effect except upon prior written notice to CCFC by which the assignee
of any such indebtedness agrees that the assignment is made subject to the terms
of this Guaranty, and that any attempted assignment of such indebtedness in
violation of the provisions hereof shall be void.
6. Subrogation. Until the Obligations have been paid in full, (a)
Guarantor shall not have any right of subrogation and waives all rights to
enforce any remedy which CCFC now have or may hereafter have against any of the
Affiliated Parties, and waives the benefit of, and all rights to participate in,
any security now or hereafter held by CCFC from any of the Affiliated Parties
and (b) Guarantor waives any claim, right or remedy which Guarantor may now have
or hereafter acquire against any of the Affiliated Parties that arises hereunder
and/or from the performance by the Guarantor hereunder including, without
limitation, any claim, remedy or right of subrogation, reimbursement,
exoneration, contribution, indemnification, or participation in any claim, right
or remedy of CCFC against any of the Affiliated Parties, or any security which
CCFC now have or hereafter acquire, whether or not such claim, right or remedy
arises in equity, under contract, by statute, under common law or otherwise.
7. Bankruptcy.
7
263
(a) So long as any of the Obligations are owed to CCFC,
Guarantor shall not, without the prior written consent of CCFC, commence, or
join with any other Person in commencing, any bankruptcy, reorganization, or
insolvency proceeding against any of the Affiliated Parties. The obligations of
Guarantor under this Guaranty shall not be altered, limited or affected by any
proceeding, voluntary or involuntary, involving the bankruptcy, reorganization,
insolvency, receivership, liquidation or arrangement of any of the Affiliated
Parties, or by any defense which any of the Affiliated Parties may have by
reason of any order, decree or decision of any court or administrative body
resulting from any such proceeding.
(b) So long as any Obligations are owed to CCFC, to the
extent of such Obligations, Guarantor shall file, in any bankruptcy or other
proceeding in which the filing of claims is required or permitted by law, all
claims which Guarantor may have against any of the Affiliated Parties relating
to any indebtedness of any of the Affiliated Parties to Guarantor, and hereby
assigns to CCFC all rights of Guarantor thereunder. If Guarantor does not file
any such claim, CCFC, is hereby authorized to do so in the name of Guarantor or,
in CCFC's discretion, to assign the claim to a nominee and to cause proofs of
claim to be filed in the name of CCFC's nominee. The foregoing power of attorney
is coupled with an interest and cannot be revoked. CCFC or its nominee shall
have the sole right to accept or reject any plan proposed in any such proceeding
and to take any other action which a party filing a claim is entitled to take.
In all such cases, whether in administration, bankruptcy or otherwise, the
person authorized to pay such a claim shall pay the same to CCFC to the extent
of any Obligations which then remain unpaid, and, to the full extent necessary
for that purpose, Guarantor hereby assigns to CCFC all of Guarantor's rights to
all such payments or distributions to which Guarantor would otherwise be
entitled; provided, however, that Guarantor's obligations hereunder shall not be
satisfied except to the extent that CCFC receives cash by reason of any such
payment or distribution. If CCFC receives anything hereunder other than cash,
the same shall be held as collateral for amounts due under this Guaranty.
8. Successions or Assignments.
(a) This Guaranty shall inure to the benefit of the
successors or assigns of CCFC who shall have, to the extent of their interest,
the rights of CCFC hereunder.
(b) This Guaranty is binding upon Guarantor and its
successors and assigns. Guarantor is not entitled to assign its obligations
hereunder to any other person without the written consent of CCFC and
Administrative Agent, and any purported assignment in violation of this
provision shall be void.
9. Waivers.
(a) No delay on the part of CCFC in exercising any of their
rights (including those hereunder) and no partial or single exercise thereof and
no action or non-action by CCFC, with or without notice to Guarantor or anyone
else, shall constitute a waiver of any rights or shall affect or impair this
Guaranty.
8
264
(b) GUARANTOR HEREBY WAIVES ITS RIGHT TO A JURY TRIAL OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS GUARANTY OR RELATING
TO THE SUBJECT MATTER OF THIS GUARANTY AND THE RELATIONSHIP BETWEEN GUARANTOR
AND CCFC THAT IS BEING ESTABLISHED. GUARANTOR ACKNOWLEDGES THAT THIS WAIVER IS A
MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT CCFC HAS ALREADY
RELIED ON THE WAIVER IN ENTERING INTO THIS GUARANTY, AND THAT CCFC WILL CONTINUE
TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS. GUARANTOR FURTHER
WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL,
AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL.
10. Interpretation. The section headings in this Guaranty are for
the convenience of reference only and shall not affect the meaning or
construction of any provision hereof.
11. Notices. All notices in connection with this Guaranty shall
be given by telex or cable or by notice in writing hand-delivered or sent by
facsimile transmission or by certified mail return-receipt requested (airmail,
if overseas), postage prepaid. All such notices shall be sent to the appropriate
telex or telecopier number or address, as the case may be, set forth in Section
15 below or to such other number or address as shall have been subsequently
specified by written notice to the other party, and shall be sent with copies,
if any, as indicated below. All such notices shall be effective upon receipt,
and confirmation by answerback of any such notice so sent by telex shall be
sufficient evidence of receipt thereof.
12. Amendments. This Guaranty may be amended only with the
written consent of the parties hereto.
13. Jurisdiction; Governing Law.
(a) Any action or proceeding relating in any way to this
Guaranty may be brought and enforced in the courts of the State of New York or
of the United States for the Southern District of New York. Any such process or
summons in connection with any such action or proceeding may be served by
mailing a copy thereof by certified or registered mail, or any substantially
similar form of mail, addressed to Guarantor as provided for notices hereunder.
(b) This Guaranty and the rights and obligations of CCFC and
of the Guarantor shall be governed by and construed in accordance with the law
of the State of New York without reference to principles of conflicts of laws
(other than Section 5-1401 of the New York General Obligations Law).
14. Integration of Terms. This Guaranty contains the entire
agreement between the Guarantor and CCFC relating to the subject matter hereof
and supersedes all oral statements and prior writing with respect hereto.
9
265
15. Addresses.
(a) The address of Guarantor for notices is:
Calpine Corporation
00 Xxxx Xxx Xxxxxxxx Xxxxxx
Xxx Xxxx, Xxxxxxxxxx 00000
Attention: Asset Management and General Counsel
Telephone Number: (000) 000-0000
Telecopier Number: (000) 000-0000
and
0000 Xxxx Xxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxxxx 00000
Attn: Corporate Asset Management
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
(b) The address of CCFC for notices is:
Calpine Corporation
00 Xxxx Xxx Xxxxxxxx Xxxxxx
Xxx Xxxx, Xxxxxxxxxx 00000
Attention: Asset Management and General Counsel
Telephone Number: (000) 000-0000
Telecopy Number: (000) 000-0000
and
0000 Xxxx Xxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxxxx 00000
Attn: Corporate Asset Management
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
(c) The address of Administrative Agent for notices is:
The Bank of Nova Scotia
000 Xxxxxxxxx Xxxxxx, X.X., Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx Xxxxxxxx
Telephone Number: (000) 000-0000
Telecopy Number: (000) 000-0000
10
266
16. Interest; Collection Expenses. Any amount required to be paid
by Guarantor pursuant to the terms hereof shall bear interest at the Default
Rate or the maximum rate permitted by law, whichever is less, from the date due
until paid in full. If CCFC are required to pursue any remedy against Guarantor
hereunder, Guarantor shall pay to CCFC, as the case may be, upon demand, all
reasonable attorneys' fees and expenses all other costs and expenses incurred by
CCFC in enforcing this Guaranty.
17. Reinstatement of Guaranty. This Guaranty shall continue to be
effective or be reinstated, as the case may be, if at any time any payment to or
on behalf of any of the Affiliated Parties or to CCFC by any of the Affiliated
Parties under the Relevant Documents or by Guarantor hereunder is rescinded or
must otherwise be returned by CCFC upon the insolvency, bankruptcy,
reorganization, dissolution or liquidation of any of the Affiliated Parties or
otherwise, all as though such payment had not been made.
18. Counterparts. The Guaranty may be executed in one or more
duplicate counterparts, and when executed and delivered by all of the parties
listed below shall constitute a single binding agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
11
267
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be
duly executed and delivered in San Jose, California as of the day and year first
written above.
CALPINE CORPORATION,
a Delaware corporation
By:
---------------------------------------------
Name:
Title:
Agreed and accepted.
CALPINE CONSTRUCTION FINANCE COMPANY, L.P.,
a Delaware limited partnership
By: CALPINE CCFC GP, INC.,
a Delaware corporation,
its General Partner
By:
----------------------------------
Name:
Title:
268
EXHIBIT D2-B
to the Credit Agreement
COMPLETION GUARANTY
THIS COMPLETION GUARANTY (this "Guaranty") dated as of , 1999 is made by
CALPINE CORPORATION, a Delaware corporation ("Guarantor"), in favor of THE BANK
OF NOVA SCOTIA, as Administrative Agent ("Administrative Agent") for the Banks
under that certain Credit Agreement (the "Credit Agreement") dated as of October
20, 1999, among Calpine Construction Finance Company, L.P., a Delaware limited
partnership, as Borrower ("Borrower"), the financial institutions listed on
Exhibit H thereto, (the "Banks"), Credit Suisse First Boston, as Lead Arranger,
Syndication Agent and Bookrunner and The Bank of Nova Scotia, as Lead Arranger,
LC Bank and Administrative Agent.
RECITALS
A. Guarantor owns all the outstanding stock of each of Calpine CCFC
GP, Inc., a Delaware corporation, the sole general partner of Borrower, and each
of the limited partners of Borrower.
B. Administrative Agent and the Banks have agreed to enter into the
Credit Agreement with Borrower on the condition that Guarantor guarantee certain
of Borrower's obligations thereunder as provided herein.
C. Guarantor acknowledges that it will benefit, directly and
indirectly, if Administrative Agent and the Banks enter into the Credit
Agreement.
D. The obligations of Guarantor hereunder are being incurred
concurrently with the obligations of Borrower under the Credit Agreement.
E. Capitalized terms used but not defined herein shall have the
respective meanings given them in Exhibit A to the Credit Agreement and the
Rules of Interpretations contained in said Exhibit A shall apply hereto.
AGREEMENT
NOW, THEREFORE, in consideration of the premises set forth above and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged and as an inducement to Administrative Agent and the Banks
to enter into the Credit Agreement with Borrower, Guarantor hereby consents and
agrees as follows:
1. Guaranty.
(a) The undersigned Guarantor, as primary obligor and not
merely as surety, unconditionally and irrevocably guarantees to the Banks (i)
the performance, when due, of the obligations of Borrower under Section 5.14 of
the Credit Agreement to achieve Completion of each of the Initial Projects and
the Funded Subsequent Projects (including with respect to any partially owned
Projects), (ii) the payment, when due, of the obligations of Borrower under
Section 5.17.2 of the Credit Agreement and (iii) if Borrower is unable to obtain
a disbursement of Loan proceeds under the Credit
269
Agreement for any Project for which the requirements of Section 5.14 of the
Credit Agreement have not been waived in accordance with the terms of the Credit
Agreement for a period of 60 consecutive days after a request for the same
pursuant to a Drawdown Certificate delivered pursuant to Section 3.4 of the
Credit Agreement, the prompt payment, when due, of the Project Costs for which
funds were requested in such Drawdown Certificate, in each case together with
the payment of all expenses incurred by Administrative Agent or the Banks in
enforcing any of such obligations and liabilities or the terms hereof,
including, without limitation, reasonable fees and expenses of legal counsel
(collectively, the "Obligations"), and agrees that if for any reason Borrower
shall fail to pay or perform, as the case may be, when due any of such
Obligations, Guarantor will pay or perform, as the case may be, the same
forthwith; provided, however, if the default giving rise to the potential
exercise of remedies is susceptible of cure and the failure to so exercise
remedies could not reasonably be expected to have a Material Adverse Effect,
Administrative Agent and the Banks shall not exercise any remedies in the nature
of foreclosure on or sale of any Collateral, appointment of a receiver, entry
into possession of any Project or other remedies under the Credit Documents
intended to or having the effect of depriving Borrower of the use, possession or
enjoyment of any of the Projects as a result of an Event of Default thereunder
for 90 days so long as Guarantor is diligently pursuing performance of the
Obligations and/or diligently attempting to refinance all outstanding Loans
under the Credit Agreement. Guarantor waives notice of acceptance of this
Guaranty and of any obligation to which it applies or may apply under the terms
hereof, and waives diligence, presentment, demand of payment or performance,
notice of dishonor or non-payment or non-performance, protest, notice of
protest, of any such obligations, suit or taking other action by the Banks
against, and giving any notice of default or other notice to, or making any
demand on, any party liable thereon (including Guarantor).
(b) This Guaranty is a primary obligation of Guarantor and is
an absolute, unconditional, continuing and irrevocable guaranty of payment and
performance, as the case may be, of the Obligations and not of collectibility,
and is in no way conditioned on or contingent upon any attempt to enforce in
whole or in part Borrower's liabilities and obligations to the Banks. If
Borrower shall fail to pay or perform, as the case may be, any of the
Obligations to the Banks as and when they are due, Guarantor shall forthwith pay
or perform, as the case may be, such Obligations immediately (in the case of
payment obligations, in immediately available funds). Each failure by Borrower
to pay or perform, as the case may be, any Obligations shall give rise to a
separate cause of action herewith, and separate suits may be brought hereunder
as each cause of action arises.
(c) The Banks may, at any time and from time to time (whether
or not after revocation or termination of this Guaranty) without the consent of
or notice to Guarantor, except such notice as may be required by the Credit
Agreement or applicable law which cannot be waived, without incurring
responsibility to Guarantor, without impairing or releasing the obligations of
Guarantor hereunder, upon or without any terms or conditions and in whole or in
part, (i) change the manner, place and terms of payment or performance or change
or extend the time of payment or performance of, or renew or alter, any
Obligation, or any obligations and liabilities (including any of those
hereunder) incurred directly or indirectly in respect thereof or hereof or in
any manner modify, amend or supplement the terms of the Credit Agreement
(including provisions with respect to the Completion of the Projects), any
documents, instruments or agreements executed in connection therewith, in each
case with the consent of Borrower, if required by the Credit Agreement, and the
guaranty herein made shall apply to the Obligations changed, extended, renewed,
modified, amended, supplemented or altered in any manner; (ii) exercise or
refrain from exercising any rights against Borrower or others (including
Guarantor) or otherwise act or refrain from acting; (iii) add or release any
other guarantor from its obligations without affecting or impairing the
obligations of Guarantor hereunder; (iv) settle or compromise any Obligations
and/or any obligations and liabilities (including any of those hereunder)
incurred directly or indirectly in respect thereof or hereof, and may
subordinate the payment or performance of all or any part thereof to the payment
or performance of any obligations and liabilities which may be due to the Banks
or others;
2
270
(v) sell, exchange, release, surrender, realize upon or otherwise deal with in
any manner or in any order any property by whomsoever pledged or mortgaged to
secure or howsoever securing the Obligations or any liabilities or obligations
(including any of those hereunder) incurred directly or indirectly in respect
thereof or hereof and/or any offset thereagainst; (vi) apply any sums by
whomsoever paid or howsoever realized to any obligations and liabilities of
Borrower to the Banks under the Credit Agreement or the other Credit Documents
in the manner provided therein regardless of what obligations and liabilities
remain unpaid; (vii) consent to or waive any breach of, or any act, omission or
default under, the Credit Agreement (including provisions with respect to the
Completion of the Projects) or otherwise amend, modify or supplement (with the
consent of Borrower, if required by the Credit Agreement) the Credit Agreement
(including provisions with respect to the Completion of the Projects) or any of
such other instruments or agreements; and/or (viii) act or fail to act in any
manner referred to in this Guaranty which may deprive Guarantor of its right to
subrogation against Borrower to recover full indemnity for any payments or
performances made pursuant to this Guaranty or of its right of contribution
against any other party.
(d) No invalidity, irregularity or unenforceability of the
obligations or liabilities hereby guaranteed shall affect, impair or be a
defense to this Guaranty, which is a primary obligation of Guarantor.
(e) This is a continuing Guaranty and all obligations to which
it applies or may apply under the terms hereof shall be conclusively presumed to
have been created in reliance hereon. In the event that, notwithstanding the
provisions of Section 1(a) hereof, this Guaranty shall be deemed revocable in
accordance with applicable law, then any such revocation shall become effective
only upon receipt by Administrative Agent of written notice of revocation signed
by Guarantor. No revocation or termination hereof shall affect in any manner
rights arising under this Guaranty with respect to Obligations arising prior to
receipt by Administrative Agent of written notice of such revocation or
termination.
(f) (i) Except as otherwise required by law, each payment
required to be made by Guarantor to the Banks hereunder shall be made without
deduction or withholding for or on account of Taxes. If such deduction or
withholding is so required, Guarantor shall, upon notice thereof from
Administrative Agent, (A) pay the amount required to be deducted or withheld to
the appropriate authorities before penalties attach thereto or interest accrues
thereon, (B) on or before the 60th day after payment of such amount, forward to
the Banks an official receipt evidencing such payment (or a certified copy
thereof), and (C) in the case of any such deduction or withholding, forthwith
pay to Administrative Agent for the account of the Banks such additional amount
as may be necessary to ensure that the net amount actually received by the Banks
is free and clear of such Taxes, including any Taxes on such additional amount,
is equal to the amount that the Banks would have received had there been no such
deduction or withholding.
(ii) As used herein, the term "Tax" means any present or
future tax, levy, impost, duty, charge, assessment or fee of any nature
(including interest, penalties and additions thereto) that is imposed by any
government or other taxing authority in respect of any payment under this
Guaranty other than (A) any income, franchise or similar tax imposed upon the
gross or net income of Administrative Agent or any Bank by the United States,
New York State, any jurisdiction where Administrative Agent or any Bank is
organized and/or the jurisdiction in which is located any office from or at
which Administrative Agent or any Bank is making or maintaining any Loans or
receiving any payments under any of the Credit Documents and (B) any stamp,
registration, documentation or similar tax.
3
271
(g) In fulfilling its obligations hereunder with respect to
the Obligations set forth in Section 1(a)(i) hereof, Guarantor hereby
irrevocably and unconditionally guarantees, promises and agrees to perform and
comply with Section 5.14 of the Credit Agreement. The words "perform and comply
with" are used in their most comprehensive sense and include without limitation
(i) the payment of all costs and expenses with respect to the construction of
the Initial Projects and the Funded Subsequent Projects and the construction of
such Projects within the time and in the manner set forth in Section 5.14 of the
Credit Agreement, (ii) the payment, satisfaction or discharge of all Liens
(other than Permitted Liens other than the Liens described in clause (c) of the
definition of "Permitted Liens") arising out of or relating to the construction
and Completion of, and that are or may be imposed upon or asserted against, the
Initial Projects and the Funded Subsequent Projects and (iii) the defense and
indemnification of the Banks against all such Liens, whether arising from the
furnishing of labor, materials, supplies or equipment, from taxes, assessments,
fees or other charges, from injuries or damage to persons or property, or
otherwise. Without limiting the generality of the foregoing, Guarantor agrees
(A) to cause any and all costs of achieving Completion of each of the Initial
Projects and the Funded Subsequent Projects, including without limitation the
costs of all labor, materials, supplies and equipment related thereto and any
and all costs and cost overruns prior to such Completion, to be funded, paid and
satisfied from Guarantor's own resources as the same shall become due and (B) to
cause the Completion of each of the Initial Projects and the Funded Subsequent
Projects, using Guarantor's own resources, in a timely, good and workmanlike
manner, in accordance with the terms of the Credit Documents; provided, however,
that Guarantor shall not be required to pay any performance and/or other
liquidated damages due and owing from a Contractor (other than a Contractor that
is an Affiliate of Guarantor) under a Construction Contract; provided, further,
Guarantor's liability with respect to such liquidated damages shall be limited
to the amount specified in clause (vii)(B) of the definition of "Completion"
less the amount of any such liquidated damages determined to be due and owing
from any applicable Contractors.
2. Representations and Warranties. Guarantor makes the
representations and warranties set forth below to Administrative Agent and the
Banks as of the date hereof:
(a) Guarantor is duly formed, validly existing and in good
standing under the laws of the State of Delaware and has the power and authority
to execute and deliver this Guaranty and to perform its obligations hereunder.
(b) Guarantor has taken all necessary corporate action to
authorize the execution and delivery of this Guaranty and the performance of its
obligations hereunder.
(c) All governmental authorizations and actions necessary in
connection with the execution and delivery by Guarantor of this Guaranty and the
performance of its obligations hereunder have been obtained or performed and
remain valid and in full force and effect.
(d) This Guaranty has been duly executed and delivered by
Guarantor and constitutes the legal, valid and binding obligation of Guarantor,
enforceable against Guarantor in accordance with the terms of this Guaranty,
subject to applicable bankruptcy, insolvency and other similar laws affecting
creditors' rights generally.
(e) The execution, delivery and performance of this Guaranty
(i) do not and will not contravene any provisions of Guarantor's certificate of
incorporation or bylaws, or any law, rule, regulation, order, judgment or decree
applicable to or binding on Guarantor or any of its Affiliates or properties;
(ii) do not and will not contravene, or result in any breach of or constitute
any default under, any agreement or instrument to which Guarantor is a party or
by which Guarantor or any of its properties
4
272
may be bound or affected; and (iii) do not and will not require the consent of
any Person under any existing law or agreement which has not already been
obtained.
(f) There is no pending or, to the best of Guarantor's
knowledge, threatened action or proceeding affecting Guarantor before any court,
governmental agency or arbitrator, which might reasonably be expected to
materially and adversely affect the financial condition, results of operations,
business or prospects of Guarantor or the ability of Guarantor to perform its
obligations under this Guaranty.
(g) All quarterly and annual financial statements heretofore
delivered by Guarantor to Administrative Agent are true, correct and complete,
do not fail to disclose any material liabilities, whether direct or contingent,
fairly present the financial condition of Guarantor as of the date delivered and
are prepared in accordance with generally accepted accounting principles
consistently applied.
(h) Guarantor possesses all franchises, certificates,
licenses, permits and other governmental authorizations and approvals necessary
for it to own its properties, conduct its businesses and perform its obligations
under this Guaranty.
(i) Guarantor is not an investment company or a company
controlled by an investment company, within the meaning of the Investment
Company Act of 1940, and is not subject to, or is exempt from, regulation under
the Public Utility Holding Company Act of 1935 and the Federal Power Act.
(j) Guarantor has established adequate means of obtaining
financial and other information pertaining to the businesses, operations and
condition (financial and otherwise) of Borrower and its properties on a
continuing basis, and Guarantor now is and hereafter will be completely familiar
with the businesses, operations and condition (financial and otherwise) of
Borrower and its properties.
(k) (i) Guarantor is not, and will not as a result of the
execution and delivery of this Guaranty, be rendered insolvent, (ii) Guarantor
does not intend to incur, or believe it is incurring, obligations beyond its
ability to pay or perform and (iii) Guarantor's property remaining after the
delivery and performance of this Guaranty will not constitute unreasonably small
capital.
(l) Guarantor is not in default under any material agreement
relating to the incurrence of debt to which it is a party.
3. Covenants. So long as any Obligations are outstanding, Guarantor
agrees that:
(a) It will maintain in full force and effect all consents of
any governmental or other authority that are required to be obtained by it with
respect to this Guaranty and will obtain any that may become necessary in the
future;
(b) It will comply in all material respects with all
applicable laws and orders to which it may be subject if failure so to comply
would materially impair its ability to perform its obligations under this
Guaranty;
(c) Promptly, and in any event within 30 Banking Days after
the General Counsel of Guarantor obtains knowledge thereof, Guarantor will give
to Administrative Agent notice of the occurrence of any event or of any
litigation or governmental proceeding pending (i) against Guarantor
5
273
or any of its Affiliates which could affect the business, operations, property,
assets or condition (financial or otherwise) of Guarantor so as to materially
and adversely affect the ability of Guarantor to perform its obligations
hereunder or (ii) with respect to this Guaranty, which event or pending
proceeding is likely to materially and adversely affect the business,
operations, property, assets or condition (financial or otherwise) of Guarantor
and its Affiliates taken as a whole;
(d) It will deliver such other documents and other information
reasonably requested by Administrative Agent;
(e) It will comply in all material respects with its
certificate of incorporation;
(f) Guarantor will not permit its:
(i) Tangible Net Worth to be less than (A) $415,000,000
plus (B) 50% of the consolidated net income of Guarantor and its Subsidiaries
(without giving effect to any losses) for each Fiscal Quarter ending on or after
June 30, 1999 plus (C) 100% of the Net Equity Proceeds from any equity offering
by Guarantor after June 30, 1999;
(ii) Leverage Ratio to be greater than .85 to 1.00 as of
the end of any Fiscal Quarter;
(iii) Interest Coverage Ratio as of the end of any Fiscal
Quarter to be less than 1.75 to 1.00 for the 12 month period comprising the four
previous Fiscal Quarters; or
(iv) Interest Coverage Ratio (Parent Only) as of the end
of any Fiscal Quarter to be less than 1.60 to 1.00 for the 12 month period
comprising the four previous Fiscal Quarters.
Guarantor shall furnish, or shall cause to be furnished, to Administrative Agent
as soon as possible and in any event within 60 days after the end of each of the
first three Fiscal Quarters of each Fiscal Year and within 120 days after the
end of each Fiscal Year, a certificate, executed by a Responsible Officer of
Guarantor, showing (in reasonable detail and with appropriate calculations and
computations in all respects reasonably satisfactory to Administrative Agent)
compliance with the covenants set forth in this Section 3(f).
Capitalized terms used in this Section 3(f) and defined in Appendix A attached
hereto shall have the meanings given therein.
4. Waiver. Guarantor hereby waives and relinquishes all rights and
remedies accorded by applicable law to sureties or guarantors and agrees not to
assert or take advantage of any such rights or remedies, including without
limitation (a) any right to require Administrative Agent or the Banks to proceed
against Borrower or any other person or to proceed against or exhaust any
security held by Administrative Agent or the Banks at any time or to pursue any
other remedy in Administrative Agent's or the Banks' power before proceeding
against Guarantor, (b) any defense that may arise by reason of the incapacity,
lack of power or authority, death, dissolution, merger, termination or
disability of Borrower or any other Person or the failure of Administrative
Agent or the Banks to file or enforce a claim against the estate (in
administration, bankruptcy or any other proceeding) of Borrower or any other
Person, (c) demand, presentment, protest and notice of any kind except as
provided herein, including without limitation notice of the existence, creation
or incurring of any new or additional indebtedness or obligation or of any
action or non-action on the part of Borrower, Administrative Agent, the Banks,
any endorser or creditor of Borrower or Guarantor or on the part of any other
person under this or any other
6
274
instrument in connection with any obligation or evidence of indebtedness held by
Administrative Agent or the Banks as collateral or in connection with any
Obligations, (d) any defense based upon an election of remedies by
Administrative Agent or the Banks, including without limitation an election to
proceed by non-judicial rather than judicial foreclosure, which destroys or
otherwise impairs the subrogation rights of Guarantor, the right of Guarantor to
proceed against Borrower for reimbursement, or both, (e) any defense based on
any offset against any amounts which may be owed by any Person to Guarantor for
any reason whatsoever, (f) any defense based on any act, failure to act, delay
or omission whatsoever on the part of Borrower of the failure by Borrower to do
any act or thing or to observe or perform any covenant, condition or agreement
to be observed or performed by it under the Credit Documents, (g) any defense
based upon any statute or rule of law which provides that the obligation of a
surety must be neither larger in amount nor in other respects more burdensome
than that of the principal provided, that, upon payment or performance in full
of the Obligations, this Guaranty shall no longer be of any force or effect, (h)
any defense, setoff or counterclaim which may at any time be available to or
asserted by Borrower against Administrative Agent, the Banks or any other Person
under the Credit Agreement, (i) any duty on the part of Administrative Agent or
the Banks to disclose to Guarantor any facts Administrative Agent or the Banks
may now or hereafter know about Borrower, regardless of whether Administrative
Agent or the Banks have reason to believe that any such facts materially
increase the risk beyond that which Guarantor intends to assume, or have reason
to believe that such facts are unknown to Guarantor, or have a reasonable
opportunity to communicate such facts to Guarantor, since Guarantor acknowledges
that Guarantor is fully responsible for being and keeping informed of the
financial condition of Borrower and of all circumstances bearing on the risk of
non-payment or non-performance of any obligations and liabilities hereby
guaranteed, (j) the fact that Guarantor may at any time in the future dispose of
all or part of its direct or indirect interest in Borrower, (k) any defense
based on any change in the time, manner or place of any payment or performance
under, or in any other term of, the Credit Agreement (including provisions with
respect to the Completion of the Projects) or any other amendment, renewal,
extension, acceleration, compromise or waiver of or any consent or departure
from the terms of the Credit Agreement (including provisions with respect to the
Completion of the Projects), (l) any defense arising because of Administrative
Agent's or the Banks' election, in any proceeding instituted under the Federal
Bankruptcy Code, of the application of Section 1111(b)(2) of the Federal
Bankruptcy Code, and (m) any defense based upon any borrowing or grant of a
security interest under Section 364 of the Federal Bankruptcy Code.
5. Subordination. Except as otherwise specifically provided in this
Guaranty, all existing and future indebtedness of Borrower to Guarantor (except
to the extent such indebtedness consists of approved operating expenses or other
O&M Costs with respect to materials or services provided consistent with an
applicable Annual Operating Budget) and the right of Guarantor to withdraw any
capital invested by Guarantor in Borrower, is hereby subordinated to all
obligations and liabilities hereby guaranteed. Without the prior written consent
of Administrative Agent, such subordinated indebtedness shall not be paid or
withdrawn in whole or in part, nor shall Guarantor accept any payment of or on
account of any such indebtedness or as a withdrawal of capital while the Credit
Agreement is in effect except from distributions permitted under Waterfall Level
8 and 10 of Section 7.2 of the Credit Agreement or as permitted under Section
3.8(b) of the Credit Agreement. Any payment by Borrower in violation of this
Guaranty shall be received by Guarantor in trust for Administrative Agent and
the Banks, and Guarantor shall cause the same to be paid to Administrative Agent
for the benefit of the Banks immediately upon demand by Administrative Agent on
account of Borrower's obligations and liabilities hereby guaranteed. Guarantor
shall not assign all or any portion of such indebtedness while the Credit
Agreement remains in effect except upon prior written notice to Administrative
Agent by which the assignee of any such indebtedness agrees that the assignment
is made subject to the terms of this Guaranty, and that any attempted assignment
of such indebtedness in violation of the provisions hereof shall be void.
7
275
6. Subrogation. So long as the Credit Agreement remains in effect,
(a) Guarantor shall not have any right of subrogation and waives all rights to
enforce any remedy which the Banks now have or may hereafter have against
Borrower, and waives the benefit of, and all rights to participate in, any
security now or hereafter held by Administrative Agent or the Banks from
Borrower and (b) Guarantor waives any claim, right or remedy which Guarantor may
now have or hereafter acquire against Borrower that arises hereunder and/or from
the performance by Guarantor hereunder including, without limitation, any claim,
remedy or right of subrogation, reimbursement, exoneration, contribution,
indemnification, or participation in any claim, right or remedy of the Banks
against Borrower, or any security which the Banks now have or hereafter acquire,
whether or not such claim, right or remedy arises in equity, under contract, by
statute, under common law or otherwise.
7. Bankruptcy.
(a) So long as the Credit Agreement remains in effect,
Guarantor shall not, without the prior written consent of Administrative Agent,
commence, or join with any other Person in commencing, any bankruptcy,
reorganization, or insolvency proceeding against Borrower. The obligations of
Guarantor under this Guaranty shall not be altered, limited or affected by any
proceeding, voluntary or involuntary, involving the bankruptcy, reorganization,
insolvency, receivership, liquidation or arrangement of Borrower, or by any
defense which Borrower may have by reason of any order, decree or decision of
any court or administrative body resulting from any such proceeding.
(b) So long as the Credit Agreement remains in effect, to the
extent of any Obligations, Guarantor shall file, in any bankruptcy or other
proceeding in which the filing of claims is required or permitted by law, all
claims which Guarantor may have against Borrower relating to any indebtedness of
Borrower to Guarantor, and hereby assigns to Administrative Agent on behalf of
the Banks all rights of Guarantor thereunder. If Guarantor does not file any
such claim, Administrative Agent, as attorney-in-fact for Guarantor, is hereby
authorized to do so in the name of Guarantor or, in Administrative Agent's
discretion, to assign the claim to a nominee and to cause proofs of claim to be
filed in the name of Administrative Agent's nominee. The foregoing power of
attorney is coupled with an interest and cannot be revoked. Administrative Agent
or its nominee shall have the sole right to accept or reject any plan proposed
in any such proceeding and to take any other action which a party filing a claim
is entitled to take. In all such cases, whether in administration, bankruptcy or
otherwise, the person authorized to pay such a claim shall pay the same to
Administrative Agent to the extent of any Obligations which then remain unpaid,
and, to the full extent necessary for that purpose, Guarantor hereby assigns to
Administrative Agent all of Guarantor's rights to all such payments or
distributions to which Guarantor would otherwise be entitled; provided, however,
that Guarantor's obligations hereunder shall not be satisfied except to the
extent that Administrative Agent receives cash by reason of any such payment or
distribution. If Administrative Agent receives anything hereunder other than
cash, the same shall be held as collateral for amounts due under this Guaranty.
8. Successions or Assignments.
(a) This Guaranty shall inure to the benefit of the successors
or assigns of the Banks who shall have, to the extent of their interest, the
rights of the Banks hereunder; provided, however, that the rights of the Banks
hereunder, if any be retained by them, shall have priority over and be senior to
the rights of its successors or assigns unless Administrative Agent shall
otherwise elect.
(b) This Guaranty is binding upon Guarantor and its successors
and assigns. Guarantor is not entitled to assign its obligations hereunder to
any other person without the written consent of Administrative Agent, and any
purported assignment in violation of this provision shall be void.
8
276
9. Waivers.
(a) No delay on the part of Administrative Agent or the Banks
in exercising any of their rights (including those hereunder) and no partial or
single exercise thereof and no action or non-action by Administrative Agent or
the Banks, with or without notice to Guarantor or anyone else, shall constitute
a waiver of any rights or shall affect or impair this Guaranty.
(b) GUARANTOR HEREBY WAIVES ITS RIGHT TO A JURY TRIAL OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS GUARANTY OR RELATING
TO THE SUBJECT MATTER OF THIS GUARANTY AND THE RELATIONSHIP BETWEEN GUARANTOR
AND ADMINISTRATIVE AGENT THAT IS BEING ESTABLISHED. GUARANTOR ACKNOWLEDGES THAT
THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT
ADMINISTRATIVE AGENT HAS ALREADY RELIED ON THE WAIVER IN ENTERING INTO THIS
GUARANTY, AND THAT ADMINISTRATIVE AGENT WILL CONTINUE TO RELY ON THE WAIVER IN
THEIR RELATED FUTURE DEALINGS. GUARANTOR FURTHER WARRANTS AND REPRESENTS THAT IT
HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT IT KNOWINGLY AND
VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL.
10. Interpretation. The section headings in this Guaranty are for the
convenience of reference only and shall not affect the meaning or construction
of any provision hereof.
11. Notices. All notices or other communications required or
permitted to be given hereunder shall be in writing and shall be considered as
properly given (a) if delivered in person, (b) if sent by overnight delivery
service by the addressee, except that communication or notice so transmitted by
telecopy or other direct written electronic means shall be deemed to have been
validly and effectively given on the day (if a Bank Day and, if not, on the next
following Banking Day) on which it is transmitted if transmitted before 4:00
p.m., recipient's time, and if transmitted after that time, on the next
following Banking Day; provided, however, that if any notice is tendered to an
addressee and the delivery thereof is refused by such addressee, such notice
shall be effective upon such tender. Any party shall have the right to change
its address for notice hereunder to any other location within the continental
United States by giving of 30 days' notice to the other parties in the manner
set forth hereinabove.
12. Amendments. This Guaranty may be amended only with the written
consent of the parties hereto.
13. Jurisdiction; Governing Law.
(a) Any action or proceeding relating in any way to this
Guaranty may be brought and enforced in the courts of the State of New York or
of the United States for the Southern District of New York. Any such process or
summons in connection with any such action or proceeding may be served by
mailing a copy thereof by certified or registered mail, or any substantially
similar form of mail, addressed to Guarantor as provided for notices hereunder.
(b) This Guaranty and the rights and obligations of
Administrative Agent and of Guarantor shall be governed by and construed in
accordance with the law of the State of New York without reference to principles
of conflicts of laws (other than Section 5-1401 of the New York General
Obligations Law).
9
277
14. Integration of Terms. This Guaranty contains the entire agreement
between Guarantor and the Banks relating to the subject matter hereof and
supersedes all oral statements and prior writing with respect hereto.
15. Addresses.
(a) The address of Guarantor for notices is:
Calpine Corporation
00 Xxxx Xxx Xxxxxxxx Xxxxxx
Xxx Xxxx, Xxxxxxxxxx 00000
Attention: General Counsel
Telephone Number: (000) 000-0000
Telecopier Number: (000) 000-0000
(b) The address of Administrative Agent for notices is:
The Bank of Nova Scotia
000 Xxxxxxxxx Xxxxxx, X.X., Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx Xxxxxxxx
Telephone Number: (000) 000-0000
Telecopier Number: (000) 000-0000
16. Interest; Collection Expenses. Any amount required to be paid by
Guarantor pursuant to the terms hereof shall bear interest at the Default Rate
or the maximum rate permitted by law, whichever is less, from the date due until
paid in full. If Administrative Agent or the Banks are required to pursue any
remedy against Guarantor hereunder, Guarantor shall pay to Administrative Agent
or the Banks, as the case may be, upon demand, all reasonable attorneys' fees
and expenses all other costs and expenses incurred by Administrative Agent or
the Banks in enforcing this Guaranty.
17. Termination; Reinstatement of Guaranty. Upon the indefeasible
payment in full of all Obligations owing under the Credit Agreement, this
Guaranty shall terminate in its entirety. Notwithstanding the foregoing, this
Guaranty shall continue to be effective or be reinstated, as the case may be, if
at any time any payment to or on behalf of Borrower or to Administrative Agent
by Borrower in respect of the Obligations (as such term is defined in the Credit
Agreement) or by Guarantor hereunder is rescinded or must otherwise be returned
by Administrative Agent upon the insolvency, bankruptcy, reorganization,
dissolution or liquidation of Borrower or otherwise, all as though such payment
had not been made.
18. Counterparts. The Guaranty may be executed in one or more
duplicate counterparts, and when executed and delivered by all of the parties
listed below shall constitute a single binding agreement.
19. No Benefit to Borrower. This Guaranty is for the benefit of only
Administrative Agent and is not for the benefit of Borrower. Notwithstanding
that, pursuant to the Credit Agreement, Guarantor may treat any amounts actually
paid hereunder as a loan to Borrower, the Guaranty shall not be deemed to be a
contract to make a loan, or extend other debt financing or financial
accommodation, for the benefit of Borrower, in each case within the meaning of
Section 365(e) of the Federal Bankruptcy Code.
10
278
IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be duly
executed and delivered in San Jose, California as of the day and year first
written above.
CALPINE CORPORATION,
a Delaware corporation
By: ___________________________________
Name:
Title:
Agreed and accepted.
THE BANK OF NOVA SCOTIA,
as Administrative Agent
By: _______________________________
Name:
Title:
279
APPENDIX A TO COMPLETION GUARANTY
"Asset Sale" means any sale, transfer, lease or other disposition pursuant to
which (a) Guarantor or a Subsidiary receives consideration at the time of such
sale, transfer, lease contribution or conveyance at least equal to the fair
market value of assets being sold, transferred, leased, contributed or conveyed,
(b) at least 60% of the consideration received by Guarantor or such Subsidiary
is in the form of cash or cash equivalents and (c) an amount equal to 100% of
Net Available Cash is either (x) reinvested in additional assets within 365 days
of such asset sale or (y) used by Guarantor to prepay the loans and to
permanently reduce the commitments under that certain First Amended and Restated
Credit Agreement (the "Guarantor Credit Agreement") dated as of May 15, 1998
among Guarantor, certain commercial lending instructions party thereto (the
"Guarantor Lenders") and The Bank of Nova Scotia, as agent for the Guarantor
Lenders or, if the Guarantor Credit Agreement has been terminated, any
replacement thereof.
"Capital Expenditures" means for any period, the aggregate amount of all
expenditures of Guarantor and its Subsidiaries for fixed or capital assets made
during such period which, in accordance with GAAP, would be classified as
capital expenditures.
"Consolidated EBITDA" means, for any period, as applied to Guarantor, the sum of
Consolidated Net Income (Loss) (but without giving effect to adjustments,
accruals, deductions or entries resulting from purchase accounting,
extraordinary losses or gains and any gains or losses from any Asset Sales),
plus the following to the extent included in calculating Consolidated Net Income
(Loss): (a) Consolidated Income Tax Expense, (b) Consolidated Interest Expense,
(c) depreciation expense, (d) amortization expense and (e) all other non-cash
items reducing Consolidated Net Income, less all non-cash items increasing
Consolidated Net Income, in each case for such period; provided that, if
Guarantor has any Subsidiary that is not a Wholly Owned Subsidiary, Consolidated
EBITDA shall be reduced (to the extent not otherwise reduced by GAAP) by an
amount equal to (A) the consolidated net income (loss) of such Subsidiary (to
the extent included in Consolidated Net Income (Loss)) multiplied by (B) the
quotient of (1) the number of shares of outstanding common stock of such
Subsidiary not owned on the last day of such period by Guarantor or any Wholly
Owned Subsidiary divided by (2) the total number of shares of outstanding common
stock of such Subsidiary on the last day of such period.
"Capitalized Lease Liabilities" means all rental obligations of Guarantor or any
of its Subsidiaries under any leasing or similar arrangement which, in
accordance with GAAP, would be classified as capitalized leases, and, the amount
of such obligations shall be the capitalized amount thereof, determined in
accordance with GAAP, and the stated maturity thereof shall be the date of the
last payment of rent or any other amount due under such lease prior to the first
date upon which such lease may be terminated by the lessee without payment of a
penalty.
"Consolidated Income Tax Expense" means, for any period, as applied to
Guarantor, the provision for local, state, federal or foreign income taxes on a
consolidated basis for such period determined in accordance with GAAP.
"Consolidated Interest Expense" means, for any period, as applied to Guarantor,
the sum of (a) the total interest expense of Guarantor and its consolidated
Subsidiaries for such period as determined in accordance with GAAP, plus (b) all
but the principal component of rentals in respect of Capitalized Lease
Liabilities paid, accrued, or scheduled to be paid or accrued by Guarantor or
its consolidated Subsidiaries, plus (c) one-third of all operating lease
obligations paid, accrued, and/or scheduled to be paid by Guarantor and its
consolidated Subsidiaries, plus (d) capitalized interest, plus (e) dividends
paid in respect of preferred stock of Guarantor or any Subsidiary held by
Persons other than Guarantor or a Wholly Owned Subsidiary, plus (f) cash
contributions to any employee stock ownership plan to the extent such
contributions are used by such employee stock ownership plan to pay interest or
fees to any
280
Person (other than Guarantor or a Subsidiary) in connection with loans incurred
by such employee stock ownership plan to purchase capital stock of Guarantor.
"Consolidated Net Income (Loss)" means, for any period, as applied to Guarantor,
the Consolidated Net Income (Loss) of Guarantor and its consolidated
Subsidiaries for such period, determined in accordance with GAAP, adjusted by
excluding (without duplication), to the extent included in such net income
(loss), the following: (i) all extraordinary gains or losses; (ii) any net
income of any Person if such Person is not incorporated or organized in the
United States, a state thereof or the District of Columbia, except that (A)
Guarantor's equity in the net income of any such Person for such period shall be
included in Consolidated Net Income (Loss) up to the aggregate amount of cash
actually distributed by such Person during such period to Guarantor or a
Subsidiary incorporated or organized in the United States, a state thereof or
the District of Columbia, as a dividend or other distribution and (B) the equity
of Guarantor or a Subsidiary in a net loss of any such Person for such period
shall be included in determining Consolidated Net Income (Loss); (iii) the net
income of any Subsidiary to the extent that the declaration or payment of
dividends or similar distributions by such Subsidiary of such income is not at
the time thereof permitted, directly or indirectly, by operation of the terms of
its charter or by-laws or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to such Subsidiary or its
stockholders; (iv) any net income (or loss) of any Person combined with
Guarantor or any of its Subsidiaries on a "pooling of interests" basis
attributable to any period prior to the date of such combination; (v) any gain
(but not loss) realized upon the sale or other disposition of any property,
plant or equipment of Guarantor or its Subsidiaries (including pursuant to any
sale-and-leaseback arrangement) which is not sold or otherwise disposed of in
the ordinary course of business and any gain (but not loss) realized upon the
sale or other disposition by Guarantor or any Subsidiary of any capital stock of
any Person, provided that losses shall be included on an after-tax basis; and
(vi) the cumulative effect of a change in accounting principles; and further
adjusted by subtracting from such net income the tax liability of any parent of
Guarantor to the extent of payments made to such parent by Guarantor pursuant to
any tax sharing agreement or other arrangement for such period.
"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 be calculated on a net basis
(i.e., after taking into effect agreements, undertakings and other arrangements
between the Person whose obligations are being guaranteed and the counterparty
to such Person's obligations) and shall (subject to any limitation set forth
therein) be deemed to be the outstanding net principal amount (or maximum net
principal amount, if larger) of the debt, obligation or other liability
guaranteed thereby, or, if the principal amount is not stated or determinable,
the maximum reasonably anticipated net liability in respect thereof as
determined by the Person in good faith, provided that (y) the amount of any
Contingent Liability arising out of (i) any indebtedness, obligation or
liability other than the items described in clauses (a), (b) and (c) of the
definition of "Indebtedness" (as defined in this Section 3(f)) or (ii) that
certain Tranche D Letter of Credit related to the Gilroy Project and issued by
Banque Nationale de Paris, Los Angeles Branch ("BNP") pursuant to that certain
Credit Agreement dated as of August 29, 1996 by and among Calpine Gilroy Cogen,
L.P., BNP and certain other financial institutions shall be deemed to be zero
unless and until Guarantor's independent auditors have quantified the amount of
the exposure thereunder (and thereafter shall be deemed to be the amount so
quantified from time to time) and (z) the amount of any Contingent Liability
consisting of a "keep-well," "make well" or other similar arrangement shall be
deemed to be zero unless and until Guarantor is required to make any payment
with respect thereto (and shall thereafter be deemed to be the amount required
to be paid).
281
"Debt" means the outstanding principal amount of all Indebtedness of Guarantor
and its consolidated Subsidiaries of the nature referred to in clauses (a), (b),
(c) and (f) of the definition of "Indebtedness" (as defined in this Section
3(f)), and (without duplication) all Contingent Liabilities in respect of any of
the foregoing.
"Facility" means a power generation facility or energy producing facility,
including any related fuel reserve.
"Fiscal Quarter" means any period of three consecutive months ending on March
31, June 30, September 30 or December 31 of any year.
"Fiscal Year" means any period of twelve consecutive calendar months ending on
December 31.
"Gilroy Project" means the approximately 120 MW natural gas fired cogeneration
facility located in Gilroy, California and owned by Calpine Gilroy Cogen, L.P.
"Guarantor EBITDA" means, for any period, the Consolidated EBITDA of Guarantor
and its Subsidiaries, minus that portion of Consolidated Interest Expense
payable by the consolidating Subsidiaries, minus the principal payments of the
consolidating Subsidiaries, minus the consolidated non-discretionary Capital
Expenditures (i.e., Capital Expenditures which are expressly required to be made
under any agreement, contract, instrument, permit, license, law, regulation,
judgment or other arrangement (other than those arrangements and contracts that
relate to the performance of the work for which the Capital Expenditure is being
made) binding on Guarantor or any Subsidiary) of Guarantor and its Subsidiaries,
plus, without duplication, cash and Permitted Investments of Guarantor's Wholly
Owned Subsidiaries that are legally and contractually available to each such
Subsidiary for the payment of dividends, but only to the extent the source of
such cash and Permitted Investments is from that portion of Consolidated EBITDA
attributable to such Subsidiary or from repayments to such Subsidiary of loans
made by such Subsidiary.
"Guarantor Interest Expense" means, for any period, as applied to Guarantor, the
sum of (a) the total interest expense of Guarantor for such period as determined
in accordance with GAAP, plus (b) all but the principal component of rentals in
respect of Capitalized Lease Liabilities paid, accrued, or scheduled to be paid
or accrued by Guarantor, plus (c) one-third of all operating lease obligations
paid, accrued and/or scheduled to be paid by Guarantor, plus (d) capitalized
interest plus (e) dividends paid in respect of preferred stock of Guarantor held
by Persons other than Guarantor, plus (f) cash contributions to any employee
stock ownership plan to the extent such contributions are used by such employee
stock ownership plan to pay interest or fees to any person (other than
Guarantor) in connection with loans incurred by such employee stock ownership
plan to purchase capital stock of Guarantor.
"Hedging Obligations" means, with respect to any Person, the net liabilities of
such Person under (a) interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements, foreign exchange contracts,
currency swap agreements and all other agreements or arrangements designed to
protect such Person against fluctuations in interest rates or currency exchange
rates and (b) commodity or power swap or exchange agreements.
"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;
282
(b) all obligations, contingent or otherwise, relative to the
face amount of all letters of credit (excluding for purposes of this clause (b)
that certain Tranche D Letter of Credit related to the Gilroy Project and issued
by Banque Nationale de Paris, Los Angeles Branch ("BNP") pursuant to that
certain Credit Agreement dated as of August 29, 1996 by and among Calpine Gilroy
Cogen, L.P., BNP and certain other financial institutions until the events
described in clause (y) of the definition of Contingent Liability" (as defined
in this Section 3(f)) have occurred with respect to the Tranche D Letter 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 Capitalized
Lease Liabilities;
(d) all other items other than deferred taxes, deferred
revenue and deferred leases 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
Obligations;
(f) whether or not so included as liabilities in accordance
with GAAP, all net obligations of such Person to pay the deferred purchase price
of property or services (excluding accounts payable incurred in the ordinary
course of business), and 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), 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 this Agreement, 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, unless the indebtedness of such partnership
or joint venture is expressly nonrecourse to such Person.
"Interest Coverage Ratio" means, for any period of four Fiscal Quarters, the
ratio of (x) the Consolidated EBITDA of Guarantor and its Subsidiaries during
such period to (y) the Consolidated Interest Expense of Guarantor and its
Subsidiaries (excluding from Consolidated Interest Expense for purposes of this
clause (y) interest capitalized in connection with the construction of a new
Facility which interest is capitalized during the construction of such Facility)
incurred during such period.
"Interest Coverage Ratio (Parent Only)" means, for any period of four Fiscal
Quarters, the ratio of (x) the Guarantor EBITDA during such period to (y)
Guarantor Interest Expense (excluding from Guarantor Interest Expense for
purposes of this clause (y) interest capitalized in connection with the
construction of a new Facility which interest is capitalized during the
construction of such Facility) during such period.
"Leverage Ratio" means the ratio of (a) Debt to (b) Debt plus Tangible Net
Worth.
"Net Available Cash" means, with respect to any Asset Sale, the case or cash
equivalent payments received by Guarantor or a Subsidiary in connection with
such Asset Sale (including any cash received by way of deferred payment of
principal pursuant to a note or installment receivable or otherwise, but only as
or when received and also including the proceeds of other property received when
converted to cash or cash equivalents) net of the sum of, without duplication,
(i) all reasonable legal, title and recording tax expenses, reasonable
commissions, and other reasonable fees and expenses incurred directly relating
to such Asset Sale, (ii) all local, state, federal and foreign taxes required to
be paid or accrued as a liability by Guarantor or any of its Subsidiaries as a
consequence of such Asset Sale, (iii)
283
payments made to repay Indebtedness which is secured by any assets subject to
such Asset Sale in accordance with the terms of any Lien upon or other security
agreement of any kind with respect to such assets, or which must by its terms,
or by applicable law, be repaid out of the proceeds from such Asset Sale and
(iv) all distributions required by any contract entered into other than in
contemplation of such Asset Sale to be paid to any holder of a minority equity
interest in such Subsidiary as a result of such Asset Sale, so long as such
distributions do not exceed such minority holder's pro rata portion (based on
such minority holder's proportionate equity interest) of the cash or cash
equivalent payments described above, net of the amounts set forth in clauses
(i)-(iii) above.
"Net Equity Proceeds" means, with respect to any issuance by Guarantor of any
equity securities, the gross consideration received by or for the account of
Guarantor minus underwriting and brokerage commissions, discounts and fees
relating to such issuance that are payable by Guarantor.
"Subsidiary" means, with respect to any Person, any corporation, partnership or
other Person of which more than 50% of the outstanding capital stock or other
comparable ownership interest 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 on or more other
Subsidiaries of such Person, or by one or more other Subsidiaries of such
Person. Unless otherwise specified, all references to "Subsidiary" contained in
this Section 3(f) shall mean a Subsidiary of Guarantor.
"Tangible Net Worth" means the consolidated net worth of Guarantor and its
Subsidiaries after subtracting therefrom the aggregate amount of any intangible
assets of Guarantor and its Subsidiaries, including goodwill, franchises,
licenses, patents, trademarks, trade names, copyrights, service marks and brand
names.
"Wholly Owned Subsidiary" means a Subsidiary all the capital stock (or other
comparable ownership interests) of which (other than directors' qualifying
shares) is owned by Guarantor or another Wholly Owned Subsidiary.
284
EXHIBIT D-3
to the Credit Agreement
RECORDING REQUESTED BY AND
WHEN RECORDED, RETURN TO:
Xxxx Xxxxxxx Xxxxx
XXXXXX & XXXXXXX
000 "X" XXXXXX, XXXXX 0000
XXX XXXXX, XXXXXXXXXX 00000
--------------------------------------------------------------------------------
DEED OF TRUST, ASSIGNMENT OF RENTS
AND SECURITY AGREEMENT
DATED AS OF ____________, 1999
BY
CALPINE CONSTRUCTION FINANCE COMPANY, L.P.,
A DELAWARE LIMITED PARTNERSHIP,
AS TRUSTOR
TO
TITLE COMPANY,
AS TRUSTEE
FOR THE BENEFIT OF
THE BANK OF NOVA SCOTIA, AS ADMINISTRATIVE AGENT FOR THE BANKS,
AS BENEFICIARY
--------------------------------------------------------------------------------
285
TABLE OF CONTENTS
Page
----
ARTICLE 1 - DEFINITIONS.....................................................................3
1.1 DEFINED TERMS......................................................................3
1.2 ACCOUNTING TERMS...................................................................4
1.3 THE RULES OF INTERPRETATION........................................................4
ARTICLE 2 - GENERAL COVENANTS AND PROVISIONS................................................4
2.1 TRUSTOR PERFORMANCE OF CREDIT DOCUMENTS............................................4
2.2 GENERAL REPRESENTATIONS, COVENANTS AND WARRANTIES..................................5
2.3 COMPLIANCE WITH LEGAL REQUIREMENTS.................................................5
2.4 INSURANCE; APPLICATION OF INSURANCE PROCEEDS; APPLICATION OF
EMINENT DOMAIN PROCEEDS............................................................5
2.5 REJECTION OF GROUND LEASE BY LESSOR................................................5
2.6 EXPENSES...........................................................................6
2.7 BENEFICIARY ASSUMES NO SECURED OBLIGATIONS.........................................6
2.8 FURTHER ASSURANCES.................................................................6
2.9 ACTS OF TRUSTOR....................................................................6
2.10 AFTER-ACQUIRED PROPERTY............................................................7
2.11 SITE...............................................................................7
2.12 POWER OF ATTORNEY.................................................................10
2.13 COVENANT TO PAY...................................................................10
2.14 SECURITY AGREEMENT................................................................10
ARTICLE 3 - REMEDIES.......................................................................11
3.1 ACCELERATION OF MATURITY..........................................................11
3.2 PROTECTIVE ADVANCES...............................................................11
3.3 INSTITUTION OF EQUITY PROCEEDINGS.................................................11
3.4 BENEFICIARY'S POWER OF ENFORCEMENT................................................12
3.5 BENEFICIARY'S RIGHT TO ENTER AND TAKE POSSESSION, OPERATE AND APPLY INCOME........13
3.6 SEPARATE SALES....................................................................14
3.7 WAIVER OF APPRAISEMENT, VALUATION, STAY, EXTENSION AND REDEMPTION LAWS............14
3.8 RECEIVER..........................................................................14
3.9 SUITS TO PROTECT THE TRUST ESTATE.................................................15
3.10 PROOFS OF CLAIM...................................................................15
3.11 TRUSTOR TO PAY THE NOTES ON ANY DEFAULT IN PAYMENT; APPLICATION OF
MONIES BY BENEFICIARY.............................................................15
3.12 DELAY OR OMISSION; NO WAIVER......................................................16
3.13 NO WAIVER OF ONE DEFAULT TO AFFECT ANOTHER........................................16
3.14 DISCONTINUANCE OF PROCEEDINGS; POSITION OF PARTIES RESTORED.......................17
3.15 REMEDIES CUMULATIVE...............................................................17
3.16 INTEREST AFTER EVENT OF DEFAULT...................................................17
3.17 FORECLOSURE; EXPENSES OF LITIGATION...............................................17
3.18 DEFICIENCY JUDGMENTS..............................................................18
3.19 WAIVER OF JURY TRIAL..............................................................18
3.20 EXCULPATION OF BENEFICIARY........................................................18
ARTICLE 4 - RIGHTS AND RESPONSIBILITIES OF TRUSTEE; OTHER PROVISIONS RELATING TO TRUSTEE...18
4.1 EXERCISE OF REMEDIES BY TRUSTEE...................................................18
1
286
4.2 RIGHTS AND PRIVILEGES OF TRUSTEE..................................................19
4.3 RESIGNATION OR REPLACEMENT OF TRUSTEE.............................................19
4.4 AUTHORITY OF BENEFICIARY..........................................................19
4.5 EFFECT OF APPOINTMENT OF SUCCESSOR TRUSTEE........................................20
4.6 CONFIRMATION OF TRANSFER AND SUCCESSION...........................................20
4.7 EXCULPATION.......................................................................20
4.8 ENDORSEMENT AND EXECUTION OF DOCUMENTS............................................20
4.9 MULTIPLE TRUSTEES.................................................................20
4.10 NO REQUIRED ACTION................................................................20
4.11 TERMS OF TRUSTEE'S ACCEPTANCE.....................................................21
ARTICLE 5 - GENERAL........................................................................21
5.1 DISCHARGE.........................................................................21
5.2 NO WAIVER.........................................................................21
5.3 EXTENSION, REARRANGEMENT OR RENEWAL OF SECURED OBLIGATIONS........................22
5.4 FORCIBLE DETAINER.................................................................22
5.5 WAIVER OF STAY OR EXTENSION.......................................................22
5.6 NOTICES...........................................................................22
5.7 SEVERABILITY......................................................................23
5.8 APPLICATION OF PAYMENTS...........................................................23
5.9 GOVERNING LAW.....................................................................23
5.10 ENTIRE AGREEMENT..................................................................23
5.11 AMENDMENTS........................................................................23
5.12 SUCCESSORS AND ASSIGNS............................................................23
5.13 RENEWAL, ETC......................................................................24
5.14 FUTURE ADVANCES...................................................................24
5.15 LIABILITY.........................................................................24
5.16 SUBJECT TO GROUND LEASE...........................................................24
5.17 RELEASE OF COLLATERAL.............................................................24
5.18 FIXTURE FILING UNDER UNIFORM COMMERCIAL CODE......................................24
5.19 CREDIT AGREEMENT CONTROLS.........................................................25
2
287
FORM OF DEED OF TRUST
This DEED OF TRUST, ASSIGNMENT OF RENTS AND SECURITY AGREEMENT, dated as
of ___________, 1999 (this "Deed of Trust") BY CALPINE CONSTRUCTION FINANCE
COMPANY, a Delaware limited partnership ("Trustor"), whose address is
___________________________, to TITLE COMPANY, as trustee ("Trustee"), whose
address is TC ADDRESS, for the benefit of THE BANK OF NOVA SCOTIA, as
Administrative Agent for the Banks (as defined below) (together with its
successors and assigns, "Beneficiary"), whose address is 000 Xxxxxxxxx Xxxxxx,
X.X., Xxxxx 0000, Xxxxxxx, Xxxxxxx 00000.
Recitals
A. Trustor, The Bank of Nova Scotia, as Lead Arranger, LC Bank and
Administrative Agent, Credit Suisse First Boston, as Lead Arranger, Syndication
Agent and Bookrunner, and the financial institutions named therein (together
with their respective successors and assigns, the "Banks") have entered into a
Credit Agreement, dated as of October 20, 1999 (as modified, supplemented or
amended from time to time, the "Credit Agreement"), pursuant to which the Banks
have agreed to lend to Borrower One Billion Dollars ($1,000,000,000) for the
purpose of purchasing, constructing, owning and operating various power
projects. [DISCUSSION OF COLLATERAL PROPERTY] Capitalized terms used in this
Deed of Trust and not otherwise defined herein shall have the meanings assigned
to them in the Credit Agreement.
B. The Banks are willing to make the Loans and make other financial
accommodations in accordance with the Credit Agreement, but in each case only
upon the condition, among others, that Trustor secure the loans with various
items of real and personal property owned by Trustor.
C. As set forth more fully below, Trustor intends to secure the payment and
performance of the Loans with the Trust Estate (as defined below), along with
various other items of personal and real property owned by Trustor.
Agreement
NOW, THEREFORE, to secure the prompt and complete payment when and as
due and payable of all of the obligations and liabilities of Trustor to
Beneficiary and the Banks, by acceleration or otherwise, arising out of or in
connection with the Credit Agreement, the promissory notes executed or to be
executed by Trustor in favor of Beneficiary, the other Credit Documents and the
obligations of Trustor set forth herein, including, without limitation, Section
2.8 hereof (collectively, the "Secured Obligations"), and in consideration of
the covenants herein contained and in the Credit Agreement, Trustor, intending
to be legally bound, does hereby grant, bargain, sell, convey, warrant, assign,
transfer, mortgage, pledge, set over and confirm unto Trustee in trust for
Beneficiary as set forth in this Deed of Trust, for the benefit of Beneficiary
and the Banks, all of Trustor's estate, right, title, interest, property, claim
and demand, now or hereafter arising, in and to the following property and
rights (herein collectively called the "Trust Estate"):
288
(a) Trustor's interest in and to the lands and premises described
herein (the "Premises") including without limitation, any interests
under a lease of the Premises whereby Trustor leases the Premises (the
"Ground Lease") and the leasehold estate and all other rights of Trustor
under the Ground Lease, if any, together with all and singular the
tenements, hereditaments and appurtenances thereto, and also Trustor's
rights in and to (i) any land lying within the right-of-way of any
streets, open or proposed, adjoining the same, (ii) any easements,
natural gas pipelines, rights-of-way and rights used in connection
therewith or as a means of access thereto, including, without
limitation, the easements described in Exhibit B hereto, all easements
for ingress and egress and easements for water and sewage pipelines,
running in favor of Trustor, or appurtenant to the Site, or arising
under the Ground Lease (collectively, the "Easements"), (iii) any and
all sidewalks, alleys, strips and gores of land adjacent thereto or used
in connection therewith (the Premises and all of the foregoing being
hereinafter collectively called the "Site"), and (iv) all rights of
Trustor to exercise any election or option to make any determination or
to give any notice, consent, waiver or approval or to take any other
action under the Ground Lease;
(b) all buildings, structures, fixtures and other improvements
now or hereafter erected on the Site owned by Trustor, including the
Project, as defined in the Credit Agreement (collectively, the
"Improvements");
(c) all machinery, apparatus, equipment, fittings, fixtures,
boilers, turbines and other articles of personal property, including all
goods and all goods which become fixtures, now owned or hereafter
acquired by Trustor and now or hereafter located on, attached to or used
in the operation of or in connection with the Site and/or the
Improvements, and all replacements thereof, additions thereto and
substitutions therefor, to the fullest extent permitted by applicable
law (all of the foregoing being hereinafter collectively called the
"Equipment");
(d) all raw materials, work in process and other materials used
or consumed in the construction of, or now or hereafter located on or
used in connection with, the Site, the Improvements and the Equipment,
(including, without limitation, fuel and fuel deposits, now or hereafter
located on the Site or elsewhere or otherwise owned by Trustor) (the
above items, together with the Equipment, being hereinafter collectively
called the "Tangible Collateral");
(e) all rights, powers, privileges and other benefits of Trustor
(to the extent assignable) now or hereafter obtained by Trustor from any
Governmental Authority, including, without limitation, Permits,
governmental actions relating to the ownership, operation, management
and use of the Site, the development and financing of the Project, the
Improvements and the Equipment, and any improvements, modifications or
additions thereto;
(f) all the lands and interests in lands, tenements and
hereditaments hereafter acquired by Trustor in connection with or
appurtenant to the Site, including (without limitation) all interests of
Trustor, whether as lessor or lessee, in any leases of land hereafter
made and all rights of Trustor thereunder;
2
289
(g) any and all other property in connection with or appurtenant
to the Site that may from time to time, by delivery or by writing of any
kind, be subjected to the lien hereof by Trustor or by anyone on its
behalf or with its consent, or which may come into the possession or be
subject to the control of Trustee or Beneficiary pursuant to this Deed
of Trust, being hereby collaterally assigned to Beneficiary and
subjected or added to the lien or estate created by this Deed of Trust
forthwith upon the acquisition thereof by Trustor, as fully as if such
property were now owned by Trustor and were specifically described in
this Deed of Trust and subjected to the lien and security interest
hereof; and Trustee and Beneficiary is hereby authorized to receive any
and all such property as and for additional security hereunder; and
(h) all the remainder or remainders, reversion or reversions,
rents, revenues, issues, profits, royalties, income and other benefits
derived from any of the foregoing, all of which are hereby assigned to
Beneficiary, who is hereby authorized to collect and receive the same,
to give proper receipts and acquittances therefor and to apply the same
in accordance with the provisions of this Deed of Trust.
[ADD PARTICULAR ITEMS OF COLLATERAL RELATING TO FACILITY IN QUESTION]
TO HAVE AND TO HOLD the said Trust Estate, whether now owned or held or
hereafter acquired, unto Beneficiary, its successors and assigns, pursuant to
the provisions of this Deed of Trust.
IT IS HEREBY COVENANTED, DECLARED AND AGREED that the lien, security
interest or estate created by this Deed of Trust to secure the payment of the
Secured Obligations, both present and future, shall be first, prior and superior
to any Lien, security interest, reservation of title or other interest
heretofore, contemporaneously or subsequently suffered or granted by Trustor,
its legal representatives, successors or assigns, except only those, if any,
expressly hereinafter referred to and that the Trust Estate is to be held, dealt
with and disposed of by Beneficiary, upon and subject to the terms, covenants,
conditions, uses and agreements set forth in this Deed of Trust.
PROVIDED ALWAYS, that upon payment in full of the Secured Obligations in
accordance with the terms and provisions hereof and of the Credit Agreement and
the observance and performance by Trustor of its covenants and agreements set
forth herein and therein, then this Deed of Trust and the estate hereby and
therein granted shall cease and be void and shall be reconveyed as provided
herein below.
ARTICLE 1 - DEFINITIONS
1.1 Defined Terms. Capitalized terms used in this Deed of Trust and
not otherwise defined herein shall have the meanings assigned to them in the
Credit Agreement. Any term defined by reference to an agreement, instrument or
other document shall have the meaning so assigned to it whether or not such
document is in effect. In addition, for purposes of this Deed of Trust, the
following definitions shall apply:
3
290
"Credit Agreement" has the meaning ascribed to it in Recital A
hereof.
"Easements " has the meaning ascribed to it in the Granting
Clauses.
"Equipment" has the meaning ascribed to it in the Granting
Clauses.
"Ground Lease" has the meaning ascribed to it in the Granting
Clauses.
"Improvements" has the meaning ascribed to it in the Granting
Clauses.
"Premises" has the meaning ascribed to it in the Granting
Clauses.
"Proceeds" has the meaning assigned to it under the UCC and, in
any event, shall include, without limitation, (i) any and all proceeds of any
insurance (including, without limitation, property casualty and title
insurance), indemnity, warranty or guaranty payable from time to time with
respect to any of the Premises; (ii) any and all proceeds in the form of
accounts (as such term is defined in the UCC), security deposits, tax escrows
(if any), down payments (to the extent the same may be pledged under applicable
law), collections, contract rights, documents, instruments, chattel paper, liens
and security instruments, guaranties or general intangibles relating in whole or
in part to the Premises and all rights and remedies of whatever kind or nature
Trustor may hold or acquire for the purpose of securing or enforcing any
obligation due Trustor thereunder.
"Secured Obligations" has the meaning ascribed to it in the
Granting Clauses.
"Site" has the meaning ascribed to it in the Granting Clauses.
"Tangible Collateral" has the meaning ascribed to it in the
Granting Clauses.
"Trust Estate" has the meaning ascribed to it in the Granting
Clauses.
1.2 Accounting Terms. As used herein and in any certificate or other
document made or delivered pursuant hereto, accounting terms not defined herein
shall have the respective meanings given to them under GAAP.
1.3 The Rules of Interpretation. The rules of interpretation as set
forth in the Credit Agreement shall govern the terms, conditions and provisions
hereof. In the event of any conflict between those set forth in this Deed of
Trust and the Credit Agreement, the latter shall be deemed controlling and shall
preempt the former.
ARTICLE 2 - GENERAL COVENANTS AND PROVISIONS
2.1 Trustor Performance of Credit Documents. Trustor shall perform,
observe and comply with each and every provision hereof, and with each and every
provision contained in the Credit Documents and shall promptly pay to
Beneficiary, when payment shall become due, the
4
291
principal with interest thereon and all other sums required to be paid by
Trustor under this Deed of Trust and the other Credit Documents at the time and
in the manner provided in the Credit Agreement.
2.2 General Representations, Covenants and Warranties. Trustor, to
the best of its knowledge, represents, covenants and warrants that as of the
date hereof: (a) Trustor has good and marketable title to the Ground Lease and
the leasehold estate created thereby, free and clear of all encumbrances except
the title exceptions set forth on Exhibit C hereto and that it has the right to
hold, occupy and enjoy its interest in the Premises on and subject to the terms
and conditions of the Ground Lease, and has good right, full power and lawful
authority to mortgage and pledge the same as provided herein and Beneficiary may
at all times peaceably and quietly enter upon, hold, occupy and enjoy the entire
Premises in accordance with the terms hereof; (b) all costs arising from
construction of any improvements, the performance of any labor and the purchase
of all Tangible Collateral and Improvements have been or shall be paid when due;
(c) the Site has access for ingress and egress to dedicated street(s); and (d)
no material part of the Premises has been damaged, destroyed, condemned or
abandoned.
2.3 Compliance with Legal Requirements. Trustor shall promptly,
fully, and faithfully comply with all Legal Requirements relating to its use and
occupancy of the Premises, whether or not such compliance requires work or
remedial measures that are ordinary or extraordinary, foreseen or unforeseen,
structural or nonstructural, or that interfere with the use or enjoyment of the
Premises.
2.4 Insurance; Application of Insurance Proceeds; Application of
Eminent Domain Proceeds.
2.4.1 Trustor shall at its sole expense obtain for, deliver to,
assign and maintain for the benefit of Beneficiary, during the term of this Deed
of Trust, insurance policies insuring the Site and liability insurance policies,
all in accordance with the requirements of Section 5.18 of the Credit Agreement.
Trustor shall pay promptly when due any premiums on such insurance policies and
on any renewals thereof. In the event of the foreclosure of this Deed of Trust
or any other transfer of the Ground Lease in extinguishment of the indebtedness
and other sums secured hereby, all right, title and interest of Trustor in and
to all casualty insurance policies, and renewals thereof then in force, shall
pass to the purchaser or grantee in connection therewith; provided that
Trustor's Obligations shall be reduced accordingly.
2.4.2 All insurance proceeds and all Eminent Domain Proceeds
shall be paid and/or shall be applied in accordance with the provisions of the
Credit Agreement, including, without limitation, Sections 7.5 and 7.6 of the
Credit Agreement.
2.5 Rejection of Ground Lease by Lessor. To the extent applicable, if
the lessor under the Ground Lease rejects or disaffirms the Ground Lease or
purports or seeks to disaffirm the Ground Lease pursuant to any Bankruptcy Law,
then:
2.5.1 To the extent permitted by law or Governmental Rule,
Trustor shall remain in possession of the Premises demised under the Ground
Lease and shall perform all acts reasonably necessary for Trustor to remain in
such possession for the unexpired term of such
5
292
Ground Lease (including all renewals), whether the then existing terms and
provisions of such Ground Lease require such acts or otherwise; and
2.5.2 All the terms and provisions of this Deed of Trust and the
lien created by this Deed of Trust shall remain in full force and effect and
shall extend automatically to all of Trustor's rights and remedies arising at
any time under, or pursuant to, Section 365(h) of the Bankruptcy Code, including
all of Trustor's rights to remain in possession of the Premises.
2.6 Expenses.
2.6.1 Trustor shall pay when due and payable all costs provided
for in Section 12.4 of the Credit Agreement; and
2.6.2 Trustor shall indemnify Beneficiary with respect to any
transaction or matter in any way connected with any portion of the Site, or
Trustor's use, occupancy, or operation of the Site as specifically provided in
Section 5.11 of the Credit Agreement.
2.7 Beneficiary Assumes No Secured Obligations. It is expressly
agreed that, anything herein contained to the contrary notwithstanding, Trustor
shall remain obligated under all agreements which are included in the definition
of "Trust Estate" and shall perform all of its obligations thereunder in
accordance with the provisions thereof, and neither Beneficiary nor any of the
Banks shall have any obligation or liability with respect to such obligations of
Trustor, nor shall Beneficiary or any of the Banks be required or obligated in
any manner to perform or fulfill any obligations or duties of Trustor under such
agreements, or to make any payment or to make any inquiry as to the nature or
sufficiency of any payment received by it, or to present or file any claim or
take any action to collect or enforce the payment of any amounts which have been
assigned to Beneficiary hereunder or to which Beneficiary or the Banks may be
entitled at any time or times.
2.8 Further Assurances. Trustor shall, from time to time, at its
expense, promptly execute and deliver all further instruments and documents, and
take all further action, that may be necessary or that Trustee or Beneficiary
may reasonably request, in order to perfect and continue the lien and security
interest granted hereby and to enable Beneficiary to obtain the full benefits of
the lien and security interest granted or intended to be granted hereby. Trustor
shall keep the Trust Estate free and clear of all Liens, other than Permitted
Liens. Without limiting the generality of the foregoing, Trustor shall execute
and record or file this Deed of Trust and each amendment hereto, and such
financing or continuation statements, or amendments thereto, and such other
instruments, endorsements or notices, as may be necessary, or as Beneficiary or
Trustee may reasonably request, in order to perfect and preserve the lien and
security interest granted or purported to be granted hereby. Trustor hereby
authorizes Beneficiary to file one or more financing statements or continuation
statements, and amendments thereto, relative to all or any part of the Trust
Estate necessary to preserve or protect the lien and security interest granted
hereby without the signature of Trustor where permitted by law.
2.9 Acts of Trustor. Except as provided in or permitted by the Credit
Agreement, Trustor hereby represents and warrants that it has not mortgaged,
hypothecated, assigned or pledged and hereby covenants that it will not
mortgage, hypothecate, assign or pledge, so long as this Deed
6
293
of Trust shall remain in effect, any of its right, title or interest in and to
the Trust Estate or any part thereof, to anyone other than Beneficiary.
2.10 After-Acquired Property. Any and all of the Trust Estate which
is hereafter acquired shall immediately, without any further conveyance,
assignment or act on the part of Trustor or Beneficiary, become and be subject
to the lien and security interest of this Deed of Trust as fully and completely
as though specifically described herein, but nothing contained in this Section
2.10 shall be deemed to modify or change the obligations of Trustor under
Section 2.8 hereof. If and whenever from time to time Trustor shall hereafter
acquire any real property or interest therein which constitutes or is intended
to constitute part of the Trust Estate hereunder, Trustor shall promptly give
notice thereof to Beneficiary and Trustor shall forthwith execute, acknowledge
and deliver to Beneficiary a supplement to this Deed of Trust in form and
substance reasonably satisfactory to Beneficiary subjecting the property so
acquired to the lien of this Deed of Trust. At the same time, if Beneficiary so
requests, Trustor shall deliver to Beneficiary an endorsement to the lender's
policy of title insurance issued to Beneficiary insuring the lien of this Deed
of Trust which shall insure to Beneficiary in form and substance satisfactory to
Beneficiary that the lien of this Deed of Trust as insured under such title
insurance policy encumber such later acquired property and that Trustor's title
to such property meets all of the applicable requirements of the Credit
Documents with respect to title to Trustor's real property.
2.11 Site.
2.11.1 To the extent applicable, Trustor shall pay or cause to be
paid all rent and other charges required under the Ground Lease as and when the
same are due and shall promptly and faithfully perform or cause to be performed
all other material terms, obligations, covenants, conditions, agreements,
indemnities and liabilities of Trustor under the Ground Lease. Trustor shall
observe all applicable covenants, easements and other restrictions of record
with respect to the Site, the Easements or to any other part of the Trust
Estate, in all material respects.
2.11.2 To the extent applicable, Trustor shall do, or cause to be
done, all things necessary to preserve and keep unimpaired all rights of Trustor
as lessee under the Ground Lease, and to prevent any default under the Ground
Lease, or any termination, surrender, cancellation, forfeiture, subordination or
impairment thereof. Trustor does hereby authorize and irrevocably appoint and
constitute Beneficiary as its true and lawful attorney-in-fact, which
appointment is coupled with an interest, in its name, place and stead, to take
any and all actions deemed necessary or desirable by Beneficiary to perform and
comply with all the obligations of Trustor under the Ground Lease, and to do and
take upon the occurrence and during construction of an Event of Default (as such
term is defined in the Credit Agreement), but without any obligation so to do or
take, any action which Beneficiary deems reasonably necessary to prevent or cure
any default by Trustor under the Ground Lease, to enter into and upon the Site
or any part thereof as provided in the Credit Agreement in order to prevent or
cure any default of Trustor pursuant thereto, to the end that the rights of
Trustor in and to the leasehold estate created by the Ground Lease shall be kept
free from default.
2.11.3 To the extent applicable, Trustor shall use all reasonable
efforts to enforce the obligations of the lessor under the Ground Lease in a
commercially reasonable manner.
7
294
2.11.4 To the extent applicable, Trustor shall not voluntarily
surrender its leasehold estate and interest under the Ground Lease or modify,
change, supplement, alter or amend the Ground Lease or affirmatively waive any
provisions thereof, either orally or in writing, except as permitted in the
Credit Agreement, and any attempt on the part of Trustor to do any of the
foregoing without the written consent of Beneficiary shall be null and void.
2.11.5 To the extent applicable, if any action or proceeding
shall be instituted to evict Trustor or to recover possession of the Site or any
part thereof or interest therein from Trustor or any action or proceeding
otherwise affecting the Site or this Deed of Trust shall be instituted, then
Trustor shall, immediately after receipt, deliver to Beneficiary a true and
complete copy of each petition, summons, complaint, notice of motion, order to
show cause and all other pleadings and papers, however designated, served in any
such action or proceeding.
2.11.6 To the extent applicable, Trustor covenants and agrees
that the fee title to the Site and the leasehold estate created under the Ground
Lease shall not merge but shall always remain separate and distinct,
notwithstanding the union of said estates either in Trustor or a third party by
purchase or otherwise and, in case Trustor acquires the fee title or any other
estate, title or interest in and to the Site, the lien of this Deed of Trust
shall, without further conveyance, simultaneously with such acquisition, be
spread to cover and attach to such acquired estate and as so spread and attached
shall be prior to the lien of any mortgage placed on the acquired estate after
the date of this Deed of Trust.
2.11.7 To the extent applicable, no release or forbearance of any
of Trustor's obligations under the Ground Lease by the lessor thereunder, shall
release Trustor from any of its obligations under this Deed of Trust.
2.11.8 To the extent applicable, Trustor shall, within ten days
after written demand from Beneficiary, deliver to Beneficiary proof of payment
of all items that are required to be paid by Trustor under the Ground Lease,
including, without limitation, rent, taxes, operating expenses and other
charges.
2.11.9 To the extent applicable, the lien of this Deed of Trust
shall attach to all of Trustor's rights and remedies at any time arising under
or pursuant to Section 365(h) of the Bankruptcy Law, including, without
limitation, all of Trustor's rights to remain in possession of the Site. Trustor
shall not elect to treat the Ground Lease as terminated under Section 365(h)(1)
of the Bankruptcy Law, and any such election shall be void.
2.11.9.1 To the extent applicable, if pursuant to Section
365(h)(2) of the Bankruptcy Law, Trustor shall seek to offset against
the rent reserved in the Ground Lease the amount of any damages caused
by the nonperformance by the lessor or any other party of any of their
respective obligations thereunder after the rejection by the lessor or
such other party of the Ground Lease under the Bankruptcy Law, then
Trustor shall, prior to effecting such offset, notify Beneficiary of its
intent to do so, setting forth the amount proposed to be so offset and
the basis therefor. Beneficiary shall have the right to object to all or
any part of such offset that, in the reasonable judgment of Beneficiary,
would constitute a breach of the Ground Lease, and in the event of such
objection, Trustor shall not effect any offset of the amounts found
objectionable by Beneficiary. Neither
8
295
Beneficiary's failure to object as aforesaid nor any objection relating
to such offset shall constitute an approval of any such offset by
Beneficiary.
2.11.9.2 To the extent applicable, if any action,
proceeding, motion or notice shall be commenced or filed in respect of
the lessor under the Ground Lease or any other party or in respect of
the Ground Lease in connection with any case under the Bankruptcy Law,
then Beneficiary shall have the option to intervene in any such
litigation with counsel of Beneficiary's choice. Beneficiary may proceed
in its own name in connection with any such litigation, and Trustor
agrees to execute any and all powers, authorizations, consents or other
documents required by Beneficiary in connection therewith.
2.11.9.3 To the extent applicable, Trustor shall, after
obtaining knowledge thereof, promptly notify Beneficiary of any filing
by or against the lessor or other party with an interest in the Site of
a petition under the Bankruptcy Law. Trustor shall promptly deliver to
Beneficiary, following receipt, copies of any and all notices,
summonses, pleadings, applications and other documents received by
Trustor in connection with any such petition and any proceedings
relating thereto.
2.11.9.4 To the extent applicable, if there shall be
filed by or against Trustor a petition under the Bankruptcy Law, and
Trustor, as lessee under the Ground Lease, shall determine to reject the
Ground Lease pursuant to Section 365(a) of the Bankruptcy Law, then
Trustor shall give Beneficiary such notice as may be required by law of
the date on which Trustor shall apply to the bankruptcy court for
authority to reject the Ground Lease. Beneficiary shall have the right,
but not the obligation, to serve upon Trustor within such twenty day
period a notice stating that Beneficiary demands that Trustor assume and
assign the Ground Lease to Beneficiary pursuant to Section 365 of the
Bankruptcy Law. If Beneficiary shall serve upon Trustor the notice
described in the preceding sentence, to the extent permitted by law or
Governmental Rule Trustor shall not seek to reject the Ground Lease and
shall comply with the demand provided for in the preceding sentence. In
addition, effective upon the entry of an order for relief with respect
to Trustor under the Bankruptcy Law, Trustor hereby assigns and
transfers to Beneficiary a non-exclusive right to apply to the
bankruptcy court under Section 365(d)(4) of the Bankruptcy Law for an
order extending the period during which the Ground Lease may be rejected
or assumed; and shall (a) promptly notify Beneficiary of any default by
Trustor in the performance or observance of any of the terms, covenants
or conditions on the part of Trustor to be performed or observed under
the Ground Lease and of the giving of any written notice by the lessor
thereunder to Trustor of any such default, and (b) promptly cause a copy
of each written notice given to Trustor by the lessor under the Ground
Lease to be delivered to Beneficiary. Beneficiary may rely on any notice
received by it from any such lessor of any default by Trustor under the
Ground Lease and may take such action as may be permitted by law or
Governmental Rule to cure such default even though the existence of such
default or the nature thereof shall be questioned or denied by Trustor
or by any Person on its behalf.
9
296
2.12 Power of Attorney. Trustor does hereby irrevocably constitute and
appoint Beneficiary, its true and lawful attorney (which appointment is coupled
with an interest), with full power of substitution, for Trustor and in the name,
place and stead of Trustor or in Beneficiary's own name, for so long as any of
the Secured Obligations are outstanding, to ask, demand, collect, receive,
receipt for and xxx for any and all rents, income and other sums which are
assigned hereunder with full power to endorse the name of Trustor on all
instruments given in payment or in part payment thereof, to settle, adjust or
compromise any claims thereunder as fully as Trustor itself could do and in its
discretion file any claim or take any action or proceeding, either in its own
name or in the name of Trustor or otherwise, which Beneficiary may deem
necessary or appropriate to protect and preserve the right, title and interest
of Beneficiary in and to such rents, income and other sums and the security
intended to be afforded hereby; provided that Beneficiary shall not exercise
such rights unless an Event of Default has occurred and is continuing.
2.13 Covenant to Pay. If an Event of Default has occurred and is
continuing and such Event of Default could reasonably be expected to materially
and adversely affect Beneficiary's interest hereunder in the Trust Estate or
result in personal injury, then Beneficiary, among its other rights and
remedies, shall have the right, but not the obligation, to pay, observe or
perform the same, in whole or in part, and with such modifications as
Beneficiary reasonably shall deem advisable. To the extent provided in the
Credit Agreement, all sums, including, without limitation, reasonable attorneys
fees, so expended or incurred by Beneficiary by reason of the default of
Trustor, or by reason of the bankruptcy or insolvency of Trustor, as well as,
without limitation, sums expended or incurred to sustain the lien or estate of
this Deed of Trust or its priority, or to protect or enforce any rights of
Beneficiary hereunder, or to recover any of the Secured Obligations, or to
complete construction of the Project for which the Credit Agreement are intended
as financing, or for repairs, maintenance, alterations, replacements or
improvements thereto or for the protection thereof, or for real estate taxes or
other governmental assessments or charges against any part of the Trust Estate,
or premiums for insurance of the Trust Estate, shall be entitled to the benefit
of the lien on the Trust Estate as of the date of the recording of this Deed of
Trust, shall be deemed to be added to and be part of the Secured Obligations
secured hereby, whether or not the result thereof causes the total amount of the
Secured Obligations to exceed the stated amount set forth in the second
introductory paragraph of this Deed of Trust, and shall be repaid by Trustor as
provided in the Credit Agreement.
2.14 Security Agreement.
2.14.1 This Deed of Trust shall also be a security agreement
between Trustor and Beneficiary covering the Deed of Trust Property constituting
personal property or fixtures (hereinafter collectively called "UCC Collateral")
governed by the [INSERT RELEVANT STATE] Uniform Commercial Code ("UCC") as the
same may be more specifically set forth in any financing statement delivered in
connection with this Deed of Trust, and as further security for the payment and
performance of the Secured Obligations, Trustor hereby grants to Beneficiary a
security interest in such portion of the Site to the full extent that the Site
may be subject to the UCC. In addition to Beneficiary's other rights hereunder,
Beneficiary shall have all rights of a secured party under the UCC. Trustor
shall execute and deliver to Beneficiary all financing statements and such
further assurances that may be reasonably required by Beneficiary to establish,
create, perfect (to the extent the same can be achieved by the filing of a
financing statement) and
10
297
maintain the validity and priority of Beneficiary's security interests, and
Trustor shall bear all reasonable costs thereof, including all UCC searches.
Except as otherwise provided in the Credit Agreement, if Beneficiary should
dispose of any of the Site comprising the UCC Collateral pursuant to the UCC,
ten (10) days' prior written notice by Beneficiary to Trustor shall be deemed to
be reasonable notice; provided, however, Beneficiary may dispose of such
property in accordance with the foreclosure procedures of this Deed of Trust in
lieu of proceeding under the UCC. Beneficiary may from time to time execute and
deliver at Trustor's expense, all continuation statements, termination
statements, amendments, partial releases, or other instruments relating to all
financing statements by and between Trustor and Beneficiary. Except as otherwise
provided in the Credit Agreement, if an Event of Default shall occur and is
continuing, (a) Beneficiary, in addition to any other rights and remedies which
it may have, may exercise immediately and without demand to the extent permitted
by law, any and all rights and remedies granted to a secured party under the UCC
including, without limiting the generality of the foregoing, the right to take
possession of the UCC Collateral or any part thereof, and to take such other
measures as Beneficiary may deem necessary for the care, protection and
preservation of such collateral and (b) upon request or demand of Beneficiary,
Trustor shall at its expense, assemble the UCC Collateral and make it available
to Beneficiary at a convenient place acceptable to Beneficiary. Trustor shall
pay to Beneficiary on demand, any and all expenses, including reasonable
attorneys' fees and disbursements incurred or paid by Beneficiary in protecting
the interest in the UCC Collateral and in enforcing the rights hereunder with
respect to such UCC Collateral.
2.14.2 Trustor and the Beneficiary agree, to the extent permitted
by law, that: (i) this Deed of Trust upon recording or registration in the real
estate records of the proper office shall constitute a financing statement filed
as a "fixture filing" within the meaning of [SECTIONS 9-313 AND 9-402 OF THE
UCC]; (ii) all or a part of the Trust Estate are or are to become fixtures; and
(iii) the addresses of Trustor and Beneficiary are as set forth on the first
page of this Deed of Trust.
ARTICLE 3 - REMEDIES
3.1 Acceleration of Maturity. If an Event of Default occurs and is
continuing, Beneficiary may (except that such acceleration shall be automatic if
the Event of Default is caused by a Bankruptcy Event of Trustor), declare the
Secured Obligations to be due and payable immediately, and upon such declaration
such principal and interest and other sums shall immediately become due and
payable without demand, presentment, notice or other requirements of any kind
(all of which Trustor waives).
3.2 Protective Advances If an Event of Default shall have occurred
and is continuing, then without thereby limiting Beneficiary's other rights or
remedies, waiving or releasing any of Trustor's obligations, or imposing any
obligation on Beneficiary, Beneficiary may either advance any amount owing or
perform any or all actions that Beneficiary considers necessary or appropriate
to cure such default. All such advances shall constitute "Protective Advances."
No sums advanced or performance rendered by Beneficiary shall cure, or be deemed
a waiver of any Event of Default.
3.3 Institution of Equity Proceedings. If an Event of Default occurs
and is continuing, Beneficiary may institute an action, suit or proceeding in
equity for specific performance of this
11
298
Deed of Trust, the Notes or any Credit Document, all of which shall be
specifically enforceable by injunction or other equitable remedy.
3.4 Beneficiary's Power of Enforcement.
(a) If an Event of Default occurs, Beneficiary shall be
entitled, at its option and in its sole and absolute discretion, to prepare and
record on its own behalf, or to deliver to Trustee for recording, if
appropriate, written declaration of default and demand for sale and written
Notice of Breach and Election to Sell (or other statutory notice) to cause the
Trust Estate to be sold to satisfy the obligations hereof, and in the case of
delivery to Trustee, Trustee shall cause said notice to be filed for record.
(b) After the lapse of such time as may then be required by
law following the recordation of said Notice of Breach and Election to Sell, and
notice of sale having been given as then required by law, Trustee without demand
on Trustor, shall sell the Trust Estate or any portion thereof at the time and
place fixed by it in said notice, either as a whole or in separate parcels, and
in such order as it may determine, at public auction to the highest bidder, of
cash in lawful money of the United States payable at the time of sale. Trustee
may, for any cause it deems expedient, postpone the sale of all or any portion
of said property until it shall be completed and, in every case, notice of
postponement shall be given by public announcement thereof at the time and place
last appointed for the sale and from time to time thereafter Trustee may
postpone such sale by public announcement at the time fixed by the preceding
postponement; provided that Trustee shall give Trustor notice of such
postponement to the extent required by law. Trustee shall execute and deliver to
the purchaser its Deed, Xxxx of Sale, or other instrument conveying said
property so sold, but without any covenant or warranty, express or implied. The
recitals in such instrument of conveyance of any matters or facts shall be
conclusive proof of the truthfulness thereof. Any person, including Beneficiary,
may bid at the sale.
(c) After deducting all costs, fees and expenses of Trustee
and of this Deed of Trust, including, without limitation, costs of evidence of
title and reasonable attorneys' fees of Trustee or Beneficiary in connection
with a sale, Trustee shall apply the proceeds of such sale to payment of all
sums expended under the terms hereof not then repaid, with accrued interest at
the interest rate on the Notes then to the payment of all other sums then
secured hereby and the remainder, if any, to the person or persons legally
entitled thereto.
(d) If any Event of Default occurs, Beneficiary may, either
with or without entry or taking possession of the Trust Estate, and without
regard to whether or not the indebtedness and other sums secured hereby shall be
due and without prejudice to the right of Beneficiary thereafter to bring an
action or proceeding to foreclose or any other action for any default existing
at the time such earlier action was commenced, proceed by any appropriate action
or proceeding: (1) to enforce payment of the Secured Obligations, to the extent
permitted by law, or the performance of any term hereof or any other right; (2)
to foreclose this Deed of Trust in any manner provided by law for the
foreclosure of mortgages or deeds of trust on real property and to sell, as an
entirety or in separate lots or parcels, the Trust Estate or any portion thereof
pursuant to the laws of the [RELEVANT STATE] or under the judgment or decree of
a court or courts of
12
299
competent jurisdiction, and Beneficiary shall be entitled to recover in any such
proceeding all costs and expenses incident thereto, including reasonable
attorneys' fees in such amount as shall be awarded by the court; (3) to exercise
any or all of the rights and remedies available to it under the Credit
Documents; and (4) to pursue any other remedy available to it. Beneficiary shall
take action either by such proceedings or by the exercise of its powers with
respect to entry or taking possession, or both, as Beneficiary may determine.
(e) The remedies described in this Section 3.4 may be
exercised with respect to all or any portion of the Tangible Collateral, either
simultaneously with the sale of any real property encumbered hereby or
independent thereof. Beneficiary shall at any time be permitted to proceed with
respect to all or any portion of the Tangible Collateral in any manner permitted
by the UCC. Trustor agrees that Beneficiary's inclusion of all or any portion of
the Tangible Collateral in a sale or other remedy exercised with respect to the
real property encumbered hereby, as permitted by the UCC, is a commercially
reasonable disposition of such property.
3.5 Beneficiary's Right to Enter and Take Possession, Operate and
Apply Income.
(a) If an Event of Default occurs, Trustor, upon demand of
Beneficiary, shall forthwith surrender to Beneficiary the actual possession and,
if and to the extent permitted by law, Beneficiary itself, or by such officers
or agents as it may appoint, may enter and take possession of all the Trust
Estate including the Tangible Collateral, without liability for trespass,
damages or otherwise, and may exclude Trustor and its agents and employees
wholly therefrom and may have joint access with Trustor to the books, papers and
accounts of Trustor.
(b) If an Event of Default has occurred and is continuing and
Trustor shall for any reason fail to surrender or deliver the Trust Estate, the
Tangible Collateral or any part thereof after Beneficiary's demand, Beneficiary
may obtain a judgment or decree conferring on Beneficiary or Trustee the right
to immediate possession or requiring Trustor to deliver immediate possession of
all or part of such property to Beneficiary or Trustee and Trustor hereby
specifically consents to the entry of such judgment or decree. Trustor shall pay
to Beneficiary or Trustee, upon demand, all costs and expenses of obtaining such
judgment or decree and reasonable compensation to Beneficiary or Trustee, their
attorneys and agents, and all such costs, expenses and compensation shall, until
paid, be secured by the lien of this Deed of Trust.
(c) Upon every such entering upon or taking of possession,
Beneficiary or Trustee may hold, store, use, operate, manage and control the
Trust Estate and conduct the business thereof, and, from time to time in its
sole and absolute discretion and without being under any duty to so act:
(1) make all necessary and proper maintenance, repairs,
renewals and replacements thereto and thereon, and all necessary additions,
betterments and improvements thereto and thereon and purchase or otherwise
acquire fixtures, personalty and other property in connection therewith;
(2) insure or keep the Trust Estate insured;
13
300
(3) manage and operate the Trust Estate and exercise
all the rights and xxxxxx of Trustor in their name or otherwise with respect to
the same;
(4) enter into agreements with others to exercise the
powers herein granted Beneficiary or Trustee, all as Beneficiary or Trustee from
time to time may determine; and shall apply the monies so received by
Beneficiary or Trustee in such priority as provided by the Credit Agreement to
(1) the payment of interest and principal due and payable on the Beneficiary,
(2) the deposits for taxes and assessments and insurance premiums due, (3) the
cost of insurance, taxes, assessments and other proper charges upon the Trust
Estate or any part thereof; (4) the compensation, expenses and disbursements of
the agents, attorneys and other representatives of Beneficiary or Trustee as
allowed under this Deed of Trust; and (5) any other charges or costs required to
be paid by Trustor under the terms of the Credit Agreement.
(5) rent or sublet the Trust Estate or any portion
thereof for any purpose permitted by this Deed of Trust.
Beneficiary or Trustee shall surrender possession of the Trust
Estate and the Tangible Collateral to Trustor (i) as may be required by law or
court order, or (ii) when all amounts under any of the terms of the Credit
Agreement or this Deed of Trust, shall have been paid current and all Events of
Default have been cured or waived. The same right of taking possession, however,
shall exist if any subsequent Event of Default shall occur and be continuing.
3.6 Separate Sales. To the extent permitted by law or Governmental
Rule, the Trust Estate may be sold in one or more parcels and in such manner and
order as Trustee, in his sole discretion, may elect, it being expressly
understood and agreed that the right of sale arising out of any Event of Default
shall not be exhausted by any one or more sales.
3.7 Waiver of Appraisement, Valuation, Stay, Extension and Redemption
Laws. Trustor agrees to the full extent permitted by law that if an Event of
Default occurs and is continuing, neither Trustor nor anyone claiming through or
under it shall or will set up, claim or seek to take advantage of any
appraisement, valuation, stay, extension or redemption laws now or hereafter in
force, in order to prevent or hinder the enforcement or foreclosure of this Deed
of Trust or the absolute sale of the Trust Estate or any portion thereof or the
final and absolute putting into possession thereof, immediately after such sale,
of the purchasers thereof, and Trustor for itself and all who may at any time
claim through or under it, hereby waives, to the full extent that it may
lawfully so do, the benefit of all such laws, and any and all right to have the
assets comprising the Trust Estate marshalled upon any foreclosure of the lien
hereof and agrees that Trustee or any court having jurisdiction to foreclose
such lien may sell the Trust Estate in part or as an entirety.
3.8 Receiver. If an Event of Default occurs, Beneficiary, to the
extent permitted by law, and without regard to the value, adequacy or occupancy
of the security for the indebtedness and other sums secured hereby, shall be
entitled as a matter of right if it so elects to the appointment of a receiver
to enter upon and take possession of the Trust Estate and to collect all
earnings, revenues and receipts and apply the same as the court may direct, and
such receiver may be appointed by any court of competent jurisdiction upon
application by Beneficiary. To the extent permitted by law or Governmental Rule,
Beneficiary may have a receiver appointed without notice to Trustor or any
14
301
third party, and Beneficiary may waive any requirement that the receiver post a
bond. To the extent permitted by law or Governmental Rule, Beneficiary shall
have the power to designate and select the Person who shall serve as the
receiver and to negotiate all terms and conditions under which such receiver
shall serve. To the extent permitted by law or Governmental Rule, any receiver
appointed on Beneficiary's behalf may be an Affiliate of Beneficiary. The
reasonable expenses, including receiver's fees, reasonable attorneys' fees,
costs and agent's compensation, incurred pursuant to the powers herein contained
shall be secured by this Deed of Trust. The right to enter and take possession
of and to manage and operate the Trust Estate and to collect all earnings,
revenues and receipts, whether by a receiver or otherwise, shall be cumulative
to any other right or remedy available to Beneficiary under this Deed of Trust,
the Credit Agreement or otherwise available to Beneficiary and may be exercised
concurrently therewith or independently thereof, but such rights shall be
exercised in a manner which is otherwise in accordance with and consistent with
the Credit Agreement. Beneficiary shall be liable to account only for such
earnings, revenues and receipts (including, without limitation, security
deposits) actually received by Beneficiary, whether received pursuant to this
section or any other provision hereof. Notwithstanding the appointment of any
receiver or other custodian, Beneficiary shall be entitled as pledgee to the
possession and control of any cash, deposits, or instruments at the time held
by, or payable or deliverable under the terms of this Deed of Trust to,
Beneficiary.
3.9 Suits to Protect the Trust Estate. Beneficiary shall have the
power and authority to institute and maintain any suits and proceedings as
Beneficiary, in its sole and absolute discretion, may deem advisable (a) to
prevent any impairment of the Trust Estate by any acts which may be unlawful or
in violation of this Deed of Trust, (b) to preserve or protect its interest in
the Trust Estate, or (c) to restrain the enforcement of or compliance with any
legislation or other Legal Requirement that may be unconstitutional or otherwise
invalid, if the enforcement of or compliance with such enactment, rule or order
might impair the security hereunder or be prejudicial to Beneficiary's interest
3.10 Proofs of Claim. In the case of any receivership, insolvency,
Bankruptcy Event, reorganization, arrangement, adjustment, composition or other
judicial proceedings affecting Trustor, any Affiliate or any guarantor, co-maker
or endorser of any of Trustor's obligations, its creditors or its property,
Beneficiary, to the extent permitted by law, shall be entitled to file such
proofs of claim or other documents as it may deem be necessary or advisable in
order to have its claims allowed in such proceedings for the entire amount due
and payable by Trustor under the Credit Agreement or any other Credit Document,
at the date of the institution of such proceedings, and for any additional
amounts which may become due and payable by Trustor after such date.
3.11 Trustor to Pay the Notes on Any Default in Payment; Application
of Monies by Beneficiary.
(a) In case of a foreclosure sale of all or any part of the
Trust Estate and of the application of the proceeds of sale to the payment of
the sums secured hereby, to the extent permitted by law, Beneficiary shall be
entitled to enforce payment from Trustor of any additional amounts then
remaining due and unpaid and to recover judgment against Trustor for any portion
thereof remaining unpaid, with interest at the interest rate on the Notes.
15
302
(b) Trustor hereby agrees to the extent permitted by law, that
no recovery of any such judgment by Beneficiary or other action by Beneficiary
and no attachment or levy of any execution upon any of the Trust Estate or any
other property shall in any way affect the Lien and security interest of this
Deed of Trust upon the Trust Estate or any part thereof or any Lien, rights,
powers or remedies of Beneficiary hereunder, but such Lien, rights, powers and
remedies shall continue unimpaired as before.
(c) Any monies collected or received by Beneficiary under this
Section 3.11 shall be first applied to the payment of compensation, expenses and
disbursements of the agents, attorneys and other representatives of Beneficiary,
and the balance remaining shall be applied to the payment of amounts due and
unpaid under the Credit Agreement.
3.12 Delay or Omission; No Waiver. No delay or omission of Beneficiary
or the Banks to exercise any right, power or remedy upon any Event of Default
shall exhaust or impair any such right, power or remedy or shall be construed to
waive any such Event of Default or to constitute acquiescence therein. Every
right, power and remedy given to Beneficiary whether contained herein or in the
Credit Agreement or otherwise available to Beneficiary may be exercised from
time to time and as often as may be deemed expedient by Beneficiary.
3.13 No Waiver of One Default to Affect Another. No waiver of any
Event of Default hereunder shall extend to or affect any subsequent or any other
Event of Default then existing, or impair any rights, powers or remedies
consequent thereon. If Beneficiary (a) grants forbearance or an extension of
time for the payment of any sums secured hereby; (b) takes other or additional
security for the payment thereof; (c) waives or does not exercise any right
granted in the Credit Agreement, this Deed of Trust or any other Credit
Document; (d) releases any part of the Trust Estate from the lien or security
interest of this Deed of Trust or any other instrument securing the Secured
Obligations; (e) consents to the filing of any map, plat or replat of the
Premises; (f) consents to the granting of any easement on the Premises; or (g)
makes or consents to any agreement changing the terms of this Deed of Trust or
any Credit Document subordinating the lien or any charge hereof, no such act or
omission shall release, discharge, modify, change or affect the liability under
the Credit Agreement, this Deed of Trust or any other Credit Document or
otherwise of Trustor, or any subsequent purchaser of the Trust Estate or any
part thereof or any maker, co-signer, surety or guarantor with respect to any
other matters not addressed by such act or omission. No such act or omission
shall preclude Beneficiary from exercising any right, power or privilege herein
granted or intended to be granted in case of any Event of Default then existing
or of any subsequent Event of Default, nor, except as otherwise expressly
provided in an instrument or instruments executed by Beneficiary, shall the lien
or security interest of this Deed of Trust be altered thereby, except to the
extent expressly provided in such acts or omissions. In the event of the sale or
transfer by operation of law or otherwise of all or any part of the Trust
Estate, Beneficiary, without notice to any person, firm or corporation, is
hereby authorized and empowered to deal with any such vendee or transferee with
reference to the Trust Estate or the indebtedness secured hereby, or with
reference to any of the terms or conditions hereof, as fully and to the same
extent as it might deal with the original parties hereto and without in any way
releasing or discharging any of the liabilities or undertakings hereunder, or
waiving its right to declare such sale or transfer an Event of Default as
provided herein. Notwithstanding anything to the contrary contained in this Deed
of Trust or any Credit Document, (i) in the case of any non-monetary Event
16
303
of Default, Beneficiary may continue to accept payments due hereunder without
thereby waiving the existence of such or any other Event of Default and (ii) in
the case of any monetary Event of Default, Beneficiary may accept partial
payments of any sums due hereunder without thereby waiving the existence of such
Event of Default if the partial payment is not sufficient to completely cure
such Event of Default.
3.14 Discontinuance of Proceedings; Position of Parties Restored. If
Beneficiary shall have proceeded to enforce any right or remedy under this Deed
of Trust by foreclosure, entry of judgement or otherwise and such proceedings
shall have been discontinued or abandoned for any reason, or such proceedings
shall have resulted in a final determination adverse to Beneficiary, then and in
every such case Trustor and Beneficiary shall be restored to their former
positions and rights hereunder, and all rights, powers and remedies of
Beneficiary shall continue as if no such proceedings had occurred or had been
taken.
3.15 Remedies Cumulative. Subject to the provisions of Section 5.15
hereof, no right, power or remedy, including without limitation remedies with
respect to any security for the Secured Obligations, conferred upon or reserved
to Beneficiary by the Credit Agreement, this Deed of Trust or any other Credit
Document is exclusive of any other right, power or remedy, but each and every
such right, power and remedy shall be cumulative and concurrent and shall be in
addition to any other right, power and remedy given hereunder or under any
Credit Document, now or hereafter existing at law, in equity or by statute, and
Beneficiary shall be entitled to resort to such rights, powers, remedies or
security as Beneficiary shall in its sole and absolute discretion deem
advisable.
3.16 Interest After Event of Default. If an Event of Default shall
have occurred and is continuing, all sums outstanding and unpaid under the
Credit Documents and this Deed of Trust shall, at Beneficiary's option, bear
interest at the interest rate on the Notes until such Event of Default has been
cured. Trustor's obligation to pay such interest shall be secured by this Deed
of Trust.
3.17 Foreclosure; Expenses of Litigation. If Trustee forecloses,
reasonable attorneys' fees for services in the supervision of said foreclosure
proceeding shall be allowed to the Trustee and Beneficiary as part of the
foreclosure costs. In the event of foreclosure of the lien hereof, there shall
be allowed and included as additional indebtedness all reasonable expenditures
and expenses which may be paid or incurred by or on behalf of Beneficiary for
attorneys' fees, appraiser's fees, outlays for documentary and expert evidence,
stenographers' charges, publication costs, and costs (which may be estimated as
to items to be expended after foreclosure sale or entry of the decree) of
procuring all such abstracts of title, title searches and examinations, title
insurance policies and guarantees, and similar data and assurances with respect
to title as Beneficiary may deem reasonably necessary either to prosecute such
suit or to evidence to a bidder at any sale which may be had pursuant to such
decree the true condition of the title to or the value of the Trust Estate or
any portion thereof. All expenditures and expenses of the nature in this section
mentioned, and such expenses and fees as may be incurred in the protection of
the Trust Estate and the maintenance of the lien and security interest of this
Deed of Trust, including the reasonable fees of any attorney employed by
Beneficiary in any litigation or proceeding affecting this Deed of Trust or any
Credit Document, the Trust Estate or any portion thereof, including, without
limitation, civil, probate, appellate and bankruptcy proceedings, or in
preparation for the commencement or defense of any proceeding or threatened suit
or proceeding, shall be immediately due and payable by Trustor, with
17
304
interest thereon at the interest rate on the Notes, and shall be secured by this
Deed of Trust. Trustee waives its right to any statutory fee in connection with
any judicial or nonjudicial foreclosure of the lien hereof and agrees to accept
a reasonable fee for such services.
3.18 Deficiency Judgments Subject to Article 9 of the Credit
Agreement, if after foreclosure of this Deed of Trust or Trustee's sale
hereunder, there shall remain any deficiency with respect to any amounts payable
under the Credit Documents or hereunder or any amounts secured hereby, and
Beneficiary shall institute any proceedings to recover such deficiency or
deficiencies, all such amounts shall continue to bear interest at the interest
rate on the Notes. Subject to Article 9 of the Credit Agreement, Trustor waives
any defense to Beneficiary's recovery against Trustor of any deficiency after
any foreclosure sale of the Trust Estate. Subject to Article 9 of the Credit
Agreement, to the extent permitted by law, Trustor expressly waives any defense
or benefits that may be derived from any statute granting Trustor any defense to
any such recovery by Beneficiary. Subject to Article 9 of the Credit Agreement,
in addition, Beneficiary and Trustee shall be entitled to recovery of all of
their reasonable costs and expenditures (including without limitation any court
imposed costs) in connection with such proceedings, including their reasonable
attorneys' fees, appraisal fees and the other costs, fees and expenditures
referred to in Section 3.17 above. This provision shall survive any foreclosure
or sale of the Trust Estate, any portion thereof and/or the extinguishment of
the lien hereof.
3.19 Waiver of Jury Trial. Beneficiary and Trustor each waive any
right to have a jury participate in resolving any dispute whether sounding in
contract, tort or otherwise arising out of, connected with, related to or
incidental to the relationship established between them in connection with the
Notes, this Deed of Trust or any other Credit Document. Any such disputes shall
be resolved in a bench trial without a jury.
3.20 Exculpation of Beneficiary. The acceptance by Beneficiary of the
assignment contained herein with all of the rights, powers, privileges and
authority created hereby shall not, prior to entry upon and taking possession of
the Trust Estate by Beneficiary, be deemed or construed to make Beneficiary a
"mortgagee in possession"; nor thereafter or at any time or in any event
obligate Beneficiary to appear in or defend any action or proceeding relating to
the Trust Estate, nor shall Beneficiary, prior to such entry and taking, be
liable in any way for any injury or damage to person or property sustained by
any Person in or about the Trust Estate.
ARTICLE 4 - RIGHTS AND RESPONSIBILITIES OF TRUSTEE;
OTHER PROVISIONS RELATING TO TRUSTEE
Notwithstanding anything to the contrary in this Deed of Trust, Trustor
and Beneficiary agree as follows.
4.1 Exercise of Remedies by Trustee To the extent that this Deed of
Trust or applicable law authorizes or empowers Beneficiary to exercise any
remedies set forth in Article Three hereof or otherwise, or perform any acts in
connection therewith, Trustee (but not to the exclusion of Beneficiary unless so
required under the law of the State of [RELEVANT STATE]) shall have the power to
exercise any or all such remedies, and to perform any acts provided for in this
Deed of Trust in connection therewith, all for the benefit of Beneficiary and on
Beneficiary's behalf
18
305
in accordance with applicable law of the State of [RELEVANT STATE]. In
connection therewith, Trustee: (a) shall not exercise, or waive the exercise of,
any Beneficiary's Remedies (other than any rights or Trustee to any indemnity or
reimbursement), except at Beneficiary's request, and (b) shall exercise, or
waive the exercise of, any or all of Beneficiary's remedies at Beneficiary's
request, and in accordance with Beneficiary's directions as to the manner of
such exercise or waiver. Trustee may, however, decline to follow Beneficiary's
request or direction if Trustee shall be advised by counsel that the action or
proceeding, or manner thereof, so directed may not lawfully be taken or waived.
4.2 Rights and Privileges of Trustee. To the extent that this Deed of
Trust requires Trustor to reimburse Beneficiary for any expenditures Beneficiary
may incur, Trustee shall be entitled to the same rights to reimbursement of
expenses as Beneficiary, subject to such limitations and conditions as would
apply in the case of Beneficiary. To the extent that this Deed of Trust negates
or limits Beneficiary's liability as to any matter, Trustee shall be entitled to
the same negation or limitation of liability. To the extent that Trustor,
pursuant to this Deed of Trust, appoints Beneficiary as Trustor's attorney in
fact for any purpose, Beneficiary or (when so instructed by Beneficiary) Trustee
shall be entitled to act on Trustor's behalf without joinder or confirmation by
the other.
4.3 Resignation or Replacement of Trustee Trustee may resign by an
instrument in writing addressed to Beneficiary, and Trustee may be removed at
any time with or without cause (i.e., in Beneficiary's sole and absolute
discretion) by an instrument in writing executed by Beneficiary. In case of the
death, resignation, removal or disqualification of Trustee or if for any reason
Beneficiary shall deem it desirable to appoint a substitute, successor or
replacement Trustee to act instead of Trustee originally named (or in place of
any substitute, successor or replacement Trustee), then Beneficiary shall have
the right and is hereby authorized and empowered to appoint a successor,
substitute or replacement Trustee, and, if preferred, several substitute
trustees in succession, without any formality other than appointment and
designation in writing executed by Beneficiary, which instrument shall be
recorded if required by the law of the State of [RELEVANT STATE]. The law of the
State of [RELEVANT STATE] shall govern the qualifications of any Trustee. The
authority conferred upon Trustee by this Deed of Trust shall automatically
extend to any and all other successor, substitute and replacement Trustee(s)
successively until the Secured Obligations have been paid in full or the Trust
Estate has been sold hereunder or released in accordance with the provisions of
the Credit Documents. Beneficiary's written appointment and designation of any
Trustee shall be full evidence of Beneficiary's right and authority to make the
same and of all facts therein recited. No confirmation, authorization, approval
or other action by Trustor shall be required in connection with any resignation
or other replacement of Trustee.
4.4 Authority of Beneficiary. If Beneficiary is a banking
corporation, state banking corporation or a national banking association and the
instrument of appointment of any successor or replacement Trustee is executed on
Beneficiary's behalf by an officer of such corporation, state banking
corporation or national banking association, then such appointment may be
executed by any authorized officer or agent of Beneficiary and such appointment
shall be conclusively presumed to be executed with authority and shall be valid
and sufficient without proof of any action by the board of directors or any
superior officer of Beneficiary.
19
306
4.5 Effect of Appointment of Successor Trustee. Upon the appointment
and designation of any successor, substitute or replacement Trustee, Trustee's
entire estate and title in the Trust Estate shall vest in the designated
successor, substitute or replacement Trustee. Such successor, substitute or
replacement Trustee shall thereupon succeed to and shall hold, possess and
execute all the rights, powers, privileges, immunities and duties herein
conferred upon Trustee. All references herein to Trustee shall be deemed to
refer to Trustee (including any successor or substitute appointed and designated
as herein provided) from time to time acting hereunder.
4.6 Confirmation of Transfer and Succession. Any new Trustee
appointed pursuant to any of the provisions hereof shall, without any further
act, deed or conveyance, become vested with all the estates, properties, rights,
powers and trusts of his predecessor in the rights hereunder with like effect as
if originally named as Trustee herein; but nevertheless, upon the written
request of Beneficiary or of any successor, substitute or replacement Trustee,
any former Trustee ceasing to act shall execute and deliver an instrument
transferring to such successor, substitute or replacement Trustee all of the
right, title, estate and interest in the Trust Estate of Trustee so ceasing to
act, together with all the rights, powers, privileges, immunities and duties
herein conferred upon Trustee, and shall duly assign, transfer and deliver all
properties and moneys held by said Trustee hereunder to said successor,
substitute or replacement Trustee.
4.7 Exculpation. Trustee shall not be liable for any error of
judgment or act done by Trustee in good faith, or otherwise be responsible or
accountable under any circumstances whatsoever, except for Trustee's gross
negligence, willful misconduct or knowing violation of law. Trustee shall not be
personally liable in case of entry by him, or anyone entering by virtue of the
powers herein granted him, upon the Trust Estate for debts contracted or
liability or damages incurred in the management or operation of the Trust
Estate. Trustee shall have the right to rely on any instrument, document or
signature authorizing or supporting any action taken or proposed to be taken by
it hereunder, believed by it in good faith to be genuine. All moneys received by
Trustee shall, until used or applied as herein provided, be held in trust for
the purposes for which they were received, but need not be segregated in any
manner from any other moneys (except to the extent required by law). Trustee
shall be under no liability for interest on any moneys received by it hereunder.
4.8 Endorsement and Execution of Documents. Upon Beneficiary's
written request, Trustee shall, without liability or notice to Trustor, execute,
consent to, or join in any instrument or agreement in connection with or
necessary to effectuate the purposes of the Credit Documents. Trustor hereby
irrevocably designates Trustee as its attorney in fact to execute, acknowledge
and deliver, on Trustor's behalf and in Trustor's name, all instruments or
agreements necessary to implement any provision(s) of this Deed of Trust or to
further perfect the lien created by this Deed of Trust on the Trust Estate. This
power of attorney shall be deemed to be coupled with an interest and shall
survive any disability of Trustor.
4.9 Multiple Trustees. If Beneficiary appoints multiple trustees,
then any Trustee, individually, may exercise all powers granted to Trustee under
this instrument, without the need for action by any other Trustee(s).
4.10 No Required Action. Trustee shall not be required to take any
action under this Deed of Trust or to institute, appear in or defend any action,
suit or other proceeding in connection
20
307
therewith where in his opinion such action will be likely to involve him in
expense or liability, unless requested so to do by a written instrument signed
by Beneficiary and, if Trustee so requests, unless Trustee is tendered security
and indemnity satisfactory to him against any and all costs, expense and
liabilities arising therefrom. Trustee shall not be responsible for the
execution, acknowledgment or validity of the Credit Documents, or for the proper
authorization thereof, or for the sufficiency of the lien and security interest
purported to be created hereby, and makes no representation in respect thereof
or in respect of the rights, remedies and recourses of Beneficiary.
4.11 Terms of Trustee's Acceptance. Trustee accepts the trust created
by this Deed of Trust upon the following terms and conditions:
(a) DELEGATION. Trustee may exercise any of its powers through
appointment of attorney(s) in fact or agents.
(b) SECURITY. Trustee shall be under no obligation to take any
action upon any Event of Default unless furnished security or indemnity, in form
satisfactory to Trustee, against costs, expenses, and liabilities that Trustee
may incur.
(c) COSTS AND EXPENSES. Trustor shall reimburse Trustee, as
part of the Secured Obligations secured hereunder, for all reasonable
disbursements and expenses (including reasonable legal fees and expenses)
incurred by reason of or arising from an Event of Default and as provided for in
this Deed of Trust, including any of the foregoing incurred in Trustee's
administering and executing the trust created by this Deed of Trust and
performing Trustee's duties and exercising Trustee's powers under this Deed of
Trust.
(d) RELEASE. Upon payment of the Secured Obligations secured
hereunder, Beneficiary shall request Trustee to release this Deed of Trust and
shall surrender all the Secured Obligations secured hereunder to Trustee.
Trustee shall release this Deed of Trust without charge to Trustor. Trustor
shall pay all costs of recordation, if any.
ARTICLE 5 - GENERAL
5.1 Discharge. When all of the Secured Obligations shall have been
paid in full, then this Deed of Trust and the lien and security interest created
hereby shall be of no further force and effect, Trustor shall be released from
the covenants, agreements and obligations of Trustor contained in this Deed of
Trust and all right, title and interest in and to the Trust Estate shall revert
to Trustor. Beneficiary and Trustee, at the request and the expense of Trustor,
shall promptly execute a deed of reconveyance and such other documents as may be
reasonably requested by Trustor to evidence the discharge and satisfaction of
this Deed of Trust and the release of Trustor from its obligations hereunder.
5.2 No Waiver. The exercise of the privileges granted in this Deed of
Trust to perform Trustor's obligations under the agreements which constitute the
Trust Estate shall in no event be considered or constitute a waiver of any right
which Beneficiary may have at any time, after an Event of Default shall have
occurred and be continuing, to declare the Secured Obligations to be immediately
due and payable. No delay or omission to exercise any right, remedy or power
21
308
accruing upon any default shall impair any such right, remedy or power or shall
be construed to be a waiver of any such default or acquiescence therein; and
every such right, remedy and power may be exercised from time to time and as
often as may be deemed expedient.
5.3 Extension, Rearrangement or Renewal of Secured Obligations. It is
expressly agreed that any of the Secured Obligations at any time secured hereby
may be from time to time extended for any period, or with the consent of Trustor
rearranged or renewed, and that any part of the security herein described, or
any other security for the Secured Obligations, may be waived or released,
without altering, varying or diminishing the force, effect or lien or security
interest of this Deed of Trust; and the lien and security interest granted by
this Deed of Trust shall continue as a prior lien and security interest on all
of the Trust Estate not expressly so released, until the Secured Obligations are
fully paid and this Deed of Trust is terminated in accordance with the
provisions hereof; and no other security now existing or hereafter taken to
secure the payment of the Secured Obligations or any part thereof or the
performance of any obligation or liability of Trustor whatever shall in any
manner impair or affect the security given by this Deed of Trust; and all
security for the payment of the Secured Obligations or any part thereof and the
performance of any obligation or liability shall be taken, considered and held
as cumulative.
5.4 Forcible Detainer. Trustor agrees for itself and all Persons
claiming by, through or under it, that subsequent to foreclosure hereunder in
accordance with this Deed of Trust and applicable law if Trustor shall hold
possession of the Trust Estate or any part thereof, Trustor or the Persons so
holding possession shall be guilty of trespass; and any such tenant failing or
refusing to surrender possession upon demand shall be guilty of forcible
detainer and shall be liable to such purchasers for reasonable rental on said
premises, and shall be subject to eviction and removal in accordance with law.
5.5 Waiver of Stay or Extension. To the extent permitted to be waived
by law, Trustor shall not at any time insist upon or plead or in any manner
whatever claim the benefit or advantage of any stay, extension or moratorium law
now or at any time hereafter in force in any locality where the Trust Estate or
any part thereof may or shall be situated, nor shall Trustor claim any benefit
or advantage from any law now or hereafter in force providing for the valuation
or appraisement of the Trust Estate or any part thereof prior to any sale
thereof to be made pursuant to any provision of this Deed of Trust or to a
decree of any court of competent jurisdiction, nor after any such sale shall
Trustor claim or exercise any right conferred by any law now or at any time
hereafter in force to redeem the Trust Estate so sold or any part thereof; and
Trustor hereby expressly waives all benefit or advantage of any such law or laws
and the appraisement of the Trust Estate or any part thereof, and covenants that
Trustor shall not hinder or delay the execution of any power herein granted and
delegated to Beneficiary but that Trustor shall permit the execution of every
such power as though no such law had been made.
5.6 Notices. Except where certified or registered mail notice is
required by applicable law, any notice to Trustor or Beneficiary required or
permitted hereunder shall be deemed to be given when given in the manner
prescribed in Section 12.1 of the Credit Agreement. All notices to Trustee
required or permitted hereunder shall be deemed given when given in the manner
prescribed in Section 12.1 of the Credit Agreement to the following address:
[TRUSTEE ADDRESS]
22
309
5.7 Severability. All rights, powers and remedies provided herein may
be exercised only to the extent that the exercise thereof does not violate any
applicable law, and are intended to be limited to the extent necessary so that
they will not render this Deed of Trust invalid, unenforceable or not entitled
to be recorded, registered or filed under any applicable law. In the event any
term or provision contained in this Deed of Trust is in conflict, or may
hereafter be held to be in conflict, with the laws of RELEVANT STATE or of the
United States of America, this Deed of Trust shall be affected only as to such
particular term or provision, and shall in all other respects remain in full
force and effect.
5.8 Application of Payments. In the event that any part of the
Secured Obligations cannot lawfully be secured hereby, or in the event that the
lien and security interest hereof cannot be lawfully enforced to pay any part of
the Secured Obligations, or in the event that the lien or security interest
created by this Deed of Trust shall be invalid or unenforceable as to any part
of the Secured Obligations, then all payments on the Secured Obligations shall
be deemed to have been first applied to the complete payment and liquidation of
that part of the Secured Obligations which is not secured by this Deed of Trust
and the unsecured portion of the Secured Obligations shall be completely paid
and liquidated prior to the payment and liquidation of the remaining secured
portion of the Secured Obligations.
5.9 Governing Law
THIS DEED OF TRUST IS GOVERNED BY AND SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF RELEVANT STATE.
5.10 Entire Agreement. THIS WRITTEN AGREEMENT, THE CREDIT AGREEMENT,
THE NOTES AND THE OTHER CREDIT DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN
THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS,
OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
AS OF THE DATE HEREOF, THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
___________________________ ___________________________
TRUSTOR BENEFICIARY
5.11 Amendments. This Deed of Trust may be amended, supplemented or
otherwise modified only by an instrument in writing signed by Trustor and
Beneficiary.
5.12 Successors and Assigns. All terms of this Deed of Trust shall run
with the land and bind each of Trustor and Beneficiary and their respective
successors and assigns, and all Persons claiming under or through Trustor or
Beneficiary, as the case may be, or any such successor or assign, and shall
inure to the benefit of Beneficiary and Trustor, and their respective successors
and assigns.
23
310
5.13 Renewal, Etc. Beneficiary may at any time and from time to time
renew or extend this Deed of Trust, or alter or modify the same in any way, or
waive any of the terms, covenants or conditions hereof in whole or in part and
may release any portion of the Trust Estate or any other security, and grant
such extensions and indulgences in relation to the Secured Obligations as
Beneficiary may determine, without the consent of any junior lienor or
encumbrancer and without any obligation to give notice of any kind thereto and
without in any manner affecting the priority of the lien and security interest
hereof on any part of the Trust Estate; provided that nothing in this Section
5.13 shall grant Beneficiary the right to alter or modify the Deed of Trust
without the consent of the Trustor unless otherwise specifically permitted in
this Deed of Trust.
5.14 Future Advances. This Deed of Trust is executed and delivered to
secure, among other things, future advances. It is understood and agreed that
this Deed of Trust secures present and future advances made for the benefit of
Trustor and that the lien of such future advances shall relate to the date of
this Deed of Trust. The advances are being used by Trustor to pay for all or
part of the cost of completing erection, acquisition, construction, alteration
or repair of any part of the Project, the financing of which, in whole or in
part, this Deed of Trust was given to secure.
5.15 Liability. Notwithstanding any provision in this Deed of Trust to
the contrary, Recourse against the Trustor, Partners, Members, Shareholders and
their respective Affiliates (all as defined in the Credit Agreement),
stockholders, officers, directors and employees under this Deed of Trust shall
be limited to the extent provided in Article 9 of the Credit Agreement.
5.16 Subject to Ground Lease. The Trustor, the Beneficiary and the
Trustee acknowledge and agree that this Deed of Trust is subject to the terms
and conditions of the Ground Lease. In the event of a conflict between the terms
of this Deed of Trust and the Ground Lease, the terms of the Ground Lease shall
supersede and control.
5.17 Release of Collateral.
(a) The Trust Property shall be released from the security
interest created by this Deed of Trust at any time or from time to time upon the
request of the Trustor; provided that the requirements of the Credit Agreement
have been satisfied. Upon satisfaction of such requirements, a Responsible
Officer of the Beneficiary shall instruct the Trustee to promptly execute,
deliver and acknowledge any necessary or proper instruments of termination,
satisfaction or release to evidence the release of any Trust Property permitted
to be released pursuant to this Deed of Trust.
(b) The Beneficiary may instruct the Trustee to release Trust
Property from the security interest created hereunder upon the sale or
disposition of such Trust Property pursuant to the Beneficiary's powers, rights
and duties with respect to remedies provided herein.
5.18 Fixture Filing Under Uniform Commercial CodeTrustor and the
Beneficiary agree, to the extent permitted by law, that: (i) this Deed of Trust
upon recording or registration in the real estate records of the proper office
shall constitute a financing statement filed as a "fixture filing" within the
meaning of [SECTIONS 9-313 AND 9-402] of the UCC; and (ii) the addresses of
Trustor and Beneficiary are as set forth on the last page of this Deed of Trust.
24
311
5.19 Credit Agreement Controls. In the event of any conflict between
any terms and provisions set forth in this Deed of Trust and those set forth in
the Credit Agreement, the terms and provisions of the Credit Agreement shall
supersede and control the terms and provisions of this Deed of Trust
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
25
312
IN WITNESS WHEREOF, Trustor has caused this Deed of Trust to be duly
executed and delivered as of the day and year first above written.
CALPINE CONSTRUCTION FINANCE COMPANY L.P.,
a Delaware limited partnership
By: CALPINE CCFC GP, INC., its General Partner
By: ______________________________________
Name:
Title:
26
313
THE STATE OF ss.
ss.
COUNTY OF ss.
This instrument was acknowledged before me on _______________, 1999, by
_______________________________, ____________________________ President of _____
____________________________________, a ______________ corporation, on behalf of
such corporation.
________________________________________
Notary Public, State of ________________
My Commission Expires: _________________
________________________________________
Printed Name of Notary
27
314
EXHIBIT A
DESCRIPTION OF SITE
315
EXHIBIT B
DESCRIPTION OF EASEMENTS
316
EXHIBIT C
PERMITTED ENCUMBRANCES
317
EXHIBIT D-4
to the Credit Agreement
SECURITY AGREEMENT
Dated as of __________, 1999
between
CALPINE CONSTRUCTION FINANCE COMPANY, L.P.,
a Delaware limited partnership
and
THE BANK OF NOVA SCOTIA
as Administrative Agent
318
TABLE OF CONTENTS
Page
----
1. Definitions............................................................ 1
2. Assignment, Pledge and Grant of Security Interest...................... 2
3. Obligations Secured.................................................... 7
4. Representations and Warranties of Borrower............................. 7
5. Covenants of Borrower. Borrower covenants as follows:................. 7
6. Events of Default...................................................... 8
7. Remedies Upon Event of Default......................................... 8
8. Remedies Cumulative; Delay Not Waiver.................................. 9
9. Application of Proceeds................................................ 10
10. Attorney-In-Fact...................................................... 10
11. Administrative Agent May Perform...................................... 11
12. Perfection; Further Assurances........................................ 11
13. Place of Business; Location of Records................................ 11
14. Continuing Assignment and Security Interest; Transfer of Notes........ 11
15. Termination of Security Interest...................................... 12
16. Attorneys' Fees....................................................... 12
17. Liability............................................................. 12
18. Amendments; Waivers; Consents......................................... 12
19. Notices............................................................... 12
20. Governing Law......................................................... 13
21. Reinstatement......................................................... 13
22. Severability.......................................................... 13
23. Survival of Provisions................................................ 13
24. Headings Descriptive.................................................. 13
25. Entire Agreement...................................................... 13
26. Time.................................................................. 13
27. Counterparts.......................................................... 14
28. Waiver of Jury Trial.................................................. 14
i
319
SECURITY AGREEMENT
This SECURITY AGREEMENT (this "Agreement"), dated as of _______, 1999, is
entered into by and between CALPINE CONSTRUCTION FINANCE COMPANY, L.P., a
Delaware limited partnership ("Borrower"), and THE BANK OF NOVA SCOTIA, as
Administrative Agent ("Administrative Agent") for the Banks (as defined below).
PREFACE
A. Borrower intends to construct and own and operate the Projects.
B. Borrower, the financial institutions listed on Exhibit H to the Credit
Agreement (the "Banks"), Credit Suisse First Boston, as Lead Arranger,
Syndication Agent and Bookrunner and The Bank of Nova Scotia, as Lead Arranger,
LC Bank and Administrative Agent, have entered into that certain Credit
Agreement, dated as of October 20, 1999 (as modified, supplemented or amended
from time to time, the "Credit Agreement"), pursuant to which the Banks agreed
to make certain advances of credit to Borrower in the amounts specified and on
the terms and subject to the conditions set forth therein. For purposes of this
Agreement, the term "Banks" shall include the Administrative Agent, the Lead
Arrangers, the Syndication Agent, the Bookrunner, the Co-Documentation Agents
and the Banks (as such terms are defined in the Credit Agreement).
C. As a condition precedent to the Banks' making the advances of credit
contemplated by the Credit Agreement, the Banks require that Borrower shall have
executed this Agreement.
AGREEMENT
In consideration of the promises contained herein, and in order to induce
the Banks to enter into the Credit Agreement and to make the advances of credit
pursuant to the terms thereof, and for other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, Borrower hereby
agrees with Administrative Agent for the benefit of Administrative Agent and the
Banks as follows:
1 DEFINITIONS.
1.1 "UCC" shall mean the Uniform Commercial Code as the same may,
from time to time, be in effect in the State of New York or, with respect to the
Operating Accounts only, the State of California; provided, however, in the
event that, by reason of mandatory provisions of law, any or all of the
attachment, perfection or priority of the security interest in any Collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction other
than the State of New York or, if applicable, the State of California, the term
"UCC" shall mean the Uniform Commercial Code as in effect in such other
jurisdiction for purposes of the
320
provisions hereof relating to such attachment, perfection or priority and for
purposes of definitions related to such provisions.
1.2 All capitalized terms used, but not otherwise defined herein,
shall have the meanings provided in the Credit Agreement. The rules of
interpretation contained in Exhibit A to the Credit Agreement shall apply to
this Agreement.
2 ASSIGNMENT, PLEDGE AND GRANT OF SECURITY INTEREST.
2.1 To secure the timely payment and performance of the
Obligations (as defined in Section 3 hereof), except as provided in Section 2.5,
Borrower does hereby assign, grant and pledge to, and subject to a security
interest in favor of, Administrative Agent, on behalf of and for the benefit of
Administrative Agent and the Banks, all the estate, right, title and interest of
Borrower, whether now owned or hereafter acquired, in, to and under:
2.1.1 The following agreements and documents, as amended
from time to time (individually, an "Assigned Agreement," and collectively, the
"Assigned Agreements") and all of Borrower's rights thereunder:
(a) The Prime Construction Contracts, including (i)
Contract for Construction between Borrower, as successor in interest to Magic
Valley Generation, L.P., and Xxxxxx Construction Corporation, dated Xxxxx 00,
0000, (xx) Contract for Engineering, Procurement, and Construction between
Borrower, as successor in interest to CPN South Point, LLC, and The South Point
Joint Venture, dated Xxxxx 00, 0000, (xxx) Contract for Engineering,
Procurement, and Construction between Borrower, as successor in interest to
Calpine Xxxxxx, LLC, and Xxxxxxx Power Corporation, dated as of June 1, 1999,
and (iv) Contract Agreement between General Electric Company and Borrower, as
successor in interest to Xxxxxxxxx, LLC, for the Xxxxxxxxx Power Project
Combined Cycle Power Plant Westbrook, Maine, dated as of February 5, 1999;
(b) The Power Island Supply Contracts, including (i)
Purchase Contract between Westinghouse Power Generation and Borrower, as
successor in interest to Calpine Corporation, dated as of June 30, 1998, (ii)
Purchase Contract for Power Island Equipment between Siemens Westinghouse Power
Corporation and Borrower, as successor in interest to CPN South Point, LLC,
dated as of March 15, 1999, and (iii) Purchase Contract for Power Island
Equipment between Siemens Westinghouse Power Corporation and Borrower, as
successor in interest to Calpine Xxxxxx, Inc., dated as of December 16, 1998;
(c) The Engineering Contracts, including Contract for
Professional Services between Xxxxxxx & Xxxxx, L.L.C., and Borrower, as
successor in interest to Magic Valley Generation, L.P., dated as of December 8,
1998;
(d) The Maintenance Contracts, including (i) Maintenance
Contract between Westinghouse Power Generation and Borrower, as successor in
interest to Calpine Corporation, dated as of June 30, 1998, (ii) Maintenance
Contract between Siemens Westinghouse Power Corporation and Borrower, as
successor in interest to Calpine Corporation,
2
321
dated as of Xxxxx 00, 0000, (xxx) Maintenance Contract between Siemens
Westinghouse Power Corporation and Borrower, as successor in interest to Calpine
Corporation, dated as of December 18, 1998, and (iv) Long Term Parts & Long Term
Service Contract between Borrower, as successor in interest to Xxxxxxxxx Power,
LLC, and General Electric International, dated as of February 5, 1999;
(e) The Construction Management Agreements;
(f) The Project Documents related to the delivery of water
to the Projects; including (i) Agreement for Purchase of Treated Effluent Water,
between the City of Edinburg and Borrower, as successor in interest to Calpine
Corporation dated April 21, 1998; First Amendment to Agreement for Purchase of
Treated Effluent Water by and between the City of Edinburg and Borrower, as
successor in interest to Magic Valley Generation, L.P. dated August 4, 1999,
(ii) Master Agreement for Purchase and Sale of Water by and between Xxxxxxx
County Irrigation District No. Two and Borrower, as successor in interest to
Magic Valley Generation, L.P., dated June 17, 1999, (iii) Water Delivery
Contract by and between Xxxxxxx County Irrigation District No. One and Borrower,
as successor in interest to Magic Valley Generation, L.P., dated July 19, 1999,
(iv) Xxxxxxx Money Contract between Bayview Irrigation District No. 11 and
Borrower, as successor in interest to Magic Valley Generation, L.P., dated July
27, 1999; and (v) Agreement by and between Borrower, as successor in interest to
Xxxxxxxxx Power, LLC, and Portland Water District, dated as of February 25,
1999;
(g) The Leases, including (i) Amended and Restated Ground
Lease Agreement, executed as of August 4, 1999 and approved as BIA Lease
B1778-FM on August 19, 1999 between the Fort Mojave Indian Tribe, a federal
recognized Indian Tribe and Borrower;
(h) the O&M Agreements;
(i) the Project Management Agreements;
(j) the Gas Supply Contracts;
(k) the Gas Transportation Agreements;
(l) the Fuel Management Agreements;
(m) the Power Purchase Agreements, including Power Purchase
and Sale Agreement between Borrower, as successor in interest to Calpine Power
Services Company and Magic Valley Electric Cooperative, Inc., dated as of May
22, 1998;
(n) the Power Marketing Agreements;
(o) (i) that certain Option Contract dated as of September
3, 1999, by and between, on the one hand, Xxxxx X. Xxxxxxxxxx and Xxxxxxx X.
Xxxxxxxxxx and, on the other hand, Calpine Eastern Corporation, a Delaware
corporation ("Calpine Eastern"), whose interest has been assigned to Borrower,
(ii) that certain Option Contract dated as of September 3, 1999, by and between,
on the one hand, Xxxxxx Xxxxxxxxxx, Xxxxx Xxxxxxxxxx, Xxxxxx
3
322
Xxxxxxxxxx Xxxxxx and Xxxx Xxxxxxxxxx Xxxxxxx and, on the other hand, Calpine
Eastern, whose interest has been assigned to Borrower, (iii) that certain Option
Contract dated as of September 3, 1999, by and between Xxxxxx X. "Shorty" Xxxxx
and Calpine Eastern, whose interest has been assigned to Borrower, (iv) that
certain Option Agreement dated as of March 10, 1998 by and between, on the one
hand, Tulare Hills Corporation, a California corporation as to an undivided
63.687% interest, Xxxxxxx Xxx, an unmarried man and Xxxxxxx Xxx, an unmarried
man as joint tenants, as to an undivided 12.1% interest and Danville Realty
Corporation, as to an undivided 24.213% interest and, on the other hand, Calpine
Corporation, a Delaware corporation ("Calpine"), whose interest has been
assigned to Borrower, (v) that certain Option Contract dated as of September 3,
1999, by and between, on the one hand, Xxxxxx Xxxxxxx and Xxxxx Xxxxxxx and, on
the other hand, Calpine Eastern, whose interest has been assigned to Borrower,
(vi) that certain Option Agreement dated as of April 9, 1999 by and among, on
the one hand, Xxxxx X. Xxxxxxxxxx, as Trustee of the Xxxxxxxxxx Family Trust
dated October 23, 1991, as amended and restated April 17, 1997 (as to an
undivided 97% interest), Xxxx Xxxxxxxxxx (as to an undivided 1% interest),
Xxxxxxx X. Xxxxx (as to an undivided 1% interest) and Xxxxxxx X. Xxxxxx (as to
an undivided 1% interest) and, on the other hand, Calpine and Bechtel
Enterprises, Inc., a Delaware corporation, Calpine's interest in which has been
assigned to Borrower, (vii) that certain Option Agreement, dated as of October
20, 1999, by and between Pittsburg District Energy Facility, LLC, a Delaware
limited liability company and Borrower, (viii) that certain Option Contract
dated as of June 25, 1999, by and between Xxxx X. Xxxxxx and Calpine Eastern,
whose interest has been assigned to Borrower, (ix) that certain Option Agreement
dated as of July 21, 1998, by and between The Dow Chemical Company, a Delaware
corporation and Calpine Pittsburg, Inc., a Delaware corporation, a 50% undivided
interest in which has been assigned to Borrower, (x) that certain Option
Agreement for Purchase of Real Property dated as of August 20, 1999, by and
between Xxxxxx Xxxx Xxxx and Calpine Eastern, whose interest has been assigned
to Borrower, (xi) that certain Option Agreement for Purchase of Real Property
dated as of July 30, 1999, by and between Xxxxxx X. Xxxxxxxx and Xxxxxx X.
Xxxxx, Esq., whose interest has been assigned to Borrower, and (xii) that
certain Lease Agreement by and between The City of Alexander City, a
municipality located in the County of Tallapoosa in the State of Alabama and
Calpine Eastern, whose interest has been assigned to Borrower.
(p) all other Project Documents not listed above to which
Borrower is or may become a party from time to time;
(q) the insurance policies maintained or required to be
maintained by Borrower or any other Person under the Credit Agreement,
including, without limitation, any such policies insuring against loss of
revenues by reason of interruption of the operation of a Project and all loss
proceeds and other amounts payable to Borrower thereunder, and all eminent
domain proceeds relating to any Project;
(r) to the extent assignable, all other agreements,
including vendor warranties, running to Borrower or assigned to Borrower,
relating to the construction, maintenance, improvement, operation or acquisition
of a Project or any part thereof, or transport of material, equipment and other
parts of a Project or any part thereof;
4
323
(s) any other lease or sublease agreements or easement
agreements relating to a Project or any part thereof or any ancillary facilities
to which Borrower is or becomes a party;
(t) each Additional Project Document, and, to the extent
assignable, any other agreements to which Borrower may be or become a party to
relating to the construction or operation of a Project or any part thereof;
(u) all amendments, supplements, substitutions and renewals
to any of the aforesaid agreements; and
(v) all Permits, including those described on Exhibit G-3
to the Credit Agreement or any Appendix thereto, but excluding any of the
Permits which by their terms or by operation of law prohibit or do not allow
assignment or which would become void solely by virtue of a security interest
being granted therein;
2.1.2 all rents, profits, income, royalties and revenues
derived in any other manner by Borrower from its ownership of a Project or any
part thereof and the operation of a Project or any part thereof, including,
without limitation, all Project Revenues and all revenues from the sale of
electricity, steam, heat, goods or services, but excluding amounts distributed
to Borrower under Waterfall Level 8 and 10 of Section 7.2.1 of the Credit
Agreement;
2.1.3 all other personal property and fixtures of Borrower
relating to any Project, whether now owned or existing or hereafter acquired or
arising, or in which Borrower may have an interest, and wheresoever located,
whether or not of a type which may be subject to a security interest under the
UCC, including all machinery, tools, engines, turbines (including combustion
turbines and steam turbine generators), boilers, fuel storage tanks, control
equipment, appliances, mechanical and electrical systems, elevators, lighting,
alarm systems, fire control systems, furnishings, furniture, service equipment,
motor vehicles, building or maintenance equipment, building or maintenance
materials, pipes and pipelines supplies, goods and property covered by any
warehouse receipts or bills of lading or other such documents, spare parts,
maps, plans, specifications, architectural, engineering, construction or shop
drawings, manuals or similar documents, copyrights, trademarks and trade names,
and any replacements, renewals or substitutions for any of the foregoing or
additional tangible or intangible personal property hereafter acquired by
Borrower;
2.1.4 all goods, money, instruments, investment securities,
accounts, contract rights, documents, deposit accounts, chattel paper, general
intangibles, and inventory relating to any Project;
2.1.5 all Accounts, including without limitation, the
Construction Accounts, the Revenue Accounts, the Operating Accounts, the Loss
Proceeds Account and the Working Capital Reserve Accounts, including any
sub-accounts within such accounts; and
2.1.6 the proceeds of all of the foregoing (all of the
collateral described in clauses 2.1.1 through 2.1.6, but excluding the property
described in Section 2.5, being herein
5
324
collectively referred to as the "Collateral"), including without limitation, (a)
all rights of Borrower to receive moneys due and to become due under or pursuant
to the Collateral; (b) all rights of Borrower to receive the return of any
premiums for, or proceeds of, any insurance, indemnity, warranty or guaranty
with respect to the Collateral or to receive any condemnation proceeds; (c) all
claims of Borrower for damages arising out of, or for breach of or default
under, the Assigned Agreements or any other Collateral; (d) all rights of
Borrower to terminate, amend, supplement, modify or waive performance under the
Assigned Agreements, to perform thereunder and to compel performance and
otherwise exercise all remedies thereunder; and (e) to the extent not included
in the foregoing, all proceeds receivable or received when any and all of the
foregoing Collateral is sold, collected, exchanged or otherwise disposed of,
whether voluntarily or involuntarily.
2.2 In order to effectuate the foregoing, Borrower has heretofore
delivered, or concurrently with the delivery hereof, is delivering to
Administrative Agent an executed counterpart or certified copy of each of the
Assigned Agreements. Borrower will likewise deliver to Administrative Agent an
executed counterpart of each future lease, construction agreement, operation
agreement and other agreement relating to the Project or any part thereof, and
amendments and supplements to the foregoing, included in the Collateral, as they
are entered into by Borrower promptly upon the execution thereof.
Notwithstanding anything to the contrary contained herein, no such future lease,
construction agreement, operation agreement or other material agreement relating
to a Project or any part thereof may be entered into by Borrower except as
permitted under the Credit Agreement.
2.3 Notwithstanding anything to the contrary contained herein,
Borrower shall remain liable under each of the Assigned Agreements to perform
all of the obligations undertaken by it thereunder, all in accordance with and
pursuant to the terms and provisions thereof, and Administrative Agent shall
have no obligation or liability under any of such Assigned Agreements by reason
of or arising out of this Agreement, nor shall Administrative Agent be required
or obligated in any manner to perform or fulfill any obligations of Borrower
thereunder or to make any payment or inquiry as to the nature or sufficiency of
any payment received by it, or present or file any claim or take any action to
collect or enforce the payment of any amounts which may have been assigned to it
or to which it may be entitled at any time.
2.4 If any default by Borrower under any of the Assigned
Agreements shall occur and be continuing, then Administrative Agent shall, at
its option and after the expiration of the applicable cure periods under Section
8.1.7 of the Credit Agreement, be permitted (but shall not be obligated) to
remedy any such default by giving written notice of such intent to Borrower and
to the parties to the Assigned Agreement or Assigned Agreements for which
Administrative Agent intends to remedy the default. After giving such notice of
its intent to cure such default and upon the commencement thereof,
Administrative Agent will proceed diligently to cure such default. Any cure by
Administrative Agent of Borrower's default under any of the Assigned Agreements
shall not be construed as an assumption by Administrative Agent or any of the
Banks of any obligations, covenants or agreements of Borrower under such
Assigned Agreement, and neither Administrative Agent nor any of the Banks shall
be liable to Borrower or any other Person as a result of any actions undertaken
by Administrative Agent in curing or attempting to cure any such default, except
as set forth in Section 12.13 of the Credit Agreement. This
6
325
Agreement shall not be deemed to release or to affect in any way the obligations
of Borrower under the Assigned Agreements.
2.5 Notwithstanding anything to the contrary herein contained, the
Collateral described in Section 2.1 shall not include, and the Lien granted
hereunder shall not extend to, any such Collateral relating to the Project
described on Appendix G-1S to the Credit Agreement and that West Phoenix
Project.
3 OBLIGATIONS SECURED. Without limiting the generality of the foregoing,
this Agreement and all of the Collateral secure the payment and performance when
due of all Obligations (as defined in the Credit Agreement) of Borrower to the
Administrative Agent and the Banks (the "Obligations").
4 REPRESENTATIONS AND WARRANTIES OF BORROWER. Borrower represents and
warrants as of the date hereof as follows:
4.1 Borrower has not assigned any of its rights under the Assigned
Agreements except as provided in the Credit Documents.
4.2 Borrower has not executed and is not aware of any effective
financing statement, security agreement or other instrument similar in effect
covering all or any part of the Collateral, except such as may have been filed
pursuant to this Agreement and the other Credit Documents or pursuant to the
documents evidencing Permitted Liens.
4.3 Except as permitted by the Credit Agreement, Borrower is
lawfully possessed of ownership of the Collateral and has full right, title and
interest in and to all rights purported to be granted to it under the Assigned
Agreements, not subject to any mortgages, liens, charges, or encumbrances except
Permitted Liens. Borrower has full power and lawful authority to grant and
assign the Collateral hereunder.
5 COVENANTS OF BORROWER. Borrower covenants as follows:
5.1 Any action or proceeding to enforce this Agreement or any
Assigned Agreement may be taken by Administrative Agent either in Borrower's
name or in Administrative Agent's name, as Administrative Agent may deem
necessary.
5.2 Borrower will, so long as any Obligations shall be
outstanding, warrant and defend its title to the Collateral and the interest of
Administrative Agent in the Collateral against any claim or demand of any
persons (other than Permitted Liens) which could reasonably be expected to
materially adversely affect Borrower's title to, or Administrative Agent's right
or interest in, such Collateral.
5.3 Borrower will at all times keep accurate and complete records
of the Collateral. Borrower shall permit representatives of Administrative Agent
upon reasonable prior notice, and in accordance with Section 5.6 of the Credit
Agreement, at any time during normal business hours of Borrower to inspect and
make abstracts from Borrower's books and records pertaining to the Collateral.
Upon the occurrence and during the continuation of any Event of
7
326
Default, at Administrative Agent's request, Borrower shall promptly deliver
copies of any and all such records to Administrative Agent.
5.4 Unless waived in writing by Administrative Agent, Borrower
shall give Administrative Agent at least 45 days' notice before it changes the
location of its principal place of business and chief executive office and shall
at the expense of Borrower execute and deliver such instruments and documents as
may reasonably be required by Administrative Agent to maintain a prior perfected
security interest in the Collateral.
6 EVENTS OF DEFAULT. The occurrence of an Event of Default under the
Credit Agreement, whatever the reason therefor and whether it shall be voluntary
or involuntary or be effected by operation of law, or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body, shall constitute an event of default
hereunder (an "Event of Default").
7 REMEDIES UPON EVENT OF DEFAULT.
7.1 If any Event of Default has occurred and is continuing,
Administrative Agent may (1) declare any amounts payable by Borrower under the
Credit Agreement to be due and payable immediately and thereupon the same shall
become immediately due and payable (provided that if such Event of Default
occurs under Section 8.1.4 of the Credit Agreement with respect to Borrower, all
such amounts shall become automatically due and payable); (2) proceed to protect
and enforce the rights vested in it by this Agreement, including but not limited
to, the right to cause all revenues pledged hereby as security and all other
moneys pledged hereunder to be paid directly to it, and to enforce its rights
hereunder to such payments and all other rights hereunder by such appropriate
judicial proceedings as it shall deem most effective to protect and enforce any
of such rights, either at law or in equity or otherwise, whether for specific
enforcement of any covenant or agreement contained in any of the Assigned
Agreements, or in aid of the exercise of any power therein or herein granted, or
for any foreclosure hereunder and sale under a judgment or decree in any
judicial proceeding, or to enforce any other legal or equitable right vested in
it by this Agreement or by law; (3) cause any action at law or suit in equity or
other proceeding to be instituted and prosecuted to collect or enforce any
Obligations or rights hereunder or included in the Collateral, or to foreclose
or enforce any other agreement or other instrument by or under or pursuant to
which such Obligations are issued or secured, subject in each case to the
provisions and requirements thereof; (4) sell or otherwise dispose of any or all
of the Collateral or cause the Collateral to be sold or otherwise disposed of in
one or more sales or transactions, at such prices and in such manner as
Administrative Agent may deem commercially reasonable, and for cash or on credit
or for future delivery, without assumption of any credit risk at any broker's
board or at public or private sale, without demand of performance or notice of
intention to sell or of time or place of sale (except such notice as is required
by applicable statute and cannot be waived), it being agreed that Administrative
Agent may be a purchaser on behalf of the Banks or on its own behalf at any such
sale and that Administrative Agent, any Bank, or any other Person who may be a
bona fide purchaser for value and without notice of any claims of any or all of
the Collateral so sold shall thereafter hold the same absolutely free from any
claim or right of whatsoever kind, including any equity of redemption, of
Borrower, any such demand, notice or right and equity being hereby expressly
waived and
8
327
released to the extent permitted by law; (5) incur reasonable expenses,
including reasonable attorneys' fees, reasonable consultants' fees, and other
costs appropriate to the exercise of any right or power under this Agreement;
(6) perform any obligation of Borrower hereunder or under any other Credit
Document, and make payments, purchase, contest or compromise any encumbrance,
charge or lien, and pay taxes and expenses without, however, any obligation to
do so; (7) in connection with any acceleration and foreclosure, take possession
of the Collateral and render it usable and repair and renovate the same without,
however, any obligation to do so, and enter upon any Site or any other location
where the same may be located for that purpose, control, manage, operate, rent
and lease the Collateral, either separately or in conjunction with any Project,
collect all rents and income from the Collateral and apply the same to reimburse
the Banks for any cost or expenses incurred hereunder or under any of the Credit
Documents and to the payment or performance of Borrower's obligations hereunder
or under any of the Credit Documents, and apply the balance to the Loans of
Borrower as provided for in the Credit Agreement and any remaining excess
balance to whomsoever is legally entitled thereto; (8) secure the appointment of
a receiver of any Project or any part thereof and/or the Collateral or any part
thereof; or (9) exercise any other or additional rights or remedies granted to a
secured party under the UCC. If pursuant to applicable law prior notice of any
such action is required to be given to Borrower, Borrower hereby acknowledges
that the minimum time required by such applicable law, or if no minimum time is
specified, 10 Banking Days, shall be deemed a reasonable notice period.
7.2 All reasonable costs and expenses (including reasonable
attorneys' fees and expenses) incurred by Administrative Agent in connection
with any such suit or proceeding or in connection with the performance by
Administrative Agent of any of Borrower's agreements contained in any of the
Assigned Agreements or any exercise of its rights or remedies hereunder,
pursuant to the terms of this Agreement, together with interest thereon (to the
extent permitted by law) computed at a rate per annum equal to the Default Rate
from the date on which such costs or expenses are incurred to the date of
payment thereof, shall constitute additional indebtedness secured by this
Agreement and shall be paid by Borrower to Administrative Agent on behalf of the
Banks on demand.
8 REMEDIES CUMULATIVE; DELAY NOT WAIVER.
8.1 No right, power or remedy herein conferred upon or reserved to
Administrative Agent is intended to be exclusive of any other right, power or
remedy and every such right, power and remedy shall, to the extent permitted by
law, be cumulative and in addition to every other right, power and remedy given
hereunder or now or hereafter existing at law or in equity or otherwise. The
assertion or employment of any right or remedy hereunder or otherwise shall not
prevent the concurrent assertion or employment of any other appropriate right or
remedy. Resort to any or all security now or hereafter held by Administrative
Agent may be taken concurrently or successively and in one or several
consolidated or independent judicial actions or lawfully taken nonjudicial
proceedings, or both.
8.2 No delay or omission of Administrative Agent to exercise any
right or power accruing upon the occurrence and during the continuance of any
Event of Default as aforesaid shall impair any such right or power or shall be
construed to be a waiver of any such
9
328
Event of Default or an acquiescence therein; and every power and remedy given by
this Agreement may be exercised from time to time, and as often as shall be
deemed expedient, by Administrative Agent.
9 APPLICATION OF PROCEEDS. Upon the occurrence and during the
continuation of an Event of Default, the proceeds of any sale of or other
realization upon, all or any part of the Collateral shall be applied: first, to
all fees, costs and expenses incurred by and due and owing to Administrative
Agent and the Banks under the Credit Agreement, the other Credit Documents or
the Collateral Documents; second, to accrued and unpaid interest on the
Obligations (including any interest which, but for the provisions of the
Bankruptcy Code, would have accrued on such amounts); third, to the principal
amounts of the Obligations outstanding; fourth, to any other Obligations of
Borrower owing to Administrative Agent or the Banks; and fifth, to, or as
directed by, Borrower.
10 ATTORNEY-IN-FACT. Borrower hereby constitutes and appoints
Administrative Agent, acting for and on behalf of itself and the Banks and each
successor or assign of Administrative Agent and the Banks, the true and lawful
attorney-in-fact of Borrower, with full power and authority in the place and
stead of Borrower and in the name of Borrower, Administrative Agent or otherwise
to enforce all rights, interests and remedies of Borrower with respect to the
Collateral, including, without limitation, the right:
10.1 to ask, require, demand, receive and give acquittance for any
and all moneys and claims for moneys due and to become due under or arising out
of the Assigned Agreements or any of the other Collateral, including without
limitation, any insurance policies with respect to any Project;
10.2 to elect remedies thereunder and to endorse any checks or
other instruments or orders in connection therewith;
10.3 to file any claims or take any action or institute any
proceedings in connection therewith which Administrative Agent may reasonably
deem to be necessary or advisable;
10.4 to pay, settle or compromise all bills and claims which may
be or become liens or security interests against any or all of the Collateral,
or any part thereof, unless a bond or other security satisfactory to
Administrative Agent has been provided; and
10.5 upon foreclosure and to the extent provided in the Consents,
to do any and every act which Borrower may do on its behalf with respect to the
Collateral or any part thereof and to exercise any or all of Borrower's rights
and remedies under any or all of the Assigned Agreements;
provided, however, that Administrative Agent shall not exercise any such rights
except upon the occurrence and continuation of an Event of Default. This power
of attorney is a power coupled with an interest and shall be irrevocable.
10
329
11 ADMINISTRATIVE AGENT MAY PERFORM. Upon the occurrence and during the
continuance of an Event of Default, if Borrower fails to perform any agreement
contained herein, Administrative Agent may itself perform, or cause performance
of, such agreement, and the reasonable expenses of Administrative Agent incurred
in connection therewith shall be part of the Obligations.
12 PERFECTION; FURTHER ASSURANCES.
12.1 Borrower agrees that from time to time, at the expense of
Borrower, Borrower shall promptly execute and deliver all instruments and
documents, and take all action, that may be reasonably necessary, or that
Administrative Agent may reasonably request, in order to perfect and protect the
assignment and security interest granted or intended to be granted hereby or to
enable Administrative Agent to exercise and enforce its rights and remedies
hereunder with respect to any Collateral. Without limiting the generality of the
foregoing, Borrower shall (i) if any Collateral shall be evidenced by a
promissory note or other instrument in excess of $5,000, deliver and pledge to
Administrative Agent for the benefit of the Banks such note duly endorsed
without recourse, and accompanied by duly executed instruments of transfer or
assignment, all in form and substance satisfactory to Administrative Agent; and
(ii) execute and deliver to Administrative Agent such financing or continuation
statements, or amendments thereto, and such other instruments, endorsements or
notices, as may be reasonably necessary or desirable or as Administrative Agent
may reasonably request, in order to perfect and preserve the assignments and
security interests granted or purported to be granted hereby.
12.2 Borrower hereby authorizes Administrative Agent to file one
or more financing or continuation statements, and amendments thereto, relative
to all or any part of the Collateral without the signature of Borrower where
permitted by law.
12.3 Borrower shall pay all filing, registration and recording
fees and all refiling, re-registration and re-recording fees, and all reasonable
expenses incident to the execution and acknowledgment of this Agreement, any
assurance, and all federal, state, county and municipal stamp taxes and other
taxes, duties, imports, assessments and charges arising out of or in connection
with the execution and delivery of this Agreement, any agreement supplemental
hereto, any financing statements, and any instruments of further assurance.
12.4 Borrower shall, promptly upon request, provide to
Administrative Agent all information and evidence it may reasonably request
concerning the Collateral to enable Administrative Agent to enforce the
provisions of this Agreement.
13 PLACE OF BUSINESS; LOCATION OF RECORDS. Unless Administrative Agent is
otherwise notified under Section 5.4, the place of business and chief executive
office of Borrower is, and all records of Borrower concerning the Collateral are
and will be, located at the address set forth in Section 12.1 of the Credit
Agreement.
14 CONTINUING ASSIGNMENT AND SECURITY INTEREST; TRANSFER OF NOTES. This
Agreement shall create a continuing assignment of, and security interest in, the
Collateral and shall (a) remain in full force and effect until payment in full
of the Obligations, (b) be binding
11
330
upon Borrower, its successors and assigns; provided, however, that the
obligations of Borrower, its successors and assigns hereunder may not be
assigned without the prior written consent of Administrative Agent; and (c)
inure, together with the rights and remedies of Administrative Agent, to the
benefit of Administrative Agent, the Banks and their respective successors,
transferees and assigns. Without limiting the generality of the foregoing but
subject to the terms of the Credit Agreement, Administrative Agent or any of the
Banks may assign or otherwise transfer all or any part of or interest in the
Notes and the other Credit Documents or other evidence of indebtedness held by
them to any other Person to the extent permitted by and in accordance with the
Credit Agreement, and such other Person shall thereupon become vested with all
or an appropriate part of the benefits in respect thereof granted to the Banks
herein or otherwise. The release of the security interest in any or all of the
Collateral, the taking or acceptance of additional security, or the resort by
Administrative Agent to any security it may have in any order it may deem
appropriate, shall not affect the liability of any person on the indebtedness
secured hereby. If this Agreement shall be terminated or revoked by operation of
law, Borrower will indemnify and save Administrative Agent and the Banks
harmless from any loss which may be suffered or incurred by Administrative Agent
and the Banks in acting hereunder prior to the receipt by Administrative Agent,
its successors, transferees, or assigns of notice of such termination or
revocation.
15 TERMINATION OF SECURITY INTEREST. Upon the indefeasible payment in
full of the Obligations, the security interest granted hereby shall terminate
and all rights to the Collateral shall revert to Borrower. Upon any such
termination, Administrative Agent will, at Borrower's expense, execute and,
subject to Section 21 hereof, deliver to Borrower such documents (including,
without limitation, UCC-3 termination statements) as Borrower shall reasonably
request to evidence such termination.
16 ATTORNEYS' FEES. In the event any legal action or proceeding
(including, without limitation, any of the remedies provided for herein or at
law) is commenced to enforce or interpret this Agreement or any provision
thereof, unless Borrower is the prevailing party, Borrower shall indemnify each
of Administrative Agent and the Banks for their reasonable attorneys' fees and
other costs and expenses incurred therein, and if a judgment or award is entered
in any such action or proceeding, such reasonable attorneys' fees and other
costs and expenses may be made a part of such judgment or award.
17 LIABILITY. Recourse against the Borrower, Partners, Shareholders and
their respective Affiliates, stockholders, officers, directors and employees
under this Agreement shall be limited to the extent provided in Article 9 of the
Credit Agreement.
18 AMENDMENTS; WAIVERS; CONSENTS. No amendment, modification, termination
or waiver of any provision of this Agreement, or consent to any departure by
Borrower therefrom, shall in any event be effective without the written
concurrence of Administrative Agent and the Borrower.
19 NOTICES. All notices required or permitted under the terms and
provisions hereof shall be in writing and any such notice shall be effective if
given in accordance with the
12
331
provisions of Section 12.1 of the Credit Agreement. Notices to Borrower may be
given at the address of Borrower set forth in such Section 12.1.
20 GOVERNING LAW. This Agreement, including all matters of construction,
validity, performance and the creation, validity, enforcement or priority of the
lien of, and security interests created by, this Agreement in or upon the
Collateral shall be governed by the laws of the state of New York, without
reference to conflicts of law (other than Section 5-1401 of the New York General
Obligations Law), except as required by mandatory provisions of law and except
to the extent that the validity or perfection of the lien and security interest
hereunder, or remedies hereunder, in respect of any particular Collateral are
governed by the laws of a jurisdiction other than the state of New York.
Notwithstanding the foregoing, the validity, perfection and priority of the lien
and security interest created hereunder in respect to the Operating Accounts is
governed by the laws of the State of California.
21 REINSTATEMENT. This Agreement shall continue to be effective or be
reinstated, as the case may be, if at any time any amount received by
Administrative Agent in respect of the Obligations is rescinded or must
otherwise be restored or returned by Administrative Agent upon the insolvency,
bankruptcy, reorganization, liquidation of Borrower or any general partner of
Borrower or upon the dissolution of, or appointment of any intervenor or
conservator of, or trustee or similar official for, Borrower or any general
partner of Borrower or any substantial part of Borrower's or any of its general
partners' assets, or otherwise, all as though such payments had not been made.
22 SEVERABILITY. The provisions of this Agreement are severable, and if
any clause or provision shall be held invalid or unenforceable in whole or in
part in any jurisdiction, then such invalidity or unenforceability shall affect
only such clause or provision, or part thereof, in such jurisdiction and shall
not in any manner affect such clause or provision in any other jurisdiction, or
any other clause or provision of this Agreement in any jurisdiction.
23 SURVIVAL OF PROVISIONS. All agreements, representations and warranties
made herein shall survive the execution and delivery of this Agreement and the
Credit Agreement and the making of the Loans and extensions of credit
thereunder. Notwithstanding anything in this Agreement or implied by law to the
contrary, the agreements, representations and warranties of Borrower set forth
herein shall terminate only upon payment of the Obligations, and the termination
of all Commitments and other obligations of the Banks under the Credit
Documents.
24 HEADINGS DESCRIPTIVE. The headings in this Agreement are for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose or be given any substantive effect.
25 ENTIRE AGREEMENT. This Agreement, together with any other agreement
executed in connection herewith, is intended by the parties as a final
expression of their agreement and is intended as a complete and exclusive
statement of the terms and conditions thereof.
26 TIME. Time is of the essence of this Agreement.
13
332
27 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which shall
together constitute one and the same agreement.
28 WAIVER OF JURY TRIAL. BORROWER AND ADMINISTRATIVE AGENT HEREBY WAIVE
THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF THIS AGREEMENT OR ANY DEALINGS BETWEEN THEM RELATING TO
THE SUBJECT MATTER OF THIS AGREEMENT AND THE RELATIONSHIP AMONG BORROWER AND
ADMINISTRATIVE AGENT THAT IS BEING ESTABLISHED. BORROWER AND ADMINISTRATIVE
AGENT ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A
BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THE WAIVER IN ENTERING
INTO THIS AGREEMENT, AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR
RELATED FUTURE DEALINGS. BORROWER AND ADMINISTRATIVE AGENT FURTHER WARRANT AND
REPRESENT THAT EACH HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT
EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
14
333
IN WITNESS WHEREOF, each of the undersigned has caused this Security
Agreement to be duly executed and delivered as of the day and year first above
written.
CALPINE CONSTRUCTION FINANCE
COMPANY, L.P.,
a Delaware limited partnership
By: Calpine CCFC GP, Inc.,
a Delaware corporation,
its General Partner
By:
------------------------
Name:
Title:
THE BANK OF NOVA SCOTIA,
as Administrative Agent
By:
---------------------------------
Name:
Title:
334
EXHIBIT D-5
to Credit Agreement
FORM
OF
LIEN SUBORDINATION AGREEMENT
between
________________________________,
and
THE BANK OF NOVA SCOTIA,
as Administrative Agent
335
LIEN SUBORDINATION AGREEMENT
This LIEN SUBORDINATION AGREEMENT (this "Agreement") dated as of
____________, _____ is made by and among ___________________, ("Subordinated
Creditor"), THE BANK OF NOVA SCOTIA, as Administrative Agent ("Administrative
Agent") under the Credit Agreement described below, and CALPINE CONSTRUCTION
FINANCE COMPANY, L.P., a Delaware limited partnership ("Pledgor").
A. Administrative Agent and the Banks party thereto (such
parties, acting through the Administrative Agent, being collectively referred to
herein as the "Senior Lenders") and Borrower have entered into that certain
Credit Agreement (the "Credit Agreement"), dated as of October 20, 1999 among
Borrower the financial institutions listed on Exhibit H thereto, (the "Banks"),
Credit Suisse First Boston, as Lead Arranger, Syndication Agent and Bookrunner
and The Bank of Nova Scotia, as Lead Arranger, LC Bank and Administrative Agent.
Capitalized terms used and not defined herein shall be given the meanings
ascribed to them in the Credit Agreement.
B. In order to induce the Senior Lenders to enter into the Credit
Agreement, Pledgor has entered into the Security Agreement dated as of October
20, 1999 (the "Security Agreement") pursuant to which Pledgor granted a security
interest to the Senior Lenders in the Collateral (as defined in the Security
Agreement). The security interest of the Senior Lenders in the Collateral
pursuant to the terms of the Security Agreement shall be referred to herein as
the "Senior Liens."
C. Subordinated Creditor desires to place a lien, subordinated
according to the terms of this Agreement, on a portion of the Collateral (such
portion of the Collateral, the "Subject Collateral") pursuant to
___________________, collectively referred to herein as the "Subordinated
Documents"). The security interest of Subordinated Creditor in the Subject
Collateral arising in favor of Subordinated Creditor pursuant to the provisions
of the Subordinated Documents shall be referred to herein as the "Junior Liens."
D. The Senior Lenders have agreed that Pledgor may subject the
Subject Collateral to the Junior Liens only if Subordinated Creditor executes
this Subordination Agreement and subordinates, to the extent and in the manner
hereinafter set forth, the obligations of Pledgor to Subordinated Creditor under
the Subordinated Documents (collectively referred to herein as the "Subordinated
Debt") to all indebtedness or other obligations of Pledgor to the Senior
Lenders, direct or indirect, absolute or contingent, due or to become due, now
existing or hereafter arising (herein called the "Senior Lender Debt") to the
extent set forth in this Agreement.
NOW THEREFORE, in consideration of the premises and as an
inducement to the Senior Lenders to grant financial accommodations to Pledgor,
and in consideration of the granting thereof, the parties hereby agree as
follows:
1. Subordinated Creditor hereby consents to and acknowledges the
grant to the Senior Lenders of the Senior Liens in the Subject Collateral.
336
2. Until all Senior Lender Debt then due shall have been paid or
performed in full:
(a) Subordinated Creditor shall not demand, xxx for, or
accept from Pledgor or any other person any such payment or collateral
in respect of the Subordinated Debt other than amounts distributed to
Pledgor in accordance with the Credit Agreement, nor, except as provided
in this Section 2(a) or in Section 4 below, take any other action to
enforce or collect upon any such payment or to enforce its rights in
respect of the Subordinated Debt, nor cancel, set off or otherwise
discharge any part of the Subordinated Debt; provided, however, that
nothing herein shall limit the right or ability of Subordinated Creditor
(i) to receive payments from Pledgor in respect of the Subordinated Debt
as provided herein so long as no Event of Default or, to the extent
payments are to be made from the Construction Account or Loss Proceeds
Account, Non-Fundamental Project Default with respect to the _______
Project under the Credit Agreement has occurred and is continuing, or
(ii) to accelerate the maturity of the Subordinated Debt at any time
after the Loans under the Credit Agreement have been accelerated; and
provided further that in the event that the Senior Lenders rescind the
acceleration of the Loans under the Credit Agreement and provide written
notice to Subordinated Creditor thereof, or the Subordinated Creditor
otherwise becomes aware of such rescission, Subordinated Creditor shall
rescind the acceleration of the Subordinated Debt.
(b) Neither Pledgor nor Subordinated Creditor shall take
any action prejudicial to or inconsistent with the Senior Lenders'
priority position over Subordinated Creditor created by this Agreement.
Subordinated Creditor will not take or cause to be taken, any action,
the purpose or effect of which is or could be to give Subordinated
Creditor any preference or priority over Senior Lenders, with respect to
the Subject Collateral or any part thereof. Subordinated Creditor shall
not take any action to enforce its rights with respect to the Subject
Collateral and shall have no right to direct the Senior Lenders to
exercise any right, remedy or power with respect to the Subject
Collateral. Subordinated Creditor will not institute any suit or assert
in any suit, bankruptcy, insolvency or other proceeding any claim
against the Senior Lenders seeking damages from any of them or other
relief, by way of specific performance, injunction or otherwise, with
respect to any action with respect to the Collateral taken or omitted by
the Senior Lenders in accordance with this Agreement. Subordinated
Creditor will execute and deliver to the Administrative Agent any other
instrument reasonably requested by Administrative Agent to further
assure the subordinated status, in accordance with this Agreement, of
the lien of Subordinated Creditor with respect to the Subject
Collateral; and
(c) The Junior Liens are hereby made subordinate, junior
and inferior and postponed in priority, operation and effect to the
priority, operation and effect of the Senior Liens, notwithstanding the
perfection, order of perfection or failure by Senior Lenders to perfect
any such Senior Liens and other liens or the filing or recording, order
of filing or recording of, or failure to file or record any instrument
or other document in any filing or recording office in any jurisdiction.
2
337
3. Neither any change in the manner, place or terms of payment
of, nor any change or extension of the time of payment of, nor any renewal or
alteration of the interest on, any of the obligations secured by the Senior
Liens, nor any amendment or supplement to the Security Agreement or the other
Credit Documents nor any exercising or refraining from exercising of any rights
under the Security Agreement or the other Credit Documents, including, without
limitation, the right to waive any default, shall require notice to or consent
of Subordinated Creditor, and none of the foregoing shall in any manner
whatsoever impair the priority of the Senior Liens.
4. Subordinated Creditor will not commence or join with any other
creditor or creditors of Pledgor in commencing any bankruptcy, reorganization or
insolvency proceedings against Pledgor. At any general meeting of creditors of
Pledgor or in the event of any proceeding, voluntary or involuntary, for the
distribution, division or application of all or part of the assets of Pledgor or
the proceeds thereof, whether such proceeding be for the liquidation,
dissolution or winding up of Pledgor or its business, receivership, insolvency
or bankruptcy proceeding, an assignment for the benefit of creditors or
proceeding by or against Pledgor for position or extension or otherwise, if all
Senior Lender Debt has not been paid in full at the time, Administrative Agent
is hereby irrevocably authorized at any such meeting or in any such proceeding:
(a) To enforce claims comprising Subordinated Debt in the
name of Subordinated Creditor, by proof of debt, proof of claim, suit or
otherwise;
(b) To collect any assets of Pledgor distributed, divided
or applied by way of dividend or payment, or such securities issued, on
account of Subordinated Debt and apply the same, or the proceeds of any
realization upon the same that Administrative Agent in its discretion
elects to effect, to the Senior Lender Debt until all Senior Lender Debt
shall have been paid in full (Administrative Agent hereby agreeing to
render any surplus to Subordinated Creditor); provided, however, that
Subordinated Creditor shall be entitled to receive any securities of
Pledgor (or of any other company, trust, partnership, corporation or
other entity provided for by any plan of reorganization or
readjustment), the payment of which is junior or otherwise subordinate,
to the extent provided herein with respect to the Subordinated Debt, to
the payment of all Senior Lender Debt then outstanding and to the
payment of all securities issued in exchange for Senior Lender Debt then
outstanding; and
(c) To take generally any action in connection with any
such meeting or proceeding which Subordinated Creditor might otherwise
take; provided, however, that Subordinated Creditor shall retain, to the
exclusion of Senior Lenders and Administrative Agent, the right to vote
claims comprising or arising out of the Subordinated Debt in any such
proceeding, including the right to vote to accept or reject any plan of
partial or complete liquidation, reorganization, readjustment,
arrangement, composition or extension.
After the commencement of any such bankruptcy, insolvency or
reorganization proceeding, Subordinated Creditor may inquire of Administrative
Agent in writing whether Administrative Agent intends to exercise the foregoing
rights with respect to the Subordinated
3
338
Debt. Should Administrative Agent fail, at least 20 days before the deadline
therefor, either to file a proof of claim with respect to the Subordinated Debt
and to furnish a copy thereof to Subordinated Creditor, or to inform
Subordinated Creditor in writing that Administrative Agent intends to exercise
its rights to assert the Subordinated Debt in the manner hereinabove provided,
Subordinated Creditor may, but shall not be required to, proceed to file a proof
of claim with respect to the Subordinated Debt and take such further steps with
respect thereto, not inconsistent with this Agreement, as Subordinated Creditor
may deem proper.
Subject to and from and after the payment in full of all Senior
Lender Debt, Subordinated Creditor shall be subrogated to the rights of the
Senior Lenders to receive payments or distributions of cash, property or
securities of Pledgor applicable to the Senior Lender Debt until all amounts
owing on the Subordinated Debt shall be paid in full. For purposes of such
subrogation, no payments or distribution to the Senior Lenders to which
Subordinated Creditor would have been entitled but for the provisions of this
Agreement, and no payments paid over by Subordinated Creditor to Senior Lenders
pursuant to this Agreement, shall, as among Pledgor, its creditors other than
Senior Lenders, and Subordinated Creditor, be deemed to be a payment or
distribution on account of the Subordinated Debt, it being understood that the
provisions of this Agreement are and are intended solely for the purpose of
defining the relative rights of Subordinated Creditor and the Senior Lenders.
Nothing contained in this Agreement is intended to or shall impair, as between
Pledgor, its creditors other than the Senior Lenders and Subordinated Creditor,
the obligation of Pledgor, which is absolute and unconditional, to pay to
Subordinated Creditor the principal of and the premium, if any, and the interest
on the Subordinated Debt as and when the same shall become due and payable in
accordance with its terms, or to affect the relative rights of Subordinated
Creditor and creditors of Pledgor other than the Senior Lenders.
5. Should any collateral with respect to the Subordinated Debt be
received by Subordinated Creditor in violation of this Agreement, such payment
or collateral shall be delivered forthwith to Administrative Agent by the
recipient for application to Senior Lender Debt, in the form received.
Administrative Agent is irrevocably authorized to supply any required
endorsement or assignment which may have been omitted. Until so delivered, any
such payment or collateral shall be held by Subordinated Creditor in trust for
the Senior Lenders and shall not be commingled with other funds or property of
Subordinated Creditor.
6. Subordinated Creditor is the lawful owner of the Subordinated
Debt and no part thereof has been assigned to or subordinated or subjected to
any other security interest in favor of anyone other than the Senior Lenders.
Subordinated Creditor may not assign all or any portion of the Subordinated Debt
without the prior written consent of the Senior Lenders, which consent shall not
be unreasonably withheld or delayed, and only upon the execution and delivery to
the Senior Lenders of an agreement by any such assignee to be bound by the terms
of this Agreement (including provisions relating to assignment), in form and
substance satisfactory to the Senior Lenders.
7. Upon the occurrence of an Event of Default under the Security
Agreement the Administrative Agent shall be permitted and hereby is authorized
to take any and all actions and to exercise any and all rights, remedies and
options which the Senior Lenders may have
4
339
under the Security Agreement and at law or in equity, including to (i) cause
Pledgor's obligations to be performed and (ii) sell or otherwise realize upon
the Subject Collateral.
8. Administrative Agent is hereby authorized to demand specific
performance of this Agreement, whether or not Pledgor shall have complied with
the provisions hereof applicable to it, at any time when Subordinated Creditor
shall have failed to comply with any provision hereof applicable to it.
Subordinated Creditor hereby irrevocably waives any defense based on the
adequacy of a remedy at law which might be asserted as a bar to the remedy of
specific performance hereof in any action brought therefor by Administrative
Agent. Subordinated Creditor further waives presentment, notice and protest in
connection with all negotiable instruments evidencing Senior Lender Debt or
Subordinated Debt to which Subordinated Creditor may be a party, notice of the
acceptance of this Agreement by Administrative Agent, notice of any loan made,
extension granted or other action taken in reliance hereon, and all demands and
notices of every kind in connection with this Agreement, Senior Lender Debt or
time of payment of Senior Lender Debt or Subordinated Debt. Subordinated
Creditor hereby assents to any renewal, extension or postponement of the time of
payment of Senior Lender Debt or any other indulgence with respect thereto, to
any increase in the amount of the Senior Lender Debt, to any substitution,
exchange or release of collateral therefor and to the addition or release of any
person primarily or secondarily liable thereon and assents to the provisions of
any instrument, security or other writing evidencing Senior Lender Debt.
9. Pledgor and Subordinated Creditor shall execute and deliver to
Administrative Agent such further instruments and shall take such further action
as Administrative Agent may at any time or times reasonably request in order to
carry out the provisions and intent of this Agreement.
10. The rights granted to the Senior Lenders hereunder are solely
for their protection and nothing herein contained shall impose on Administrative
Agent or the Senior Lenders any duties with respect to any property of Pledgor
or Subordinated Creditor received hereunder. Neither Administrative Agent nor
the Senior Lenders shall have any duty to preserve rights against prior parties
in any property of any kind received hereunder.
11. Notwithstanding any provision to the contrary herein, the
parties acknowledge and agree that all of the covenants, representations,
waivers and other provisions by or relating to Subordinated Creditor hereunder
shall apply and be effective to and in respect of the Subordinated Debt only,
and shall not apply or be effective to or in respect of any other obligations,
due or to become due, now existing or hereafter arising, by Pledgor to
Subordinated Creditor.
12. This Agreement may be executed in any number of counterparts.
but all such counterparts shall together constitute but one agreement. In making
proof of this Agreement, it shall not be necessary to produce or account for
more than one counterpart signed by each of the parties hereto.
13. This Agreement shall be binding upon Pledgor, Subordinated
Creditor, and their respective executors, administrators, other legal
representatives, successors and assigns,
5
340
and shall inure to the benefit of the Senior Lenders, their respective
successors and assigns and shall be governed by the laws of the State of New
York.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
6
341
IN WITNESS WHEREOF, the parties hereto have caused this
Subordination Agreement to be duly executed as of the date first above written.
[_____________________],
a [__________] corporation,
as Subordinated Creditor
By:
----------------------------------------
Name:
Title:
THE BANK OF NOVA SCOTIA,
as Administrative Agent
By:
----------------------------------------
Name:
Title:
CALPINE CONSTRUCTION FINANCE COMPANY, L.P.,
a Delaware limited partnership,
as Pledgor
By: CALPINE CCFC GP, INC.
a Delaware corporation,
its General Partner
By:
--------------------------------
Name:
Title:
7
342
EXHIBIT D-7
to Credit Agreement
FORM OF SUBORDINATION AGREEMENT
between
------------------------------
and
THE BANK OF NOVA SCOTIA,
as Administrative Agent
343
TABLE OF CONTENTS
PAGE
----
1. Definitions......................................................................1
2. Certain Subordination Terms......................................................2
3. Credit Agreement and Credit Documents............................................4
4. Time of Filing...................................................................4
5. Wrongful Collections.............................................................5
6. Ownership of Subordinated Debt; Amendment of Subordinated Debt Documents.........5
7. Waivers..........................................................................5
8. Subrogation; No Impairment of Borrower's Obligations.............................5
9. Reinstatement....................................................................6
10. Bankruptcy.......................................................................6
11. Further Assurances...............................................................6
12. Successors and Assigns...........................................................6
13. Counterparts.....................................................................6
14. Governing Law....................................................................7
344
SUBORDINATION AGREEMENT
This SUBORDINATION AGREEMENT ("Agreement"), dated as of
________________, is made by and between ___________________________, a
__________________ ("Junior Claimant"), and The Bank of Nova Scotia, as
Administrative Agent (the "Administrative Agent") for the Senior Claimants (as
defined below).
PREFACE
A. Calpine Construction Finance Company, L.P., a Delaware limited
partnership ("Borrower"), has entered into that certain Credit Agreement
("Credit Agreement"), dated as of October 20, 1999, by and among Borrower, The
Bank of Nova Scotia, as Lead Arranger, LC Bank and Administrative Agent, the
financial institutions listed on Exhibit H thereto (the "Banks" and, together
with Administrative Agent, Lead Arrangers, Syndication Agent, Bookrunner, LC
Bank, and all financial institutions parties to the Credit Agreement, the
"Senior Claimants") and Credit Suisse First Boston, as Lead Arranger,
Syndication Agent and Bookrunner, pursuant to which the Senior Claimants will,
subject to the terms and conditions contained therein and in the other Credit
Documents, provide credit facilities to Borrower in connection with Borrower's
development, construction and ownership of the Projects.
B. Borrower and Junior Claimant have and/or will enter into one
or more promissory notes and/or other documents and instruments (collectively,
the "Subordinated Agreement") pursuant to which, subject to the terms and
conditions contained therein and herein, Junior Claimant has and/or will lend to
Borrower funds in a principal amount up to the amount of Contributions required
or permitted to be made by Borrower under the Credit Agreement (the "Junior
Claimant Loan").
C. The Senior Claimants have agreed that Borrower may incur such
indebtedness to Junior Claimant under the Subordinated Agreement only if Junior
Claimant shall join in this Agreement and Junior Claimant shall subordinate, to
the extent and in the manner hereinafter set forth, all claims and rights in
respect of the Subordinated Debt (as defined below) to all Senior Claims (as
defined below) to the extent set forth in this Agreement.
AGREEMENT
NOW THEREFORE, in consideration of the premises and as an
inducement to the Senior Claimants to grant financial accommodations to
Borrower, and in consideration of the granting thereof, the parties hereby agree
as follows:
1. DEFINITIONS. All capitalized terms used herein and not
otherwise defined herein shall have the meaning given in the Credit Agreement as
in effect on the date hereof. As used in this Agreement, the following terms
shall have the following respective meanings:
"Proceeding" means any (a) insolvency, bankruptcy,
receivership, liquidation, reorganization, readjustment, composition or other
similar proceeding of or against
345
Borrower, its property or its creditors as such, (b) proceeding for any
liquidation, dissolution or other winding-up of Borrower, voluntary or
involuntary, whether or not involving insolvency or bankruptcy proceedings, (c)
general assignment for the benefit of creditors of Borrower or (d) other
marshalling of the assets of Borrower.
"Senior Claims" means, subject in each case to Sections 3
and 8 hereof, (a) the principal of, and premium, if any, and interest on, the
Loans under the Credit Agreement (including, without limitation, any interest
accruing thereon at the legal rate after the commencement of any Proceeding and
any additional interest that would have accrued thereon but for the commencement
of such Proceeding); and (b) all other Obligations of Borrower to any Senior
Claimants, whether now existing or hereafter incurred or created, under or with
respect to the Credit Documents or any replacement, supplement to, or
refinancing of the Loans and other Obligations of the Borrower to any Senior
Claimants permitted under Section 3 hereof.
"Subordinated Debt" means all indebtedness owing to Junior
Claimant arising under or in respect of the Subordinated Debt Documents.
"Subordinated Debt Documents" means the Subordinated
Agreement, any promissory note or other instrument relating thereto and any
other documents or instruments directly relating to the foregoing (including any
amendments, replacements or substitutions thereof).
2. CERTAIN SUBORDINATION TERMS. Until all Senior Claims shall
have been paid in full and the Senior Claimants' commitments irrevocably
terminated under the Credit Documents, and notwithstanding anything in the
Subordinated Debt Documents to the contrary:
2.1 Except as permitted under the Credit Agreement
(including Section 3.8(b) thereof), Borrower shall not, directly or indirectly,
make any payment of principal, interest or otherwise on or in respect of the
Subordinated Debt.
2.2 Except for the right to demand and accept payments
permitted under the Credit Agreement or as provided in Section 2.1 or 2.5.2 of
this Agreement, Junior Claimant shall not demand, xxx for, or accept from
Borrower or any other Person any such payment or collateral, nor take any other
action to enforce or collect upon any such payment or to enforce its rights to
receive any such payment, in either case in respect of the Subordinated Debt,
provided, however, that nothing herein shall limit the right or ability of
Junior Claimant (i) to receive payments from Borrower in respect of the
Subordinated Debt as provided in Section 2.1 so long as no Event of Default
under the Credit Agreement has occurred and is continuing, or (ii) to accelerate
the maturity of the Subordinated Debt at any time after the Loans under the
Credit Agreement have been accelerated; and provided further that in the event
that the Senior Claimants rescind the acceleration of the Loans and provide
written notice to Junior Claimant thereof, or the Junior Claimant otherwise
becomes aware of such rescission, Junior Claimant shall rescind the acceleration
of the Subordinated Debt.
2
346
2.3 Neither Borrower nor the Junior Claimant shall take
any action prejudicial to or inconsistent with the Senior Claimants' priority
position over Junior Claimant created by this Agreement, including, without
limitation, any action which will hinder, delay or otherwise prevent the Senior
Claimants from taking any action they deem necessary to enforce rights with
respect to the Senior Claims or the Lien of the Collateral Documents. Junior
Claimant shall not take any action or otherwise act to contest on account of the
Subordinated Debt (i) the validity or priority of any Liens or security
interests granted to, or for the benefit of, the Senior Claimants, (ii) the
relevant rights and duties of the Senior Claimants with respect to the Junior
Claimant on account of any Subordinated Debt as established in this Agreement or
(iii) Senior Claimants' exercise of remedies in accordance with the Credit
Agreement and the other Credit Documents.
2.4 Each document or instrument evidencing Subordinated
Debt shall bear a legend providing that payment of the Subordinated Debt
thereunder has been subordinated to prior payment of the Senior Claims in the
manner and to the extent set forth in this Agreement.
2.5 Without the prior written consent of the
Administrative Agent, acting in its sole discretion, Junior Claimant shall not
commence or join with any other creditor or creditors of Borrower in commencing
any Proceeding against Borrower or any general partner of Borrower, but may join
in any Proceeding after it has commenced. At any general meeting of creditors of
Borrower or any general partner thereof, or in the event of any Proceeding, if
all Senior Claims have not been paid in full at such time, Administrative Agent
on behalf of the Senior Claimants is hereby irrevocably authorized at any such
meeting or in any such Proceeding:
2.5.1 to enforce claims comprising Subordinated
Debt in the name of Junior Claimant, by proof of debt, proof of claim, suit or
otherwise;
2.5.2 to collect any assets of Borrower
distributed, divided or applied by way of dividend or payment as a result of a
Proceeding, or such securities issued, on account of Subordinated Debt as a
result thereof and apply the same, or the proceeds of any realization upon the
same that the Senior Claimants in their discretion elect to effect, to Senior
Claims until all Senior Claims shall have been paid in full (the Senior
Claimants hereby agreeing to render any surplus to Junior Claimant and/or other
subordinated creditors, as their interests appear, or to interplead such surplus
with a court of competent jurisdiction); and
2.5.3 to take generally any action in connection
with any such meeting or proceeding which Junior Claimant might otherwise take
in respect of the Subordinated Debt and claims relating thereto; provided,
however, that Junior Claimant shall retain, to the exclusion of Senior Claimants
and Administrative Agent, the right to vote claims comprising or arising out of
the Subordinated Debt in any Proceeding, including the right to vote to accept
or reject any plan of partial or complete liquidation, reorganization,
readjustment, arrangement, composition or extension.
3
347
After the commencement of any such Proceeding, Junior
Claimant may inquire in writing of Administrative Agent on behalf of the Senior
Claimants whether the Senior Claimants intend to exercise the foregoing rights
with respect to the Subordinated Debt. Should the Senior Claimants fail, at
least 20 days before the deadline therefor, either to file a proof of claim with
respect to the Subordinated Debt and to furnish a copy thereof to the Junior
Claimant, or to inform such Junior Claimant in writing that the Senior Claimants
intend to exercise their rights to assert the Subordinated Debt in the manner
hereinabove provided, Junior Claimant may, but shall not be required to, proceed
to file a proof of claim with respect to the Subordinated Debt and take such
further steps with respect thereto, not inconsistent with this Agreement, as
Junior Claimant may deem proper.
2.6 Upon the occurrence and during the continuation of an
Event of Default, Junior Creditor may, but shall have no obligation to, upon not
less than 10 days prior written notice to Administrative Agent, purchase all of
the outstanding Loans and other Obligations of Borrower owing to the Senior
Claimants by irrevocably tendering, in immediately available funds, full payment
of the Purchase Price (as defined below) to Senior Claimants:
2.6.1 The Purchase Price shall be equal to the
total amount of Senior Claims at the time of acceleration (assuming such
obligations have been accelerated);
2.6.2 Any such purchase by Junior Claimant shall be
without warranty by, or recourse to, the Senior Claimants, except with respect
to the legal and beneficial ownership by the Senior Claimants of the Obligations
so purchased, free and clear of all Liens and rights of others; and
2.6.3 Concurrently with any such purchase the
Senior Claimants shall forthwith sell, assign, transfer and convey to Junior
Claimant all of their right, title and interest in and to the Credit Documents
and all Liens and other security interests in favor of the Senior Claimants
securing the obligations of Borrower in connection therewith.
3. CREDIT AGREEMENT AND CREDIT DOCUMENTS. Junior Claimant
acknowledges that it has been provided with a copy of the Credit Agreement and
has read and is familiar with the provisions of the Credit Agreement, including
without limitation Article 7 thereof. Junior Claimant hereby consents to the
application of Project Revenues in accordance with the Credit Agreement,
including without limitation Article 7 thereof, notwithstanding anything in the
Subordinated Debt Documents to the contrary.
4. TIME OF FILING. Notwithstanding the time of filing, attachment
or recording of any document or other instrument, it is agreed by Junior
Claimant that any liens arising under or pursuant to the Collateral Documents
(as defined in the Credit Documents) shall be senior to any liens arising in
favor of Junior Claimant as part of or relating to the Subordinated Debt
Documents; provided, however, that nothing herein shall be deemed to permit
Junior Claimant to obtain any such liens.
4
348
5. WRONGFUL COLLECTIONS. Should any payment on account of, or any
collateral for any part of, the Subordinated Debt be received by Junior Claimant
in violation of this Agreement, such payment or collateral shall be delivered
forthwith to Administrative Agent on behalf of the Senior Claimants by the
recipient for application to Senior Claims, in the form received. Administrative
Agent is irrevocably authorized to supply any required endorsement or assignment
which may have been omitted. Until so delivered, any such payment or collateral
shall be held by the recipient in trust for the Senior Claimants and shall not
be commingled with other funds or property of the recipient.
6. OWNERSHIP OF SUBORDINATED DEBT; AMENDMENT OF SUBORDINATED DEBT
DOCUMENTS.
6.1 Junior Claimant represents and warrants that it is the
lawful owner of the Subordinated Debt and no part thereof has been assigned to
or subordinated or subjected to any other security interest in favor of anyone
other than the Senior Claimants. Junior Claimant agrees that it may not assign
all or any portion of the Subordinated Debt or any of its rights or remedies
under the Subordinated Debt Documents except upon the execution and delivery to
Administrative Agent of an agreement by any such assignee to be bound by the
terms of this Agreement (including provisions relating to assignment), in form
and substance the same as this Agreement, or otherwise as may be reasonably
satisfactory to Administrative Agent.
6.2 Without the prior written consent of Administrative
Agent and the Required Banks, the Subordinated Debt Documents may not be amended
so as to have an adverse effect upon the Senior Claims or Borrower's ability to
pay the Senior Claims at any time.
7. WAIVERS. Administrative Agent and the Senior Claimants are
hereby authorized to demand specific performance of this Agreement, whether or
not Borrower shall have complied with the provisions hereof applicable to it, at
any time when Junior Claimant shall have failed to comply with any provision
hereof applicable to it. Junior Claimant hereby irrevocably waives any defense
based on the adequacy of a remedy at law which might be asserted as a bar to the
remedy of specific performance hereof in any action brought therefor by the
Senior Claimants. Junior Claimant (a) further waives presentment, notice and
protest in connection with all negotiable instruments evidencing Senior Claims
or Subordinated Debt to which Junior Claimant may be a party, notice of the
acceptance of this Agreement by the Senior Claimants, notice of any loan made,
extension granted or other action taken in reliance hereon, and all demands and
notices of every kind in connection with this Agreement, Senior Claims or time
of payment of Senior Claims or Subordinated Debt and (b) hereby assents to any
renewal, extension or postponement of the time of payment of Senior Claims or
any other indulgence with respect thereto, to any increase in the amount of
Senior Claims, to any substitution, exchange or release of collateral therefor
and to the addition or release of any person primarily or secondarily liable
thereon and assents to the provisions of any instrument, security or other
writing evidencing Senior Claims.
8. SUBROGATION; NO IMPAIRMENT OF BORROWER'S OBLIGATIONS. Subject
to and from and after the payment in full of all Senior Claims and the
irrevocable termination of
5
349
Senior Claimants' commitments under the Credit Documents, Junior Claimant shall
be subrogated to the rights of the Senior Claimants to receive payments or
distributions of cash, property or securities of Borrower applicable to the
Senior Claims until all amounts owing on the Subordinated Debt shall be paid in
full. For purposes of such subrogation, no payments or distributions to the
Senior Claimants to which Junior Claimant would be entitled but for the
provisions of this Agreement, and no payments paid over by Junior Claimant to
Senior Claimants pursuant to this Agreement shall, as among the Borrower, its
creditors other than the Senior Claimants, and Junior Claimant, be deemed to be
a payment or distribution on account of the Subordinated Debt, it being
understood that the provisions of this Agreement are intended solely for the
purpose of defining the relative rights of Junior Claimant and the Senior
Claimants. Nothing contained in this Agreement is intended to or shall impair,
as between Borrower and Junior Claimant, the obligation of Borrower, which is
absolute and unconditional, to pay to Junior Claimant the principal of and the
premium, if any, and the interest on the Subordinated Debt, and all other
amounts payable by Borrower under the Subordinated Debt Documents, as and when
the same shall become due and payable, or to affect the relative rights of
Junior Claimant and creditors of Borrower other than the Senior Claimants.
9. REINSTATEMENT. The obligations of Junior Claimant under this
Agreement shall continue to be effective, or be reinstated, as the case may be,
if at any time any payment in respect of any Senior Claim, or any other payment
to any holder of any Senior Claim in its capacity as such, is rescinded or must
otherwise be restored or returned by the holder of such Senior Claims upon the
occurrence of any Proceeding, or upon or as a result of the appointment of a
receiver, intervenor or conservator of, or trustee or similar officer for,
Borrower or any substantial part of its property, or otherwise, all as though
such payment had not been made.
10 BANKRUPTCY. This Agreement shall remain in full force and
effect as between the Junior Claimant and Senior Claimant notwithstanding the
occurrence of any Proceeding affecting Borrower.
11. FURTHER ASSURANCES. Borrower and Junior Claimant shall
execute and deliver to the Senior Claimants such further instruments and shall
take such further action as the Senior Claimants may at any time or times
reasonably request in order to carry out the provisions and intent of this
Agreement.
12. SUCCESSORS AND ASSIGNS. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns. Neither the Junior Claimant nor the Senior
Claimants shall have a duty to preserve rights against prior parties in any
property of any kind received hereunder. Nothing contained herein shall impose
on the Senior Claimants any duties with respect to any property of Borrower or
Junior Claimant received hereunder.
13. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, but all such counterparts shall together constitute but one
agreement. In making proof of this Agreement, it shall not be necessary to
produce or account for more than one counterpart signed by each of the parties
hereto.
6
350
14. GOVERNING LAW. This Agreement is intended to take effect as a
sealed instrument, shall be binding upon the parties hereto and their respective
executors, administrators, other legal representatives, successors and assigns,
and shall inure to the benefit of the Senior Claimants, their respective
successors and assigns and shall be governed by the laws of the State of New
York without reference to principles of conflict of laws (other than Section
5-1401 of the New York General Obligations Law). The parties hereto intend and
agree that this Agreement shall remain binding on such parties (other than
Borrower) notwithstanding the termination (except upon the payment in full of
Senior Claims) or unenforceability of this Agreement as against Borrower.
[REMINDER OF PAGE INTENTIONALLY LEFT BLANK]
7
351
IN WITNESS WHEREOF, the parties hereto have caused this
Subordination Agreement to be duly executed as of the date first above written.
[JUNIOR CLAIMANT]
______________________________
a ____________________________
By:
------------------------------
Name:
Title:
THE BANK OF NOVA SCOTIA,
as Administrative Agent
By:
------------------------------
Name:
Title:
Acknowledged and Agreed:
CALPINE CONSTRUCTION FINANCE COMPANY, L.P.,
a Delaware limited partnership
By: CALPINE CCFC GP, Inc.,
a Delaware corporation,
its General Partner
By:
-----------------------
Name:
Title:
8
352
EXHIBIT D-8
to Credit Agreement
[AFFILIATE CONTRACT]
SUBORDINATION AGREEMENT
Dated as of _________, 1999
between
_________________,
a _______________,
and
THE BANK OF NOVA SCOTIA,
as Administrative Agent
353
SUBORDINATION AGREEMENT
This [AFFILIATE CONTRACT] SUBORDINATION AGREEMENT (this
"Agreement") dated as of __________, 1999 is entered into by and between
_______________, a ______________ (the "Junior Claimant"), and THE BANK OF NOVA
SCOTIA, as Administrative Agent ("Administrative Agent") for the Senior
Claimants (as defined below).
PREFACE
A. Calpine Construction Finance Company, L.P., a Delaware limited
partnership ("Borrower"), the financial institutions listed on Exhibit H thereto
(the "Banks"), Credit Suisse First Boston, as Lead Arranger, Syndication Agent
and Bookrunner and The Bank of Nova Scotia, as Lead Arranger, LC Bank and
Administrative Agent (the Banks, Administrative Agent, the Lead Arrangers, the
Syndication Agent, the Bookrunner and all financial institutions parties to the
Credit Agreement, the "Senior Claimants"), have entered into that certain Credit
Agreement dated as of October 20, 1999 ("Credit Agreement"), pursuant to which
the Senior Claimants will, subject to the terms and conditions contained
therein, provide credit facilities to Borrower in connection with Borrower's
development, construction and ownership of the Projects (as defined below).
B. Borrower and Junior Claimant have entered into (i) that
certain __________ (the "______________") and (ii) that certain ____________
(the "_________" and together with the ____________, the "Subordinated
Contracts") pursuant to which, subject to the terms and conditions contained
therein and herein, Borrower has agreed to pay certain fees for the [operation,
maintenance and management] of the Project by Junior Claimant (the "O&M Costs").
That portion of the O&M Costs which are designated in Section ___ of the
_______, Section ___ of the _____ or Section _______ of the _________ is
referred to herein as the "Subordinated O&M Costs."
C. The Senior Claimants have agreed that Borrower may enter into
each of the Subordinated Contracts only if Junior Claimant shall join in this
Agreement and Junior Claimant shall subordinate, to the extent and in the manner
hereinafter set forth, all claims and rights in respect of the Subordinated O&M
Costs to all Senior Claims (as defined below) to the extent set forth in this
Agreement.
AGREEMENT
NOW THEREFORE, in consideration of the premises and as an
inducement to the Senior Claimants to grant financial accommodations to
Borrower, and in consideration of the granting thereof, the parties hereby agree
as follows:
354
1. DEFINITIONS. All capitalized terms used herein and not
otherwise defined herein shall have the meaning given in the Credit Agreement.
As used in this Agreement, the following terms shall have the following
respective meanings:
"Proceeding" means any (a) insolvency, bankruptcy,
receivership, liquidation, reorganization, readjustment, composition or other
similar proceeding relating to Borrower, its property or its creditors as such,
(b) proceeding for any liquidation, dissolution or other winding-up of Borrower,
voluntary or involuntary, whether or not involving insolvency or bankruptcy
proceedings, (c) assignment for the benefit of creditors of Borrower or (d)
other marshaling of the assets of Borrower.
"Senior Claims" means (a) the principal of, and premium,
if any, and interest on the Loans under the Credit Agreement (including, without
limitation, any interest accruing thereon at the legal rate after the
commencement of any Proceeding and any additional interest that would have
accrued thereon but for the commencement of such Proceeding); and (b) all other
Obligations of Borrower to any Senior Claimants, whether now existing or
hereafter incurred or created, under or with respect to the Credit Documents and
any related documents.
2. CERTAIN SUBORDINATION TERMS. Until all Senior Claims shall
have been paid in full and the Senior Claimants' commitments irrevocably
terminated under the Credit Documents, and notwithstanding anything in
[either/any] of the Subordinated Contracts to the contrary:
2.1 Junior Claimant acknowledges that, notwithstanding
anything in [either/any] of the Subordinated Contracts to the contrary, Borrower
may pay to Junior Claimant Subordinated O&M Costs due to Junior Claimant under
Waterfall Level 6 of Section 7.2 of the Credit Agreement only if and to the
extent monies are sufficient for the payment thereof pursuant to such Section
7.2. Except as provided in this Section 2.1, Borrower shall not, directly or
indirectly, make any payment on or in respect of the Subordinated O&M Costs, and
Borrower shall not in any event transfer any collateral for any part of, the
Subordinated O&M Costs.
2.2 Except for the right to demand and accept payments set
forth in Section 2.1 hereof, Junior Claimant shall not demand, xxx for, or
accept from Borrower any such payment or collateral, nor take any other action
to enforce or collect upon any such payment or to enforce its rights, in either
case in respect of the Subordinated O&M Costs, nor set off against obligations
owed to Borrower under [either/any] of the Subordinated Contracts or otherwise
against any part of the Subordinated O&M Costs. Notwithstanding anything in
[either/any] of the Subordinated Contracts to the contrary, the failure by
Borrower to pay any Subordinated O&M Costs shall not under any circumstances,
except where the funds are available therefor and payment is permitted under
Section 2.1 hereof, constitute a breach or default under [either/any] of the
Subordinated Contracts.
2.3 Neither Borrower nor Junior Claimant shall otherwise
take any action prejudicial to or inconsistent with the Senior Claimants'
priority position over Junior Claimant created by this Agreement.
2
355
2.4 Each negotiable instrument or promissory note
evidencing a Subordinated O&M Cost or a lien, if any, in respect thereof shall
bear a legend (or otherwise include provisions satisfactory to Administrative
Agent) providing that payment of the Subordinated O&M Costs thereunder and the
priority of any such lien have been subordinated to prior payment of the Senior
Claims and the liens in respect thereof in the manner and to the extent set
forth in this Agreement.
2.5 Junior Claimant shall not commence or voluntarily
permit Borrower to commence or join with any other creditor or creditors of
Borrower in commencing any Proceeding against Borrower or any partner of
Borrower; provided that Junior Claimant shall not be so restricted with respect
to claims arising directly out of Borrower's failure to perform its obligations
or make any payments of O&M Costs under [either/any] of the Subordinated
Contracts other than the Subordinated O&M Costs. At any general meeting of
creditors of Borrower or in the event of any Proceeding, if all Senior Claims
have not been paid in full at such time, Administrative Agent on behalf of the
Senior Claimants is hereby irrevocably authorized at any such meeting or in any
such Proceeding:
2.5.1 to enforce claims comprising the Subordinated
O&M Costs in the name of Junior Claimant, by proof of debt, proof of claim, suit
or otherwise;
2.5.2 to collect any assets of Borrower
distributed, divided or applied by way of dividend or payment as a result of a
Proceeding, or such securities issued, on account of the Subordinated O&M Costs
as a result thereof and apply the same, or the proceeds of any realization upon
the same that the Senior Claimants in their discretion elect to effect, to
Senior Claims until all Senior Claims shall have been paid in full (the Senior
Claimants hereby agreeing to render any surplus as a court of competent
jurisdiction may direct);
2.5.3 other than voting claims comprising the
Subordinated O&M Costs, to take generally any action in connection with any such
meeting or proceeding which Junior Claimant might otherwise take in respect of
the Subordinated O&M Costs and claims relating thereto.
After the commencement of any such Proceeding, Junior Claimant
may inquire of Administrative Agent in writing whether Administrative Agent
intends to exercise the foregoing rights with respect to the Subordinated O&M
Costs. Should Administrative Agent fail, within a reasonable time after receipt
of such inquiry, either to file a proof of claim with respect to the
Subordinated O&M Costs and to furnish a copy thereof to Junior Claimant, or to
inform Junior Claimant in writing that the Senior Claimants intend to exercise
their rights to assert the Subordinated O&M Costs in the manner hereinabove
provided, Junior Claimant may, but shall not be required to, proceed to file a
proof of claim with respect to the Subordinated O&M Costs and take such further
steps with respect thereto, not inconsistent with this Agreement, as Junior
Claimant may deem proper.
2.6 In the event that (a) the Senior Claimants foreclose
on any or all of their liens on all or a substantial portion of the assets
constituting one or more of the Projects (or succeed to such assets by way of a
transfer in lieu of foreclosure), and (b) Senior Claimants assume [either/any]
of the Subordinated Contracts in accordance with the terms of the Consent
3
356
and Agreement dated as of ___________, 1999 among Junior Claimant,
Administrative Agent and Borrower (the "Consent") (or enter into a new agreement
pursuant to Section 1(d) of the Consent), then notwithstanding anything in
[either/any] of the Subordinated Contracts to the contrary, (i) Borrower (or any
successor or assign) shall not be obligated to pay the Subordinated O&M Costs,
if any, then due, except as set forth in Section 2.6.1 or 2.6.2, as applicable,
(ii) each of the Subordinated Contracts shall remain in full force and effect
notwithstanding any such foreclosure (but subject to the terms and conditions
thereof), and (iii) the following shall apply:
2.6.1 In the event that the Senior Claimants
(including, for purposes of this Section 2.6.1, their Affiliates) or any of them
become the owners of one or more of the Projects, the Senior Claimants shall
apply to the outstanding balance, if any, of the Subordinated O&M Costs relating
to such Project(s) on (or promptly after) the last day of each calendar quarter
all Project Operating Revenues relating to such Project(s) received in excess of
amounts applied during such quarterly period to (a) the payment or application
of all costs for the operation and maintenance of the project in the nature of
those costs defined as "Senior O&M Costs" payable under Waterfall Xxxxx 0 of
Section 7.2 of the Credit Agreement, which expenditures shall not be materially
greater than as are consistent with operation of such Project(s) in accordance
with prudent operating practices (as determined with reference to similar
facilities under similar operating conditions), (b) the payment of a return of
and on the investment of the Senior Claimants, whether such investment is in the
form of equity or debt (and whether or not the Senior Claimants have foreclosed
on their liens by way of a partial or full credit bid or otherwise), which
payments shall not be greater than the periodic payments which would have been
payable under the priorities specified in Waterfall Levels 2 through 5 and 8 of
Section 7.2 of the Credit Agreement as in effect immediately prior to such
foreclosure, as reasonably determined by the Senior Claimants (assuming for
purposes of calculating such payment that (i) Loans had been extended at the
Base Rate in the amount of the unpaid balance of all Loans owed to the Senior
Claimants immediately prior to the exercise by such parties of their remedies,
(ii) such deemed Loans have not been repaid upon foreclosure, (iii) such deemed
Loans are to be deemed amortized straight line through the Loan Maturity Date
(without giving effect to any acceleration) and (iv) all outstanding Letters of
Credit were fully drawn upon by the respective LC Beneficiaries immediately
prior to foreclosure) and (c) funding of reserves in an amount which would have
been available for the benefit of the Senior Claimants under Waterfall Level 5
of Section 7.2 of the Credit Agreement as in effect immediately prior to such
foreclosure. Upon such foreclosure by the Senior Claimants, each of the
Subordinated Contracts, as applicable, shall be deemed to be amended to reflect
such arrangement.
2.6.2 In the event that the Senior Claimants sell
one or more of the Projects to a third party ("New Owner"), the New Owner shall
apply to the outstanding balance, if any, of the Subordinated O&M Costs relating
to such Project(s) on (or promptly after) the last day of each calendar quarter
all Project Operating Revenues relating to such Project(s) received in excess of
amounts applied during such quarterly period to (a) the payment of all costs for
the operation and maintenance of such Project(s) in the nature of those costs
defined as "Senior O&M Costs" payable under Waterfall Xxxxx 0 of Section 7.2 of
the Credit Agreement, which expenditures shall not be materially greater than as
are consistent with operation of such Project(s) in accordance with prudent
operating practices (as determined with reference to similar facilities under
similar operating conditions), (b) the periodic payment of fees, interest and
principal as required by the lenders to the New Owner, which payments shall not
be materially
4
357
greater on an annual basis than such amounts payable by Borrower to the Senior
Claimants under the Credit Agreement as in effect immediately prior to
foreclosure by the Senior Claimants, as reasonably determined by the lenders to
the New Owner; provided that greater payments shall be permitted so long as the
payment of such excess amounts is subordinated to the Subordinated O&M Costs and
(c) the funding of reserves not materially in excess of the amounts which would
have been available for the benefit of the Senior Claimants under Waterfall
Level 5 of Section 7.2 the Credit Agreement as in effect immediately prior to
such foreclosure. The lenders to such New Owner shall be deemed to be Senior
Claimants hereunder, and the payments specified in clause (b) and (c) of this
Section 2.6.2 shall be deemed to be Senior Claims under this Agreement. Subject
to Junior Claimant's rights under Section ___ of the _____, Section _______ of
the ________ and Section ____ of the _________, Junior Claimant agrees that it
will execute and deliver to New Owner's lenders such new subordination
agreement, such amendments to each of the Subordinated Contracts, and such other
instruments, in each case consistent with the terms of this Agreement, and
Junior Claimant shall take such further action, as the lenders to the New Owner
reasonably request in furtherance of this Section 2.6.2.
3. CREDIT AGREEMENT. Junior Claimant acknowledges that it has
been provided with a copy of the Credit Agreement and has read and is familiar
with the provisions of the Credit Agreement, including without limitation
Article 7 thereof. Junior Claimant hereby consents to the application of Project
Revenues in the order of priority set forth in the Credit Agreement, including
without limitation Article 7 thereof, notwithstanding anything in either of the
Subordinated Contracts to the contrary.
4. TIME OF FILING. Notwithstanding the time of filing, attachment
or recording of any document or other instrument, it is agreed by Junior
Claimant that any liens arising under or pursuant to the Collateral Documents
(as defined in the Credit Documents) shall be senior to any liens arising in
favor of Junior Claimant as part of or relating to either of the Subordinated
Contracts.
5. WRONGFUL COLLECTIONS. Should any payment on account of, or any
collateral for any part of, the Subordinated O&M Costs be received by Junior
Claimant in violation of this Agreement, such payment or collateral shall be
delivered forthwith to Administrative Agent on behalf of the Senior Claimants by
the recipient for application to Senior Claims, in the form received.
Administrative Agent is irrevocably authorized to supply any required
endorsement or assignment which may have been omitted. Until so delivered, any
such payment or collateral shall be held by the recipient in trust for the
Senior Claimants and shall not be commingled with other funds or property of the
recipient.
6. OWNERSHIP OF SUBORDINATED O&M COSTS; AMENDMENT OF SUBORDINATED
CONTRACTS.
6.1 Junior Claimant represents and warrants that it is the
lawful owner of the right to receive the Subordinated O&M Costs and no part
thereof has been assigned to or subordinated or subjected to any other security
interest in favor of anyone other than the Senior Claimants. Junior Claimant
shall not assign all or any portion of the Subordinated O&M Costs, its
commitment under, or any of its rights or remedies under, [EITHER/ANY] of the
Subordinated Contracts without the prior written consent of Administrative Agent
and the Required Banks,
5
358
which may be granted or withheld in their sole discretion, and in any event only
upon the execution and delivery to Administrative Agent of an agreement by any
such assignee to be bound by the terms of this Agreement (including provisions
relating to assignment), in form and substance the same as this Agreement, or
otherwise as may be reasonably satisfactory to Administrative Agent.
6.2 Subject to Section 6.13.1 of the Credit Agreement,
Junior Claimant shall not amend either of the Subordinated Contracts without
Administrative Agent's prior written consent.
7. WAIVERS. Administrative Agent and the Senior Claimants are
hereby authorized to demand specific performance of this Agreement, whether or
not Borrower shall have complied with the provisions hereof applicable to it, at
any time when Junior Claimant shall have failed to comply with any provision
hereof applicable to it. Junior Claimant hereby irrevocably waives any defense
based on the adequacy of a remedy at law which might be asserted as a bar to the
remedy of specific performance hereof in any action brought therefor by the
Senior Claimants. Junior Claimant further waives presentment, notice and protest
in connection with all negotiable instruments evidencing Senior Claims or
Subordinated O&M Costs to which Junior Claimant may be a party, notice of the
acceptance of this Agreement by the Senior Claimants, notice of any loan made,
extension granted or other action taken in reliance hereon, and all demands and
notices of every kind in connection with this Agreement, Senior Claims or time
of payment of Senior Claims or Subordinated O&M Costs. Junior Claimant hereby
assents to any renewal, extension or postponement of the time of payment of
Senior Claims or any other indulgence with respect thereto, to any increase in
the amount of Senior Claims, to any substitution, exchange or release of
collateral therefor and to the addition or release of any person primarily or
secondarily liable thereon and assents to the provisions of any instrument,
security or other writing evidencing Senior Claims.
8. SUBROGATION; NO IMPAIRMENT OF BORROWER'S OBLIGATIONS. Subject
to and from and after the indefeasible payment in full of all Senior Claims and
the irrevocable termination of Senior Claimants' commitments under the Credit
Documents, Junior Claimant shall be subrogated to the rights of the Senior
Claimants to receive payments or distributions of cash, property or securities
of Borrower applicable to the Senior Claims until all amounts owing on the
Subordinated O&M Costs shall be paid in full, it being understood that the
provisions of this Agreement are and are intended solely for the purpose of
defining the relative rights of Junior Claimant and the Senior Claimants;
provided that such rights of subrogation shall be nonexclusive, and shall be
shared with any other subordinated creditor of the Borrower which has entered
into an agreement with the Administrative Agent providing similar rights of
subrogation. Nothing contained in this Agreement is intended to or shall impair,
as between Borrower, its creditors other than the Senior Claimants and Junior
Claimant, the obligation of Borrower, which is absolute and unconditional, to
pay to Junior Claimant the principal of and the premium, if any, and the
interest on the Subordinated O&M Costs as and when the same shall become due and
payable in accordance with the terms of this Agreement and the Subordinated
Contracts, or to affect the relative rights of Junior Claimant and creditors of
Borrower other than the Senior Claimants.
6
359
9. REINSTATEMENT. The obligations of Junior Claimant under this
Agreement shall continue to be effective, or be reinstated, as the case may be,
if at any time any payment in respect of any Senior Claim, or any other payment
to any holder of any Senior Claim in its capacity as such, is rescinded or must
otherwise be restored or returned by the holder of such Senior Claims upon the
occurrence of any Proceeding, or upon or as a result of the appointment of a
receiver, intervenor or conservator of, or trustee or similar officer for,
Borrower or any substantial part of its property, or otherwise, all as though
such payment had not been made.
10. BANKRUPTCY. This Agreement shall remain in full force and
effect as between the Junior Claimant and Senior Claimant notwithstanding the
occurrence of any Proceeding affecting Borrower.
11. FURTHER ASSURANCES. Borrower and Junior Claimant shall
execute and deliver to the Senior Claimants such further instruments and shall
take such further action as the Senior Claimants may at any time or times
reasonably request in order to carry out the provisions and intent of this
Agreement.
12. SUCCESSORS AND ASSIGNS. The rights granted to the Senior
Claimants hereunder are solely for their protection and nothing herein contained
shall impose on the Senior Claimants any duties with respect to any property of
Borrower or Junior Claimant received hereunder. The Senior Claimants shall have
no duty to preserve rights against prior parties in any property of any kind
received hereunder.
13. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, but all such counterparts shall together constitute but one
agreement. In making proof of this Agreement, it shall not be necessary to
produce or account for more than one counterpart signed by each of the parties
hereto.
14. GOVERNING LAW. This Agreement is intended to take effect as a
sealed instrument, shall be binding upon the parties hereto and their respective
executors, administrators, other legal representatives, successors and assigns,
and shall inure to the benefit of the Senior Claimants, their respective
successors and assigns and shall be governed by the laws of the State of New
York without reference to principles of conflict of laws (other than Section
5-1401 of the New York General Obligations Law). The parties hereto intend and
agree that this Agreement shall remain binding on such parties (other than
Borrower) notwithstanding the termination (except upon the payment in full of
Senior Claims) or unenforceability of this Agreement as against Borrower.
7
360
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed as of the date first above written.
____________________,
a _____________________,
as Junior Claimant
By: __________________,
a ________________,
its General Partner
By: _____________________________
Name:
Title:
THE BANK OF NOVA SCOTIA,
as Administrative Agent
By: ____________________________________
Name:
Title:
The undersigned acknowledges and agrees to the foregoing:
CALPINE CONSTRUCTION FINANCE COMPANY L.P.,
a Delaware limited partnership
By: Calpine CCFC GP, Inc,
a Delaware corporation,
its General Partner
By: ____________________________________
Name:
Title:
361
EXHIBIT E-1
to Credit Agreement
================================================================================
FORM OF
CONSENT AND AGREEMENT
[(CONTRACT)]
Dated as of _________, 199__
by
[CONTRACTING PARTY]
================================================================================
362
FORM OF CONSENT AND AGREEMENT
This FORM OF CONSENT AND AGREEMENT ("Consent"), dated as of
___________, 1999 is executed by [CONTRACTING PARTY], a _______________
corporation (the "Undersigned"), and CALPINE CONSTRUCTION FINANCE COMPANY, L.P.,
a Delaware limited partnership ("Borrower"), for the benefit of THE BANK OF NOVA
SCOTIA, as Administrative Agent ("Administrative Agent") for the Banks under the
Credit Agreement (as defined below).
RECITALS
A. Borrower has entered into that certain Credit Agreement, dated
as of October 20, 1999 ("Credit Agreement"), by and among Borrower, the
financial institutions listed on Exhibit H thereto (the "Banks"), Credit Suisse
First Boston, as Lead Arranger, Syndication Agent and Bookrunner and The Bank of
Nova Scotia, as Lead Arranger, LC Bank and Administrative Agent. Unless
otherwise defined, all terms used herein which are defined in the Credit
Agreement, shall have their respective meanings as used therein.
B. The Undersigned and Borrower have entered into that certain
[CONTRACT] dated as of ________, 199__ (as amended, supplemented or modified
from time to time in accordance with its terms and the terms hereof, the
"Contract"), with respect to the _______ Project (the "Project").
C. Pursuant to the Security Agreement dated as of October 20,
1999 ("Security Agreement"), by and between Borrower and Administrative Agent,
Borrower has assigned its interest under the Contract to Administrative Agent on
behalf of Administrative Agent and the Banks.
AGREEMENT
NOW THEREFORE, the Undersigned hereby agrees as follows:
1. The Undersigned acknowledges receipt of the Security Agreement
and consents to the Borrower's transfer, assignment, grant of a security
interest and all other provisions described therein, and agrees with
Administrative Agent for the benefit of the Banks as follows:
(a) Administrative Agent shall be entitled (but not
obligated) to exercise all rights and to cure any defaults of Borrower
under the Contract. Upon receipt of notice from Administrative Agent,
the Undersigned agrees to accept such exercise and cure by
Administrative Agent and to render all performance due by it under the
Contract and this Consent to the Banks. The Undersigned agrees to make
all payments to be made by it under the Contract directly to
Administrative Agent for the benefit of the Banks upon receipt of
Administrative Agent's written instructions.
(b) The Undersigned will not, without the prior written
consent of Administrative Agent (such consent not to be unreasonably
withheld), (i) cancel or terminate the Contract or suspend performance
of its services thereunder except as provided in the Contract and in
accordance with paragraph 1(c) hereof, or consent to or accept any
cancellation, termination or suspension thereof by Borrower, (ii) sell,
assign or otherwise dispose (by operation of law or otherwise) of any
part of its interest in the Contract, or (iii) amend or modify the
Contract in any material respect. The Undersigned agrees to deliver
duplicates or copies of all notices of default delivered under or
pursuant to the Contract to Administrative Agent promptly upon receipt
or delivery thereof.
363
(c) The Undersigned will not terminate the Contract on
account of any default or breach of Borrower thereunder without written
notice to Administrative Agent and first providing to Administrative
Agent (i) thirty (30) days from the date notice of default or breach is
delivered to Administrative Agent to cure such default if such default
is the failure to pay amounts to the Undersigned which are due and
payable under the Contract or (ii) a reasonable opportunity, but not
fewer than ninety (90) days, to cure such breach or default if the
breach or default cannot be cured by the payment of money to the
Undersigned so long as Administrative Agent or its designee shall have
commenced to cure the breach or default within such ninety (90)-day
period and thereafter diligently pursues such cure to completion and
continues to perform any monetary obligations under the Contract and all
other obligations under the Contract are performed by Borrower or
Administrative Agent. If possession of the Project is necessary to cure
such breach or default, and Administrative Agent or its designee(s) or
assignee(s) declare Borrower in default and commence foreclosure
proceedings, Administrative Agent or its designee(s) or assignee(s) will
be allowed a reasonable period to complete such proceedings. If
Administrative Agent or its designee(s) or assignee(s) are prohibited by
any court order or bankruptcy or insolvency proceedings from curing the
default or from commencing or prosecuting foreclosure proceedings, the
foregoing time periods shall be extended by the period of such
prohibition. The Undersigned consents to the transfer of Borrower's
interest under the Contract to the Banks or any of them or a purchaser
or grantee at a foreclosure sale by judicial or nonjudicial foreclosure
and sale or by a conveyance by Borrower in lieu of foreclosure and
agrees that upon such foreclosure, sale or conveyance, the Undersigned
shall recognize the Banks or any of them or other purchaser or grantee
as the applicable party under the Contract (provided that such Banks or
purchaser or grantee assumes the obligations of Borrower under the
Contract).
(d) In the event that the Contract is rejected by a
trustee or debtor-in-possession in any bankruptcy or insolvency
proceeding, or if the Contract is terminated for any reason other than a
default which could have been but was not cured by Administrative Agent
as provided in paragraph 1(c) above, and if, within forty-five (45) days
after such rejection or termination, the Banks or their successors or
assigns shall so request, the Undersigned will execute and deliver to
the Banks a new Contract, which Contract shall be on the terms and
conditions as the original Contract for the remaining term of the
Contract before giving effect to such termination.
(e) In the event the Banks or their designee(s) or
assignee(s) elect to perform Borrower's obligations under the Contract
or to enter into a new Contract as provided in subparagraph (c) or (d)
respectively above, the Banks, their designee(s) and assignee(s), shall
have no personal liability to the Undersigned for the performance of
such obligations, and the sole recourse of the Undersigned in seeking
the enforcement of such obligations shall be to such parties' interest
in the Project.
(f) In the event the Banks or their designee(s) or
assignee(s) succeed to Borrower's interest under the Contract or enter
into a new Contract, the Banks or their designee(s) or assignee(s) shall
cure any defaults for failure to pay amounts owed under the Contract,
but shall not otherwise be required to perform or be subject to any
defenses or offsets by reason of any of Borrower's other obligations
under the Contract that were unperformed at such time. The Banks shall
have the right to assign all or a pro rata interest in the Contract or a
new Contract entered into pursuant to subparagraph (d) to a person or
entity to whom the Project is transferred, provided such transferee
assumes the obligations of Borrower (or the Banks) under the Contract.
Upon such assignment, Administrative Agent and, if applicable, the Banks
2
364
(including their Administrative Agents and employees) shall be released
from any further liability thereunder to the extent of the interest
assigned.
(g) The warranties provided by the Undersigned under the
Contract shall continue in full force and effect (until the expiration
of the warranty periods set forth in the Contract) in the event that the
Banks or their designee(s) or assignee(s) succeed to Borrower's interest
in the Contract (whether by foreclosure, sale or other assignment) and
upon the further assignment or sale of the Contract by the Banks or
their designee(s) or assignee(s).
[(h) The Undersigned hereby assigns to Borrower (and
Borrower's assigns) all its interest in any subcontracts and purchase
orders in excess of $____________ now existing or hereinafter entered
into by the Undersigned for performance of any part of the Undersigned's
obligations under the Contract (the "Subcontracts"). Such assignment
shall be effective only upon the occurrence of a breach or default
(after the expiration of any applicable cure period) by the Undersigned
under the Contract or upon the termination of the Contract, and then
only as to those Subcontracts which Borrower (or its assigns) at such
time accepts in writing. The Undersigned hereby further assigns to
Borrower (and Borrower's assigns) all of its rights with respect to any
warranties under all Subcontracts. Each Subcontract hereinafter entered
into by the Undersigned shall contain a consent by the subcontractor
thereunder to the foregoing assignments set forth in this Section 1(h).]
2. The Undersigned hereby represents and warrants that:
(a) The execution, delivery and performance by the
Undersigned of the Contract and this Consent has been duly authorized by
all necessary corporate action, and does not and will not require any
further consents or approvals which have not been obtained, or violate
any provision of any law, regulation, order, judgment, injunction or
similar matters or breach any agreement presently in effect with respect
to or binding on the Undersigned;
(b) This Consent and the Contract are legal, valid and
binding obligations of the Undersigned, enforceable against the
Undersigned in accordance with their respective terms;
(c) All government approvals necessary for the execution,
delivery and performance by the Undersigned of its obligations under the
Contract have been obtained and are in full force and effect;
(d) As of the date hereof, the Contract is in full force
and effect and has not been amended, supplemented or modified;
(e) Borrower has fulfilled all of its obligations under
the Contract, and there are no breaches or unsatisfied conditions
presently existing (or which would exist after the passage of time
and/or giving of notice) that would allow the Undersigned to terminate
the Contract; and
(f) The Contract constitutes the only agreement between
the Undersigned and Borrower with respect to the matters and interests
described therein.
3. [The Undersigned acknowledges that Borrower has succeeded by
[merger/assignment] to the interests, rights, duties, obligations and
liabilities of ______________ in the Contract, and hereby consents to such
[merger/assignment].][The Undersigned agrees that its recourse
3
365
against Borrower under the Contract is limited to Borrower's interest in the
Project, the revenue and income produced by the Project and the proceeds of any
of the foregoing.]
4. All Notices required or permitted hereunder shall be in
writing and shall be effective (a) upon receipt if hand delivered, (b) upon
receipt if sent by facsimile and (c) if otherwise delivered, upon the earlier of
receipt or two (2) Banking Days after being sent registered or certified mail,
return receipt requested, with proper postage affixed thereto, or by private
courier or delivery service with charges prepaid, and addressed as specified
below:
If to the Undersigned:
____________________________
____________________________
____________________________
Telecopy No: ______________
Telephone No: _____________
If to Administrative Agent:
The Bank of Nova Scotia
Xxx Xxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Project Finance Group
Telecopy No.: (000) 000-0000
Telephone No.: (000) 000-0000
If to Borrower:
Calpine Construction Finance Company, L.P.,
c/o Calpine Corporation
00 X. Xxx Xxxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Asset Management
Telecopy No: (000) 000-0000
Telephone No: (000) 000-0000
5. This Consent shall be binding upon and inure to the benefit of
the Undersigned, the Borrower, the Banks and their respective successors,
transferees and assigns (including without limitation, any entity that
refinances all or any portion of the Obligations under the Credit Agreement).
The Undersigned agrees to confirm such continuing obligation in writing upon the
reasonable request of Borrower, the Banks or any of their respective successors,
transferees or assigns. No termination, amendment, variation or waiver of any
provisions of this Consent shall be effective unless in writing and signed by
the Undersigned, Administrative Agent and Borrower. This Consent shall be
governed by the internal laws of the State of New York, without reference to
principles of conflict of laws (other than Section 5-1401 of the New York
General Obligations Law).
6. This Consent may be executed in one or more duplicate
counterparts, and when executed and delivered by all the parties listed below,
shall constitute a single binding agreement.
7. All references in this Consent to any document, instrument or
agreement (a) shall include all exhibits, schedules and other attachments
thereto, (b) shall include all documents,
4
366
instruments or agreements issued or executed in replacement thereof, and (c)
shall mean such document, instrument or agreement, or replacement or predecessor
thereto, as amended, modified and supplemented from time to time and in effect
at any given time.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
5
367
IN WITNESS WHEREOF, the Undersigned by its officer thereunto duly
authorized, has duly executed this Consent as of the date first set forth above.
[THE UNDERSIGNED] a ____________ corporation
By
----------------------------------------
Name:
Title:
Accepted and agreed to:
THE BANK OF NOVA SCOTIA,
as Administrative Agent for Banks
By:
-----------------------------------
Name:
Title:
CALPINE CONSTRUCTION FINANCE COMPANY, L.P.,
a Delaware limited partnership
By: CALPINE CCFC GP, INC.,
a Delaware corporation,
its General Partner
By:
-------------------------------
Name:
Title:
6
368
Schedule E-2
to Credit Agreement
SCHEDULE OF CONSENTS
The following Consents, substantially in the form of Exhibit E-1 to the
Credit Agreement and otherwise in form and substance satisfactory to the Lead
Arrangers, shall be delivered to the Administrative Agent:
1. Xxxxxx Construction Company (consenting to the collateral assignment
of Borrower's rights and obligations under the Contract for Construction, dated
as of March 26, 1999, between Borrower and Xxxxxx Construction Corporation);
2. X.X. Xxxxxx (consenting to the collateral assignment of Borrower's
rights and obligations under X.X. Xxxxxx'x guarantee of the obligations of
Xxxxxx Construction Company under the Contract for Construction set forth in
item 1 above);
3. Siemens Power Corporation (consenting to the collateral assignment of
Borrower's rights and obligations under the Maintenance Contract, dated as of
June 30, 1998, by and between Borrower and Westinghouse Power Generation0
4. Siemens Power Corporation (consenting to the collateral assignment of
Borrower's rights and obligations under the Purchase Contract, dated as of June
30, 1998, by and between Borrower and Westinghouse Power Generation);
5. Magic Valley Electric Cooperative, Inc. (consenting to the collateral
assignment of Borrower's rights and obligations under the Magic Valley Power
Purchase Agreement, dated as of May 22, 1998, by and between Borrower and Magic
Valley Electric Cooperative, Inc.);
6. Xxxxxxx & Xxxxx, L.L.C. (consenting to the collateral assignment of
Borrower's rights and obligations under the Contract for Professional Services,
dated as of December 8, 1998, by and between Borrower and Xxxxxxx & Xxxxx,
L.L.C.);
7. CCNG, Inc. (consenting to the collateral assignment of Borrower's
rights and obligations under the Fuel Management Services Agreement, dated as of
May 1, 1998, by and between Borrower and CCNG, Inc.);
8. Calpine Power Services Company (consenting to the assignment of
Borrower's rights and obligations under the Power Marketing Agreement for the
Magic Valley Project, dated as of October 20, 1999, by and between Borrower and
Calpine Power Services Company);
9. Calpine Power Services Company (consenting to the assignment of
Borrower's rights and obligations under the Power Marketing Agreement for the
South Point Project, dated as of October 20, 1999, by and between Borrower and
Calpine Power Services Company);
1
369
10. Calpine Power Services Company (consenting to the assignment of
Borrower's rights and obligations under the Power Marketing Agreement for the
Xxxxxx Project, dated as of October 20, 1999, by and between Borrower and
Calpine Power Services Company);
11. Calpine Power Services Company (consenting to the assignment of
Borrower's rights and obligations under the Power Marketing Agreement for the
Xxxxxxxxx Project, dated as of October 20, 1999, by and between Borrower and
Calpine Power Services Company);
12. Calpine Central Fuels, L.P. (consenting to the assignment of
Borrower's rights and obligations under (i) the Gas Supply Agreement, dated as
of October 20, 1999, by and between Borrower and Calpine Central Fuels, L.P. for
the Magic Valley Project and (ii) the Fuel Management Agreement, dated as of
October 20, 1999, by and between Borrower and Calpine Central Fuels, L.P. for
the Magic Valley Project);
13. CPN East Fuels, LLC (consenting to the assignment of Borrower's
rights and obligations under (i) the Gas Supply Agreement, dated as of October
20, 1999, by and between Borrower and CPN East Fuels, LLC for the Xxxxxxxxx
Project and (ii) the Fuel Management Agreement, dated as of October 20, 1999, by
and between Borrower and CPN East Fuels, LLC for the Xxxxxxxxx Project);
14. CPN Gas Marketing Company (consents to the assignment of Borrower's
rights and obligations under (i) the Gas Supply Agreement, dated as of October
20, 1999, by and between Borrower and CPN Gas Marketing Company for the South
Point Project and (ii) the Fuel Management Agreement, dated as of October 20,
1999, by and between Borrower and CPN Gas Marketing Company for the South Point
Project);
15. CPN Gas Marketing Company (consents to the assignment of Borrower's
rights and obligations under (i) the Gas Supply Agreement, dated as of October
20, 1999, by and between Borrower and CPN Gas Marketing Company for the Xxxxxx
and (ii) the Fuel Management Agreement, dated as of October 20, 1999, by and
between Borrower and CPN Gas Marketing Company for the Xxxxxx Project);
16. Calpine Corporation (consenting to the assignment of Borrower's
rights and obligations under (i) the Construction Management Agreements, dated
as of October __, 1999, by and between Borrower and Calpine Corporation for the
South Point Project (ii) the Operating & Maintenance Agreements, dated as of
October 20, 1999, by and between Borrower and Calpine Corporation for the South
Point Project and (iii) the Project Management Agreements, dated as of October
20, 1999, by and between Borrower and Calpine Corporation for the South Point
Project);
17. Calpine Corporation (consenting to the assignment of Borrower's
rights and obligations under (i) the Construction Management Agreements, dated
as of October __, 1999, by and between Borrower and Calpine Corporation for the
Xxxxxx Project (ii) the Operating & Maintenance Agreements, dated as of October
20, 1999, by and between Borrower and Calpine Corporation for the Xxxxxx Project
and (iii) the Project Management Agreements, dated as of October 20, 1999, by
and between Borrower and Calpine Corporation for the Xxxxxx Project);
2
370
18. Calpine Corporation (consenting to the collateral assignment of
Borrower's rights and obligations under the Affiliated Party Agreement Guaranty
(Magic Valley Project), dated as of October 20, 199, by Calpine Corporation and
Calpine Construction Finance Company, L.P. for the benefit of The Bank of Nova
Scotia, as Administrative Agent for the Banks;
19. Calpine Corporation (consenting to the collateral assignment of
Borrower's rights and obligations under the Affiliated Party Agreement Guaranty
(South Point Project), dated as of October 20, 199, by Calpine Corporation and
Calpine Construction Finance Company, L.P. for the benefit of The Bank of Nova
Scotia, as Administrative Agent for the Banks;
20. Calpine Corporation (consenting to the collateral assignment of
Borrower's rights and obligations under the Affiliated Party Agreement Guaranty
(Xxxxxx Project), dated as of October 20, 199, by Calpine Corporation and
Calpine Construction Finance Company, L.P. for the benefit of The Bank of Nova
Scotia, as Administrative Agent for the Banks;
21. Calpine Corporation (consenting to the collateral assignment of
Borrower's rights and obligations under the Affiliated Party Agreement Guaranty
(Xxxxxxxxx Project), dated as of October 20, 199, by Calpine Corporation and
Calpine Construction Finance Company, L.P. for the benefit of The Bank of Nova
Scotia, as Administrative Agent for the Banks;
22. Calpine Central, L.P. (consenting to the assignment of Borrower's
rights and obligations under (i) the Construction Management Agreement, dated as
of October 20, 1999, by and between Borrower and Calpine Central, L.P. for the
Magic Valley Project (ii) the Operating & Maintenance Agreement, dated as of
October 20, 1999, by and between Borrower and Calpine Central, L.P. for the
Magic Valley Project and (iii) the Project Management Agreement, dated as of
October 20, 1999, by and between Borrower and Calpine Central, L.P. for the
Magic Valley Project);
23. Calpine Eastern Corporation (consenting to the assignment of
Borrower's rights and obligations under (i) the Construction Management
Agreement, dated as of October 20, 1999, by and between Borrower and Calpine
Eastern Corporation for the Xxxxxxxxx Project (ii) the Operating & Maintenance
Agreement, dated as of October 20, 1999, by and between Borrower and Calpine
Eastern Corporation for the Xxxxxxxxx Project and (iii) the Project Management
Agreement, dated as of October 20, 1999, by and between Borrower and Calpine
Eastern Corporation for the Xxxxxxxxx Project);
24. The South Point Joint Venture (consenting to the assignment of
Borrower's rights and obligations under the Contract for Engineering,
Procurement and Construction, dated as of April 12, 1999, by and between
Borrower and The South Point Joint Venture);
25. Siemens Westinghouse Power Corporation (consenting to the assignment
of Borrower's rights and obligations under the Purchase Contract for Power
Island Equipment, dated as of March 15, 1998, by and between Borrower and
Siemens Westinghouse Power Corporation for the South Point Project);
3
371
26. Siemens Westinghouse Power Corporation (consenting to the assignment
of Borrower's rights and obligations under the Maintenance Contract, dated as of
March 10, 1999, by and between Borrower and Siemens Westinghouse Power
Corporation for the South Point Project);
27. Siemens Westinghouse Power Corporation (consenting to the assignment
of Borrower's rights and obligations under the Purchase Contract, dated as of
December 16, 1998, by and between Borrower and Siemens Westinghouse Power
Corporation for the Xxxxxx Project);
28. Siemens Westinghouse Power Corporation (consenting to the assignment
of Borrower's rights and obligations under the Maintenance Contract, dated as of
December 12, 1998, by and between Borrower and Siemens Westinghouse Power
Corporation for the Xxxxxx Project);
29. The Fort Mojave Indian Tribe (consenting to the assignment of
Borrower's rights and obligations under (i) Amended and Restated Ground Lease
Agreement, executed as of August 4, 1999 and approved as BIA Lease B1778-FM on
August 19, 1999 by and between the Fort Mojave Indian Tribe, a federally
recognized Indian Tribe, and Borrower and (ii) a Water Pipeline Construction
Agreement to be entered into between Borrower and the Fort Mojave Indian Tribe);
30. Siemens Corporation (consenting to the assignment of Borrower's
rights and obligations under the Siemens Corporation guarantee of the
obligations of Siemens Westinghouse Power Corporation under the contract set
forth in item 25 above);
31. Xxxxxxx Power Corporation (consenting to the assignment of
Borrower's rights and obligations under the Contract for Engineering,
Procurement and Construction dated as of June 1, 1999, by and between Borrower
and Xxxxxxx Power Corporation);
32. General Electric Company (consenting to the assignment of Borrower's
rights and obligations under the Contract Agreement, dated as of February 5,
1999, by and between Borrower and General Electric Company);
33. General Electric Company (consenting to the assignment of Borrower's
rights and obligations under the General Electric guarantee of the obligations
of General Electric International under the Long Term Parts and Long Term
Service Contract as set forth in item 34 below);
34. General Electric International (consenting to the assignment of
Borrower's rights and obligations under the Long Term Parts and Long term
Service Contract, dated as of February 5, 1999, by and between Borrower and
General Electric International);
35. City of Edinburg, Texas (consenting to the collateral assignment of
Borrower's rights and obligations under (i) the City of Edinburg Franchise
Agreement, dated as of May 14, 1999, from the City of Edinburg, Texas (ii) the
Agreement for Purchase of Treated Effluent Water, dated as of April 12, 1999, by
and between Borrower and the City of Edinburg, Texas
4
372
and (iii) the first Amendment to Agreement for Purchase of Treated Effluent
Water, dated as of August 4, 1999, by and between Borrower and the City of
Edinburg, Texas);
36. City of McAllen, Texas and the Board of Trustees of the McAllen
Public Utilities (consenting to the collateral assignment of Borrower's rights
and obligations under the Agreement for the Purchase of Treated Effluent Water,
dated as of August 10, 1999, by and between, on the one hand, the Borrower and,
on the other hand, the City of McAllen, Texas, and the Board of Trustees of the
McAllen Public Utility);
37. Xxxxxxx County Irrigation District No. One (consenting to the
collateral assignment of Borrower's rights and obligations under the Water
Delivery Contract, dated as of July 19, 1999, by and between Borrower and
Xxxxxxx County Irrigation District No. 1);
38. Xxxxxxx County Irrigation District No. 2 (consenting to the
collateral assignment of Borrower's rights and obligations under the Water
Contract, dated as of June 17, 1999, by and between Borrower and Xxxxxxx County
Irrigation District No. 2);
39. Central Power and Light Company (consenting to the collateral
assignment of Borrower's rights and obligations under (i) Interconnection
Agreement, dated as of February 25, 1999, by and between Borrower and Central
Power and Light Company ("CPL") (ii) Letter of Authorization to Proceed with
Engineering and Construction of Transmission Line Relocation, dated as of
December 17, 1998, by and between Borrower and Central and South West Services,
Inc. ("CSW") and (iii) Letter of Authorization to Proceed with Engineering,
Procurement and Construction of Interconnection Facilities, dated as of February
25, 1999, by and between Borrower and CSW). Such Consent shall, to the extent
required by the Lead Arrangers, include a representation from CPL that CSW is
acting as the agent for and under the direction of CPL under the agreements
described in clauses (ii) and (iii) above and that CPL has the power and
authority to Consent to the collateral assignment of Borrower's rights and
obligations under such agreements;
40. Duke Energy Xxxxxxx, X.X. (consenting to the collateral assignment
of Borrower's rights and obligations under that certain Pipeline Construction
and Operation Agreement dated as of October 1, 1999 and entered into between
Borrower and Duke Energy Xxxxxxx, X.X.). Such consent shall contain certain
amendments or modifications to the Pipeline Construction and Operation Agreement
as may be reasonably requested by the Lenders;
41. El Paso Natural Gas Company (consenting to the collateral assignment
of Borrower's rights and obligations under the El Paso Natural Gas Letter
Agreement for the Construction, Operation and Connection of the Calpine South
Point Delivery Point, dated as of July 12, 1999, by and between Borrower and El
Paso Natural Gas Company);
42. Transwestern Pipeline Company (consenting to the collateral
assignment of Borrower's rights and obligations under the Delivery Point
Construction and Operating Agreement, dated as of July 16, 1999, by and between
Transwestern Pipeline Company and Borrower);
5
373
43. Arizona Electric Power Cooperative, Inc. (consenting to the
collateral assignment of Borrower's rights and obligations under the Topock
Substation Construction and Interconnection Agreement, dated as of July 14,
1999, by and between Arizona Electric Power Cooperative, Inc. and Borrower);
44. Aha Macav Power Service (consenting to the collateral assignment of
Borrower's rights and obligations under the Contract for Design, Contribution
and Maintenance Services, dated as of May 17, 1999, by and between Borrower and
Aha Macav Power Services);
45. United States Department of Energy Western Area Power Administration
("Western") (consenting to the collateral assignment of Borrower's rights and
obligations under (i) Contract No. 99-DSR-11050, for Long-Term Firm
Point-To-Point Transmission Service, dated as of August 5, 1999, by and between
Western and Borrower; (ii) Contract No. 99-DSR-11049, for Service Agreement for
Non-Firm Point-To-Point Transmission Service, dated as of August 5, 1999, by and
between Western and Borrower and (iii) Contract No. 99-DSR-11008, for
Construction of the South Point Transmission Project, dated as of June 25, 1999,
by and between Western and Borrower). Such consent shall, to the extent required
by the Lead Arrangers, include an acknowledgement by Western that Western is
responsible for obtaining all the real property rights necessary to construct,
own and operate the transmission facilities contemplated under Contract No.
99-DSR-11008 described above;
46. Western (consenting to the collateral assignment of Borrower's
rights and obligations under (i) the Design and Engineering Services for the
Calpine Corporation, dated as of August 2, 1999, by and between Western and
Borrower, (ii) Contract No. 99-SNR-00210 for Service Agreement for Long-Term
Firm Point-To-Point Transmission Service, dated as of August 30, 1999, by and
between Western and Borrower and (iii) Contract 99-SNR-00184 Land Acquisition
Agreement, dated as of June 4, 1999, by and between Western and Borrower
47. The City of Westbrook, Maine (consenting to the collateral
assignment of Borrower's rights and obligations under (i) the Agreement (Sewage
Treatment), dated as of February 2, 1999, by and between Borrower and the City
of Xxxxxxxxx and (ii) the Credit Enhancement Agreement, dated as of June 28,
1999, by and between Borrower and the City of Westbrook, Maine and Borrower);
48. E-PRO Engineering (consenting to the collateral assignment of
Borrower's rights and obligations under the Contract for Professional Services,
dated as of September 22, 1999, between E-PRO Engineers and Environmental
Consulting LLC, and Borrower). Such consent shall, to the extent requested by
the Lead Arrangers, contain certain amendments or modifications to the Contract
for Professional Services;
49. CMP Natural Gas, L.L.C. ("CMPNG") (consenting to the collateral
assignment of Borrower's rights and obligations under the Negotiated Service
Agreement for Natural Gas Transportation, dated as of July 9, 1999, by and
between Borrower and CMPNG (the "CMP Contract")). Such Consent shall, to the
extent requested by the Lead Arrangers, clarify that CMPNG shall (i) acquire all
real estate rights necessary to construct, own and operate the gas lateral under
the CMP Contract regardless of whether, pursuant to the terms of the CMP
6
374
Contract, CMPNG or Borrower is ultimately responsible for constructing, owning
and operating such lateral and (ii) in the event that Borrower is ultimately
responsible for constructing, owning and operating such lateral, transfer to
Borrower all such real estate rights;
50. Central Maine Power (consenting to the Borrower's rights and
obligations under the Interconnection Agreement to be entered into between
Borrower and Central Maine Power);
51. Magic Valley Pipeline L.P. (consenting to the collateral assignment
of Borrower's rights and obligations under the Gas Pipeline Construction and
Transportation Agreement to be entered into between Borrower and Magic Valley
Pipeline L.P.);
52. In the event that Calpine Corporation guarantees the performance of
Magic Valley Pipeline L.P. under the agreement described in item 51 above, a
consent from Calpine Corporation (consenting to the collateral assignment of
Borrower's rights and obligations under such agreement);
53. In the event that a Gas Interconnection agreement is entered into by
and between Borrower (as opposed to Magic Valley Pipeline L.P.) and Pacific Gas
& Electric, a consent from Pacific Gas & Electric (consenting to the collateral
assignment of Borrower's rights and obligations under such agreement);
54. In the event that a Gas Interconnection Agreement is entered into by
and between Borrower (as opposed to Magic Valley Pipeline L.P.), and Tejas Gas,
a consent from Tejas Gas (consenting to the collateral assignment of Borrower's
rights and obligations under such agreement);
55. In the event that a Gas Pipeline Interconnection Agreement is
entered into by and between Borrower (as opposed to Magic Valley Pipeline L.P.),
and Texas Eastern, a consent from Texas Eastern (consenting to the collateral
assignment of Borrower's rights and obligations under such agreement);
56. In the event that a Gas Pipeline Interconnection Agreement is
entered into by and between Borrower (as opposed to Magic Valley Pipeline L.P.)
and Tennessee Gas, a consent from Tennessee Gas (consenting to the collateral
assignment of Borrower's rights and obligations under such agreement);
57. For any gas interconnection and/or transportation agreement entered
into by Borrower and third party providers of such services for (i) the South
Point Project and/or (ii) the Xxxxxx Project, a consent from the Project
Participant who is the counterparty to such agreement(s) (consenting to the
collateral assignment of Borrower's rights and obligations under such
agreement(s));
58. For any Gas Pipeline Construction and Transportation Agreement
entered into by Borrower and an Affiliate of Borrower ("Calpine Pipeline") for
(i) the South Point Project and (ii) the Xxxxxx Project, a consent from Calpine
Pipeline to such agreement(s) (consenting to the collateral assignment of
Borrower's rights and obligations under such agreement(s));
7
375
59. United States Department of Energy Western Area Power Administration
(consenting to the collateral assignment of Borrower's rights and obligations
under the Mutual Services Agreement to be entered into between Borrower and the
Western Area Power Administration);
60. United States Department of Energy Western Area Power Administration
(consenting to the collateral assignment of Borrower's rights and obligations
under the Electric Interconnection Agreement to be entered into between Borrower
and Western Area Power Administration to provide for electrical interconnection
of the Xxxxxx Project into the Western Area Power Administration transmission
system); and
61. Arizona Electric Power Cooperative, Inc. (consenting to the
collateral assignment of Borrower's rights and obligations under the Agreement
for Operation and Maintenance of the Topock Substation to be entered into
between the Arizona Electric Power Cooperative, Inc. and Borrower).
8
376
EXHIBIT F-1
to Credit Agreement
BORROWER'S CLOSING CERTIFICATE
Pursuant to the Credit Agreement (as defined below), the undersigned
hereby certifies on this __ day of ____ 1999 to The Bank of Nova Scotia, as
Administrative Agent under that certain Credit Agreement dated as of October 20,
1999 (the "Credit Agreement") among Calpine Construction Finance Company, L.P.,
a Delaware limited partnership, as Borrower ("Borrower"), the financial
institutions listed on Exhibit H thereto, (the "Banks"), Credit Suisse First
Boston, as Lead Arranger, Syndication Agent and Bookrunner and The Bank of Nova
Scotia, as Lead Arranger, LC Bank and Administrative Agent ("Administrative
Agent"), that:
1. Attached hereto are true, complete and correct copies of each
Project Document, and material Additional Project Documents in existence as of
the Closing Date, and any supplements or amendments thereto, as listed below:
(a) The Prime Construction Contracts, including (i) Contract for
Construction between Borrower, as successor in interest to Magic Valley
Generation, L.P. and Xxxxxx Construction Corporation, dated Xxxxx 00, 0000, (xx)
Contract for Engineering, Procurement, and Construction between Borrower, as
successor in interest to CPN South Point, LLC and The South Point Joint Venture,
dated Xxxxx 00, 0000, (xxx) Contract for Engineering, Procurement, and
Construction between Borrower, as successor in interest to Calpine Xxxxxx, LLC,
and Xxxxxxx Power Corporation, dated as of June 1, 1999, and (iv) Contract
Agreement between General Electric Company and Borrower, as successor in
interest to Xxxxxxxxx, LLC for the Westbrook Power Project Combined Cycle Power
Plant Westbrook, Maine, dated as of February 5, 1999;
(b) The Power Island Supply Contracts, including (i) Purchase
Contract between Westinghouse Power Generation and Borrower, as successor in
interest to Calpine Corporation, dated as of June 30, 1998, (ii) Purchase
Contract for Power Island Equipment between Siemens Westinghouse Power
Corporation and Borrower, as successor in interest to CPN South Point, LLC,
dated as of March 15, 1999, and (iii) Purchase Contract for Power Island
Equipment between Siemens Westinghouse Power Corporation and Borrower, as
successor in interest to Calpine Xxxxxx, Inc., dated as of December 16, 1998;
(c) The Engineering Contracts, including Contract for
Professional Services between Xxxxxxx & Xxxxx, L.L.C. and Borrower, as successor
in interest to Magic Valley Generation, L.P., dated as of December 8, 1998;
(d) The Maintenance Contracts, including (i) Maintenance Contract
between Westinghouse Power Generation and Borrower, as successor in interest to
Calpine Corporation, dated as of June 30, 1998, (ii) Maintenance Contract
between Siemens Westinghouse Power Corporation and Borrower, as successor in
interest to Calpine Corporation,
377
dated as of Xxxxx 00, 0000, (xxx) Maintenance Contract between Siemens
Westinghouse Power Corporation and Borrower, as successor in interest to Calpine
Corporation, dated as of December 18, 1998, and (iv) Long Term Parts & Long Term
Service Contract between Borrower, as successor in interest to Xxxxxxxxx Power,
LLC and General Electric International, dated as of February 5, 1999;
(e) The Construction Management Agreements;
(f) The Project Documents related to the delivery of water to the
Projects; including (i) Agreement for Purchase of Treated Effluent Water,
between the City of Edinburg and Borrower, as successor in interest to Calpine
Corporation dated April 21, 1998; First Amendment to Agreement for Purchase of
Treated Effluent Water by and between the City of Edinburg and Borrower, as
successor in interest to Magic Valley Generation, L.P. dated August 4, 1999,
(ii) Master Agreement for Purchase and Sale of Water by and between Xxxxxxx
County Irrigation District No. Two and Borrower, as successor in interest to
Magic Valley Generation, L.P., dated June 17, 1999, (iii) Water Delivery
Contract by and between Xxxxxxx County Irrigation District No. One and Borrower,
as successor in interest to Magic Valley Generation, L.P., dated July 19, 1999,
(iv) Xxxxxxx Money Contract between Bayview Irrigation District No. 11 and
Borrower, as successor in interest to Magic Valley Generation, L.P., dated July
27, 1999; and (v) Agreement by and between Borrower, as successor in interest to
Xxxxxxxxx Power, LLC, and Portland Water District, dated as of February 17,
1999;
(g) The Leases, including (i) Amended and Restated Ground Lease
Agreement, executed as of August 4, 1999 and approved as BIA Lease B1778-FM on
August 19, 1999 between the Fort Mojave Indian Tribe, a federal recognized
Indian Tribe and Borrower;
(h) the O&M Agreements;
(i) the Project Management Agreements;
(j) the Gas Supply Contracts;
(k) the Gas Transportation Agreements;
(1) the Fuel Management Agreements;
(m) the Power Purchase Agreements, including Power Purchase and
Sale Agreement between Calpine Power Services Company and Borrower, as successor
in interest to Magic Valley Electric Cooperative, Inc., dated as of May 22,
1998;
(n) the Power Marketing Agreements;
2. All of the documents listed above are in full force and effect in
accordance with their terms.
3. Borrower is not and, to Borrower's knowledge, no other party to
any Operative Document (other than any Additional Project Document not in
existence as of the
2
378
Closing Date) is, or, but for the passage of time or the giving of notice or
both will be, in breach of any material obligation thereunder which is
reasonably expected to have Material Adverse Effect on Borrower or any Project.
4. Each Applicable Permit listed in Part I(A) of Exhibits G-3A, B, C
and D is in full force and effect, and except as disclosed therein, is not
subject to appeals or further proceedings or to any unsatisfied condition that
could reasonably be expected to have a Material Adverse Effect on Borrower or
any Project. Borrower has no reason to believe that any Permit identified in
Part II(A) of Exhibits G-3A, B, C or D will not be obtained without material
difficulty or delay by the time they are needed.
5. Each representation and warranty made in Article 4 of the Credit
Agreement is true and correct as of the Closing Date.
6. There exists no Event of Default or Inchoate Default or, with
respect to any Project, Non-Fundamental Project Default or Non-Fundamental
Project Inchoate Default as of the Closing Date.
7. The conditions precedent set forth in Section 3.1 of the Credit
Agreement have been satisfied or have been waived in writing by Administrative
Agent with the consent of the Banks.
8. The copies of the annual and quarterly financial statements of
Borrower delivered by Borrower pursuant to Section 3.1.20 of the Credit
Agreement are true and correct in all material respects and are the most recent
annual and quarterly financial statements of Borrower. As of the Closing Date,
no material adverse change in the consolidated assets, liabilities, operations
or financial condition of Borrower has occurred from those set forth on such
financial statements.
All capitalized terms used herein which are defined in the Credit
Agreement shall have the meaning given to them in the Credit Agreement unless
otherwise defined herein.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
3
379
IN WITNESS WHEREOF, the undersigned has duly executed this
certificate on behalf of the Borrower as of the date first written above.
CALPINE CONSTRUCTION FINANCE COMPANY, L.P.,
a Delaware limited partnership
By: CALPINE CCFC GP, INC.,
a Delaware corporation,
its General Partner
By:
---------------------------------------
Name:
Title:
380
EXHIBIT F-2
to Credit Agreement
[XXXXX USA INC. LETTERHEAD]
______, 0000
Xxx Xxxx xx Xxxx Xxxxxx,
as Lead Arranger for the Banks
Xxx Xxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Manager, Project Finance
Credit Suisse First Boston
as Lead Arranger for the Banks
Eleven Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Manager, Project Finance
Re: Magic Valley, South Point, Xxxxxx and Westbrook Projects (the
"Initial Projects")
Ladies and Gentlemen:
The undersigned, a duly authorized officer of Xxxxx USA, Inc., a
Delaware corporation ("Insurance Consultant"), hereby provides this letter to
you in accordance with Section 3.1.9/3.3.10 of that certain Credit Agreement
dated as of October 20, 1999 (the "Credit Agreement"), among Calpine
Construction Finance Company, L.P., a Delaware limited partnership, as Borrower
("Borrower"), the financial institutions listed on Exhibit H thereto (the
"Banks"), Credit Suisse First Boston, as Lead Arranger, Syndication Agent and
Bookrunner and The Bank of Nova Scotia, as Lead Arranger, LC Bank and
Administrative Agent. Except as provided herein, all terms used herein which are
defined in the Credit Agreement shall have the meanings given therein.
Insurance Consultant acknowledges that pursuant to the Credit Agreement, the
Banks will be providing financing to Borrower for the construction of the
Initial Projects and in so doing will be relying on this certificate and the
Insurance Consultant's report dated _________. Such report represents Insurance
Consultant's professional opinion as of such date and as of the date hereof.
Attached hereto as Exhibit A is a true, correct and complete list of the
coverages which have been obtained to date in connection with the Initial
Projects as evidenced by certificates of insurance and cover notes supplied by
Borrower.
Upon delivery of the original certificates of insurance, copies of
which are attached as Appendix A, Borrower will have provided satisfactory
evidence of compliance with the provisions of Exhibit K to the Credit Agreement.
Sincerely,
XXXXX USA, INC.
381
EXHIBIT F-3
to Credit Agreement
[X.X. XXXX INC. LETTERHEAD]
______, 0000
Xxx Xxxx xx Xxxx Xxxxxx,
as Lead Arranger for the Banks
Xxx Xxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Manager, Project Finance
Credit Suisse First Boston
as Lead Arranger for the Banks
Eleven Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Manager, Project Finance
Re: _________________ Project(s)
Ladies and Gentlemen:
The undersigned, a duly authorized representative of X.X. Xxxx,
Inc., a Washington corporation ("Independent Engineer"), hereby provides this
letter to you in accordance with Section 3.1.11/3.3.12 of that certain Credit
Agreement dated as of October 20, 1999 (the "Credit Agreement"), among Calpine
Construction Finance Company, L.P., a Delaware limited partnership, as Borrower
("Borrower"), the financial institutions listed on Exhibit H thereto, Credit
Suisse First Boston ("CSFB"), as Lead Arranger, Syndication Agent and
Bookrunner, The Bank of Nova Scotia ("BNS"), as Lead Arranger, LC Bank and
Administrative Agent (BNS and CSFB collectively as the "Lead Arrangers"), TD
Securities (USA) Inc., as Co-Arranger and Co-Documentation Agent and CIBC Inc.,
as Co-Arranger and Co-Documentation Agent. Except as provided herein, all terms
used herein which are defined in the Credit Agreement shall have the meanings
given therein.
X.X. Xxxx, Inc. has been retained by the Lead Arrangers as the
Independent Engineer and it has prepared an Independent Engineer's Report dated
October 12, 1999 (the "Independent Engineer's Report").
The Independent Engineer's Report was prepared pursuant to the
scope of services under our Professional Services Agreement with the Lead
Arrangers and those services were provided in accordance with generally accepted
engineering practices.
In connection with the preparation of the Independent Engineer's
Report, personnel of the Independent Engineer have participated in meetings or
telephone discussions with representatives of Calpine Corporation and it's
affiliates, the Borrower, counsel to the Borrower, the Lead Arrangers and
counsel to the Lead Arrangers in regard to the Initial Projects.
This letter is solely for the information of, and assistance to,
the Lead Arrangers in conducting and documenting its investigation of the
matters covered by the Independent Engineer's Report
382
in connection with the Initial Projects and is not to be used, circulated,
quoted or otherwise referred to within or without the lending group for any
purpose, nor is it to be referred to in whole or in part in any other document,
except that reference may be made to it in the above-mentioned Credit Agreement
or in any list of closing documents pertaining to the Initial Projects.
Sincerely,
X.X. XXXX INC.
383
EXHIBIT F-4
to Credit Agreement
[FUEL CONSULTANT LETTERHEAD]
_______________, 0000
Xxx Xxxx xx Xxxx Xxxxxx,
as Lead Arranger for the Banks
Xxx Xxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn. Manager, Project Finance
Credit Suisse First Boston
as Lead Arranger for the Banks
Eleven Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Manager, Project Finance
Re: ____________________________ Project(s)
Ladies and Gentlemen:
The undersigned, a duly authorized officer of __________________,
("Fuel Consultant"), hereby provides this letter to you in accordance with
Section 3.1.13/3.3.14 of that Credit Agreement dated as of October 20, 1999 (the
"Credit Agreement"), among Calpine Construction Finance Company, L.P., a
Delaware limited partnership, as Borrower ("Borrower"), the financial
institutions listed on Exhibit H thereto (the "Banks"), Credit Suisse First
Boston, as Lead Arranger, Syndication Agent and Bookrunner and The Bank of Nova
Scotia, as Lead Arranger, LC Bank and Administrative Agent. Except as provided
herein, all terms used herein which are defined in the Credit Agreement shall
have the meanings given therein.
Fuel Consultant acknowledges that pursuant to the Credit
Agreement, the Banks will be providing financing to the Borrower for the
construction of the above-referenced Project(s) and in so doing will be relying
on this Certificate and Fuel Consultant's report dated _____________. Fuel
Consultant certifies that attached hereto as Exhibit A is a true, correct and
complete copy of Fuel Consultant's report, and that said report represents Fuel
Consultant's professional opinion as of the date hereof. Further, Fuel
Consultant confirms, as of the date hereof, the evaluation, estimates,
projections, conclusions and recommendations contained in such report.
Sincerely,
[FUEL CONSULTANT]
384
EXHIBIT F-5
to Credit Agreement
[INDEPENDENT POWER MARKETING CONSULTANT LETTERHEAD]
___________, 0000
Xxx Xxxx xx Xxxx Xxxxxx
as Lead Arranger for the Banks
Xxx Xxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Manager, Project Finance
Credit Suisse First Boston
as Lead Arranger for the Banks
Eleven Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Manager, Project Finance
Re: ______________________ Project(s)
Ladies and Gentlemen:
The undersigned, a duly authorized representative of ,
("Independent Power Marketing Consultant"), hereby provides this letter to you
in accordance with Section 3.1.14/3.3.15 of that certain Credit Agreement dated
as of October 20, 1999 (the "Credit Agreement"), among Calpine Construction
Finance Company, L.P., a Delaware limited partnership, as Borrower ("Borrower"),
the financial institutions listed on Exhibit H thereto (the "Banks"), Credit
Suisse First Boston, as Lead Arranger, Syndication Agent and Bookrunner and The
Bank of Nova Scotia, as Lead Arranger, LC Bank and Administrative Agent. Except
as provided herein, all terms used herein which are defined in the Credit
Agreement shall have the meanings given therein.
Independent Power Marketing Consultant acknowledges that pursuant
to the Credit Agreement, the Banks will be providing financing to the Borrower
for the construction of the above-referenced Project(s) and in so doing will be
relying on this certificate and Independent Power Marketing Consultant's report
dated ____________. Independent Power Marketing Consultant certifies that
attached hereto as Exhibit A is a true, correct and complete copy of Independent
Power Marketing Consultant's report, and that said report represents Independent
Power Marketing Consultant's professional opinion as of such date and as of the
date hereof. Further, since the date of the aforementioned Independent Power
Marketing Consultant's report, nothing has come to our attention which would
cause us to change that report.
Sincerely,
[INDEPENDENT POWER MARKETING CONSULTANT]
000
XXXXXXXX X-0X - DESCRIPTION OF MAGIC VALLEY PROJECT
Magic Valley is a 730 MW gas-fired combined cycle power plant currently under
construction in Edinburg, Texas on a 59.6-acre site. It will consist of two 230
XX Xxxxxxxxxxxx model 501 "G" gas turbines, with one 250 XX Xxxxxxxxxxxx
condensing steam turbine, a water-cooled steam condenser, and other ancillary
equipment. Magic Valley is being constructed using Calpine's "owner construct"
approach, with Siemens Westinghouse supplying the combustion turbines, HRSGs,
steam turbine, condenser, SCR, and other associated equipment. Xxxxxx
Construction Corporation is the Construction Contractor, while Xxxxxxx & Xxxxx,
L.L.C. is providing engineering services. The Project's construction is expected
to last 24 months, with commercial operation scheduled for April 2001. The
Project will sell 250 MW to 400 MW of the net electrical output to Magic Valley
Electric Cooperative, Inc. under a 20-year power sales agreement, and will sell
the balance of the net electrical output into the ERCOT wholesale merchant power
market. The Project will be an Eligible Facility, and Borrower will be an Exempt
Wholesale Generator with respect to this Project.
000
XXXXXXXX X-0X-XXXXXXXXXXX XX XXXXX XXXXX PROJECT
South Point is a 545 MW gas-fired combined cycle power plant currently under
construction on a 320-acre site leased from the Fort Mojave Indian Tribe on
their Reservation in Arizona, approximately 110 miles south of Las Vegas,
Nevada. The electricity generated will be sold to the Arizona, Nevada and
California (WSCC) power markets. The Project will be an Eligible Facility, and
Borrower will be an Exempt Wholesale Generator with respect to this Project.
South Point will be constructed using a modified engineering, procurement and
construction approach. Siemens Westinghouse Power Corporation will supply and
guarantee performance of the power island equipment consisting of two 185 XX
Xxxxxxxxxxxx model 501 FD combustion turbines with a 190 MW steam turbine,
condenser, selective catalytic reduction, and other associated equipment. The
design, engineering, procurement and construction of the balance-of-plant
equipment will be performed under a fixed-price, date-certain contract with a
joint venture between The Industrial Company and the Utility Engineering
Corporation. Calpine Corporation will be responsible for integrated project
management as well as for start up and commissioning. Construction of the
project commenced in June 1999, with commercial operation planned for May 2001.
000
XXXXXXXX X-0X - DESCRIPTION OF THE XXXXXXXXX PROJECT
Westbrook is a 540 MW gas-fired combined cycle merchant power plant located in
Westbrook, Maine on a 30-acre parcel of industrial park property. General
Electric Company ("GE") is constructing the Westbrook project pursuant to a
fixed-price, date-certain EPC contract. Construction is expected to last 24
months, with commercial operation taking place in February 2001. The Project
will sell electricity into the wholesale merchant power market.
The Project will ultimately be an Eligible Facility.
000
XXXXXXXX X-0X - DESCRIPTION OF XXXXXX PROJECT
Xxxxxx is a 545 MW gas-fired, combined cycle power plant currently under
construction on 19 acres of Calpine's existing 77-acre Xxxxxxxxx project site
approximately seven miles southwest of Yuba City, California. Xxxxxx will sell
electricity into the WSCC wholesale merchant power market. The Project will be
an Eligible Facility, and Borrower will be an Exempt Wholesale Generator with
respect to this Project.
Xxxxxx will be constructed using a modified engineering, procurement and
construction approach. Siemens Westinghouse Power Corporation will supply and
guarantee performance of the power island equipment consisting of two 170 XX
Xxxxxxxxxxxx model 501 FD combustion turbines with a 160 MW steam turbine and
two Xxxx NEM ("NEM") heat recovery steam generators, selective catalytic
reduction, and other associated equipment. Xxxxxxx Power Corporation will
perform the design, engineering, procurement, and construction of the
balance-of-plant equipment, including the air-cooled condenser, under a
fixed-price, date-certain contract. Calpine Corporation will be responsible for
integrated project management as well as for start up and commissioning.
Construction of the Project commenced in June 1999 and commercial operation is
scheduled for April 2001.
000
XXXXXXXX X-0X - DESCRIPTION OF ONTELAUNEE PROJECT
Ontelaunee, located in Berks County, Pennsylvania, will be a 546 MW gas-fired
combined cycle generation unit, which will sell electricity into the MAAC
wholesale merchant power market. The unit will be located on land optioned from
two private owners. The Project will be an Eligible Facility, and Borrower will
be an Exempt Wholesale Generator with respect to this Project.
Power will be produced from two Siemens Westinghouse 501 FD combustion turbines.
The Project will also be configured with two heat recovery steam generators
("HRSG") and a condensing reheat steam turbine.
000
XXXXXXXX X-0X - DESCRIPTION OF EASTERN REGION PROJECT 03
Eastern Region Project 03 will be located in Florida. It will be a 545 MW
gas-fired combined cycle generation unit, which will sell electricity into the
SERC wholesale merchant power market. The unit will be located on a twenty-acre
parcel of land. The Project will be an Eligible Facility, and Borrower will be
an Exempt Wholesale Generator with respect to this Project.
Power will be produced from two Siemens Westinghouse 501 FD combustion turbines.
The Project will also be configured with two heat recovery steam generators
("HRSG") and a condensing reheat steam turbine.
000
XXXXXXXX X-0X - DESCRIPTION OF EASTERN REGION PROJECT 01
[*]
000
XXXXXXXX X-0X - XXXXXXXXXXX XX XXXXXXX XXXXXX PROJECT 02
[*]
000
XXXXXXXX X-0X - DESCRIPTION OF EASTERN REGION PROJECT 04
Eastern Region Project 04 will be located in Florida. It will be a 500 MW
gas-fired combined cycle generation unit, which will sell electricity into the
SERC wholesale merchant power market. The unit will be located on approximately
35 acres optioned from a private landowner. The Project will be an Eligible
Facility, and Borrower will be an Exempt Wholesale Generator with respect to
this Project.
Power will be produced from two Siemens Westinghouse 501 FD combustion turbines.
The Project will also be configured with two heat recovery steam generators
("HRSG") and a condensing reheat steam turbine.
000
XXXXXXXX X-0X - DESCRIPTION OF LOST PINES PROJECT
Lost Pines, located in Bastrop County, Texas, will be a 545 MW gas-fired
combined cycle generation unit, which will be jointly owned with Gentex Power
Corporation, a wholly owned subsidiary of Lower Colorado River Authority. Lost
Pines will be located on a 10-acre site on the Gentex-owned Sim Gideon power
plant site. Borrower and Gentex will each own a 50% undivided interest in the
Project. The Lost Pines Project will sell electricity into the ERCOT wholesale
merchant power market. The Project will be an Eligible Facility, and Borrower
will be an Exempt Wholesale Generator with respect to this Project.
Power will be produced from two Siemens Westinghouse 501 F-D combustion
turbines. The Project will also be configured with two heat recovery steam
generators and a condensing reheat steam turbine.
000
XXXXXXXX X-0X - DESCRIPTION OF CENTRAL REGION PROJECT 01
Central Region Project 01 will be located in Alabama. It will be a 734 MW
gas-fired combined cycle cogeneration unit, which will sell steam and a portion
of its electricity to a large industrial company. The unit will be located
inside the fence of the industrial company on leased land owned by the company.
The Project will be a Qualifying Facility under PURPA and will be able to sell
power above the 168 MW maximum offtaker's capacity requirement into the SERC
wholesale market.
Power will be produced from three Siemens Westinghouse 501 F-D Combustion
turbines. The Project will also be configured with three heat recovery steam
generators ("HRSG") and a full condensing reheat steam turbine. The company's
maximum steam requirements can be provided from only one of the HRSGs.
000
XXXXXXXX X-0X - DESCRIPTION OF BAYTOWN PROJECT
Baytown, located in Xxxxxxxx County, Texas, will be a 780 MW gas-fired combined
cycle cogeneration unit, which will sell steam and a portion of its electricity
to the Bayer Corporation. The unit will be located on 18 acres of leased land
inside the Bayer Chemical facility that is owned by Bayer. The Project will be a
Qualifying Facility under PURPA and will be able to sell power above Bayer's 290
MW maximum capacity requirement into the SPP wholesale market.
Power will be produced from three Siemens Westinghouse 501 F-D combustion
turbines. The Project will also be configured with three heat recovery steam
generators and a condensing extraction steam turbine. Approximately 1,000-kpph
steam will be provided to Bayer from an extraction off of the steam turbine.
000
XXXXXXXX X-0X - DESCRIPTION OF LYONDELL CITGO PROJECT
Lyondell CITGO, located in Pasadena, Xxxxxx County, Texas will be a 545 MW
gas-fired combined cycle cogeneration unit, which will sell steam and a portion
of its electricity production to Lyondell CITGO Refining ("LCR"). The unit will
be located on a leased 10-acre site owned by LCR just outside the refinery. The
Project will be a Qualifying Facility under PURPA and will be able to sell power
above the refiner's 172 MW maximum capacity requirement into the ERCOT wholesale
market.
Power will be produced initially from one Siemens Westinghouse 501 F-D
combustion turbine, which will be configured with a heat recovery steam
generator ("HRSG"). A second Siemens Westinghouse 501 F-D combustion turbine and
an additional HRSG will be added along with a condensing reheat steam turbine
after the initial combustion turbine reaches commercial operation. LCR's maximum
steam requirements of 600 kpph can be provided from only one of the HRSGs.
000
XXXXXXXX X-0X - XXXXXXXXXXX XX XXXXXXX XXXXXX PROJECT 02
[*]
000
XXXXXXXX X-0X - DESCRIPTION OF LOS MEDANOS PROJECT
The Los Medanos Energy Facility, located in Contra Costa County, California,
will be a 530 MW gas-fired combined cycle cogeneration unit, which will sell
steam and a portion of its electricity to USS-POSCO Industries ("UPI"). The unit
will be located "outside the fence" of UPI on land leased from UPI. The Project
will be a Qualifying Facility under PURPA and will be able to sell power above
55 MW capacity requirement into the WSCC wholesale market.
Power will be produced from two General Electric 7241 FA Combustion turbines.
The Project will also be configured with two heat recovery steam generators
("HRSG") and a condensing reheat steam turbine. Steam will be provided to UPI
from the HRSGs when the gas turbine is operating and from one auxiliary boiler
when the turbines are down for maintenance or forced outages.
000
XXXXXXXX X-0X - DESCRIPTION OF WEST PHOENIX PROJECT
West Phoenix, located in Arizona, will be a nominally rated 500 MW gas-fired
combined cycle generation unit which will be jointly owned with Pinnacle West
Capital Corporation ("PNW)". Borrower and PNW will each own a 50% undivided
interest in the Project. The West Phoenix Project will sell electricity into the
WSCC wholesale merchant power market. The unit will be located on land leased
from Arizona Public Service adjacent to its existing West Phoenix Power Plant.
The Project will be an Eligible Facility, and Borrower will be an Exempt
Wholesale Generator with respect to this Project.
Power will be produced from two Siemens Westinghouse 501 FD2 combustion
turbines. The Project will also be configured with two heat recovery steam
generators ("HRSG") and a condensing reheat steam turbine.
000
XXXXXXXX X-0X - DESCRIPTION OF DELTA PROJECT
Delta Energy Center, located in Contra Costa County, California, will be an 800
MW gas-fired combined cycle generation unit, which may be jointly owned with
Bechtel Enterprises Holdings, Inc. or one of its wholly owned subsidiaries.
Borrower will either own 100% of the Project or Borrower and Bechtel will each
own a 50% undivided interest in the Project. The Delta Project will sell
electricity into the WSCC wholesale merchant power market. The unit will be
located at Calpine's Pittsburg I power plant. The Project will be an Eligible
Facility, and Borrower will be an Exempt Wholesale Generator with respect to
this Project.
Power will be produced from three Siemens Westinghouse 501 FD2 combustion
turbines. The Project will also be configured with three heat recovery steam
generators ("HRSG") and a condensing reheat steam turbine.
000
XXXXXXXX X-0X - DESCRIPTION OF XXXXXXX PROJECT
Xxxxxxx Energy Center, located in Santa Xxxxx County, California, will be a 545
MW gas-fired combined cycle generation unit, which may be jointly owned with
Bechtel Enterprises Holdings, Inc. or one of its wholly owned subsidiaries.
Borrower will either own 100% of the Project or Borrower and Bechtel will each
own a 50% undivided interest in the Project. The Xxxxxxx Project will sell
electricity into the WSCC wholesale merchant power market. The unit will be
located on land to be purchased by the Project. The Project will be an Eligible
Facility, and Borrower will be an Exempt Wholesale Generator with respect to
this Project.
Power will be produced from two Siemens Westinghouse 501 FD2 combustion
turbines. The Project will also be configured with two heat recovery steam
generators ("HRSG") and a condensing reheat steam turbine.
000
XXXXXXXX X-0-X
XXXXXXX XXXXXX PROJECT 04
[*]
000
XXXXXXXX X-0-X
MAGIC VALLEY POWER MARKETING PLAN
[*]
000
XXXXXXXX X-0-X
XXXXX XXXXX POWER MARKETING PLAN
[*]
406
APPENDIX G-2-C
XXXXXXXXX POWER MARKETING PLAN
[ * ]
407
APPENDIX G-2-X
XXXXXX POWER MARKETING PLAN
[ * ]
000
Xxxxxxxx X-0X
MAGIC VALLEY:
Date Issued
Permit Issuing Agency Or Required
------ -------------- -----------
PART I. APPLICABLE PERMITS
A. BORROWER
Texas Air Permit to Operate/PSD Permit TNRCC Issued on
December 31, 1998
TPDES wastewater TNRCC Final permit issued
Discharge permit on July 16, 1999
Certify Project DOE Submit before start of
capability to use construction; submitted
alternate fuel on September 16, 1999
Rural Utility Service Approval of RUS Approval dated 4/8/99
MVEC Agreements
Notice of Intent for EPA Two days before start
NPDES General Stormwater Of construction;
Construction Permit submitted on September
28, 1998, and March 22,
1999
Stormwater Pollution EPA Complete two days
Prevention Plan before start of
construction; completed
on September 22, 1998
and March 17, 1999
Confirm that no protected Texas Historical THC sent confirmation
cultural resources are located Comm'n on March 13, 1998 and
on site March 31, 1999
Change zoning to heavy industrial City of Edinburg Change was approved on
September 1, 1998
Clean Water Act Section 404 USACE Letters stating no
Permit/Certification permit required dated
May 26, 1999 and
September 28, 1999.
Development permit Xxxxxxx County Exemption certificate
409
Date Issued
Permit Issuing Agency Or Required
------ -------------- -----------
issued on October 21,
1999
Drainage System Discharge Permit Xxxxxxx County Drainage Dated September 9, 1999
District No. 1
Obtain building permit City of Edinburg Permit was issued on
September 10, 1999
Final Plat Approval City of Edinburg Dated on or about 6/4/99
Obtain approval for discharge Xxxxxxx County Drainage City of Edinburg
into drainage system District No. 1 obtained approval on
September 13, 1999
B. THIRD PARTY
City of Edinburg, amend TNRCC Issued on February 22,
existing reclaimed water 1999
reuse approval
PART II. PERMITS (TO BE OBTAINED)
A. BORROWER
Exempt Wholesale Generator FERC Prior to making sales
Certification of electric energy
Federal Power Act Section 205 FERC Prior to making sales
Approval of electric energy
CAA Title V Permit TNRCC Apply no later than the
start of operation;
short application was
filed April 20, 1999
CAA Title IV Phase II TNRCC Submit application and
Acid Rain Permit compliance plan for NOx
24 months before the
later of January 1, 2000,
or start of operation;
application was
submitted April 20,
1999
410
Date Issued
Permit Issuing Agency Or Required
------ -------------- -----------
Obtain certificate for transfer TNRCC Transfer was requested
of water rights purchased on September 17, 1999;
from Bayview Irrigation request for conversion
District; convert water use will be initiated after
after transfer transfer
Register as electric Texas PUC Within 30 days of start
wholesale generator of generation
CAA Continuous TNRCC Apply within 120 days
Emission Monitoring of commencing system
Certification commercial operations
B. THIRD PARTY
City of McAllen, amend TNRCC City will seek
Existing water reuse approval amendment before
providing reclaimed
water to Project
United Irrigation District, convert TNRCC/Watermaster United will convert
water use under its water rights before commencing
delivery of raw water
on October 1, 2000
United Irrigation District, submit TNRCC/Watermaster Submit prior to
annual contract delivery on October 1,
2000, and on or before
January 15 of each
subsequent year
Xxxxxxx County Irrigation District TNRCC/Watermaster HCID No. 2 will convert
No. 2, convert water use under before commencing
its water rights delivery of raw water
on October 1, 2000
Xxxxxxx County Irrigation District TNRCC/Watermaster Submit before delivery
No. 2, submit annual contract of raw water on October
1, 2000, and before
January 1, 2001 through
2005
000
Xxxxxxxx X-0X
XXXXX XXXXX:
Action Agency Involved Date Action Taken
------ --------------- -----------------
PART I.
Final Environmental Impact Bureau of Indian 01/99
Statement (FEIS) re: Lease Affairs
Agreement(1)
FEIS Record of Decision Bureau of Indian 03/99
re: Lease Agreement Affairs
CAA Permit to Construct and Environmental Protection 05/24/99
Commence Initial Operation Agency
of the Project/PSD Permit
Finding of No Significant Impact Bureau of Land Management 12/12/97
and Rights-of-Way for Construction
Operation, Maintenance and
Termination of Substation and
Transmission Lines to the Project(2)
Right-of-Way Grant and Bureau of Land Management 06/17/99
and Temporary Use Permit
for Placement and Construction of
Gas Pipeline to the Project(3)
----------
(1) Amended Ground Lease Agreement between Fort Mojave Indian Tribe and
Calpine South Point, Inc.
(2) 30-year term subject to renewal.
(3) Right-of-Way has term of 20 years subject to renewal; temporary use permit
for construction has two-year term from 05/12/99 subject to renewal.
412
Action Agency Involved Date Action Taken
------ --------------- -----------------
Notice of Intent for Baseline Environmental Protection NOI dated 08/02/99
Construction Stormwater Agency
Discharges from
Construction of the Project(4)
Stormwater Pollution Prevention Environmental Protection Dated 7/9/99
Plan
Clean Water Act Section 404 Nationwide Corps of Engineers 03/18/99
Permit 12 for Construction of Water
Supply Pipeline to the Project(5)
Clean Water Act Section 401 Environmental Protection 12/13/96(6)
Water Quality Certification Agency
in Indian Country for Construction
of Water Supply Pipeline to the Project
Clean Water Act Section 404 Corps of Engineers Jurisdictional
Nationwide Permit 14 for submittal filed
Construction of the Project
Clear Water Act Section 401 Environmental Protection 12/13/96(7)
Water Quality Certification in Agency
Indian Country for Construction
of the Project
Self Certification of Coal U.S. Department of Energy Filed 09/01/99
Capability under Power Plant and
Industrial Fuel Use Act
Planned Area Development Plan FMIT June 2, 1999
Water Use Permit FMIT March 15, 1999
Building Permit FMIT June 7, 1999
----------
(4) Pollution Prevention Plan has been filed separately.
(5) Two-year term from 03/18/99 unless modified, reissued or revoked; may also
require a Notice of Intent for baseline construction stormwater
discharges.
(6) Conditional EPA CWA Section 401 water quality certification exists for CWA
Section 404 Nationwide Permit 12.
(7) Conditional EPA CWA Section 401 water quality certification exists for CWA
Section 404 Nationwide Permit 14.
413
Action Agency Involved Date Action Taken
------ --------------- -----------------
Determination of No Hazard to Federal Aviation Administration Issued 08/31/99(8)
Air Navigation
PART II.
Exempt Wholesale Generator Certification FERC Prior to making sales of electric
energy
Federal Power Act Section 205 Approval FERC Prior to making sales of electric
energy
CAA Title IV Acid Rain Permit Environmental Protection Application was filed
Agency 07/28/99; permit not
yet issued
CAA Title V Permit Environmental Protection Application must be
to Operate Agency filed within one year
after commencement
of initial operation
Notice of Intent for Environmental Must be filed two
Multi-Sector Storm Water Protection days before
Discharges from Operation Agency commencement of
of the Project operation(9)
Clean Water Act Section 404 Environmental Before commencement
Nationwide Permit 12 for Protection Agency of construction(10)
Construction of Natural Gas
Pipeline to the Project(11)
----------
(8) Expires 03/14/01 unless extended, revised or terminated by the issuing
office.
(9) Separate Pollution Prevention Plan will need to be filed.
(10) See Opinion of Steptoe & Xxxxxxx dated November 3, 1999.
(11) May also require a Notice of Intent for construction stormwater discharges
and related Pollution Prevention Plan.
414
Action Agency Involved Date Action Taken
------ --------------- -----------------
Clean Water Act Section 404 Environmental 12/13/96(12)
Water Quality Certification Protection Agency
In Indian Country for Construction
of Natural Gas Pipeline to the
Project
----------
(12) Conditional EPA CWA Section 401 water quality certification exists for CWA
Section 404 Nationwide Permit 12
000
Xxxxxxxx X-0X
WESTBROOK:
PART I
Action Agency Involved Date Action Taken
------ --------------- -----------------
Powerplant and Industrial Fuel Use U.S. Dept of Energy Office of Coal September 16, 1999
Act Self Certification of Coal & Power IM/EX
Capability
PUC Approval of the Water Agreement Maine Public Utilities Commission February 25, 1999
Maine DEP Site Location of Maine Department of Environmental Issued 12/31/98
Development Act Permit Protection
Maine DEP Site Location of Maine Department of Environmental Issued 12/31/98
Development Stormwater Permit - Protection
Submitted as part of SLDA Permit
Maine DEP Site Location of Maine Department of Environmental Issued 6/23/99
Development Act Amendment Protection
Natural Resource Protection Act Maine Department of Environmental Issued 12/17/98
Permit (NRPA) Protection
Clean Water Act Section 404 Permit U.S. Army Corps of Engineers Issued 12/8/98
National Pollutant Discharge U.S. Environmental Protection Agency Issued February 22, 1999
Elimination System (NPDES)
Construction General Permit
Stormwater Pollution Prevention Plan U.S. Environmental Protection Agency Dated February 24, 1999
Conditional Use Site Plan City of Xxxxxxxxx Issued 7/7/98 Extended to
7/7/99, Construction
Commenced
416
Building Permit City of Xxxxxxxxx Obtained by General
Contractor
Action Agency Involved Date Action Taken
------ --------------- -----------------
Air License Maine Department of Environmental Issued December, 1998
Protection
Stormwater Permit for Operations EPA Region 1
FAA Notification Federal Aviation Administration Issued 1/5/99
PART II. PERMITS (TO BE OBTAINED)
Action Agency Involved Date Action Taken
------ --------------- -----------------
Exempt Wholesale Generator FERC Prior to making sales of
Certification electric energy
Federal Power Act Section 205 FERC Prior to making sales of
Approval electric energy
NEPOOL Interconnection Approval NEPOOL Prior to making sales of
electric energy
FERC Approval of NEPOOL NEPOOL Prior to making sales of
Interconnection electric energy
Title IV Acid Rain Permit Maine DEP Prior to operational
start-up
Title V Permit Maine DEP Must submit application
within 12 months after
operational start-up
Certificate of Occupancy City of Xxxxxxxxx To be obtained by General
Contractor
Street Opening Permit City of Xxxxxxxxx To be obtained by General
Contractor
Sign Permit City of Xxxxxxxxx To be obtained by General
Contractor
000
Xxxxxxxx X-0X
XXXXXX:
Date Issued
Permit Issuing Agency Or Required
------ -------------- -----------
PART I. APPLICABLE PERMITS
Powerplant and Industrial Fuel Use Act US Dept of Energy September 16, 1999
Act Self Certification of Coal Office of Coal & Power
Capability IM/EX
Streambed Alteration Agreement for CDFG Currently in signing
bridge construction and stormwater stages
outfall
Clean Water Act Section 401 Permit CRWQCB April 23, 1999
Waiver
Clean Water Act Section 404 Permit USACE June 3, 1999
Powerplant Site Certification California Energy April 14, 1999
Commission
Final Determination of Feather River Air Quality December 1, 1998
Compliance/Authority to Construct Management District (Errata to November 13,
(FRAQMD) 1998 FDOC)
Biological Opinion NMFS March 7, 1999
Consultation/Biological Opinion USFWS April 2, 1999
CEC Modification of Condition of CEC Dated 10/1/99
Certification BIO-7
Stormwater Discharge Permit or SWRCB May 28, 1999
Waiver/Notice of Intent for
Construction
Stormwater Pollution Prevention Plan SWRCB Dated March 20, 1999
Consistency Determination CDFG October 7, 1999
Xxxxxx County Plan Amendment 97-04 Xxxxxx County March 30, 1999
and Rezone 97-07
418
Date Issued
Permit Issuing Agency Or Required
------ -------------- -----------
PART II. PERMITS (TO BE OBTAINED)
A. BORROWER
Exempt Wholesale Generator FERC Prior to making sales
Certification of electric energy
Federal Power Act Section 205 Approval FERC Prior to making sales
of electric energy
Air Permit to Operate FRAQMD Prior to operational
start-up
Permit for Waste Discharge County Environmental Prior to operational
Health Department start-up
Stormwater Discharge Permit or SWRCB Prior to operational
Waiver/Notice of Intent for start-up
Operations
CEC Modification of Condition of CEC Pending
Certification BIO-5
Streambed Alteration Agreement for CDFG Spring of 2000
gas pipeline
Federal Operating Permit Title V USEPA Must submit application
within 12 months after
operational start-up
Continuous Emission Certification Submitted to USEPA Within 180 days of
Source Test Report operational start-up
Prevention of Significant USEPA Prior to Commencement
Deterioration (PSD) Permit of Construction
Title IV Acid Rain Permit USEPA Prior to operational
start-up - Submitted
May 6, 1999
B. THIRD PARTY
De-Watering Permit CRWQCB Prior to Commencement
419
Date Issued
Or Required
Permit Issuing Agency of Construction
------ -------------- -----------
Project Building Permit Xxxxxx County October 19, 1999
Transportation Permits CalTrans and County Public Immediately prior to the
Works Department work being done.
Excavation Permit Cal OSHA Immediately prior to
the work being done.
Structural Permit Cal OSHA Immediately prior to
the work being done.
Well Drilling Permits Xxxxxx County Immediately prior to the
work being done.
000
XXXXXXXX X-0-X
MAGIC VALLEY PROJECT BUDGET
[*]
000
XXXXXXXX X-0-X
XXXXX XXXXX PROJECT BUDGET
[*]
422
APPENDIX G-4-C
XXXXXXXXX PROJECT BUDGET
[*]
423
APPENDIX G-4-X
XXXXXX PROJECT BUDGET
[ * ]
424
G-5
BASE CASE PROJECT PROJECTIONS
[ * ]
000
XXXXXXXX X-0-X
MAGIC VALLEY PROJECT SCHEDULE
[*]
000
XXXXXXXX X-0-X
XXXXX XXXXX PROJECT SCHEDULE
[*]
427
APPENDIX G-6-C
XXXXXXXXX PROJECT SCHEDULE
[*]
428
EXHIBIT G-7
Pending Litigation
None, except with respect to the following litigation relating to the Xxxxxx
Project:
1. In the matter of Xxxxxx Power Project, PSD Permit No. NSR 4-4-4, SAC
98-01, PSD Appeal No. 99-6;
2. Xxxxxx v. Energy Resources Conservation and Development Commission,
Xxxxxxxxxx Xxxxxxx Xxxxx Xx. XX 00000; and
3. Xxxxxx v. Energy Resources Conservation and Development Commission, Court
of Appeal, Third District, No. 3 Civ. C033265, petition for writ of review
denied October 14, 1999.
429
EXHIBIT G-8
Hazardous Substances Disclosure
None, except as disclosed in:
1. Phase I Environmental Site Assessment Magic Valley Site Edinburg, Xxxxxxx
County, Texas dated April 1999, prepared by Environmental Consulting and
Technology, Inc.
2. Phase I Environmental Site Assessment for the Proposed Southpoint Power
Plant dated August 13, 1999, prepared by Xxxxxxx/Xxxxx Inc.
3. Phase I Environmental Site Assessment Review and Update Xxxxxx Power Plant
Project dated August 17, 1999, prepared by Xxxxxx Xxxxxxx Environmental
Corporation.
4. Phase I Environmental Site Assessment of Xxxxxxxxxx Property (Map 0, Xxx
0), Xxxx Xxxxxx, Xxxxxxxxx, Xxxxx dated June 1998, prepared by Xxxxxxx
Engineering Inc.
5. Analytical Summary of Phase II Environmental Site Assessment of Proposed
Westbrook Power Plant Westbrook, Maine dated December 30, 1998, prepared by
Xxxxxxx Engineering Inc.
430
EXHIBIT H
to Credit Agreement
SCHEDULE OF BANK/LENDING OFFICES
Bank Percentage of Loans Allocation
---- ------------------- ----------
1. THE BANK OF NOVA SCOTIA 5.0000000000% $56,785,714.29
Xxx Xxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
2. CREDIT SUISSE FIRST BOSTON 5.6785714290% $56,785,714.29
Eleven Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
3. TORONTO DOMINION (TEXAS) INC. 5.6785714290% $56,785,714.29
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
4. CIBC INC. 5.6785714290% $56,785,714.29
Two Paces West
0000 Xxxxx Xxxxx Xxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
5. BANK OF MONTREAL 5.0000000000% $56,785,714.29
000 X. XxXxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
6. BAYERISCHE HYPO-UND 5.6785714290% $56,785,714.29
VEREINSBANK AG - NEW YORK
BRANCH
x/x Xxxxxxxxxx Xxxxxxxxxxx XX - Xxx Xxxx
Xxxxxx
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
7. BAYERISCHE LANDESBANK CAYMAN 5.6785714290% $56,785,714.29
ISLANDS BRANCH
000 Xxxxxxxxx Xxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
431
Bank Percentage of Loans Allocation
---- ------------------- ----------
8. BANQUE NATIONALE DE PARIS 5.6785714290% $56,785,714.29
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
9. DG BANK DEUTSCHE 5.6785714280% $56,785,714.28
GENOSSENSCHAFTSBANK AG,
CAYMAN ISLAND BRANCH
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
10. DRESDNER BANK AG NEW YORK AND 5.6785714820% $56,785,714.28
GRAND CAYMAN BRANCHES
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
11. EXPORT DEVELOPMENT 5.6785714280% $56,785,714.28
CORPORATION
000 X'Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxx XXX 0X0
12. MEESPIERSON CAPITAL CORP. 5.6785714280% $56,785,714.28
0 Xxxxxxxx Xxxxx
000 Xxxxxxx Xxxxxxxxx, 0xx Xxxxx
Xxxxxxxx, XX 00000-0000
13. NEWCOURT CAPITAL USA INC. 5.6785714280% $56,785,714.28
0000 Xxxxxx of the Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
14. CITICORP USA, INC. 5.0% $50,000,000
0 Xxxx'x Xxx
Xxx Xxxxxx, Xxxxxxxx 00000
15. COBANK, ACB 5.0% $50,000,000
0000 X. Xxxxxx Xx.
Xxxxxxxxx, Xxxxxxxx 00000
16. ING (U.S.) CAPITAL LLC 5.0% $50,000,000
00 Xxxx 00xx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000
432
Bank Percentage of Loans Allocation
---- ------------------- ----------
17. UNION BANK OF CALIFORNIA, N.A. 5.6785714280% $56,785,714.28
000 X. Xxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, XX 00000
18. CREDIT LYONNAIS NEW YORK BRANCH 3.0% $30,000,000
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
19. LANDESBANK HESSEN-THURINGEN 2.5% $25,000,000
GIROZENTRALE
000 Xxxxx Xxx.
Xxx Xxxx, Xxx Xxxx 00000
-------------------------------------
TOTAL 100% 1,000,000,000
433
EXHIBIT I
to Credit Agreement
Annual Insurance Certificate
[LETTERHEAD OF BORROWER'S INSURANCE BROKER]
[Date]
The Bank of Nova Scotia,
as Administrative Agent for the Banks
Xxx Xxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Manager, Project Finance
Ladies and Gentlemen:
The undersigned, a duly authorized officer of _______________ a
_______________ ("Insurance Broker"), hereby provides this letter to you in
accordance with Section 5.8.8 of that certain Credit Agreement dated as of
October 20, 1999 (the "Credit Agreement"), among Calpine Construction Finance
Company, L.P., a Delaware limited partnership, as Borrower ("Borrower"), the
financial institutions listed on Exhibit H thereto (the "Banks"), Credit Suisse
First Boston, as Lead Arranger, Syndication Agent and Bookrunner and The Bank of
Nova Scotia, as Lead Arranger, LC Bank and Administrative Agent. Except as
provided herein, all terms used herein which are defined in the Credit Agreement
shall have the meanings given therein.
Insurance Broker acknowledges that pursuant to the Credit Agreement, the
Banks are providing financing to Borrower for the construction and/or operation
of the Initial Projects and Funded Subsequent Projects and in so doing are
relying on Borrower's continued compliance with the provisions of Exhibit K to
the Credit Agreement.
Insurance Broker hereby certifies that, as of the date hereof, Borrower has
obtained and is maintaining in full force and effect insurance policies
conforming, in all material respects, to the requirements set forth in Exhibit K
to the Credit Agreement.
Respectfully submitted,
434
EXHIBIT J-1
to Credit Agreement
BANK WITHHOLDING CERTIFICATE (TREATY)
[Date]
CALPINE CONSTRUCTION FINANCE COMPANY, L.P.
a Delaware limited partnership
c/o Calpine Corporation
00 X. Xxx Xxxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Manager, Project Finance
THE BANK OF NOVA SCOTIA
as Administrative Agent for the Banks
Xxx Xxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Manager, Project Finance
In connection with the Credit Agreement dated as of October 20, 1999
(the "Credit Agreement"), among Calpine Construction Finance Company, L.P., a
Delaware limited partnership, as Borrower, the financial institutions listed on
Exhibit H thereto, Credit Suisse First Boston, as Lead Arranger, Syndication
Agent and Bookrunner and The Bank of Nova Scotia, as Lead Arranger, LC Bank and
Administrative Agent, the undersigned hereby certifies, represents and warrants
that [NAME OF RELEVANT BANK OR AGENT] is a [NAME OF COUNTRY] corporation and is
currently exempt from any U.S. federal withholding tax on amounts paid to it
from U.S. sources under the Credit Agreement by virtue of compliance with the
provisions of the Income Tax Convention between the United States and [NAME OF
COUNTRY], signed [DATE], [AS AMENDED]. Our fiscal year is the twelve months
ending [_______________________].
The undersigned (a) is a corporation organized under the laws of
[NAME OF COUNTRY] whose registered business is managed or controlled in [NAME OF
COUNTRY], (b) [DOES NOT HAVE A PERMANENT ESTABLISHMENT OR FIXED BASE IN THE
UNITED STATES/DOES HAVE A PERMANENT ESTABLISHMENT OR FIXED BASE IN THE UNITED
STATES BUT THE CREDIT AGREEMENT IS NOT EFFECTIVELY CONNECTED WITH SUCH PERMANENT
ESTABLISHMENT OR FIXED BASE], (c) is not exempt from tax on the income in [NAME
OF COUNTRY] and (d) is the beneficial owner of the income.
We enclose two signed copies of Form 1001 of the U.S. Internal
Revenue Service.
Yours faithfully,
[NAME OF RELEVANT BANK]
By:
---------------------------------------
Name:
Title:
435
EXHIBIT J-2
to Credit Agreement
BANK WITHHOLDING CERTIFICATE (EFFECTIVELY CONNECTED)
[Date]
CALPINE CONSTRUCTION FINANCE COMPANY, L.P.,
a Delaware limited partnership
c/o Calpine Corporation
00 X. Xxx Xxxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Manager, Project Finance
THE BANK OF NOVA SCOTIA,
as Administrative Agent for the Banks
Xxx Xxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Manager, Project Finance
In connection with the Credit Agreement dated as of October 20, 1999,
(the "Credit Agreement"), among Calpine Construction Finance Company, L.P., a
Delaware limited partnership, as Borrower, the financial institutions listed on
Exhibit H thereto, Credit Suisse First Boston, as Lead Arranger, Syndication
Agent and Bookrunner and The Bank of Nova Scotia, as Lead Arranger, LC Bank and
Administrative Agent, the undersigned hereby certifies, represents and warrants
that [NAME OF RELEVANT BANK OR AGENT] is entitled to exemption from withholding
tax on payments to it under the provisions of Section 1441(c) of the Internal
Revenue Code of 1986, as amended, of the United States of America.
We enclose two signed copies of Form 4224 of the U.S. Internal Revenue
Service.
Yours faithfully,
[NAME OF RELEVANT BANK]
By:
---------------------------------
Name:
Title:
436
EXHIBIT K
to Credit Agreement
INSURANCE REQUIREMENTS
Defined terms used in this Exhibit K not otherwise defined herein shall
have the meanings set forth in that certain Credit Agreement dated as of October
20, 1999, by and among Calpine Construction Finance Company, L.P. ("Borrower"),
a Delaware limited partnership, Credit Suisse First Boston, as Lead Arranger,
Syndication Agent and Bookrunner, and The Bank of Nova Scotia as Lead Arranger,
LC Bank and Administrative Agent, and the Banks parties thereto.
1. With respect to each Initial Project and any Funded Subsequent
Project, Borrower shall, without cost to the Banks, maintain or cause to be
maintained on its behalf in effect at all times the types of insurance required
by the following provisions together with any other types of insurance, in form
acceptable to Administrative Agent and Financing Parties, required hereunder,
with insurance companies rated "A-" or better, with a minimum size rating of "
IX," by Best's Insurance Guide and Key Ratings, (or an equivalent rating by
another nationally recognized insurance rating agency of similar standing if
Best's Insurance Guide and Key Ratings shall no longer be published) or other
insurance companies of recognized responsibility satisfactory to Administrative
Agent, the following insurance coverages until all obligations of Borrower
pursuant to the Credit Agreement and the other Credit Documents have been fully
discharged:
a. Commercial general liability insurance for such Project on an
"occurrence" policy form or AEGIS claims-first-made form, including coverage for
premises/operations, explosion, collapse and underground hazards,
products/completed operations, broad form property damage, blanket contractual
liability for both oral and written contracts, independent contractor's and
personal injury, for Borrower and for contractors, with primary coverage limits
of no less than $1,000,000 for injuries or death to one or more persons or
damage to property resulting from any one occurrence and a $ 1, 000,000 annual
aggregate limit.
The commercial general liability policy shall also include a severability
of interest clause and a cross liability clause in the event more than one
entity is "named insured" under the liability policy. Policy exclusions which
are not standard to the commercial general liability coverage form or are added
by manual endorsements or are proposed to be added after the Closing Date for
each Initial Project or after the Funding Date for each Funded Subsequent
Project, as the case may be, that restrict coverage, are to be approved by
Administrative Agent. Work performed by others for Borrower at any such Project
shall not commence until a certificate of insurance has been delivered verifying
coverages outlined above to be in place and naming Borrower as insured or
additional insured and Administrative Agent as additional insured. Deductibles
in excess of $50,000 shall be subject to review and approval by Administrative
Agent.
b. Automobile liability insurance, including coverage for owned,
non-owned and hired automobiles for both bodily injury and property damage and
containing appropriate no-fault insurance provisions or other endorsements in
accordance with state legal requirements, with limits of no less than $1,000,000
per accident with respect to bodily injury, property damage or death.
437
c. Worker's compensation insurance and employer's liability
insurance, with a limit of not less than $1,000,000, disability benefits
insurance and such other forms of insurance which Borrower is required by law to
provide for any such Project, providing statutory benefits and other states'
endorsement and USL&H Act coverage and Xxxxx Act (if any exposure exists),
covering loss resulting from injury, sickness, disability or death of the
employees of Borrower. Work performed by others for Borrower at any such Project
shall not commence until a certificate of insurance has been delivered verifying
coverages outlined above to be in place.
d. From the point of groundbreaking for each Initial Project and
any Funded Subsequent Project and through the date of Completion for such
Project, builder's risk insurance covering each such Project separately on an
"all risk basis" on a completed value form with "extended coverage" (including
earthquake (subject to the next paragraph), flood, collapse, sinkhole and
subsidence) and "soft cost coverage" on a no coinsurance basis and providing (i)
coverage for such Project site, including removal of debris, insuring the
buildings, structures, machinery, equipment, facilities, fixtures and other
properties constituting a part of each such Project in a minimum aggregate
amount not less than the full replacement value of each such Project, and in any
case subject to a construction term aggregate limit of $100,000,000 for flood
coverage and for earthquake coverage, but in no event an amount less than the
limit necessary to satisfy the other related Project contracts; (ii) off-site
coverage with a per occurrence limit of $5,000,000 or such higher amount as is
sufficient to cover off-site equipment associated with such Project, (iii)
transit coverage with a per occurrence limit of not less than the greater of
$5,000,000 or an amount sufficient to cover the full insurable value of any item
in transit, (iv) coverage for operational testing and startup with the same
dollar coverage and modifications as set out in (i) above, (v) delay in opening
coverage for interest during construction, debt service and continuing expenses
in an amount not less than an 18 month indemnification period limit, on an "all
risk" basis, as set forth in (i) through (iv) above. All such policies may have
deductibles of not greater than $250,000 per loss; earthquake and flood coverage
shall have a deductible of not greater than $250,000 with the exception of
California earthquake (for which the deductible may be 5% of values at risk),
coastal windstorm (2% deductible) and any such Project located in a 100 year
flood zone ($500,000 deductible); and-delay in opening coverage shall have a
deductible not greater than a 45 day period; operational testing shall have a
deductible of not greater than $500,000; and transit coverage shall have a
deductible of not greater than $ 100,000. Builders risk policy shall include
first party cleanup, hazardous materials, subject to a sublimit of $250,000.
At least 45 days prior to the shipment of equipment for any Initial
Project or any Funded Subsequent Project manufactured outside the United States,
ocean cargo coverage shall be secured in an amount not less than the full
replacement costs of the value of equipment shipped. Such coverage shall apply
to all equipment, destined for the applicable Project site, which is valued in
excess of $500,000 and has a lead time to replace exceeding five (5) months. The
ocean cargo policy shall attach coverage prior to equipment departing the
premises of the manufacturer and shall continue in force until the shipment
arrives at the applicable Project site including 60 days storage, or is insured
under the builders risk policy. Marine delay in opening or advanced loss of
profits shall be insured in an amount not less than the equivalent of interest
during construction, debt service and continuing expenses subject to an
indemnification period not less than twelve months or such additional time
required to repair/replace the equipment being shipped. The waiting period shall
not exceed 45 days. The ocean cargo policy shall not be subject to cancellation
with the exception of wars and strikes preventing passage to the United States
and nonpayment of premium.
438
Earthquake coverage shall include coverage for movement, earthquakes,
shocks, tremors, landslides, subsidence, volcanic activity, sinkhole coverage,
mud-flow or rock-fall, or any other earth movement, all whether direct or
indirect, approximate or remote or in whole or in part caused by, contributed to
or aggravated by any physical damage insured against by such policy regardless.;
of any other cause or event that contributes, concurrently or in sequence, to
the, loss.
Flood coverage shall include, but not be limited to, coverage for waves,
tide or tidal water, inundation, rainfall and/or resulting runoff or the rising
(including the overflowing or breaking boundaries) of lakes, ponds, reservoirs,
rivers, harbors, streams, or other bodies of water, whether or not driven by
wind.
e. From and after the date of Completion for each such Project,
"all risk" property insurance coverage in the amount not less than the full
replacement value of such Project, including a full replacement cost endorsement
(no co-insurance) with no deduction for depreciation, providing, without
limitation, (i) coverages against loss or damage by fire, lightning, windstorm,
hail, explosion, riot, civil commotion, aircraft, vehicles, smoke, other risks
from time to time included under "all risk" or "extended coverage" policies,
earthquake, flood (provided, however, that earthquake and flood coverage may be
subject to an annual aggregate limit of not less than $100,000,000 with the
exception of California (for which the limit shall be as agreed to by
Administrative Agent and Borrower and which in Administrative Agent's reasonable
discretion, after consultation with the Banks, is commercially feasible),
collapse, sinkhole, subsidence and such other perils as Administrative Agent,
after consultation with the Banks and Borrower, may from time to time require to
be insured, with a sublimit of not less than $250,000 for on-site clean-up
required as a result of the occurrence of an insured risk (ii) off-site coverage
with a per occurrence limit of $2,000,000 or such higher amount as is sufficient
to cover off-site equipment for which there have been progress payments, (iii)
transit coverage (including ocean cargo where ocean transit will be required)
with a per occurrence limit of not less than $2,000,000, and (iv) boiler and
machinery coverage on a "comprehensive" basis including breakdown and repair
with limits not less than the full replacement cost of the insured objects.
Borrower shall also maintain or cause to be maintained with respect to each such
Project, from and after the date of Completion of such Project, business
interruption insurance on an "all risk" basis as set forth in (1) through (iv)
above, in an amount equal to satisfy policy coinsurance conditions, but not less
than the sum of 12 months scheduled Debt Service attributable to such Project,
continuing expenses and profits. Borrower shall also maintain or cause to be
maintained, expediting or extra expense coverage in an amount not less than
$3,000,000. Borrower shall also maintain or cause to be maintained with respect
to each such Project contingent business interruption insurance on a blanket
basis in an amount not less than six months scheduled Debt Service attributable
to such Project and continuing expenses and profits of such Project. The
policy/policies shall include increased cost of construction coverage, debris
removable, and building ordinance coverage to pay for loss of "undamaged"
property which may be required to be replaced due to enforcement of local,
state, or federal ordinances subject to a sublimit of $10,000,000. All such
policies may have deductibles of not greater than $250,000 per loss with the
exception of the combustion turbine ($750,000); windstorm if located in a
coastal area (2%), earthquake if located in California (for which the deductible
may be 5% of values at risk) and flood if located in a 100 year zone ($500,000);
business interruption coverage shall have a waiting period of not greater than
45 days. In the event the all risk property and the boiler and machinery
coverage are not written in the same policy, each policy shall be endorsed to
provide a joint loss agreement.
439
f. Umbrella / excess liability insurance of not less than
$50,000,000 per occurrence and in the aggregate during the construction and the
operation of each such Project. Such coverages shall be on a per occurrence
policy form or AEGIS claims-first-made form and over and above coverage provided
by the policies described in paragraphs (a), (b) and (c) above whose limits
shall apply toward the $50,000,000 limits set forth in this section. The
umbrella and/or excess policies shall not contain endorsements which restrict
coverages as set forth in paragraphs (a), (b) and (c) above, and which are
provided in the underlying policies. The limit applying for each such Project
can be satisfied by insuring multiple Projects under one policy subject to a per
Project aggregate endorsement. If the policy or policies provided under this
paragraph contain(s) aggregate limits applying to other operations of Borrower
or the Contractor or the Operator other than with respect to each individual
Project, and such limits are diminished below $25,000,000 by any incident,
occurrence, claim, settlement or judgment against such insurance which has
caused the carrier to establish a reserve, Borrower shall take immediate steps
to restore such aggregate limits or shall provide other equivalent insurance
protection for such aggregate limits.
g. Watercraft liability and protection and indemnity, to the
extent exposure exists, in an amount not less than $ 10,000,000 for all owned,
non-owned and hired watercraft used in connection with the construction and
operation of each such Project. Such coverage can be accomplished under policies
provided pursuant to general liability policies, protection and indemnity
policies or separate watercraft liability policies.
h. Aircraft liability, to the extent exposure exists, in an amount
not less than $10,000,000 for all owned, non-owned and hired aircraft, fixed
wing or rotary, used in connection with the operation of each such Project.
i. Such other or additional insurance (as to risks covered, policy
amounts, policy provisions or otherwise) as, under Prudent Utility Practices,
are from time to time insured against for property and facilities similar in
nature, use and location to the Initial Projects and the Funded Subsequent
Projects which Administrative Agent may reasonably require.
j. All Major Contractors and Major Subcontractors and the Operator
(unless covered under the Borrower's insurance) at each such Project shall,
prior to performing work at each such Project site, supply proper evidence of
insurance as set forth in paragraphs 1.a., 1.b., and 1.c. above. In addition,
excess liability or umbrella liability limits of not less than $5,000,000 for
Major Contractors and Major Subcontractors and Operators shall be certified.
Such insurance, with the exception of workers compensation, supplied by these
parties shall:
(i) add Borrower, Administrative Agent and Financing Parties,
as additional insureds;
(ii) be primary as respects insurance provided by Borrower and
Administrative Agent,
(iii) waive rights of subrogation against Borrower and
Administrative Agent;
(iv) continue in force until obligations of Contractors and
Subcontractors or the Operator are fulfilled at each such
Project.
Contractors and Subcontractors shall be responsible for tools and
equipment brought onto each Project site unless such tools and equipment are
financed by Borrower; all such financed tools and equipment shall be covered
under the builders risk policy.
440
2. All insurance coverage shall be on a "no coinsurance or self
insurance/replacement cost" basis and in such form (including the form of the
loss payable clauses) as shall be acceptable to Administrative Agent (which
acceptance shall not be unreasonably withheld). Borrower shall submit certified
copies of all policies received pursuant to the requirements of this Exhibit to
Administrative Agent for its review and approval.
3. All policies wherein the Banks party to this Agreement have an
insurable interest shall insure the interests of the Banks as well as Borrower
and all policies, with the exception of workers compensation insurance, and
shall name Administrative Agent and the Banks as additional insured, unless
Administrative Agent and/or the Banks are named as an insured under the policy.
All policies covering real or personal property or business interruption shall
name Administrative Agent or its assigns as First Loss Payee in accordance with
Lender's Loss Payable Endorsement 438 BFU or equivalent and shall provide that
any payment thereunder for any loss or damage with respect to the applicable
Project shall be made to Administrative Agent and paid into the Loss Proceeds
Account , except that such policies may provide that any payments of less than
$1,000,000 (not to exceed $2,000,000 in any year) made in respect of any single
casualty or other occurrence may be paid solely to Borrower, unless
Administrative Agent shall have notified the insurer that an Event of Default or
a related Non-Fundamental Project Default has occurred there under and shall be
continuing. Upon payment and satisfaction of all of Borrower's obligations
under, and termination of, the Credit Documents, Administrative Agent will
instruct the insurers to name Borrower, or such successor credit provider or
other Person as Borrower shall specify, as loss payee. Each policy shall
expressly provide that all provisions thereof, except the limits of liability
(which shall be applicable to all insureds as a group) and liability for
premiums (which shall be solely a liability of Borrower) shall operate in the
same manner as if there were a separate policy covering each such insured. Each
policy shall waive subrogation against Administrative Agent, any of the Banks or
Borrower and shall waive any right of the insurers to any setoff or counterclaim
or any other deduction, whether by attachment or otherwise, in respect of any
liability of Borrower or the Banks. Each such policy shall provide that if any
premium or installment is not paid when due, or if such insurance is to be
cancelled, terminated or materially changed for any reason whatsoever, the
insurers (or their representatives) will promptly' notify Borrower and
Administrative Agent, and any such cancellation, termination or change shall not
be effective until 30 days after receipt of such notice by Administrative Agent,
and that appropriate certification shall be made to Borrower by each insurer
with respect thereto. Policies of insurance, provided in accordance with this
Exhibit K shall be primary with respect to any other insurance carried by the
Banks.
4. In the event that Borrower (or Contractor as appropriate) fails to
respond in a timely and appropriate manner (as reasonably determined by
Administrative Agent) to take any steps necessary or reasonably requested by
Administrative Agent to collect from any insurers for any loss covered by any
insurance required to be maintained by this Exhibit K, Administrative Agent
shall have the right to make all proofs of loss, adjust all claims and/or
receive all or any part of the proceeds of the foregoing insurance policies,
either in its own name or the name of Borrower; provided, however, that Borrower
shall, upon Administrative Agent's request and at Borrower's own cost and
expense, make all proofs of loss and take all other steps necessary or
reasonably requested by Administrative Agent to collect from insurers for any
loss covered by any insurance required to be obtained by this Exhibit K.
441
5. On or before December 30th of each year, Borrower shall furnish to
Administrative Agent, with a copy for each Bank, a certificate signed by a
Responsible Officer of Borrower or authorized insurance representative, showing
the insurance then maintained by or on behalf of Borrower pursuant to this
Exhibit K and stating that such insurance complies in all material aspects with
the terms hereof, together with evidence of payment of the premiums thereon. In
the event that at any time the insurance as herein provided shall be reduced or
cease to be maintained, then (without limiting the rights of Administrative
Agent hereunder in respect of the Event of Default or a related Non-Fundamental
Project Default which arises as a result of such failure) Administrative Agent
may at its option maintain the insurance required hereby and, in such event,
Borrower shall reimburse Administrative Agent upon demand for the cost thereof
together with interest thereon at a rate per annum equal to the Default Rate,
but in no event shall the rate of interest exceed the maximum rate permitted by
law.
6. In the event any insurance (including the limits or deductibles
thereof) hereby required to be maintained, other than insurance required by law
to be maintained and the builder's risk insurance described in paragraph I (e)
above, shall not be available and commercially feasible in the commercial
insurance market, Administrative Agent, with the approval of the Insurance
Consultant, shall not unreasonably withhold its agreement to waive such
requirement to the extent the maintenance thereof is not so available; provided,
however, that (i) Borrower shall first request any such waiver in writing, which
request shall be accompanied by written reports prepared by an independent
insurance advisor of recognized national standing certifying that such insurance
is not reasonably available and commercially feasible in the commercial
insurance market for electric generating plants of similar type and capacity
(and, 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, such insurance advisers and the form and substance of such
reports to be reasonably acceptable to Administrative Agent; (ii) at any time
after the granting of any such waiver, Administrative Agent may request, and
Borrower shall furnish to Administrative Agent within 15 days after such
request, supplemental reports reasonably acceptable to Administrative Agent from
such insurance advisers updating their prior reports and reaffirming such
conclusion; and (iii)any such waiver shall be effective only so long as such
insurance shall not be available and commercially feasible in the commercial
insurance market, it being understood that the failure of Borrower to timely
furnish any such supplemental report shall be conclusive evidence that such
waiver is no longer effective because such condition no longer exists, but that
such failure is not the only way to establish such non-existence.
7. In the event that any policy is written on a "claims-made" basis and
such policy is not renewed or the retroactive date of such policy is to be
changed, Borrower shall obtain for each such policy or policies the broadest
basic and supplemental extended reporting period coverage or "tail" reasonably
available in the commercial insurance market for each such policy or policies
and shall provide Administrative Agent with proof that such basic and
supplemental extended reporting period coverage or "tail" has been obtained.
442
EXHIBIT L
MAGIC VALLEY PROJECT PRE-FUNDING REQUIREMENTS
[*]
443
EXHIBIT M
SOUTH POINT PROJECT PRE-FUNDING REQUIREMENTS
[*]
444
EXHIBIT N
XXXXXX PROJECT PRE-FUNDING REQUIREMENTS
[*]
445
EXHIBIT 0
XXXXXXXXX PROJECT PRE-FUNDING REQUIREMENTS
446
EXHIBIT P
MAGIC VALLEY PROJECT PRE-COMPLETION REQUIREMENTS
[ * ]
000
XXXXXXX X
Xxxxx Xxxxx Project Pre-Completion Requirements
448
EXHIBIT R
XXXXXX PROJECT PRE-COMPLETION REQUIREMENTS
[*]
449
EXHIBIT S
XXXXXXXXX PROJECT PRE-COMPLETION REQUIREMENTS
[*]
