Exhibit 10.55
EXECUTION COPY
CREDIT AGREEMENT
dated as of March 18, 1999
among
EDISON MISSION HOLDINGS CO.
and
CERTAIN COMMERCIAL LENDING INSTITUTIONS,
and
CITICORP USA, INC.
as the Administrative Agent for the Lenders
Arranged by
CREDIT SUISSE FIRST BOSTON, XXXXXX BROTHERS INC.,
XXXXXXX XXXXX BARNEY INC. and SOCIETE GENERALE
TABLE OF CONTENTS
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Page
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS................................................................ 1
1.1 Defined Terms.................................................................................. 1
1.2 Use of Defined Terms........................................................................... 20
1.3 Cross-References............................................................................... 20
1.4 Accounting and Financial Determinations........................................................ 20
ARTICLE II COMMITMENTS AND BORROWING PROCEDURES........................................................... 20
2.1 Term Loan Commitments.......................................................................... 20
2.1.1 Term Loan Commitment................................................................ 20
2.1.2 Procedure for Term Loan Borrowing................................................... 20
2.2 Revolving Loan Commitment...................................................................... 21
2.2.1 Revolving Loan Commitment.......................................................... 21
2.2.2 Procedure for Revolving Loan Borrowing............................................. 21
2.3 Lenders Not Required To Make Loans............................................................ 22
2.4 Reduction of the Commitments.................................................................. 22
2.5 Continuation and Conversion Elections......................................................... 23
2.6 Funding....................................................................................... 23
ARTICLE III REPAYMENTS, PREPAYMENTS, INTEREST AND FEES.................................................... 24
3.1 Repayments and Prepayments.................................................................... 24
3.1.1 Optional Prepayments and Commitment Reductions..................................... 24
3.1.2 Mandatory Prepayments and Commitment Reductions.................................... 25
3.2 Interest Provisions........................................................................... 26
3.2.1 Rates.............................................................................. 26
3.2.2 Post-Maturity Rates; Default Rates................................................. 26
3.2.3 Payment Dates...................................................................... 27
3.2.4 Interest Rate Determination........................................................ 27
3.3 Fees.......................................................................................... 27
3.3.1 Facility Fee....................................................................... 27
3.3.2 Administrative Agent's Fee and Miscellaneous Fees.................................. 28
ARTICLE IV CERTAIN LIBO RATE AND OTHER PROVISIONS......................................................... 28
4.1 LIBO Rate Lending Unlawful.................................................................... 28
4.2 Inability to Determine Rates.................................................................. 28
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4.3 Increased LIBO Rate Loan Costs................................................................ 29
4.4 Obligation to Mitigate........................................................................ 29
4.5 Funding Losses................................................................................ 30
4.6 Increased Capital Costs....................................................................... 31
4.7 Taxes......................................................................................... 31
4.8 Payments, Computations........................................................................ 32
4.9 Sharing of Payments........................................................................... 33
4.10 Set-off...................................................................................... 33
4.11 Replacement of Lender........................................................................ 34
ARTICLE V DEBT SERVICE RESERVE ACCOUNT.................................................................... 35
5.1 Debt Service Reserve Account.................................................................. 35
5.2 Debt Service Reserve Requirement.............................................................. 35
ARTICLE VI CONDITIONS TO LOANS............................................................................ 35
6.1 Conditions to Effectiveness................................................................... 35
6.1.1 Loan Documents...................................................................... 35
6.1.2 Acquisition......................................................................... 35
6.1.3 EME Credit Support.................................................................. 36
6.1.4 Debt Ratings........................................................................ 36
6.1.5 Financial Statements................................................................ 36
6.1.6 Projections; Rating Agency Presentations............................................ 36
6.1.7 Closing Fees, Expenses.............................................................. 36
6.1.8 Approvals........................................................................... 36
6.1.9 Consultants' Reports................................................................ 37
6.1.10 Lien Search; Recordings and Filings................................................ 37
6.1.11 Resolutions........................................................................ 37
6.1.12 Officer's Certificate.............................................................. 38
6.1.13 Opinions of Counsel................................................................ 38
6.1.14 Establishment of Accounts.......................................................... 38
6.1.15 Surveys............................................................................ 38
6.1.16 Title Insurance.................................................................... 38
6.1.17 Insurance.......................................................................... 39
6.2 All Loans....................................................................................... 39
6.2.1 Representations and Warranties; No Default.......................................... 39
6.2.2 Borrowing Request................................................................... 40
6.2.3 Satisfactory Legal Form............................................................. 40
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ARTICLE VII REPRESENTATIONS AND WARRANTIES............................................................. 40
7.1 Financial Information........................................................................ 40
7.2 Organization; Power.......................................................................... 40
7.3 Due Authorization; Non-Contravention......................................................... 41
7.4 Approvals.................................................................................... 41
7.5 No Material Adverse Change................................................................... 41
7.6 Accuracy of Information...................................................................... 41
7.7 Validity..................................................................................... 42
7.8 Compliance with Law and Contractual Obligations.............................................. 42
7.9 Regulations T, U and X....................................................................... 42
7.10 Litigation.................................................................................. 42
7.11 Ownership of Properties..................................................................... 42
7.12 Taxes....................................................................................... 43
7.13 Investment Company Act; Public Utility Holding Company Act;
Other Regulations......................................................................... 43
7.14 Environmental Warranties.................................................................... 43
7.15 The Obligations............................................................................. 44
7.16 Year 2000 Matters........................................................................... 44
7.17 Pension and Welfare Plans................................................................... 44
7.18 Subsidiaries................................................................................ 45
ARTICLE VIII COVENANTS................................................................................. 45
8.1 Affirmative Covenants........................................................................ 45
8.1.1 Financial Information, Reports, Notices............................................ 45
8.1.2 Continuation of Business and Maintenance of Existence.............................. 48
8.1.3 Compliance with Requirements of Law and Contractual Obligations
and Laws......................................................................... 48
8.1.4 Maintenance of Generating Station.................................................. 48
8.1.5 Insurance.......................................................................... 49
8.1.6 Books and Records.................................................................. 50
8.1.7 Year 2000 Matters.................................................................. 50
8.1.8 Environmental Covenant............................................................. 50
8.1.9 Further Assurances................................................................. 51
8.1.10 Additional Collateral............................................................. 51
8.1.11 Use of Proceeds................................................................... 51
8.1.12 Recovery Events................................................................... 51
8.2 Negative Covenants........................................................................... 52
8.2.1 Restrictions on Indebtedness....................................................... 52
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8.2.2 Liens................................................................................ 54
8.2.3 Consolidation, Merger................................................................ 55
8.2.4 Asset Dispositions................................................................... 55
8.2.5 Subsidiaries, Investments............................................................ 56
8.2.6 Transactions with Affiliates......................................................... 57
8.2.7 Restricted Payments.................................................................. 57
8.2.8 ERISA................................................................................ 57
8.2.9 Restrictive Agreements............................................................... 57
8.2.10 Limitation on Lines of Business..................................................... 58
8.2.11 Regulation of Parties............................................................... 58
8.2.12 Limitation on Electricity Market Risk Exposure...................................... 58
ARTICLE IX EVENTS OF DEFAULT............................................................................. 59
9.1 Listing of Events of Default................................................................... 59
9.1.1 Non-Payment of Obligations........................................................... 59
9.1.2 Breach of Warranty................................................................... 59
9.1.3 Non-Performance of Certain Covenants and Obligations................................. 59
9.1.4 Non-Performance of Other Covenants and Obligations................................... 59
9.1.5 Default on Other Indebtedness........................................................ 59
9.1.6 Bankruptcy, Insolvency............................................................... 59
9.1.7 Pension Plans........................................................................ 60
9.1.8 Judgments............................................................................ 61
9.1.9 Control of the Borrower; Ownership of EME Homer City................................. 61
9.1.10 Edison Mission Energy............................................................... 61
9.2 Action if Bankruptcy........................................................................... 62
9.3 Action if Other Event of Default............................................................... 62
9.4 Rescission of Declaration...................................................................... 62
ARTICLE X THE AGENT..................................................................................... 63
10.1 Actions....................................................................................... 63
10.2 Funding Reliance.............................................................................. 64
10.3 Exculpation................................................................................... 64
10.4 Successor..................................................................................... 65
10.5 Loans by CUSA................................................................................. 65
10.6 Reliance by Administrative Agent.............................................................. 65
10.7 Notice of Default............................................................................. 66
10.8 Credit Decisions.............................................................................. 66
10.9 Copies........................................................................................ 66
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10.10 Interest of Lenders in Collateral.............................................................. 67
ARTICLE XI MISCELLANEOUS PROVISIONS........................................................................ 67
11.1 Waivers, Amendments............................................................................. 67
11.2 Notices......................................................................................... 68
11.3 Payment of Costs and Expenses................................................................... 68
11.4 Indemnification................................................................................. 69
11.5 Survival........................................................................................ 70
11.6 Severability.................................................................................... 70
11.7 Headings........................................................................................ 70
11.8 Execution in Counterparts....................................................................... 71
11.9 Governing Law; Entire Agreement................................................................. 71
11.10 Successors and Assigns......................................................................... 71
11.11 Sale and Transfer of Loans and Notes; Participations in Loans.................................. 71
11.11.1 Assignments.......................................................................... 71
11.11.2 Participations....................................................................... 73
11.12 Other Transactions............................................................................. 74
11.13 Submission To Jurisdiction; Waivers............................................................ 74
11.14 WAIVERS OF JURY TRIAL.......................................................................... 75
11.15 Non-Recourse Persons........................................................................... 75
11.16 Acknowledgments................................................................................ 75
11.17 Releases of Guarantees and Liens............................................................... 75
11.18 Confidentiality................................................................................ 76
ANNEX
Annex I - Pricing Grids
SCHEDULES
1.1(a) - Commitments
1.1(b) - Addresses for Notices and Lending Offices
7.4 - Governmental Approvals
7.18 - Subsidiaries
8.1.5 - Insurance
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EXHIBITS
A-1 - Form of Revolving Note
A-2 - Form of 364-Day/Construction Term Loan Note
B - Form of Borrowing Request
C - Form of Continuation/Conversion Notice
D - Form of Lender Assignment Agreement
E - Form of EME Debt Service Reserve Guarantee
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CREDIT AGREEMENT, dated as of March 18, 1999, among EDISON MISSION
HOLDINGS CO., a California corporation (the "Borrower"), the various financial
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institutions as are or may become parties hereto (collectively, the "Lenders")
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and CITICORP USA, INC. ("CUSA"), as administrative agent for the Lenders (in
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such capacity, the "Administrative Agent").
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RECITALS
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A. The Borrower has requested that the Lenders establish credit
facilities to provide financing (i) for the acquisition of the Xxxxx City
Electric Generating Station and certain facilities and other assets associated
therewith and ancillary thereto (collectively, the "Generating Station")
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pursuant to the Asset Purchase Agreement, dated as of August 1, 1998 (the "Asset
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Purchase Agreement"), among Pennsylvania Electric Company, NGE Generation, Inc.
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and New York State Electric & Gas Corporation, as sellers, and EME Homer City
Generation L.P. (assignee of Mission Energy Westside, Inc.), as purchaser, (ii)
for the installation of certain pollution control equipment at the Generating
Station and (iii) for general working capital purposes.
B. The Lenders are willing to make such credit facilities available
upon and subject to the terms and conditions hereinafter set forth.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1 Defined Terms. The following terms (whether or not
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underscored) when used in this Agreement, including its preamble and recitals,
shall, except where the context otherwise requires, have the following meanings
(such meanings to be equally applicable to the singular and plural forms
thereof):
"Accounts" has the meaning specified in the Security Deposit
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Agreement.
"Acquisition" means the acquisition of the Generating Station by EME
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Xxxxx City pursuant to the Asset Purchase Agreement.
"Administrative Agent" means CUSA in its capacity as administrative
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agent for the Lenders hereunder, and includes each other Person as may have
subsequently been appointed as the successor Administrative Agent pursuant to
Section 10.4.
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"Affiliate" of any Person means any other Person which, directly or
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indirectly, controls, is controlled by or is under common control with such
Person (excluding any trustee
under, or any committee with responsibility for administering, any Pension Plan
or Welfare Plan). A Person shall be deemed to be "controlled by" any other
Person if such other Person possesses, directly or indirectly, power to direct
or cause the direction of the management and policies of such Person whether by
contract or otherwise.
"Agent-Related Persons" means CUSA and any successor agent arising
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under Section 10.4, together with their respective Affiliates, and the officers,
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directors, employees, agents and attorneys-in-fact of such Persons and
Affiliates.
"Agreement" means, on any date, this Credit Agreement as originally in
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effect on the Effective Date and as thereafter from time to time amended,
supplemented, amended and restated, or otherwise modified and in effect on such
date.
"Alternate Base Rate" means, on any date and with respect to all Base
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Rate Loans, a fluctuating rate of interest per annum equal to the higher of:
(a) the rate of interest in effect for such day as publicly announced
from time to time by the Administrative Agent at its principal office in
New York, New York, as its "base rate" (or such other term used by any
successor Administrative Agent). The "base rate" is a rate set by the
Administrative Agent based upon various factors including the
Administrative Agent's cost and desired return, general economic conditions
and other factors, and is used as a reference point for pricing some loans,
which may be priced at, above, or below such announced rate; or
(b) the Federal Funds Rate most recently determined by the
Administrative Agent plus 1/2 of 1%.
The Alternate Base Rate is not necessarily intended to be the lowest
rate of interest determined by the Administrative Agent in connection with
extensions of credit. Changes in the rate of interest on that portion of any
Loans maintained as Base Rate Loans will take effect simultaneously with each
change in the Alternate Base Rate. The Administrative Agent will give notice
promptly to the Borrower and the Lenders of changes in the Alternate Base Rate.
"Applicable Margin" means, for any day with respect to any Loan, the
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rate per annum in effect for such day based on the Borrower's Debt Rating for
such day determined as provided in the Pricing Grid.
"Asset Purchase Agreement" has the meaning set forth in the recitals.
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"Authorized Representative" means, relative to any Loan Party, those
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of its officers and employees whose signatures and incumbency shall have been
certified to the Administrative Agent and the Lenders pursuant to Section
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6.1.11.
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"Base Rate Loan" means a Loan bearing interest at a fluctuating rate
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determined by reference to the Alternate Base Rate plus the Applicable Margin
from time to time in effect.
"Borrower" has the meaning set forth in the preamble.
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"Borrowing" means Loans of the same type and, in the case of LIBO Rate
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Loans having the same Interest Period, made by all Lenders on the same Business
Day and pursuant to the same Borrowing Request in accordance with Sections 2.1.2
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and 2.2.2.
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"Borrowing Date" means any Business Day specified in a notice pursuant
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to Section 2.1.2 or 2.2.2 as a date which the Borrower requests the Lenders to
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make Loans.
"Borrowing Request" means a loan request and certificate duly executed
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by an Authorized Representative of the Borrower, substantially in the form of
Exhibit B.
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"Business Day" means:
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(a) any day which is neither a Saturday or Sunday nor a legal holiday
on which banks are authorized or required to be closed in New York, New
York; and
(b) relative to the making, continuing, prepaying or repaying of any
LIBO Rate Loans, any day on which dealings in Dollars are carried on in the
London interbank market.
"Capitalized Lease Liabilities" of any Person means all monetary
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obligations of such Person under any leasing or similar arrangement which, in
accordance with GAAP, would be classified as capitalized leases, and, for
purposes of each Loan Document, the amount of such obligations shall be the
capitalized amount thereof, determined in accordance with GAAP.
"Cash Equivalent Investment" means, at any time:
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(a) any evidence of Indebtedness, maturing not more than one year
after such time, issued or guaranteed by the United States Government or an
agency thereof;
(b) other investments in securities or bank instruments rated at
least "A" by S&P and "A2" by Xxxxx'x or "A-1" by S&P and "P-1" by Xxxxx'x
and with maturities of less than 366 days; or
(c) other securities as to which the Borrower has demonstrated, to
the satisfaction of the Administrative Agent, adequate liquidity through
secondary markets or deposit agreements.
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"Cashflow Available for Debt Service" means, in respect of any period,
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the excess, if any, of Revenues (excluding proceeds of any payments under the
EME Credit Support Guarantee or the EME Debt Service Reserve Guarantee or
proceeds of any permitted asset sale) during such period over Operating Expenses
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during such period.
"CERCLIS" means the Comprehensive Environmental Response Compensation
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Liability Information System List.
"Change in Control" means the failure of Edison Mission Energy (a) to
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own, directly or indirectly, at least 50% of the economic equity interests of
any Loan Party on a fully diluted basis or to maintain direct or indirect voting
control of any Loan Party or (b) through one or more Affiliates, to be in
control of the operation of the Generating Station.
"Code" means the Internal Revenue Code of 1986, as amended.
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"Collateral" means all assets of the Loan Parties, now owned or
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hereinafter acquired, upon which a Lien is purported to be created by any
Security Document.
"Collateral Agency and Intercreditor Agreement" means the Collateral
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Agency and Intercreditor Agreement, dated as of March 18, 1999, among the Loan
Parties, the Administrative Agent, the Secured Parties' Representative and the
Collateral Agent.
"Collateral Agent" has the meaning set forth in the Collateral Agency
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and Intercreditor Agreement.
"Commitment Termination Date" means the 364-Day Term Loan Maturity
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Date, the Construction Term Loan Maturity Date or the Revolving Loan Commitment
Termination Date, as applicable.
"Commitment Termination Events" means:
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(a) the occurrence of any Default described in clauses (a) through
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(e) of Section 9.1.6 with respect to the Borrower; or
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(b) the occurrence and continuance of any other Event of Default and
the declaration of the Loans to be due and payable pursuant to Section 9.3.
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"Commitments" means the Term Loan Commitments and the Revolving Loan
-----------
Commitments.
"Construction Term Loans" has the meaning set forth in Section 2.1.1.
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"Construction Term Loan Commitment" means, relative to any Lender, the
---------------------------------
obligation of such Lender to make Construction Term Loans to the Borrower
hereunder in an aggregate principal amount not to exceed the amount set forth
under "Construction Term Loan Commitment" opposite such Lender's name on
Schedule 1.1(a).
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"Construction Term Loan Commitment Amount" means, on any date,
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$250,000,000, as such amount may be reduced from time to time pursuant to
Section 2.4.
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"Construction Term Loan Maturity Date" means the fifth anniversary of
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the Effective Date.
"Construction Term Loan Note" means a promissory note of the Borrower
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payable to any Lender, in the form of Exhibit A-2 hereto (as such promissory
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note may be amended, endorsed or otherwise modified from time to time),
evidencing the aggregate Indebtedness of the Borrower to such Lender resulting
from outstanding Construction Term Loans, and also means all other promissory
notes accepted from time to time in substitution therefor or renewal thereof.
"Contingent Liability" means any agreement, undertaking or arrangement
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by which any Person guarantees, endorses or otherwise becomes or is contingently
liable upon (by direct or indirect agreement, contingent or otherwise, to
provide funds for payment, to supply funds to, or otherwise to invest in, a
debtor, or otherwise to assure a creditor against loss) the indebtedness,
obligation or any other liability of any other Person (other than by
endorsements of instruments in the course of collection), or guarantees the
payment of dividends or other distributions upon the shares of any other Person.
The amount of any Person's obligation under any Contingent Liability shall
(subject to any limitation set forth therein) be deemed to be the outstanding
principal amount of the debt, obligation or other liability guaranteed thereby;
provided, however, that if the maximum amount of the debt, obligation or other
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liability guaranteed thereby has not been established, the amount of such
Contingent Liability shall be the maximum reasonably anticipated amount of the
debt, obligation or other liability; provided, further, however, that any
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agreement to limit the maximum amount of such Person's obligation under such
Contingent Liability shall not, of and by itself, be deemed to establish the
maximum reasonably anticipated amount of such debt, obligation or other
liability.
"Continuation/Conversion Notice" means a notice of continuation or
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conversion and certificate duly executed by an Authorized Representative of the
Borrower, substantially in the form of Exhibit C.
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"Contractual Obligation" means, as to any Person, any provision of any
----------------------
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
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"Controlled Group" means all members of a controlled group of
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corporations and all members of a controlled group of trades or businesses
(whether or not incorporated) under common control which, together with the Loan
Parties, are treated as a single employer under Section 414(b) or 414(c) of the
Code or Section 4001 of ERISA.
"CUSA" has the meaning set forth in the preamble.
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"Debt Rating" means a rating of the Borrower's secured long-term debt
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which is not supported by a guarantee, letter of credit or other form of credit
enhancement other than the Guarantee and Collateral Agreement, the EME Credit
Support Guarantee or any EME Debt Service Reserve Guarantee. If Moody's or S&P
shall have changed its system of classifications after the date hereof, the
Borrower's Debt Rating shall be considered to be at or above a specified level
if it is at or above the new rating which most closely corresponds to the
specified level under the old rating system.
"Debt Service" means, in respect of any period, an amount equal to the
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aggregate of, without duplication, (i) all interest due and payable on the Loans
plus or minus any net amount due and payable in respect of Interest Rate Hedging
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Transactions during such period, (ii) amounts due and payable under Section
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3.3.1 during such period, (iii) amounts due and payable to the Lenders with
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respect to the deduction of withholding tax on such payments pursuant to Section
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4.7 during such period and (iv) all other amounts due and payable by the Loan
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Parties with respect to Indebtedness permitted under Section 8.2.1 (excluding
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Indebtedness permitted under Sections 8.2.1(d)(i) and 8.2.1(f)) during such
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period.
"Debt Service Coverage Ratio" means, for any period, the ratio of (a)
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Cashflow Available for Debt Service for such period to (b) Debt Service for such
period.
"Debt Service Reserve Account" has the meaning set forth in the
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Security Deposit Agreement.
"Debt Service Reserve Requirement" means, on each Quarterly Payment
--------------------------------
Date, an amount equal to the Debt Service (excluding amounts thereof referred to
in clause (iv) of the definition of the term "Debt Service") projected to be due
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and payable during the two Fiscal Quarters next succeeding such Quarterly
Payment Date.
"Default" means any Event of Default or any condition, occurrence or
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event which, after notice or lapse of time or both, would constitute an Event of
Default.
"Dollar" and the sign "$" mean lawful money of the United States.
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"Domestic Office" means, relative to any Lender, the office of such
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Lender designated on Schedule 1.1(b) or designated in the Lender Assignment
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Agreement or such other office of a Lender (or any successor or assign of such
Lender) within the United States as may be
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designated from time to time by notice from such Lender, as the case may be, to
each other Person party hereto. A Lender may have separate Domestic Offices for
purposes of making, maintaining or continuing, as the case may be, Base Rate
Loans.
"Easement and Attachment Agreement" means the Easement, License and
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Attachment Agreement, dated as of August 1, 1998, among NYSEG, Penelec and EME
Homer City (assignee of Mission Energy Westside, Inc.).
"Edison Mission Energy" means Edison Mission Energy, a California
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corporation.
"Effective Date" means the date this Agreement becomes effective
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pursuant to Section 6.1.
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"Eligible Assignee" means (a) a commercial bank organized or licensed
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under the laws of the United States, or any state thereof, and having a combined
capital and surplus of at least $250,000,000 and (b) a Person that is primarily
engaged in the business of commercial banking and that is (i) a Subsidiary of a
Lender, (ii) a Subsidiary of a Person of which a Lender is a Subsidiary or (iii)
a Person of which a Lender is a Subsidiary.
"EME Credit Support Guarantee" means a guarantee dated as of March 18,
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1999, made by Edison Mission Energy in favor of the Collateral Agent.
"EME Debt Service Reserve Guarantee" means a guarantee by Edison
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Mission Energy, substantially in the form of Exhibit E.
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"EME Homer City" means EME Homer City Generation L.P., a limited
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partnership organized under the laws of the State of Pennsylvania.
"EMMT" means Edison Mission Marketing & Trading, Inc., a California
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corporation.
"Energy Sales Agreement" means the Energy Sales Agreement, dated March
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__, 1999, between EME Homer City and EMMT.
"Environmental Capital Expenditure Program" means EME Homer City's
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proposed schedule and budget for the installation of a flue gas desulfurization
unit and three selective catalytic reduction units in the Generating Station, as
included in the projections delivered by the Borrower pursuant to Section 6.1.6
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and as amended from time to time.
"Environmental Laws" means all statutes, laws (including common law),
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ordinances, codes, rules, regulations and guidelines (including consent decrees
and administrative orders), and any other legally enforceable requirements of
any Governmental Authority relating to, regulating, or imposing liability or
standards of conduct concerning Hazardous Materials,
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public health or protection of the environment, as have been, are now, or may at
any time hereafter be in effect.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
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amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time. References
to sections of ERISA also refer to any successor sections.
"Event of Default" has the meaning set forth in Section 9.1.
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"Facility Fee" has the meaning set forth in Section 3.3.1.
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"Federal Funds Rate" means, for any period, a fluctuating interest
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rate per annum equal for each day during such period to:
(a) the weighted average of the rates on overnight federal funds
transactions with members of the Federal Reserve System arranged by federal
funds brokers, as published for such day (or, if such day is not a Business
Day, for the next preceding Business Day) by the Federal Reserve Bank of
New York; or
(b) if such rate is not so published for any day which is a Business
Day, the average of the quotations for such day on such transactions
received by the Administrative Agent from not less than three of the Lead
Arrangers (or if quotations are unavailable from any of them, up to three
federal funds brokers of recognized standing selected by the Administrative
Agent).
"First Priority Lien" means a Lien covering the Collateral having a
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priority higher than any other Lien covering the Collateral that on the
Effective Date is on file or record in any relevant jurisdiction.
"Fiscal Quarter" means any quarter of a Fiscal Year.
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"Fiscal Year" means any period of twelve consecutive calendar months
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ending on December 31; references to a Fiscal Year with a number corresponding
to any calendar year (e.g., the "1999 Fiscal Year") referred to the Fiscal Year
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ending on December 31 occurring during such calendar year.
"FPA" means the Federal Power Act, as amended.
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"F.R.S. Board" means the Board of Governors of the Federal Reserve
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System or any successor thereto."
"GAAP" has the meaning set forth in Section 1.4.
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"Generating Station" has the meaning set forth in the recitals.
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"Governmental Approval" means any authorization, consent, approval,
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license, permit, exemption, filing or registration with any Governmental
Authority.
"Governmental Authority" means any nation or government, any state,
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provincial or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Guarantee and Collateral Agreement" means the Guarantee and
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Collateral Agreement, dated as of March 18, 1999, among the Loan Parties and the
Collateral Agent.
"Hazardous Material" means:
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(a) any "hazardous substance", as defined by any Environmental Law;
(b) any "hazardous waste", as defined by any Environmental Law;
(c) any petroleum product (including crude oil or any fraction
thereof); or
(d) any pollutant or contaminant or hazardous, dangerous or toxic
chemical, material, force or substance (including polychlorinated
biphenyls, urea-formaldehyde insulation, asbestos or radioactivity) that is
regulated pursuant to or could give rise to liability under any
Environmental Law.
"herein", "hereof", "hereto", "hereunder" and similar terms contained
------ ------ ------ ---------
in any Loan Document refer to such Loan Document, as the case may be, as a whole
and not to any particular Section, paragraph or provision of such Loan Document.
"including" means including without limiting the generality of any
---------
description preceding such term, and, for purposes of each Loan Document, the
parties thereto agree that the rule of ejusdem generis shall not be applicable
------- -------
to limit a general statement, which is followed by or referable to an
enumeration of specific matters, to matters similar to the matters specifically
mentioned.
"Indebtedness" of any Person means, without duplication:
------------
(a) all indebtedness for borrowed money;
(b) all obligations issued, undertaken or assumed as the deferred
purchase price of property or services which purchase price is due more
than six months from the date of incurrence of the obligation in respect
thereof or is evidenced by a note or other instrument, except trade
accounts arising in the ordinary course of business;
-9-
(c) all reimbursement obligations with respect to surety bonds,
letters of credit (to the extent not collateralized with cash or Cash
Equivalent Investments), bankers' acceptances and similar instruments (in
each case, whether or not matured);
(d) all obligations evidenced by notes, bonds, debentures or similar
instruments, including obligations so evidenced incurred in connection with
the acquisition of property, assets or businesses;
(e) all indebtedness created or arising under any conditional sale or
other title retention agreement, or incurred as financing, in either case
with respect to property acquired by the Person (even though the rights and
remedies of the seller or bank under such agreement in the event of default
are limited to repossession or sale of such property);
(f) all Capitalized Lease Liabilities;
(g) all net obligations with respect to interest rate cap agreements,
interest rate swap agreements, sales of foreign exchange options and other
hedging agreements or arrangements;
(h) all indebtedness referred to in clauses (a) through (g) above
---------- ---
secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien upon or in
property (including accounts and contracts rights) owned by such Person,
even though such Person has not assumed or become liable for the payment of
such Indebtedness; and
(i) all Contingent Liabilities.
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.
"Indenture Trustee" has the meaning set forth in the Collateral Agency
-----------------
and Intercreditor Agreement.
"Initial Lenders" means CUSA, Credit Suisse First Boston, Xxxxxx
---------------
Commercial Paper Inc. and Societe Generale.
"Insolvency" means, with respect to any Multiemployer Plan, the
----------
condition that such plan is insolvent within the meaning of Section 4245 of
ERISA.
"Intercompany Loan Subordination Agreement" means the Intercompany
-----------------------------------------
Loan Subordination Agreement, dated as of March 18, 1999, among the Loan Parties
and the Collateral Agent.
-10-
"Interconnection Agreement" means the Interconnection Agreement, dated
-------------------------
as of August 1, 1998, among NYSEG, Penelec and EME Homer City (assignee of
Mission Energy Westside, Inc.).
"Interest Period" means, relative to any LIBO Rate Loan, the period
---------------
beginning on (and including) the date on which such LIBO Rate Loan is made or
continued as, or converted into, a LIBO Rate Loan pursuant to Section 2.1, 2.2,
------- --- ---
2.3 or 2.5 and ending on (but excluding) either (x) the day which numerically
--- ---
corresponds to such date one, two, three or six months thereafter (or, if such
month has no numerically corresponding day, on the last Business Day of such
month) as the Borrower may select in its relevant notice pursuant to Section
-------
2.1, 2.2, 2.3 or 2.5 or (y) such other day (resulting in a longer or shorter
--- --- --- ---
period) as the Borrower may select in its relevant notice pursuant to Section
-------
2.1, 2.2, 2.3 or 2.5 and the Administrative Agent confirms is available from all
--- --- --- ---
affected Lenders; provided, however, that:
-------- -------
(a) the Borrower shall not be permitted to select Interest Periods to
be in effect at any one time which have expiration dates occurring on more
than ten different dates or such other larger number of dates and on such
terms as may be agreed to by the Borrower and the Administrative Agent;
(b) Interest Periods commencing on the same date for Loans comprising
part of the same Borrowing shall be of the same duration;
(c) if such Interest Period would otherwise end on a day which is not
a Business Day, such Interest Period shall end on the next following
Business Day (unless, if such Interest Period applies to LIBO Rate Loans,
such next following Business Day is the first Business Day of a calendar
month, in which case such Interest Period shall end on the Business Day
next preceding such numerically corresponding day); and
(d) no Interest Period may end later than the date set forth in
clause (a) of the definition of "Revolving Loan Commitment Termination
---------- -------------------------------------
Date".
----
"Interest Rate Hedging Transactions" means, as to any Person, all
----------------------------------
interest rate swaps, caps or collar agreements or similar arrangements entered
into by such Person in order to protect against fluctuations in interest rates
or the exchange of nominal interest obligations, either generally or under
specific contingencies, and, in any event, not for speculative purposes.
"Investment" means, relative to any Person:
----------
(a) any loan or advance made by such Person to any other Person
(excluding commission, travel and similar advances to officers and
employees made in the ordinary course of business);
(b) any Contingent Liability of such Person; and
-11-
(c) any ownership or similar interest held by such Person in any
other Person.
The amount of any Investment shall be the original principal or capital amount
thereof less all returns of principal or equity thereon (and without adjustment
by reason of the financial condition of such other Person) and shall, if made by
the transfer or exchange of property other than cash, be deemed to have been
made in an original principal or capital amount equal to the fair market value
of such property.
"Lead Arrangers" means Credit Suisse First Boston, Xxxxxx Brothers
--------------
Inc., Xxxxxxx Xxxxx Barney Inc. and Societe Generale.
"Lender Assignment Agreement" means a Lender Assignment Agreement,
---------------------------
substantially in the form of Exhibit D.
---------
"Lenders" has the meaning set forth in the preamble.
------- --------
"LIBO Rate" has the meaning set forth in Section 3.2.1.
--------- -------------
"LIBO Rate Loan" means a Loan bearing interest, at all times during an
--------------
Interest Period applicable to such Loan, at a fixed rate of interest determined
by reference to the LIBO Rate.
"LIBO Rate (Reserve Adjusted)" means, relative to any Loan to be made,
----------------------------
continued or maintained as, or converted into, a LIBO Rate Loan for any Interest
Period, a rate per annum (rounded upwards, if necessary, to the nearest whole
multiple of l/100 of 1%) determined pursuant to the following formula:
LIBO Rate
LIBO Rate (Reserve Adjusted) = -------------------------------
1.00 - LIBOR Reserve Percentage
The LIBO Rate (Reserve Adjusted) for any Interest Period for LIBO Rate
Loans will be determined by the Administrative Agent on the basis of the LIBOR
Reserve Percentage in effect on, and the applicable rates furnished to and
received by the Administrative Agent, two Business Days before the first day of
such Interest Period.
"LIBOR Office" means, relative to any Lender, the office of such
------------
Lender designated as such on Schedule 1.1(b) or designated in the Lender
---------------
Assignment Agreement or such other office of a Lender as designated from time to
time by notice from such Lender to the Borrower and the Administrative Agent
pursuant to Section 4.4, whether or not outside the United States, which shall
-----------
be making or maintaining LIBO Rate Loans of such Lender hereunder.
"LIBOR Reserve Percentage" means, relative to any Interest Period for
------------------------
LIBO Rate Loans, the reserve percentage (expressed as a decimal) equal to the
aggregate reserve
-12-
requirements (including all basic, emergency, supplemental, marginal and other
reserves and taking into account any transitional adjustments or other scheduled
changes in reserve requirements) specified under regulations issued from time to
time by the F.R.S. Board and then applicable to assets or liabilities consisting
of and including "Eurocurrency Liabilities", as currently defined in Regulation
D of the F.R.S. Board, having a term approximately equal or comparable to such
Interest Period.
"Lien" means any security interest, mortgage, pledge, hypothecation,
----
assignment, deposit arrangement, encumbrance, lien (statutory or otherwise),
charge against or interest in property, in each case of any kind, to secure
payment of a debt or performance of an obligation.
"Loan" means Loans made by the Lenders to the Borrower pursuant to
----
Section 2.1 and Section 2.2, including Revolving Loans and Term Loans.
----------- -----------
"Loan Documents" means this Agreement, the Notes, the Security
--------------
Documents and the other agreements, documents and instruments delivered in
connection with this Agreement and the Notes including the fee letter referred
to in Section 3.3.2, each Borrowing Request and each Continuation/Conversion
-------------
Notice.
"Loan Parties" means (i) the Borrower, (ii) Edison Mission Finance
------------
Co., a California corporation, (iii) Xxxxx City Property Holdings, Inc., a
California corporation, (iv) Chestnut Ridge Energy Co., a California
corporation, (v) Mission Energy Westside, Inc., a California corporation, and
(vi) EME Homer City.
"Material Adverse Effect" means any event, development or circumstance
-----------------------
that has had or could reasonably be expected to have a material adverse effect
on (i) the business, assets, property, financial condition or operations of the
Loan Parties, taken as a whole, since the Effective Date, or (ii) the ability of
any Loan Party to perform its obligations under any of the Loan Documents.
"Moody's" means Xxxxx'x Investors Service, a division of Dun &
-------
Bradstreet Corporation, and its successors and assigns.
"Mortgage and Security Agreement" means the Mortgage and Security
-------------------------------
Agreement, dated as of March 18, 1999, made by EME Homer City to the Collateral
Agent.
"Multiemployer Plan" means a "multiemployer plan" as such term is
------------------
defined in Section 4001(a)(3) of ERISA.
"Net Cash Proceeds" means (a) in connection with any Recovery Event,
-----------------
the proceeds thereof in the form of cash and cash equivalents of such Recovery
Event, net of any expenses reasonably incurred in respect of such Recovery
Event, including attorneys' fees, amounts required to be applied to the
repayment of Indebtedness secured by a Lien expressly
-13-
permitted hereunder on any asset which is the subject of such Recovery Event
(other than any Lien pursuant to a Security Document) and net of taxes paid or
reasonably estimated to be payable as a result thereof (after taking into
account any available tax credits or deductions and any tax sharing
arrangements), to the extent that, in the case of Recovery Events relating to
property or casualty insurance claims, the amount of such proceeds exceeds
$5,000,000 with respect to any asset of any Loan Party and (b) in connection
with any issuance or sale of debt securities, the cash proceeds received from
such issuance or incurrence, net of attorneys' fees, investment banking fees,
accountants' fees, underwriting discounts and commissions and other customary
fees and expenses actually incurred in connection therewith.
"Non-Recourse Persons" means The Mission Group, Edison Mission Energy
--------------------
(except in respect of the EME Credit Support Guarantee and any EME Debt Service
Reserve Guarantee) and Southern California Edison Company, and the officers,
directors, employees, shareholders (except as aforesaid), agents, Authorized
Representatives and other controlling persons (except as aforesaid) of the
Borrower, provided that in no event shall any Loan Party be deemed to be a Non-
--------
Recourse Person.
"Note" means, as the context may require, a Revolving Note, 364-Day
----
Term Loan Note or a Construction Term Loan Note.
"NY Pool" means the New York Power Pool or any successor thereto.
-------
"NYSEG" means the New York State Electric & Gas Corporation.
-----
"Obligations" means all obligations (monetary or otherwise) of the
-----------
Loan Parties arising under or in connection with the Loan Documents.
"Operating Expenses" means, in respect of any period, all cash amounts
------------------
paid by the Loan Parties in the conduct of their business during such period,
including premiums for insurance policies, fuel supply and transportation costs,
utilities, costs of maintaining, renewing and amending Governmental Approvals,
franchise, licensing, property, real estate and income taxes, sales and excise
taxes, general and administrative expenses, employee salaries, wages and other
employment-related costs, business management and administrative services fees,
fees for letters of credit, surety bonds and performance bonds described in
Section 8.2.1(d)(i), necessary capital expenditures (other than capital
-------------------
expenditures made with the proceeds of (a) Construction Term Loans or (b)
Indebtedness permitted under Section 8.2.7(b) and all other fees and expenses
----------------
necessary for the continued operation and maintenance of the Generating Station
and the conduct of the business of the Loan Parties.
"Organic Document" means, with respect to any Person that is a
----------------
corporation, its certificate of incorporation, its by-laws and all shareholder
agreements, voting trusts and similar arrangements applicable to any of its
authorized shares of capital stock, and, with respect to any
-14-
Person that is a limited partnership, its certificate of limited partnership and
partnership agreement.
"Participant" has the meaning set forth in Section 11.11.2.
----------- ----------------
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
----
succeeding to any or all of its functions under ERISA.
"Penelec" means the Pennsylvania Electric Company.
-------
"Pension Plan" means a "pension plan", as such term is defined in
------------
Section 3(2) of ERISA (other than a Multiemployer Plan), and to which any Loan
Party or any member of the Controlled Group, has any liability, including any
liability by reason of having been a substantial employer within the meaning of
Section 4063 of ERISA at any time during the preceding five years, or by reason
of being deemed to be a contributing sponsor under Section 4069 of ERISA or
having an obligation to contribute under Section 4212 of ERISA.
"Percentage" means, with respect to the 364-Day Term Loan Commitment,
----------
the Construction Term Loan Commitment or the Revolving Loan Commitment of any
Lender, the percentage set forth on Schedule 1.1(a) for such Commitment opposite
---------------
its name or set forth in the Lender Assignment Agreement pursuant to which such
Lender became a Lender hereunder, as such percentage may be adjusted from time
to time pursuant to any Lender Assignment Agreement executed by such Lender and
delivered pursuant to Section 11.11.
-------------
"Person" means any natural person, corporation, partnership, limited
------
liability company, firm, association, trust, government, governmental agency or
any other entity, whether acting in an individual, fiduciary or other capacity.
"PJM" means PJM Interconnection, L.L.C, or any successor thereto.
---
"Pricing Grid" means the pricing grid attached as Annex I.
------------ -------
"Prudent Industry Practice" means, at a particular time, (a) any of
-------------------------
the practices, methods and acts engaged in or approved by a significant portion
of the competitive electric generating industry at such time, or (b) with
respect to any matter to which clause (a) does not apply, any of the practices,
---------
methods and acts which, in the exercise of reasonable judgment at the time the
decision was made, could have been expected to accomplish the desired result at
a reasonable cost consistent with good business practices, reliability, safety
and expedition. "Prudent Industry Practice" is not intended to be limited to the
optimum practice, method or act to the exclusion of all others, but rather to be
a spectrum of possible practices, methods or acts having due regard for, among
other things, manufacturers' warranties and the requirements of any Governmental
Authority of competent jurisdiction.
-15-
"PUHCA" means the Public Utility Holding Company Act of 1935, as
-----
amended.
"Quarterly Payment Date" means the first Business Day of each January,
----------------------
April, July and October.
"Recovery Event" means any settlement of or payment of $5,000,000 or
--------------
more in respect of (a) any property or casualty insurance claim relating to any
asset of any Loan Party or (b) any seizure, condemnation, confiscation or taking
of, or requisition of title or use of, the Generating Station or any part
thereof by any Governmental Authority.
"Reinvestment Deferred Amount" means with respect to any Recovery
----------------------------
Event, the aggregate Net Cash Proceeds received by any Loan Party in connection
therewith which are not applied to prepayments or reductions pursuant to Section
-------
3.1.2(b) as a result of the delivery of a Reinvestment Notice.
--------
"Reinvestment Notice" has the meaning set forth in Section 8.1.12.
------------------- --------------
"Reinvestment Prepayment Amount" means, with respect to any Recovery
------------------------------
Event, the Reinvestment Deferred Amount relating thereto less any amount which,
----
prior to the relevant Reinvestment Prepayment Date, the Loan Party has spent or
has agreed, pursuant to a binding written contract (under which performance is
in progress) to spend, to restore or replace the assets in respect of which a
Recovery Event has occurred pursuant to Section 8.1.12.
---------------
"Reinvestment Prepayment Date" means, with respect to any Recovery
----------------------------
Event, the earliest of (a) the first date occurring after such Recovery Event on
which an Event of Default shall have occurred, (b) the date occurring twelve
months after such Recovery Event and (c) the date on which the Loan Party shall
have determined not to, or shall have otherwise ceased to, restore or replace
the assets in respect of which a Recovery Event has occurred.
"Reorganization" means, with respect to any Multiemployer Plan, the
--------------
condition that such plan is in reorganization within the meaning of Section 4241
of ERISA.
"Reportable Event" means any of the events set forth in Section
----------------
4043(b) of ERISA, other than those events as to which the thirty day notice
period is waived under subsections .13, .14, .16, .18, .19 or .20 of PBGC Reg.
Section 2615.
"Required Deposit Rating" means a short-term certificate of deposit
-----------------------
rating from Moody's of P-1 and from Standard & Poor's of A-1+, and a long-term
unsecured debt rating of not less than Aa3 by Moody's and AA- by Standard &
Poor's.
"Required Lenders" means, at any time, Lenders holding a majority of
----------------
the Commitments.
-16-
"Requirement of Law" means, as to any Person, the Organic Documents of
------------------
such Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.
"Restricted Payment" has the meaning set forth in Section 8.2.7.
------------------ -------------
"Restricted Payment Date" means (i) in the case of any Restricted
-----------------------
Payment being made exclusively with the proceeds of Indebtedness incurred
pursuant to Section 8.2.1(e) remaining after repayment in full of the 364-Day
----------------
Term Loans, any Business Day specified by the Borrower, and (ii) in all other
cases, any Quarterly Payment Date.
"Revenue Account" has the meaning set forth in the Security Deposit
---------------
Agreement.
"Revenues" means, in respect of any period, all cash amounts received
--------
by the Loan Parties during such period, including revenues from the sale of
energy and capacity, proceeds of business interruption insurance and all
interest and other income earned on amounts in the Accounts.
"Revolving Loan" means Loans made by the Lenders to the Borrower
--------------
pursuant to Section 2.2, including Base Rate Loans and LIBO Rate Loans.
-----------
"Revolving Loan Commitment" means, relative to each Lender, the
-------------------------
obligation of such Lender to make Revolving Loans to the Borrower hereunder in
an aggregate principal amount set forth under "Revolving Loan Commitment"
opposite such Lender's name on Schedule 1.1(a).
---------------
"Revolving Loan Commitment Amount" means, on any date, $50,000,000, as
--------------------------------
such amount may be reduced from time to time pursuant to Section 2.4.
-----------
"Revolving Loan Commitment Termination Date" means the earliest of:
------------------------------------------
(a) the fifth anniversary of the Effective Date;
(b) the date on which the Revolving Loan Commitment Amount is
terminated in full or reduced to zero pursuant to Section 2.4; or
-----------
(c) the date on which any Commitment Termination Event occurs.
"Revolving Note" means a promissory note of the Borrower payable to
--------------
any Lender, in the form of Exhibit A-1 (as such promissory note may be amended,
-----------
endorsed or otherwise modified from time to time), evidencing the aggregate
Indebtedness of the Borrower to
-17-
such Lender resulting from outstanding Revolving Loans, and also means all other
promissory notes accepted from time to time in substitution therefor or renewal
thereof.
"S&P" means Standard & Poor's Ratings Services and its successors and
---
assigns.
"Same Day Funds" means immediately available funds.
--------------
"Secured Parties" has the meaning set forth in the Collateral Agency
---------------
and Intercreditor Agreement.
"Secured Parties' Representative" has the meaning set forth in the
-------------------------------
Security Deposit Agreement.
"Security Deposit Agreement" means the Security Deposit Agreement,
--------------------------
dated as of March 18, 1999, among the Loan Parties and the Collateral Agent.
"Security Documents" means (i) the Guarantee and Collateral Agreement,
------------------
the Mortgage and Security Agreement, the Intercompany Loan Subordination
Agreement, the Collateral Agency and Intercreditor Agreement, the Security
Deposit Agreement and (ii) the EME Credit Support Guarantee and any other
agreement or instrument hereafter entered into by the Borrower or any other
Person which guarantees or secures payment of the indebtedness evidenced by the
Notes or payment or performance of any other Obligation.
"Senior Debt" means (i) the Obligations and (ii) any Indebtedness of
-----------
the Borrower permitted under Section 8.2.1(b), 8.2.1(c), 8.2.1(d) or 8.2.1(e).
---------------- -------- -------- --------
"Subsidiary" means, with respect to any Person, any corporation,
----------
partnership, limited liability company or other entity of which more than 50% of
the outstanding capital stock, partnership interests or other equity interests
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) or to control the management of such partnership,
limited liability company or other entity is at the time directly or indirectly
owned by such Person, by such Person and one or more other Subsidiaries of such
Person, or by one or more other Subsidiaries of such Person.
"Taxes" has the meaning set forth in Section 4.7.
----- -----------
"Term Loans" means the 364-Day Term Loans and the Construction Term
----------
Loans.
"Term Loan Commitments" means, relative to any Lender, such Lender's
---------------------
obligations to make 364-Day Term Loans pursuant to Section 2.1.1 and
-------------
Construction Term Loans pursuant to Section 2.1.1.
-------------
-18-
"Term Loan Commitment Amount" means the aggregate of the 364-Day Term
---------------------------
Loan Commitment Amount and the Construction Term Loan Commitment Amount.
"364-Day Term Loan" has the meaning set forth in Section 2.1.1.
----------------- -------------
"364-Day Term Loan Commitment" means, relative to any Lender, the
----------------------------
obligation of such Lender to make a 364-Day Term Loan to the Borrower hereunder
in a principal amount not to exceed the amount set forth under "364-Day Term
Loan Commitment" opposite such Lender's name on Schedule 1.1(a).
---------------
"364-Day Term Loan Commitment Amount" means $800,000,000.
-----------------------------------
"364-Day Term Loan Maturity Date" means the date which is 364 days
-------------------------------
after the Effective Date.
"364-Day Term Loan Note" means a promissory note of the Borrower
----------------------
payable to any Lender, in the form of Exhibit A-2 hereto (as such promissory
-----------
note may be amended, endorsed or otherwise modified from time to time),
evidencing the aggregate Indebtedness of the Borrower to such Lender resulting
from outstanding 364-Day Term Loans, and also means all other promissory notes
accepted from time to time in substitution therefor or renewal thereof.
"Title Insurance Company" means the title insurance company issuing
-----------------------
any policy referred to in Sections 6.1.15 and 6.1.16.
--------------- ------
"Total Commitment Amount" means the Revolving Loan Commitment Amount
-----------------------
and Term Loan Commitment Amount.
"type" means, relative to any Loan, the portion thereof, if any, being
----
maintained as a Base Rate Loan or a LIBO Rate Loan.
"United States" or "U.S." means the United States of America, its
------------- ----
fifty States and the District of Columbia.
"Welfare Plan" means a "welfare plan", as such term is defined in
------------
Section 3(1) of ERISA.
"Year 2000 Problem" means any significant risk that computer hardware,
-----------------
software or equipment containing embedded microchips essential to the businesses
or operations of the Loan Parties will not, in the case of dates or time periods
occurring after December 31, 1999, function at least as effectively as in the
case of dates or time periods occurring prior to January 1, 2000.
-19-
SECTION 1.2 Use of Defined Terms. Unless otherwise defined or the
--------------------
context otherwise requires, terms for which meanings are provided in this
Agreement shall have such meanings when used in each Note, Borrowing Request,
Continuation/Conversion Notice, Loan Document, notice and other communication
delivered from time to time in connection with this Agreement or any other Loan
Document.
SECTION 1.3 Cross-References. Unless otherwise specified, references
----------------
in this Agreement to any Article, Section, Annex, Exhibit or Schedule are
references to such Article, Section, Annex, Exhibit or Schedule of or to this
Agreement and, unless otherwise specified, references in any Article, Section or
definition to any clause or paragraph are references to such clause or paragraph
of such Article, Section or definition.
SECTION 1.4 Accounting and Financial Determinations. Unless
---------------------------------------
otherwise specified, all accounting terms used herein or in any other Loan
Document shall be interpreted, all accounting determinations and computations
hereunder or thereunder shall be made, and all financial statements required to
be delivered hereunder or thereunder shall be prepared in accordance with, those
generally accepted accounting principles in effect in the United States("GAAP")
----
applied in the preparation of the financial statements referred to in Section
-------
7.1, except that quarterly financial statements are not required to contain
---
footnotes.
ARTICLE II
COMMITMENTS AND BORROWING PROCEDURES
SECTION 2.1 Term Loan Commitments. On the terms and subject to the
---------------------
conditions of this Agreement, each Lender severally agrees to make Term Loans
pursuant to such Lender's Term Loan Commitment as provided in this Section 2.1.
------------
SECTION 2.1.1 Term Loan Commitment. Each Lender severally agrees to
--------------------
make a term loan (each, a "364-Day Term Loan") to the Borrower on the Effective
-----------------
Date in a principal amount not to exceed the 364-Day Term Loan Commitment of
such Lender and each Lender severally agrees to make term loans (each, a
"Construction Term Loan") to the Borrower prior to the Construction Term Loan
------------------------
Maturity Date in an aggregate principal amount not to exceed the Construction
Term Loan Commitment of such Lender. Term Loans may from time to time be LIBO
Rate Loans or Base Rate Loans, as determined by the Borrower and notified to the
Administrative Agent in accordance with Sections 2.1.2 and 2.5. The 364-Day
-------------- ---
Term Loans shall be made in a single drawing on the Effective Date.
Construction Term Loans shall be made in multiple drawings in accordance with
the Environmental Capital Expenditure Program.
SECTION 2.1.2 Procedure for Term Loan Borrowing. The Borrower may
---------------------------------
irrevocably request to borrow under (a) the 364-Day Term Loan Commitments on the
Effective Date or (b) the Construction Term Loan Commitments prior to the
Construction Term Loan Maturity Date on any Business Day in accordance with this
Section 2.1.2, by delivering a
-------------
-20-
Borrowing Request to the Administrative Agent on a Business Day on or before
12:00 Noon, New York City time, (x) on not less than three Business Days' notice
in the case of LIBO Rate Loans, or (y) on the same Business Day, in the case of
Base Rate Loans, specifying (i) the amount and type of Term Loans to be
borrowed, (ii) the requested Borrowing Date and (iii) in the case of LIBO Rate
Loans, the respective amounts of each such type of Loan and the respective
lengths of the initial Interest Periods therefor. Each borrowing under the Term
Loan Commitments shall be in an amount equal to $5,000,000 or an integral
multiple of $1,000,000 in excess thereof or, in the case of Construction Term
Loans, the unused amount of the Construction Term Loan Commitment Amount. Upon
receipt of any such notice from the Borrower, the Administrative Agent shall
promptly notify each Lender thereof. On or before 2:00 P.M., New York City
time, on the Business Day such Term Loans are to be made, each Lender shall
deposit with the Administrative Agent Same Day Funds in an amount equal to such
Lender's Percentage of the requested Borrowing. Such deposit will be made to an
account which the Administrative Agent shall specify from time to time by notice
to the Lenders. To the extent funds are received from the Lenders, the Agent
shall make such funds available to the Borrower by wire transfer to the accounts
the Borrower shall have specified in its Borrowing Request. No Lender's
obligation to make any Loan shall be affected by any other Lender's failure to
make any Loan.
SECTION 2.2 Revolving Loan Commitment. On the terms and subject to
-------------------------
the conditions of this Agreement, each Lender severally agrees to make Revolving
Loans pursuant to such Lender's Revolving Loan Commitment as provided in this
Section 2.2.
-----------
SECTION 2.2.1 Revolving Loan Commitment. From time to time on any
-------------------------
Business Day occurring prior to the Revolving Loan Commitment Termination Date,
each Lender severally agrees to make Revolving Loans (each, a "Revolving Loan")
--------------
to the Borrower equal to such Lender's Percentage of the Borrowing of Revolving
Loans requested or deemed to be requested by the Borrower to be made on such
day. The Revolving Loans may from time to time be LIBO Rate Loans or Base Rate
Loans, as determined by the Borrower and notified to the Administrative Agent in
accordance with Section 2.2.2 and 2.5. The Borrower may from time to time
------------- ---
borrow, prepay, in whole or in part, and reborrow Revolving Loans. Revolving
Loan Commitments shall terminate automatically on the Revolving Loan Commitment
Termination Date.
SECTION 2.2.2 Procedure for Revolving Loan Borrowing. By delivering
--------------------------------------
a Borrowing Request to the Administrative Agent on or before 12:00 Noon, New
York City time, on a Business Day, the Borrower may from time to time
irrevocably request, (i) on not less than three Business Days' notice, in the
case of LIBO Rate Loans, and (ii) on the same Business Day, in the case of Base
Rate Loans, that a Borrowing of Revolving Loans be made in a minimum amount of
$5,000,000 and an integral multiple of $1,000,000 in excess thereof, or in the
unused amount of the Revolving Loan Commitment Amount. On the terms and subject
to the conditions of this Agreement, each Borrowing shall be comprised of the
same type of Loans, and shall be made on the Business Day, specified in such
Borrowing Request. On or before 2:00 P.M., New York City time, on the Business
Day such Revolving Loans are to be made, each Lender shall
-21-
deposit with the Administrative Agent Same Day Funds in an amount equal to such
Lender's Percentage of the requested Borrowing. Such deposit will be made to an
account which the Administrative Agent shall specify from time to time by notice
to the Lenders. To the extent funds are received from the Lenders, the
Administrative Agent shall make such funds available to the Borrower by wire
transfer to the accounts the Borrower shall have specified in its Borrowing
Request. No Lender's obligation to make any Loan shall be affected by any other
Lender's failure to make any Loan.
SECTION 2.3 Lenders Not Required To Make Loans. No Lender shall be
----------------------------------
required to make:
(a) any Revolving Loan if, after giving effect thereto,
(i) the aggregate outstanding principal amount of all Revolving Loans
would exceed the Revolving Loan Commitment Amount, or
(ii) the aggregate outstanding principal amount of all Revolving
Loans of such Lender would exceed such Lender's Revolving Loan Commitment;
or
(b) any Term Loan if, after giving effect thereto,
(i) the aggregate outstanding principal amount of all 364-Day Term
Loans would exceed the 364-Day Term Loan Commitment Amount, or
(ii) the aggregate outstanding principal amount of all Construction
Term Loans would exceed the Construction Term Loan Commitment Amount, or
(iii) the outstanding principal amount of the 364-Day Term Loan of
such Lender would exceed such Lender's 364-Day Term Loan Commitment, or
(iv) the aggregate outstanding principal amount of all Construction
Term Loans of such Lender would exceed such Lender's Construction Term Loan
Commitment.
SECTION 2.4 Reduction of the Commitments. The Borrower may, from
----------------------------
time to time on any Business Day occurring after the Effective Date, voluntarily
reduce the Revolving Loan Commitment Amount or the Construction Term Loan
Commitment Amount without premium or penalty (subject, however, to Section 4.5);
-----------
provided, however, that all such reductions shall require at least three hours'
-------- -------
prior notice to the Administrative Agent and be permanent, and any partial
reduction of the Revolving Loan Commitment Amount and the Construction Term Loan
Commitment Amount shall be in a minimum amount of $10,000,000; and, provided,
--------
further, that (i) the Revolving Loan Commitment Amount may not be reduced to an
-------
amount less than the aggregate amount of outstanding Revolving Loans and (ii)
the
-22-
Construction Term Loan Commitment Amount may not be reduced to an amount less
than the aggregate amount of outstanding Construction Term Loans.
SECTION 2.5 Continuation and Conversion Elections. By delivering a
-------------------------------------
Continuation/Conversion Notice to the Administrative Agent on or before 12:00
Noon, New York City time on a Business Day, the Borrower may from time to time
irrevocably elect that all, or any portion in an aggregate minimum amount of
$5,000,000 and an integral multiple of $1,000,000 in excess thereof, of any
Loans be (i) on not less than three Business Days' notice, converted into, or
continued as, LIBO Rate Loans, or (ii) on the same Business Day, be converted
into, or continued as Base Rate Loans. In the absence of delivery of a
Continuation/Conversion Notice with respect to any LIBO Rate Loan, such LIBO
Rate Loan shall automatically be continued as a LIBO Rate Loan with an Interest
Period of the same duration as the then expiring Interest Period; provided,
--------
however, that (x) each such conversion or continuation shall be pro rated among
-------
the applicable outstanding Loans of all Lenders, (y) a LIBO Rate Loan may not be
converted at any time other than the last day of the Interest Period applicable
thereto and (z) no portion of the outstanding principal amount of any Loans may
be continued as, or be converted into, LIBO Rate Loans when any Default or Event
of Default under Section 9.1.1 has occurred and is continuing. Each delivery of
-------------
a Continuation/Conversion Notice shall constitute a certification and warranty
by the Borrower that on the date of delivery of such notice no Default has
occurred and is continuing. If prior to the time of such continuation or
conversion any matter certified to by the Borrower by reason of the immediately
preceding sentence will not be true and correct at such time if then made, the
Borrower will immediately so notify the Administrative Agent. Except to the
extent, if any, that prior to the time of such continuation or conversion the
Administrative Agent shall have received written notice to the contrary from the
Borrower, such certification and warranty shall be deemed to be made at the date
of such continuation or conversion as if then made. Upon the occurrence and
during the continuance of any Event of Default under Section 9.1.1, each LIBO
-------------
Rate Loan shall convert automatically to a Base Rate Loan at the end of the
Interest Period then in effect for such LIBO Rate Loan.
SECTION 2.6 Funding. Each Lender may, if it so elects, fulfill its
-------
obligation to make, continue or convert LIBO Rate Loans hereunder by causing one
of its foreign branches or Affiliates (or an international banking facility
created by such Lender) to make or maintain such LIBO Rate Loan; provided,
--------
however, that such LIBO Rate Loan shall nonetheless be deemed to have been made
-------
and to be held by such Lender, and the obligation of the Borrower to repay such
LIBO Rate Loan shall nevertheless be to such Lender for the account of such
foreign branch, Affiliate or international banking facility. In addition, the
Borrower hereby consents and agrees that, for purposes of any determination to
be made for purposes of Sections 4.1, 4.2, 4.3, 4.4 or 4.5, it shall be
------------ --- --- --- ---
conclusively assumed that each Lender elected to fund all LIBO Rate Loans by
purchasing deposits in its LIBOR Office's interbank eurodollar markets.
-23-
ARTICLE III
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES
SECTION 3.1 Repayments and Prepayments. (a) The 364-Day Term Loan of
--------------------------
each Lender shall mature, and the Borrower unconditionally promises to pay in
full the unpaid principal amount of such 364-Day Term Loan to the Administrative
Agent, for the account of such Lender, on the 364-Day Term Loan Maturity Date.
(b) The Construction Term Loan of each Lender shall mature, and the
Borrower unconditionally promises to pay in full the unpaid principal amount of
such Construction Term Loan to the Administrative Agent, for the account of such
Lender, on the Construction Term Loan Maturity Date.
(c) The Revolving Loans of each Lender shall mature, and the Borrower
unconditionally promises to pay in full the unpaid principal amount of each
Revolving Loan to the Administrative Agent, for the account of such Lender, on
the Revolving Loan Commitment Termination Date.
(d) The Borrower shall, immediately upon any acceleration of any Loans
pursuant to Section 9.2 or Section 9.3, repay all Loans, unless, pursuant to
----------- -----------
Section 9.3, only a portion of all Loans is so accelerated.
-----------
SECTION 3.1.1 Optional Prepayments and Commitment Reductions. (a)
----------------------------------------------
At any time, and from time to time, the Borrower may, on any Business Day, make
a voluntary prepayment, in whole or in part, of the outstanding principal amount
of the Loans; provided, however, that:
-------- -------
(i) unless the Borrower notifies the Administrative Agent that such
prepayment is to be applied to prepay Revolving Loans, any such prepayment
made on or prior to the 364-Day Term Loan Maturity Date shall be applied
first to the 364-Day Term Loans until such Loans are paid in full and,
-----
second, to the Construction Term Loans until such Loans are paid in full;
------
(ii) unless the Borrower notifies the Administrative Agent that such
prepayment is to be applied to prepay Revolving Loans, any such prepayment
made after the 364-Day Term Loan Maturity Date shall be applied to the
Construction Term Loans until such Loans are paid in full;
(iii) any such prepayment shall be applied pro rata among Loans of
--- ----
the same type and, if applicable, having the same Interest Period;
-24-
(iv) any such prepayment of any LIBO Rate Loan made on any day other
than the last day of the Interest Period for such Loan shall be subject to
the provisions of Section 4.5;
-----------
(v) any such prepayment of LIBO Rate Loans shall require at least two
Business Days' prior written notice to the Administrative Agent and any
such prepayment of Base Rate Loans may be made on same day's written notice
to the Administrative Agent; and
(vi) any such partial prepayment of Loans shall be in an aggregate
minimum amount of $10,000,000.
(b) Each prepayment of Loans made pursuant to this Section 3.1.1 shall
-------------
be accompanied by accrued interest to the date of such prepayment on the amount
prepaid but shall be without premium or penalty, except as may be required by
Section 4.5. Each voluntary prepayment of Term Loans shall automatically and
-----------
permanently reduce the related Term Loan Commitment Amount by a like amount. No
voluntary prepayment of Revolving Loans shall cause a reduction in the Revolving
Loan Commitment Amount.
SECTION 3.1.2 Mandatory Prepayments and Commitment Reductions. (a)
-----------------------------------------------
If any Indebtedness shall be issued or incurred by any Loan Party in accordance
with Section 8.2.1(e), an amount equal to the lesser of (i) 100% of the Net Cash
----------------
Proceeds thereof and (ii) the aggregate principal amount of the 364-Day Term
Loans outstanding shall be applied within one Business Day after the issuance or
incurrence of such Indebtedness to the prepayment of the 364-Day Term Loans.
(b) If any Loan Party shall receive Net Cash Proceeds from any
Recovery Event, an amount equal to 100% of such Net Cash Proceeds shall be
applied on such date to the prepayment of Senior Debt as set forth below, unless
the Borrower delivers a Reinvestment Notice in respect of such Recovery Event
pursuant to Section 8.1.12, in which case, an amount equal to the Reinvestment
--------------
Prepayment Amount with respect to such Recovery Event shall be applied on each
Reinvestment Prepayment Date to the prepayment of Senior Debt as set forth
below. Any such prepayment shall be applied ratably to the prepayment of the
Senior Debt in proportion to the outstanding principal amounts thereof on the
date of such repayment. Any such prepayment of the Loans made on or prior to
the 364-Day Term Loan Maturity Date shall be applied first to the 364-Day Term
-----
Loans until such Loans are paid in full, second, to the Construction Term Loans
------
until such Loans are paid in full and, third, to the Revolving Loans. Any such
-----
prepayment of Loans made after the 364-Day Term Loan Maturity Date shall be
applied first to the Construction Term Loans until such Loans are paid in full
-----
and second to the Revolving Loans. Any such prepayment shall be applied pro
------ ---
rata among Loans of the same type and, if applicable, having the same Interest
----
Period.
(c) Each prepayment made pursuant to this Section 3.1.2 shall be
-------------
accompanied by accrued interest to the date of such prepayment on the amount
prepaid but shall be without
-25-
premium or penalty, except as may be required by Section 4.5. Each mandatory
-----------
prepayment of Loans shall automatically and permanently reduce the 364-Day Term
Loan Commitment Amount, the Construction Term Loan Commitment Amount or the
Revolving Loan Commitment Amount, as the case may be, by a like amount.
SECTION 3.2 Interest Provisions. Interest on the outstanding
-------------------
principal amount of Loans shall accrue and be payable in accordance with this
Section 3.2.
-----------
SECTION 3.2.1 Rates. (a) Pursuant to an appropriately delivered
-----
Borrowing Request or Continuation/Conversion Notice, the Borrower may elect that
Loans comprising a Borrowing accrue interest at a rate per annum:
(i) on that portion maintained from time to time as a Base Rate Loan,
equal to the sum of the Alternate Base Rate from time to time in effect
plus the Applicable Margin from time to time in effect; and
(ii) on that portion maintained as a LIBO Rate Loan, during each
Interest Period applicable thereto, equal to the sum of the LIBO Rate for
such Interest Period plus the Applicable Margin from time to time in
effect.
"LIBO Rate" means, for each day during each Interest Period for each
---------
LIBO Rate Loan, the rate per annum determined on the basis of the rate for
deposits in Dollars for a period equal to such Interest Period commencing on the
first day of such Interest Period appearing on Telerate Service Page 3750 as of
11:00 A.M., London time, two Business Days prior to the beginning of such
Interest Period. In the event that such rate does not appear on Telerate
Service Page 3750, the "LIBO Rate" shall be determined by reference to such
---------
other comparable publicly available service for displaying eurodollar rates as
may be selected by the Administrative Agent or, in the absence of such
availability, by reference to the rate at which the Administrative Agent is
offered Dollar deposits at or about 11:00 A.M., New York City time, two Business
Days prior to the beginning of such Interest Period in the interbank eurodollar
market where its eurodollar and foreign currency and exchange operations are
then being conducted for delivery on the first day of such Interest Period for
the number of days comprised therein. Notwithstanding any other provision
hereof, at such time as there shall exist for any Lender a LIBOR Reserve
Percentage which is greater than zero, the LIBO Rate used in the determination
of LIBO Rate Loans made by such Lender shall be the LIBO Rate (Reserve
Adjusted).
(b) All LIBO Rate Loans shall bear interest from and including the
first day of the applicable Interest Period to (but not including) the last day
of such Interest Period at the interest rate determined as applicable to such
LIBO Rate Loan.
SECTION 3.2.2 Post-Maturity Rates; Default Rates. (a) After the
----------------------------------
date any principal amount of any Loan is due and payable (whether on a
Commitment Termination Date, upon acceleration or otherwise), or after any
monetary Obligation of the Borrower shall become
-26-
due and payable, the Borrower shall pay, but only to the extent permitted by
law, interest (after as well as before judgment) on such overdue amount at a
rate per annum equal to the Alternate Base Rate plus the Applicable Margin plus
----
2% until such amount is paid in full.
(b) Upon the occurrence and during the continuance of any Event of
Default (other than an Event of Default under Section 9.1.1, for which provision
-------------
is made in Section 3.2.2(a) above), the Borrower shall pay, but only to the
----------------
extent permitted by law, in addition to the interest then payable on the Loans,
interest (after as well as before judgment) on the Loans at 2% per annum until
such Event of Default is cured.
SECTION 3.2.3 Payment Dates. Interest accrued on each Loan shall be
-------------
payable, without duplication:
(a) on the Commitment Termination Date;
(b) on the date of any payment or prepayment, in whole or in part, of
principal outstanding on such Loan;
(c) with respect to Base Rate Loans, on each Quarterly Payment Date
occurring after the date of the initial Borrowing hereunder;
(d) with respect to LIBO Rate Loans, the last day of each applicable
Interest Period (and, if such Interest Period shall exceed three months, on
the day three months after such Loan is made or continued); and
(e) on that portion of any Loans which is accelerated pursuant to
Section 9.2 or Section 9.3, immediately upon such acceleration.
----------- -----------
Interest accrued on Loans or other monetary Obligations arising under any Loan
Document after the date such amount is due and payable (whether on any
Commitment Termination Date, upon acceleration or otherwise) shall be payable
upon demand.
SECTION 3.2.4 Interest Rate Determination. The Administrative Agent
---------------------------
shall determine the interest rate applicable to Loans and shall give prompt
notice to the Borrower and the Lenders of such determination, and its
determination thereof shall be conclusive in the absence of manifest error.
SECTION 3.3 Fees. The Borrower agrees to pay the fees set forth in
----
this Section 3.3.
-----------
SECTION 3.3.1 Facility Fee. The Borrower agrees to pay to the
------------
Administrative Agent, for the ratable account of each Lender, facility fees (the
"Facility Fee") in respect of each of the amount of the Construction Term Loan
------------
Commitment Amount and the Revolving Loan
-27-
Commitment Amount (irrespective of usage) for each day from and after the
Effective Date at the rate per annum based on the Borrower's Debt Rating for
such day determined as provided in the Pricing Grid. Such fees shall be payable
in arrears on each Quarterly Payment Date, commencing with the first such date
following the Effective Date, and on each Commitment Termination Date.
SECTION 3.3.2 Administrative Agent's Fee and Miscellaneous Fees. The
-------------------------------------------------
Borrower agrees to pay to the Administrative Agent, for (i) its own account,
(ii) the account of the Lenders and (iii) the account of the Lead Arrangers, the
respective fees as agreed to in the letter dated February 19, 1999, between the
Administrative Agent, the Lead Arrangers, the Initial Lenders, the Borrower and
Edison Mission Energy.
ARTICLE IV
CERTAIN LIBO RATE AND OTHER PROVISIONS
SECTION 4.1 LIBO Rate Lending Unlawful. If any Lender shall
--------------------------
reasonably determine (which determination shall, upon notice thereof to the
Borrower and the Administrative Agent, be conclusive and binding on the Borrower
absent manifest error) that the introduction of or any change in or in the
interpretation of any law, rule or regulation makes it unlawful, or any central
bank or other governmental authority or comparable agency asserts that it is
unlawful, for such Lender to make, continue or maintain any Loan as, or to
convert any Loan into, a LIBO Rate Loan, the obligations of such Lender to make,
continue, maintain or convert any such Loans shall, upon such determination,
forthwith be suspended until such Lender shall notify the Administrative Agent
that the circumstances causing such suspension no longer exist, and all LIBO
Rate Loans of such Lender shall automatically convert into Base Rate Loans at
the end of the then current Interest Periods with respect thereto or sooner, if
required by such law or assertion.
SECTION 4.2 Inability to Determine Rates. If prior to the first day
----------------------------
of any Interest Period:
(a) the Administrative Agent shall have determined (which
determination shall be conclusive and binding upon the Borrower) that, by
reason of circumstances affecting the relevant market, adequate and
reasonable means do not exist for ascertaining the LIBO Rate for such
Interest Period; or
(b) the Administrative Agent shall have received notice from the
Required Lenders in respect of the relevant Borrowing that the LIBO Rate
determined or to be determined for such Interest Period will not adequately
and fairly reflect the cost to such Lenders (as conclusively certified by
such Lenders) of making or maintaining their affected Loans during such
Interest Period;
-28-
the Administrative Agent shall give telecopy or telephonic notice thereof to the
Borrower and the relevant Lenders as soon as practicable thereafter. If such
notice is given (x) any LIBO Rate Loans under the relevant Borrowing requested
to be made on the first day of such Interest Period shall be made as Base Rate
Loans, (y) any Loans under the relevant Borrowing that were to have been
converted on the first day of such Interest Period to LIBO Rate Loans shall be
continued as Base Rate Loans and (z) any outstanding LIBO Rate Loans under the
relevant Borrowing shall be converted, on the last day of the then-current
Interest Period, to Base Rate Loans. Until such notice has been withdrawn by
the Administrative Agent, no further LIBO Rate Loans under the relevant
Borrowing shall be made or continued as such, nor shall the Borrower have the
right to convert Loans under the relevant Borrowing to LIBO Rate Loans.
SECTION 4.3 Increased LIBO Rate Loan Costs. If after the date
------------------------------
hereof, the adoption of any applicable law, rule or regulation, or any change
therein, or any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Lender (or its
LIBOR Office) with any request or directive (whether or not having the force of
law) of any such authority, central bank or comparable agency shall increase the
cost to such Lender of, or result in any reduction in the amount of any sum
receivable by such Lender in respect of, making, continuing or maintaining (or
of its obligation to make, continue or maintain) any Loans as, or of converting
(or of its obligation to convert) any Loans into, LIBO Rate Loans, then the
Borrower agrees to pay to the Administrative Agent for the account of each
Lender the amount of any such increase or reduction. Such Lender shall promptly
notify the Administrative Agent and the Borrower in writing of the occurrence of
any such event, such notice to state, in reasonable detail, the reasons therefor
and the additional amount required fully to compensate such Lender for such
increased cost or reduced amount. Such additional amounts shall be payable by
the Borrower directly to such Lender within ten Business Days of its receipt of
such notice, and such notice shall be binding on the Borrower absent clear and
convincing evidence to the contrary.
SECTION 4.4 Obligation to Mitigate. Each Lender agrees that as
----------------------
promptly as practicable after it becomes aware of the occurrence of an event
that would entitle it to give notice pursuant to Section 4.l, 4.3 or 4.6, and in
------- --- --- ---
any event if so requested by the Borrower, each Lender shall use reasonable
efforts to make, fund or maintain its affected Loans through another lending
office if as a result thereof the increased costs would be avoided or materially
reduced or the illegality would thereby cease to exist and if, in the sole
opinion of such Lender, the making, funding or maintaining of such Loans through
such other lending office would not in any material respect be disadvantageous
to such Lender, contrary to such Lender's normal banking practices or violate
any applicable law or regulation. No change by a Lender in its Domestic Office
or LIBOR Office made for such Lender's convenience shall result in any increased
cost to the Borrower. The Borrower shall not be obligated to compensate any
Lender for the amount of any additional amount pursuant to Section 4.1, 4.3 or
----------- ---
4.6 accruing prior to the date which is 90 days before the date on which such
---
Lender first notifies the Borrower that it intends to claim such compensation;
it being understood that the calculation of the actual amounts may not be
possible
-29-
within such period and that such Lender may provide such calculation as soon as
reasonably practicable thereafter without affecting or limiting the Borrower's
payment obligation thereunder. If any Lender demands compensation pursuant to
Section 4.1, 4.3 or 4.6 with respect to any LIBO Rate Loan, the Borrower may, at
----------- --- ---
any time upon at least one Business Days prior notice to such Lender through the
Administrative Agent, elect to convert such Loan into a Base Rate Loan.
Thereafter, unless and until such Lender notifies the Borrower that the
circumstances giving rise to such notice no longer apply, all such LIBO Rate
Loans by such Lender shall bear interest as Base Rate Loans, notwithstanding any
prior election by the Borrower to the contrary. If such Lender notifies the
Borrower that the circumstances giving rise to such notice no longer apply, the
Borrower may elect that the principal amount of each such Loan again bear
interest as LIBO Rate Loans in accordance with this Agreement, on the first day
of the next succeeding Interest Period applicable to the related LIBO Rate Loans
of other Lenders. Additionally, the Borrower may, at its option, upon at least
five Business Days' prior notice to such Lender, elect to prepay in full,
without premium or penalty, such Lender's affected LIBO Rate Loans. If the
Borrower elects to prepay any Loans pursuant to this Section 4.4, the Borrower
-----------
shall pay within ten Business Days after written demand any additional increased
costs of such Lender accruing for the period prior to such date of prepayment.
If such conversion or prepayment is made on a day other than the last day of the
current Interest Period for such affected LIBO Rate Loans, such Lender shall be
entitled to make a request for, and the Borrower shall pay, compensation under
Section 4.5.
-----------
SECTION 4.5 Funding Losses. In the event any Lender shall incur any
--------------
loss or expense (including any loss or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by such Lender
to make, continue or maintain any portion of the principal amount of any Loan
as, or to convert any portion of the principal amount of any Loan into, a LIBO
Rate Loan) as a result of:
(a) any conversion or repayment or prepayment of the principal amount
of any LIBO Rate Loans on a date other than the scheduled last day of the
Interest Period applicable thereto, whether pursuant to Section 3.1 or
-----------
otherwise;
(b) Borrower's failure to borrow any LIBO Rate Loans in accordance
with the Borrowing Request therefor; or
(c) any Loans not being continued as, or converted into, LIBO Rate
Loans in accordance with the Continuation/Conversion Notice therefor;
then, upon the written notice of such Lender to the Borrower (with a copy to the
Administrative Agent), the Borrower shall, within ten Business Days of its
receipt thereof, pay directly to such Lender such amount as will (in the
reasonable determination of such Lender) reimburse such Lender for such loss or
expense. Such written notice (which shall include calculations in reasonable
detail) shall be binding on the Borrower absent manifest error.
-30-
SECTION 4.6 Increased Capital Costs. If after the date hereof any
-----------------------
change in, or the introduction, adoption, effectiveness, interpretation,
reinterpretation or phase-in of, any applicable law or regulation, directive,
guideline, decision or request (whether or not having the force of law) of any
court, central bank, regulator or other governmental authority affects the
amount of capital required to be maintained by any Lender, and such Lender
reasonably determines that the rate of return on its capital as a consequence of
its Revolving Loan Commitment, the Term Loan Commitments or the Loans made by
such Lender is reduced in a material amount to a level below that which such
Lender could have achieved but for the occurrence of any such circumstance,
then, in any such case upon notice from time to time by such Lender to the
Borrower, the Borrower shall pay within ten Business Days after such demand
directly to such Lender additional amounts sufficient to compensate such Lender
for such reduction in rate of return. A statement of such Lender as to any such
additional amount or amounts (including calculations thereof in reasonable
detail) shall be binding on the Borrower absent manifest error.
SECTION 4.7 Taxes. (a) All payments by the Borrower of principal
-----
of, and interest on, the Loans and all other amounts payable hereunder shall be
made free and clear of and without deduction for any present or future income,
excise, stamp or franchise taxes and other taxes, fees, duties, withholdings or
other charges of any nature whatsoever imposed by any taxing authority, but
excluding franchise taxes and taxes imposed on or measured by any Lender's net
income, in each case, imposed as result of a connection between the Lender and
the jurisdiction imposing the tax (other than a connection arising solely from
the Lender having executed, delivered or performed its obligations or received a
payment under, or enforced, this Agreement) (such non-excluded items being
called "Taxes"). In the event that any withholding or deduction from any payment
-----
to be made by the Borrower hereunder is required in respect of any Taxes
pursuant to any applicable law, rule or regulation, then the Borrower will:
(i) pay directly to the relevant authority the full amount required to
be so withheld or deducted;
(ii) within 30 days after such payment forward to the Administrative
Agent an official receipt or other documentation satisfactory to the
Administrative Agent evidencing such payment to such authority; and
(iii) pay to the Administrative Agent for the account of the Lenders
such additional amount or amounts as is necessary to ensure that the net
amount actually received by each Lender will equal the full amount such
Lender would have received had no such withholding or deduction been
required.
Moreover, if any Taxes are directly asserted against the Administrative Agent or
any Lender with respect to any payment received by the Administrative Agent or
such Lender hereunder, the Administrative Agent or such Lender may pay such
Taxes and, upon receipt of notice from the Administrative Agent or such Lender
within 30 days after such payment, the Borrower will
-31-
promptly pay such additional amounts including any penalties, interest or
expenses) as is necessary in order that the net amount received by such person
after the payment of such Taxes (including any Taxes on such additional amount)
shall equal the amount such person would have received had no such Taxes been
asserted.
(b) If the Borrower fails to pay any Taxes when due to the
appropriate taxing authority or fails to remit to the Administrative Agent, for
the account of the respective Lenders, the required receipts or other required
documentary evidence, the Borrower shall indemnify the Lenders for any
incremental Taxes, interest or penalties that may become payable by any Lender
as a result of any such failure. For purposes of this Section 4.7, a
-----------
distribution hereunder by the Administrative Agent or any Lender to or for the
account of any Lender shall be deemed a payment by the Borrower.
(c) Each Lender that is not a United States person as defined in
Section 7701(a)(3) of the Code (a "Non-U.S. Lender") shall deliver to the
---------------
Borrower and the Administrative Agent two copies of either U.S. Internal Revenue
Service Form 1001 or Form 4224, or any subsequent versions thereof or successors
thereto properly completed and duly executed by such Non-U.S. Lender claiming
complete exemption from, or a reduced rate of, U.S. federal withholding tax on
all payments by the Borrower under this Agreement and the other Loan Documents.
Such forms shall be delivered by each Non-U.S. Lender on or before the date it
becomes a party to this Agreement. In addition, each Non-U.S. Lender shall
deliver such forms promptly upon the obsolescence or invalidity of any form
previously delivered by such Non-U.S. Lender. Each Non-U.S. Lender shall
promptly notify the Borrower at any time it determines that it is no longer in a
position to provide any previously delivered certificate to the Borrower (or any
other form of certification adopted by the U.S. taxing authorities for such
purpose). The Borrower shall not be required to increase any such amounts
payable to any Non-U.S. Lender with respect to any Non-Excluded Taxes (i) that
are attributable to such Non-U.S. Lender's failure to comply with the
requirements of this Section 4.7(c) or (ii) that are United States withholding
--------------
taxes imposed on amounts payable to such Lender at the time the Lender becomes a
party to this Agreement, except to the extent that such Lender's assignor (if
any) was entitled, at the time of assignment, to receive additional amounts from
the Borrower with respect to such Non-Excluded Taxes pursuant to Section 4.7(a).
--------------
Notwithstanding any other provision of this Section 4.7(c), a Non-U.S. Lender
--------------
shall not be required to deliver any form pursuant to this Section 4.7(c) that
--------------
such Non-U.S. Lender is not legally able to deliver.
SECTION 4.8 Payments, Computations. Unless otherwise expressly
----------------------
provided, all payments by the Borrower pursuant to any Loan Document shall be
made by the Borrower to the Administrative Agent for the pro rata account of the
--- ----
Lenders entitled to receive such payment. All such payments required to be made
to the Administrative Agent shall be made, without setoff, deduction or
counterclaim, not later than 12:00 Noon, New York City time, on the date due, in
Same Day Funds, to such account as the Administrative Agent shall specify from
time to time by notice to the Borrower; provided that such payment shall be
--------
deemed made timely if made by wire transfer and by such time as an Authorized
Representative of the Borrower has advised the
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Administrative Agent of the applicable Federal Reserve System wire transfer
confirmation number. Funds received after that time shall be deemed to have been
received by the Administrative Agent on the next succeeding Business Day. The
Administrative Agent shall promptly remit in Same Day Funds to each Lender its
share, if any, of such payments received by the Administrative Agent for the
account of such Lender. All interest and fees shall be computed on the basis of
the actual number of days (including the first day but excluding the last day)
occurring during the period for which such interest or fee is payable over a
year comprised of 360 days (or, in the case of interest on a Base Rate Loan, 365
days or, if appropriate, 366 days). Whenever any payment to be made shall
otherwise be due on a day which is not a Business Day, such payment shall
(except as otherwise required by clause (c) of the definition of the term
----------
"Interest Period" with respect to LIBO Rate Loans) be made on the next
---------------
succeeding Business Day and such extension of time shall be included in
computing interest and fees, if any, in connection with such payment.
SECTION 4.9 Sharing of Payments. If any Lender shall obtain any
-------------------
payment or other recovery (whether voluntary, involuntary, by application of
setoff or otherwise) on account of any Obligation under the Loan Documents, the
EME Credit Support Guarantee or the EME Debt Service Reserve Guarantee (other
than pursuant to the terms of Sections 4.3, 4.4, 4.5, 4.6, and 4.7) in excess of
------------ --- --- --- ---
its pro rata share of payments then or therewith obtained by all Lenders holding
--- ----
Loans of such type, such Lender shall purchase from the other Lenders such
participations in Loans made by them as shall be necessary to cause such
purchasing Lender to share the excess payment or other recovery ratably with
each of them; provided, however, that if all or any portion of the excess
-------- -------
payment or other recovery is thereafter recovered from such purchasing Lender,
the purchase shall be rescinded and each Lender which has sold a participation
to the purchasing Lender shall repay to the purchasing Lender the purchase price
to the ratable extent of such recovery together with an amount equal to such
selling Lender's ratable share (according to the proportion of (a) the amount of
such selling Lender's required repayment to the purchasing Lender to (b) the
total amount so recovered from the purchasing Lender) of any interest or other
amount paid or payable by the purchasing Lender in respect of the total amount
so recovered. The Borrower agrees that any Lender so purchasing a participation
from another Lender pursuant to this Section 4.9 may, to the fullest extent
-----------
permitted by law, exercise all its rights of payment (including pursuant to
Section 4.10) with respect to such participation as fully as if such Lender were
------------
the direct creditor of the Borrower in the amount of such participation.
If under any applicable bankruptcy, insolvency or other similar law,
any Lender receives a secured claim in lieu of a setoff to which this Section
-------
4.9 applies, such Lender shall, to the extent practicable, exercise its rights
---
in respect of such secured claim in a manner consistent with the rights of the
Lenders entitled under this Section 4.9 to share in the benefits of any recovery
-----------
on such secured claim.
SECTION 4.10 Set-off. Each Lender shall, upon the occurrence of any
-------
Event of Default described in clauses (a) or (b) of Section 9.1.6 and, upon the
----------- --- -------------
occurrence of any Default described in clauses (c) through (d) of Section 9.1.6
----------- --- -------------
with respect to the Borrower or, with the
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consent of the Required Lenders, upon the occurrence and continuance beyond the
expiration of the applicable grace period, if any, of any other Event of
Default, have the right to appropriate and apply to the payment of the
Obligations owing to it (whether or not then due), and (as security for such
Obligations) the Borrower hereby grants to each Lender a continuing security
interest in, any and all balances, credits, deposits, accounts or moneys of the
Borrower then or thereafter maintained with such Lender or any bank controlling
such Lender; provided, however, that any such appropriation and application
-------- -------
shall be subject to the provisions of Section 4.9.
-----------
Each Lender agrees promptly to notify the Borrower and the
Administrative Agent after any such set-off and application made by such Lender;
provided, however, that the failure to give such notice shall not affect the
-------- -------
validity of such set-off and application.
The rights of each Lender under this Section 4.10 are in addition to
------------
other rights and remedies (including other rights of set-off under applicable
law or otherwise) which such Lender may have.
SECTION 4.11 Replacement of Lender. The Borrower shall be permitted
---------------------
to replace (with one or more replacement Lenders) any Lender which requests
reimbursement for amounts owing pursuant to Section 4.1, 4.3, 4.6 or 4.7;
--------------------- ---
provided that (i) such replacement does not conflict with any law, treaty, rule
--------
or regulation or determination of an arbitrator or a court or other governmental
authority, in each case applicable to the Borrower or such Lender or to which
the Borrower or such Lender or any of their respective property is subject, (ii)
no Default or Event of Default shall have occurred and be continuing at the time
of such replacement, (iii) the Borrower shall repay (or the replacement bank or
institution shall purchase, at par) all Loans and other amounts owing to such
replaced Lender prior to the date of replacement, (iv) the Borrower shall be
liable to such replaced Lender under Section 4.5 if any LIBO Rate Loan owing to
-----------
such replaced Lender shall be prepaid (or purchased) other than on the last day
of the Interest Period relating thereto, (v) the replacement bank or
institution, if not already a Lender, shall be reasonably satisfactory to the
Administrative Agent, (vi) the replaced Lender shall be obligated to make such
replacement in accordance with the provisions of Section 11.11.1 (provided that
--------------- --------
the Borrower or replacement Lender shall be obligated to pay the registration
and processing fee), (vii) until such time as such replacement shall be
consummated, the Borrower shall pay all additional amounts (if any) required
pursuant to Section 4.1, 4.3, 4.6 or 4.7, as the case may be, (viii) any such
--------------------- ---
replacement shall not be deemed to be a waiver of any rights which the Borrower,
the Administrative Agent or any other Lender shall have against the replaced
Lender, and (ix) if such replacement bank or institution is not already a
Lender, the Borrower shall pay to the Administrative Agent an administrative fee
of $3,500.
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ARTICLE V
DEBT SERVICE RESERVE ACCOUNT
SECTION 5.1 Debt Service Reserve Account. The Borrower shall
----------------------------
establish, for the benefit of the Lenders, in the name of the Collateral Agent,
the Debt Service Reserve Account, to be held and maintained by the Collateral
Agent in accordance with the Security Deposit Agreement.
SECTION 5.2 Debt Service Reserve Requirement. The Debt Service
--------------------------------
Reserve Requirement may be satisfied by the Borrower by one or a combination of
the following: (i) cash; (ii) a letter of credit issued by a commercial bank or
other financial institution whose long-term unsecured debt securities are rated
A or better by S&P's and A2 or better by Xxxxx'x; and (iii) an EME Debt Service
Reserve Guarantee.
ARTICLE VI
CONDITIONS TO LOANS
SECTION 6.1 Conditions to Effectiveness. This Agreement shall become
---------------------------
effective upon the satisfaction of each of the conditions precedent set forth in
this Section 6.1.
-----------
SECTION 6.1.1 Loan Documents. The Administrative Agent shall have
--------------
received: (i) this Agreement, executed and delivered by an Authorized
Representative of the Borrower, with a counterpart for each Lender; (ii) the
Guarantee and Collateral Agreement, executed and delivered by an Authorized
Representative of each Loan Party (together with an updated copy of the stock
register or other register of ownership interests of such Loan Party other than
the Borrower), with a counterpart or a copy for each Lender; (iii) the Mortgage
and Security Agreement, executed and delivered by an Authorized Representative
of each Loan Party which is a party to such agreement, with a counterpart or a
copy for each Lender; (iv) the Collateral Agency and Intercreditor Agreement,
executed and delivered by an Authorized Representative of each Loan Party, with
a counterpart or a copy for each Lender; (v) the Security Deposit Agreement,
executed and delivered by an Authorized Representative of each Loan Party, with
a counterpart or a copy for each Lender; (vi) the Intercompany Loan
Subordination Agreement, executed and delivered by an Authorized Representative
of each Loan Party, with a counterpart or a copy for each Lender; and (vii) for
the account of each Lender who so requests, its Notes, executed and delivered by
an Authorized Representative of the Borrower.
SECTION 6.1.2 Acquisition. The Acquisition shall have been
-----------
consummated on substantially the terms and conditions of the Asset Purchase
Agreement; and the Lenders have received copies of the Asset Purchase Agreement
and all related material documents reasonably requested by the Administrative
Agent, certified by an Authorized Representative of the Borrower, and the
Lenders shall be satisfied with the terms and conditions thereof (which shall
include a cash equity investment in the Borrower of at least $1,000,000,000).
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SECTION 6.1.3 EME Credit Support. The Administrative Agent shall
------------------
have received from Edison Mission Energy the EME Credit Support Guarantee.
SECTION 6.1.4 Debt Ratings. The Borrower shall have received written
------------
preliminary Debt Ratings of its senior secured long-term debt of BBB- or better
from S&P's and Baa3 or better from Xxxxx'x, in each case in form and substance
reasonably satisfactory to the Initial Lenders.
SECTION 6.1.5 Financial Statements. The Administrative Agent shall
--------------------
have received, with a copy for each Lender, the audited consolidated financial
statements of Edison Mission Energy for the 1997 Fiscal Year and the unaudited
consolidated financial statements of Edison Mission Energy for the 1998 Fiscal
Year.
SECTION 6.1.6 Projections; Rating Agency Presentations. The
----------------------------------------
Administrative Agent shall have received, with a copy for each Lender, (a)
satisfactory financial projections for the Borrower for the 1999-2019 Fiscal
Years, including pro forma consolidated financial statements, calculations of
--- -----
the projected Debt Service Coverage Ratios and the Environmental Capital
Expenditure Program and (b) the financial projections and other material
information provided to the rating agencies in connection with the issuance of
the Debt Ratings referred to in Section 6.1.4.
-------------
SECTION 6.1.7 Closing Fees, Expenses. The Administrative Agent shall
----------------------
have received for its own account, or for the account of each Lender or Lead
Arranger, as the case may be, all fees due and payable pursuant to Sections 3.3
---
and 11.3 and all costs and expenses for which invoices have been presented.
SECTION 6.1.8 Approvals. (a) All Governmental Approvals required in
---------
connection with the transactions contemplated by the Loan Documents, the
Acquisition and the conduct of the business of each of the Loan Parties are
listed on Schedule 7.4 and shall have been obtained or made, be in full force
------------
and effect and be final and any period for the filing of notice of rehearing or
application for judicial review of the issuance of each such Governmental
Approval shall have expired without any such notice or application having been
given or made, except as noted in Part B of Schedule 7.4. No such Governmental
------ ------------
Approval is the subject of any pending or, except as indicated in Part C of
------
Schedule 7.4, threatened judicial or administrative proceeding.
------------
(b) All consents and approvals required to be obtained from Persons
other than Governmental Authorities in connection with the transactions
contemplated by the Loan Documents and the Acquisition shall have been obtained
and shall be in full force and effect, other than such consents or approvals,
the failure of which to obtain, would not, individually or in the aggregate,
cause a Material Adverse Effect.
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SECTION 6.1.9 Consultants' Reports. The Administrative Agent shall
--------------------
have received, with a copy for each Lender, (i) an engineering report prepared
by Stone & Xxxxxxx and (ii) a market report prepared by Xxxxxx Bailly, in each
case in form and substance reasonably satisfactory to the Lenders.
SECTION 6.1.10 Lien Search; Recordings and Filings. (a) The
-----------------------------------
Administrative Agent shall have received results of a recent search by a Person
satisfactory to it that there are no Uniform Commercial Code, judgment or tax
lien filings on any of the assets of any Loan Party in each relevant
jurisdiction except for (i) Liens pursuant to the Loan Documents and (ii) Liens
to be discharged on or prior to the Effective Date pursuant to documentation
reasonably satisfactory to the Administrative Agent.
(b) All financing statements and other documents required to be filed,
registered or recorded in order to create, in favor of the Collateral Agent for
the benefit of the Secured Parties, a perfected, First Priority Lien shall have
been properly filed, registered or recorded in each office in each jurisdiction
in which such filings, registrations and recordations are required to perfect
the security interests created by the Security Documents, and any other action
required in the judgment of the Administrative Agent to perfect such security
interests as such First Priority Liens shall have been effected, the
Administrative Agent shall have received acknowledgment copies or other evidence
satisfactory to it of such filing, registration or recording, and the
Administrative Agent shall have received evidence satisfactory to it that all
necessary filing, recording and other fees and all taxes and expenses related to
such filings, registrations and recordings have been paid in full.
SECTION 6.1.11 Resolutions. The Administrative Agent shall have
-----------
received from each Loan Party a certificate, in form and substance reasonably
satisfactory to the Administrative Agent, dated the Effective Date, of its
Secretary, Assistant Secretary or other Authorized Representative of such Loan
Party as to:
(a) resolutions of its Board of Directors then in full force and
effect authorizing the execution, delivery and performance of each Loan
Document to be executed by it;
(b) the incumbency and signatures of those of its officers and
representatives authorized to act with respect to each Loan Document
executed by it; and
(c) such Loan Party's Organic Documents.
The Administrative Agent and each Lender may conclusively rely upon such
certificate until it shall have received a further certificate of the Secretary,
Assistant Secretary or other Authorized Representative of such Loan Party
canceling or amending such prior certificate.
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SECTION 6.1.12 Officer's Certificate. The Administrative Agent shall
---------------------
have received, with a copy for each Lender, a certificate of an Authorized
Representative of the Borrower, dated the Effective Date, in form and substance
reasonably satisfactory to the Administration Agent.
SECTION 6.1.13 Opinions of Counsel. The Administrative Agent shall
-------------------
have received opinions, dated the Effective Date and addressed to the
Administrative Agent and the Lenders, from (i) the general counsel to the Loan
Parties, (ii) the special New York and Federal Energy Regulatory Commission
counsel to the Loan Parties, (iii) the special Pennsylvania counsel to the Loan
Parties, (iv) the special New York counsel to the Lenders, and (v) the special
Pennsylvania counsel to the Lenders. Each such opinion shall be in form and
substance reasonably satisfactory to the Administrative Agent.
SECTION 6.1.14 Establishment of Accounts. The Administrative Agent
-------------------------
shall have received evidence satisfactory to it that the Borrower has
established the Revenue Account pursuant to Section 2.2(a) of the Security
--------------
Deposit Agreement.
SECTION 6.1.15 Surveys. The Administrative Agent and the Title
-------
Insurance Company each shall have received maps or plats of an as-built survey
of the sites of the real property covered by the Mortgage and Security Agreement
certified to the Administrative Agent and the Title Insurance Company in a
manner reasonably satisfactory to each of them, dated a date reasonably
satisfactory to the Administrative Agent and the Title Insurance Company,
prepared by an independent professional licensed land surveyor reasonably
satisfactory to the Administrative Agent and the Title Insurance Company, which
maps or plats and the surveys on which they are based shall (except as such
survey may fail to demonstrate a closed traverse within 35 feet at the reservoir
site) be made in accordance with the Minimum Standard Detail Requirements for
Land Title Surveys jointly established and adopted by the American Land Title
Association and the American Congress on Surveying and Mapping in 1992, and,
without limiting the generality of the foregoing, there shall be surveyed and
shown on such maps, plats or surveys the following: (i) the locations on such
sites of all the buildings, structures and other improvements and evidence
reasonably satisfactory to the Administrative Agent delineating the established
building setback lines; (ii) the lines of streets abutting the sites and width
thereof; (iii) all access and other easements appurtenant to the sites necessary
to use the sites; (iv) whether recorded, apparent from a physical inspection of
the sites or otherwise known to the surveyor, all roadways, paths, driveways,
easements, encroachments and overhanging projections and similar encumbrances
affecting the sites and any encroachments on any adjoining property by the
building structures and improvements on the sites; and (v) if the site is
described as being on a filed map, a legend relating the survey to said map.
SECTION 6.1.16 Title Insurance; Flood Insurance. (a) The
--------------------------------
Administrative Agent shall have received in respect of each parcel of owned real
property covered by the Mortgage and Security Agreement, a mortgagee's title
policy (or policies) or marked up unconditional binder for such insurance dated
the date of the recording of the Mortgage and Security Agreement. Each
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such policy shall (i) be in an amount reasonably satisfactory to the
Administrative Agent; (ii) insure that the Mortgage and Security Agreement
creates a valid first Lien on such parcel free and clear of all defects and
encumbrances, except those as may be approved by the Administrative Agent; (iii)
name the Collateral Agent for the benefit of the Secured Parties as the insured
thereunder; (iv) be in the form of an ALTA Loan Policy; (v) contain such
endorsements and affirmative coverage as the Administrative Agent may reasonably
request; and (vi) be issued by title companies reasonably satisfactory to the
Administrative Agent (including any such title companies acting as co-insurers
or reinsurers, at the option of the Administrative Agent). The Administrative
Agent shall have received evidence reasonably satisfactory to it that all
premiums in respect of each such policy, and all charges for Mortgage and
Security Agreement recording tax, if any, have been paid. The Administrative
Agent shall have also received a copy of all recorded documents referred to, or
listed as exceptions to title in, the title policy or policies referred to in
this subsection and a copy certified by such parties as the Administrative Agent
may deem reasonably appropriate, of all other documents affecting the property
covered by the Mortgage and Security Agreement as shall have been reasonably
requested by the Administrative Agent.
(b) If requested by the Administrative Agent, the Administrative
Agent shall have received (i) a policy of flood insurance which (A) covers any
parcel of improved real property which is encumbered by the Mortgage and
Security Agreement, (B) is written in an amount not less than the outstanding
principal amount of the indebtedness secured by the Mortgage and Security
Agreement which is reasonably allocable to such real property or the maximum
limit of coverage made available with respect to the particular type of property
under the National Flood Insurance Act of 1968, whichever is less, and (C) has a
term ending not later than the maturity of the Indebtedness secured by the
Mortgage and Security Agreement and (ii) confirmation that the Borrower has
received the notice required pursuant to Section 208(e)(3) of Regulation H of
the F.R.S. Board.
SECTION 6.1.17 Insurance. The Administrative Agent shall have
---------
received a letter from J&H Xxxxx & XxXxxxxx relating to insurance matters and
copies of certificates from the Borrower's insurers or insurance agents
evidencing that the insurance policies in place satisfy the requirements of
Section 8.1.5.
-------------
SECTION 6.2 All Loans. The obligation of each Lender to make any
---------
Loan (including its initial Loan) shall be subject to the satisfaction of each
of the conditions precedent set forth in this Section 6.2.
-----------
SECTION 6.2.1 Representations and Warranties; No Default. Both
------------------------------------------
before and after giving effect to any Borrowing (but, if any Default of the
nature referred to in Section 9.1.5 shall have occurred with respect to any
-------------
other Indebtedness, without giving effect to the application, directly or
indirectly, of the proceeds of such Borrowing), the following statements shall
be true and correct:
-39-
(a) the representations and warranties set forth in Article VII shall
-----------
be true and correct in all material respects with the same effect as if
then made (unless stated to relate solely to an earlier date, in which case
such representations and warranties shall be true and correct as of such
earlier date); and
(b) no Default or Event of Default has occurred and is continuing or
would result from such Borrowing.
SECTION 6.2.2 Borrowing Request. The Administrative Agent shall have
-----------------
received a Borrowing Request for such Borrowing. Each of the delivery of a
Borrowing Request and the acceptance by the Borrower of the proceeds of such
Borrowing shall constitute a representation and warranty by the Borrower that on
the date of such Borrowing (both immediately before and after giving effect to
such Borrowing and the application of the proceeds thereof) the statements made
in Section 6.2.1 are true and correct.
-------------
SECTION 6.2.3 Satisfactory Legal Form. All documents executed or
-----------------------
submitted pursuant hereto by or on behalf of the Borrower shall be satisfactory
in form and substance to the Administrative Agent and its counsel.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
In order to induce the Administrative Agent and each Lender to enter
into this Agreement and to make Loans hereunder, the Borrower represents and
warrants unto the Administrative Agent and each Lender as set forth in this
Article VII.
-----------
SECTION 7.1 Financial Information. (a) The consolidated balance
---------------------
sheet of the Borrower as at December 31, 1998, and the related consolidated
statements of income and cash flows of the Borrower, copies of which have been
furnished to the Administrative Agent, have been prepared in accordance with
GAAP consistently applied, and present fairly the consolidated financial
condition of the Borrower and its Subsidiaries as at the dates thereof and the
results of their operations for the periods then ended.
(b) The financial projections and other pro forma financial
---------
information provided to the Lenders have been prepared in good faith and are
based upon reasonable assumptions.
SECTION 7.2 Organization; Power. Each Loan Party (a) is a
-------------------
corporation or limited partnership validly organized and existing and in good
standing under the laws of the state of its incorporation, (b) is duly qualified
to do business and is in good standing as a foreign corporation or limited
partnership in each jurisdiction where the nature of its business requires such
qualification and (c) has all requisite corporate or partnership power and
authority and holds all material requisite Governmental Approvals to enter into
and perform its Obligations under this
-40-
Agreement, the Notes and each other Loan Document and to conduct the business of
owning and operating the Generating Station and the sale and marketing of
wholesale electric power and other products and services related thereto,
except, with respect to clauses (b) and (c) above, where the failure to be so
----------- ---
qualified or be in good standing or the failure to obtain such Governmental
Approvals would not, individually or in the aggregate, cause a Material Adverse
Effect.
SECTION 7.3 Due Authorization; Non-Contravention. The execution,
------------------------------------
delivery and performance by each Loan Party of each Loan Document to which it is
a party are within such Loan Party's corporate or partnership powers, have been
duly authorized by all necessary corporate or partnership action, and do not:
(a) contravene the Organic Documents of such Loan Party;
(b) contravene any material Requirement of Law or Contractual
Obligation, binding on or affecting such Loan Party; or
(c) result in, or require the creation or imposition of, any Lien
(other than pursuant to the Loan Documents) on any of the properties of
such Loan Party.
SECTION 7.4 Approvals. (a) All Governmental Approvals required in
---------
connection with the transactions contemplated by the Loan Documents, the
Acquisition and the conduct of the business of each of the Loan Parties are
listed on Schedule 7.4 and have been duly obtained or made and are in full force
------------
and effect. All such Governmental Approvals are final and any period for the
filing of notice of rehearing or application for judicial review of the issuance
of each such Governmental Approval has expired without any such notice or
application having been made, except as noted in Part B of Schedule 7.4. No
------ ------------
such Governmental Approval is the subject of any pending or, except as indicated
in Part C of Schedule 7.4, threatened judicial or administrative proceeding.
------ ------------
(b) All consents and approvals required to be obtained from Persons
other than Governmental Authorities in connection with the transactions
contemplated by the Loan Documents and the Acquisition have been obtained and
are in full force and effect, other than such consents or approvals, the failure
of which to obtain, would not, individually or in the aggregate, cause a
Material Adverse Effect.
SECTION 7.5 No Material Adverse Change. Since January 24, 1999,
--------------------------
there has not occurred any event or condition having a Material Adverse Effect.
SECTION 7.6 Accuracy of Information. (a) All factual information
-----------------------
heretofore or contemporaneously furnished by the Loan Parties and their
Affiliates in writing to the Administrative Agent or any Lender for purposes of
or in connection with this Agreement or any transaction contemplated hereby
(other than projections and other "forward-looking" information) is, and all
other such written factual information hereafter furnished by the Borrower in
writing to
-41-
the Administrative Agent or any Lender will be, true and materially accurate in
every material respect on the date as of which such information is dated or
certified, and such information is not, or shall not be, as the case may be,
incomplete by omitting to state any material fact necessary to make such
information not misleading. The information contained in the Information
Memorandum, dated at February 22, 1999, other than any opinions expressed in the
reports referred to in Section 6.1.9, was true and materially accurate in every
-------------
material respect on February 22, 1999, and on the Effective Date.
(b) All projections and other "forward-looking" information
heretofore or contemporaneously furnished by the Loan Parties and their
Affiliates in writing to the Administrative Agent or any Lender for the purposes
of or in connection with this Agreement or any transaction contemplated hereby
were prepared in good faith and are based on reasonable assumptions.
SECTION 7.7 Validity. Each Loan Document to which any Loan Party is
--------
a party constitutes, or, upon the due execution and delivery thereof by such
Loan Party, will constitute, the legal, valid and binding obligation of such
Loan Party enforceable in accordance with its terms (except as may be limited by
bankruptcy, insolvency or other similar laws affecting the enforcement of
creditors' rights generally and general principles of equity).
SECTION 7.8 Compliance with Law and Contractual Obligations. Each
-----------------------------------------------
Loan Party is in compliance with all Requirements of Law and Contractual
Obligations applicable to it, except to the extent that the failure to comply
therewith would not have a Material Adverse Effect.
SECTION 7.9 Regulations T, U and X. No Loan Party is engaged in the
----------------------
business of extending credit for the purpose of purchasing or carrying margin
stock, and no proceeds of any Loans will be used for a purpose which violates,
or would be inconsistent with, F.R.S. Board Regulation T, U or X. Terms for
which meanings are provided in F.R.S. Board Regulation T, U or X or any
regulations substituted therefor, as from time to time in effect, are used in
this Section with such meanings.
SECTION 7.10 Litigation. There is no pending or, to the knowledge of
----------
the Borrower, threatened litigation, action, proceeding, investigation or labor
controversy affecting any Loan Party or any of its properties, businesses,
assets or revenues or affecting any Governmental Approval described by Section
-------
7.4, which, if adversely determined (taking into account any insurance proceeds
---
payable under a policy where the insurer has accepted coverage without any
reservations), would have a Material Adverse Effect or which purports to
adversely affect the legality, validity or enforceability of any Loan Document.
SECTION 7.11 Ownership of Properties. Each Loan Party owns good and
-----------------------
marketable title to, or a valid leasehold in or other enforceable interest in,
all properties and assets, real and personal, tangible and intangible, of any
nature whatsoever (including patents,
-42-
trademarks, trade names, service marks and copyrights) purported to be owned,
leased or held by it, free and clear of all Liens, charges or claims (including
infringement claims with respect to patents, trademarks, copyrights and the
like) except as permitted pursuant to Section 8.2.2.
-------------
SECTION 7.12 Taxes. Each Loan Party has filed all tax returns and
-----
reports required by law to have been filed by it and has paid all taxes and
governmental charges thereby shown to be owing, except any such taxes or charges
which are being diligently contested in good faith by appropriate proceedings
and for which adequate reserves in accordance with GAAP shall have been set
aside on its books.
SECTION 7.13 Investment Company Act; Public Utility Holding Company
------------------------------------------------------
Act; Other Regulations. (a) The Borrower is not subject to any regulation as
----------------------
an "investment company" subject to the Investment Company Act of 1940, as
amended, and no Loan Party is a "holding company" or a "subsidiary company" or
an "affiliate" of a "holding company" under PUHCA, except that the Loan Parties
each are a "subsidiary company" of Edison International, which is a "holding
company" that is exempt from all regulation under PUHCA (except for Section
9(a)(2) thereof) pursuant to Section 3(a) thereof. No Loan Party is or will be
subject to regulation as a "public utility", "public utility company", "public
utility holding company", "electric corporation" or a subsidiary or affiliate of
any of the foregoing under the laws of the State of Pennsylvania or the State of
New York.
(b) EME Homer City (i) is an "exempt wholesale generator" under
PUHCA, (ii) is a member of, or otherwise has the right and authority to sell
electric power and related products and services into, the NY Pool and PJM and
(iii) has the authority to sell wholesale electric power at market-based rates
(not subject to any price cap or other market power mitigation measure).
SECTION 7.14 Environmental Warranties. Except as could not,
------------------------
individually or in the aggregate, be reasonably expected to have a Material
Adverse Effect:
(a) (i) All facilities and property owned, leased or operated by any
Loan Party have been, and continue to be, owned, leased or operated by such
Loan Party in compliance with all applicable Environmental Laws and (ii)
the Loan Parties are, and within the period of all applicable statutes of
limitation have been within the period of all applicable statutes of
limitations, in compliance with all applicable Environmental Laws.
(b) There are no pending or, to the knowledge of the Borrower,
threatened (i) claims, complaints, notices or requests for information
received by any Loan Party with respect to any alleged violation by such
Loan Party of any applicable Environmental Law, or (ii) complaints, notices
or inquiries to any Loan Party regarding potential liability under any
applicable Environmental Law.
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(c) Hazardous Materials are not present at, on, under or about any
property now or to the knowledge of the Borrower previously owned, leased
or operated by any Loan Party.
(d) Each Loan Party has obtained and is in compliance with all
Governmental Approvals required under any Environmental Law necessary for
such Loan Party's business.
(e) No property now or previously owned, leased or operated by any
Loan Party is listed or, to the knowledge of the Borrower, is proposed for
listing on the National Priorities List pursuant to any Environmental Law,
on the CERCLIS or on any similar state or local list of sites requiring
investigation or clean-up.
(f) To the knowledge of the Borrower, no conditions exist at, on,
under or about any property now or previously owned or leased by any Loan
Party or at any other location (including, without limitation, any location
to which Hazardous Materials have been sent for re-use or for recycling or
for treatment, storage or disposal) which, with the passage of time, or the
giving of notice or both, would give rise to liability under any applicable
Environmental Law.
(g) Other than as provided in the Asset Purchase Agreement, no Loan
Party has assumed or retained, by contract or operation of law, any
liabilities of any kind, fixed or contingent, known or unknown, under any
applicable Environmental Law.
SECTION 7.15 The Obligations. The Obligations are senior secured
---------------
Indebtedness of the Loan Parties ranking at least pari passu with all other
----------
senior secured Indebtedness of the Loan Parties.
SECTION 7.16 Year 2000 Matters. The Borrower has reviewed its
-----------------
operations and those of the other Loan Parties with a view to assessing whether
its businesses or the businesses of any of such other Loan Parties will, in the
receipt, transmission, processing, manipulation, storage, retrieval,
retransmission or other utilization of data, be vulnerable to a Year 2000
Problem or will be vulnerable to the effects of a Year 2000 Problem suffered by
any of the Loan Parties' major commercial counter-parties. Based on such review
the Borrower has no reason to believe that a Material Adverse Effect will occur
with respect to its businesses or operations or the businesses or operations of
any of the other Loan Parties resulting from a Year 2000 Problem.
SECTION 7.17 Pension and Welfare Plans. During the consecutive
-------------------------
twelve-month period prior to each date as of which the following representations
are made or deemed made, and prior to the date of any Borrowing hereunder, no
steps have been taken to terminate any Pension Plan; no contribution failure has
occurred with respect to any Pension Plan sufficient to give rise to a Lien
under Section 302(f) of ERISA or Section 412 of the Code; no condition exists or
event or transaction has occurred with respect to any Pension Plan which could
reasonably be expected to result in the incurrence by any Loan Party or any
member of the Controlled Group of any
-44-
material liability (other than liabilities incurred in the ordinary course of
maintaining the Pension Plan), fine or penalty and none of the following events
or conditions, either individually or in the aggregate, has resulted or is
reasonably likely to result in a material liability to any Loan Party or any
member of the Controlled Group: (i) a Reportable Event; (ii) a complete or
partial withdrawal from any Multiemployer Plan by any Loan Party or any member
of the Controlled Group; (iii) any liability of the Loan Parties or any member
of the Controlled Group under ERISA if the any Loan Party or any member of the
Controlled Group were to withdraw completely from all Multiemployer Plans as of
the annual valuation date most closely preceding the date on which this
representation is made or deemed made; or (iv) the Reorganization or Insolvency
of any Multiemployer Plan. Neither any Loan Party nor any member of the
Controlled Group has any contingent liability with respect to any post-
retirement benefit under a Welfare Plan which could reasonably be expected to
have a Material Adverse Effect, other than liability for continuation coverage
described in Part 6 of Title I of ERISA.
SECTION 7.18 Subsidiaries. Except as otherwise disclosed on Schedule
------------ --------
7.18, the Borrower has no Subsidiaries or Investments in other Persons.
----
ARTICLE VIII
COVENANTS
SECTION 8.1 Affirmative Covenants. The Borrower agrees with the
---------------------
Administrative Agent and each Lender that, until the Commitments have terminated
and all Obligations have been paid and performed in full, the Borrower shall,
and shall cause each of the other Loan Parties to, perform the obligations set
forth in this Section 8.1.
-----------
SECTION 8.1.1 Financial Information, Reports, Notices. The Borrower
---------------------------------------
shall furnish, or shall cause to be furnished, to the Administrative Agent
copies of the following financial statements, reports, notices and information:
(a) as soon as available and in any event within 60 days after the end
of each of the first three Fiscal Quarters of each Fiscal Year of the
Borrower, consolidated balance sheets of the Borrower (which will include
results for its consolidated subsidiaries) as of the end of such Fiscal
Quarter and consolidated statements of income and cash flows of the
Borrower (which will include results for its consolidated subsidiaries) for
such Fiscal Quarter and for the period commencing at the end of the
previous Fiscal Year and ending with the end of such Fiscal Quarter,
certified by an Authorized Representative of the Borrower with
responsibility for financial matters;
(b) as soon as available and in any event within 120 days after the
end of each Fiscal Year of the Borrower, commencing with the 1999 Fiscal
Year, a copy of the annual audit report for such Fiscal Year for the
Borrower (which will include results for its consolidated subsidiaries),
including therein consolidated balance sheets of the Borrower
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(which will include results for its consolidated subsidiaries) as of the
end of such Fiscal Year and consolidated statements of income and cash
flows of the Borrower (which will include results for its consolidated
subsidiaries) for such Fiscal Year, and accompanied by the opinion of
Xxxxxx Xxxxxxxx & Co. or other internationally recognized independent
auditors selected by the Borrower, which report shall state that such
consolidated financial statements present fairly in all material respects
the financial position for the periods indicated in conformity with GAAP
applied on a basis consistent with prior periods;
(c) concurrently with the delivery of the financial statements
referred to in Section 8.1.1(b), either: (i) the annual report provided to
----------------
senior management and shareholders of the Borrower for the preceding
calendar year with respect to the Generating Station, or (ii) a report for
the preceding calendar year with respect to the Generating Station covering
the following matters: (A) production, including availability, output,
planned outages and unplanned outages (and the reason for such unplanned
outages); (B) environmental matters; (C) health and safety matters, to the
extent the same shall have given rise to material claims against any Loan
Party; (D) implementation of the Environmental Capital Expenditure Program;
(E) significant plant activities, such as major plant overhauls,
alterations, modifications and other capital expenditures, significant
changes in plant operations and major operating incidents; and (F) market
activities, including quantum and average price of energy and capacity
delivered by the Generating Station to the NY Pool and PJM;
(d) concurrently with the delivery of the financial statements
referred to in Section 8.1.1(b), an operating budget for the Generating
--------
Station for the current calendar year, together with, in the case of each
calendar year beginning with the year 2000, an "income statement variance
report" showing the actual experience for the preceding calendar year (or
portion thereof) against the income statement projections for the preceding
calendar year (or portion thereof);
(e) on each Quarterly Payment Date on which the Borrower intends to
make any Investment pursuant to Section 8.2.5(b) or any Restricted Payment
----------------
pursuant to clause (b) of the proviso contained in Section 8.2.7 and,
-------------
commencing July 1, 1999, within 60 days after each other Quarterly Payment
Date, a certificate, executed by an Authorized Representative of the
Borrower with responsibility for financial matters, showing (i) the actual
Debt Service Coverage Ratio for the 12-month period ended on the last day
of the immediately preceding Fiscal Quarter, (ii) the projected Debt
Service Coverage Ratio for the 12-month period commencing on the first day
of the then current Fiscal Quarter and (iii) the projected Debt Service
Coverage Ratio for the 12-month period commencing on the first anniversary
of the first day of the then current Fiscal Quarter, in each case, in
reasonable detail with appropriate calculations and computations and, in
the case of projections, calculated on the basis of stated assumptions
reasonably acceptable to the Administrative Agent;
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(f) as soon as possible and in any event within five Business Days
after any Authorized Representative of the Borrower obtains knowledge of
the occurrence of (i) each Default under this Agreement and (ii) any
default under any other material agreement to which the any Loan Party is a
party or any termination thereof, a statement of such Authorized
Representative setting forth details of such Default, default or
termination and the action which such Loan Party has taken and proposes to
take with respect thereto;
(g) as soon as possible and in any event within five Business Days
after (i) the commencement of, or the occurrence of any material adverse
development with respect to, any litigation, action, proceeding, or labor
controversy of the type described in Section 7.10 or (ii) the commencement
------------
of any labor controversy, litigation, action, proceeding of the type
described in Section 7.10, notice thereof and, upon request of the
------------
Administrative Agent, copies of all documentation relating thereto (other
than documentation subject to the attorney-client privilege);
(h) promptly after the sending or filing thereof, copies of all
reports and registration statements which the Borrower files with the
Securities and Exchange Commission or any national securities exchange;
(i) immediately upon becoming aware of the institution of any steps by
the Borrower or any other Person to terminate any Pension Plan (other than
a standard termination under ERISA Section 4041(b)), or the failure to make
a required contribution to any Pension Plan if such failure is sufficient
to give rise to a Lien under Section 302(f) of ERISA or Section 412 of the
Code, or the taking of any action with respect to a Pension Plan which
could result in the requirement that the Borrower furnish a bond or other
security to the PBGC or such Pension Plan, or the occurrence of any event
with respect to any Pension Plan which could result in the incurrence by
the Borrower or any member of the Controlled Group of any material
liability (other than liabilities incurred in the ordinary course of
maintaining the Pension Plan), fine or penalty, or any increase in the
contingent liability of the Borrower with respect to any post-retirement
Welfare Plan benefit the occurrence or expected occurrence of any
Reportable Event or the termination, Reorganization or Insolvency of any
Multiemployer Plan or the complete or partial withdrawal by any Loan Party
or any member of the Controlled Group from a Multiemployer Plan, notice
thereof and copies of all documentation relating thereto;
(j) as soon as possible and in any event within five Business Days
after any Authorized Representative of the Borrower obtains knowledge of
the occurrence or notice of any changes in Borrower's Debt Rating by
Xxxxx'x or S&P or any other rating agency which maintains a Debt Rating on
the Borrower which is used in determining the Applicable Margin;
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(k) within ten Business Days after each anniversary of the Effective
Date, a certificate from EME Homer City's insurers or insurance agents
evidencing that the insurance policies in place satisfy the requirements of
Section 8.1.5;
-------------
(l) as soon as possible and in any event within five Business Days
after any Authorized Representative of the Borrower obtains (i) knowledge
of the occurrence, notice of any casualty, damage or loss to the Generating
Station, whether or not insured, through fire, theft, other hazard or
casualty, involving a probable loss of $3,000,000 or more or (ii) knowledge
of the occurrence, notice of any cancellation, notice of threatened or
potential cancellation or material change in the terms, coverage or amounts
of any policy of insurance required to be maintained pursuant to Section
-------
8.1.5;
-----
(m) as soon as possible and in any event within five Business Days
after any Authorized Representative of the Borrower obtains knowledge of
the occurrence, notice of any material modification of the Environmental
Capital Expenditure Program; and
(n) as soon as possible and in any event within five Business Days
after any Authorized Representative of the Borrower obtains knowledge of
the occurrence, notice that any Governmental Authority may revoke, or
refuse to grant or renew, or materially modify, any material Governmental
Approval held or sought by any Loan Party.
SECTION 8.1.2 Continuation of Business and Maintenance of Existence.
-----------------------------------------------------
The Borrower shall, and shall cause each of the other Loan Parties to, continue
to engage in business of owning and operating the Generating Station and the
sale and marketing of wholesale electric power and other products and services
related thereto, and preserve, renew and keep in full force and effect its
corporate or partnership existence and take all reasonable action to maintain
all material rights, privileges and franchises necessary or desirable in the
normal conduct of its business, except, in each case, as otherwise permitted by
Section 8.2.3.
-------------
SECTION 8.1.3 Compliance with Requirements of Law and Contractual
---------------------------------------------------
Obligations and Laws. The Borrower shall, and shall cause each of the other
--------------------
Loan Parties to, comply with all Requirements of Law and Contractual
Obligations, such compliance to include the payment, before the same become
delinquent, of all taxes, assessments and governmental charges or levies, except
to the extent non-compliance would not have a Material Adverse Effect.
SECTION 8.1.4 Maintenance of Generating Station. The Borrower shall,
---------------------------------
and shall cause EME Homer City to, (a) maintain the Generating Station in all
material respects (i) in good condition, repair and working order (ordinary wear
and tear excepted), except where the failure so to do would not have a Material
Adverse Effect, (ii) in accordance with Prudent Industry Practice, (iii) in
compliance with all material Requirements of Law and (iv) in accordance with the
terms of all insurance policies required to be maintained pursuant to Section
-------
8.1.5, and (b) make such repairs, renewals, replacements, betterments and
-----
improvements to the Generating
-48-
Station as in the reasonable judgment of the Borrower and EME Homer City are
necessary so that the Generating Station may be operated in accordance with its
intended purpose.
SECTION 8.1.5 Insurance. (a) The Borrower shall cause EME Homer City
---------
to maintain or cause to be maintained with financially sound and reputable
insurance companies, insurance for such amounts against such risks, loss, damage
and liability as are customarily insured against by other enterprises of like
size and type as that of the Generating Station, subject to the availability of
such coverage on commercially reasonable terms, all on terms and conditions
which are in accordance with good industry practice and, in any event, including
the insurance described on Schedule 8.1.5, provided that where deviations
-------------- --------
therefrom are based upon commercial unavailability, the same shall be
satisfactory to the Administrative Agent (with such substitute insurance
coverage being the most equivalent to the required coverage that is available on
commercially reasonable terms):
(b) All such policies of insurance shall:
(i) provide that, except in the case of third party liability
insurance, the Collateral Agent shall be named as loss payee and the
insurer shall waive any rights of subrogation against the Secured Parties;
(ii) with respect to third party liability insurance, the Secured
Parties shall be named as additional insureds;
(iii) provide that (A) no cancellation or termination of such
insurance, (B) no reduction in the scope of coverage or the limits of
liability of such insurance and (C) no change in the applicable provisions
required by this subsection shall be effective for 30 days after notice is
given by the insurers to the Administrative Agent and the Collateral Agent
of such cancellation, termination, reduction or change;
(iv) waive all claims for insurance premiums or commissions or
additional premiums or assessments against the Secured Parties;
(v) provide that such insurance shall be primary insurance and that
the insurers under such insurance policies shall be liable under such
policies without right of contribution from any other insurance coverage
effected by the Secured Parties under any other insurance policies with any
other insurance companies covering a loss which is also covered under the
insurance policies maintained by EME Homer City pursuant to this
subsection; and
(vi) waive any right of the insurers to setoff or counterclaim or to
make any other deductions, whether by way of attachment or otherwise, as
against the Secured Parties, and provide that, in respect of the interest
of the Secured Parties, the insurance afforded by the policies shall not be
invalidated by any action or inaction of an insured and
-49-
shall insure the Secured Parties' interest, as it appears, regardless of
any breach or violation by the insured of any warranties, declarations or
conditions contained in such policies.
SECTION 8.1.6 Books and Records. The Borrower shall, and shall cause
-----------------
each of the other Loan Parties to, keep books and records which accurately
reflect all of its business affairs and transactions and permit the
Administrative Agent and each Lender or any of their respective representatives
(at the Administrative Agent's or such Lender's expense), at reasonable times
and intervals upon reasonable prior notice, to visit all of its offices and
sites, to discuss its financial matters with its officers and independent public
accountant. The Borrower shall, at any reasonable time and from time to time
upon reasonable prior notice, permit the Administrative Agent and the Lenders or
any of their respective agents or representatives to examine and make copies of
and abstracts from the records and books of account of the Loan Parties;
provided that by virtue of this Section 8.1.6 the Borrower shall not be deemed
-------- -------------
to have waived any right to confidential treatment of the informational
obtained, subject to the provisions of applicable law or court order.
SECTION 8.1.7 Year 2000 Matters. The Borrower shall, and shall cause
-----------------
each of the other Loan Parties to, ensure that its computer based systems are
able to effectively process data including dates on and after January 1, 2000.
SECTION 8.1.8 Environmental Covenant. The Borrower shall, and shall
----------------------
cause each of the other Loan Parties to, and shall take all reasonable efforts
to, ensure that all of its or such other Loan Parties' tenants, subtenants,
contractors, subcontractors and invitees shall:
(a) comply with all applicable Environmental Laws, obtain, comply with
and maintain all necessary Governmental Approvals required under any
applicable Environmental Law, except where noncompliance, individually or
in the aggregate, could not reasonably be expected to result in a Material
Adverse Effect;
(b) promptly upon the Administrative Agent's request if there has been
an Event of Default which has not been fully and timely cured, permit an
environmental consultant whom the Administrative Agent in its discretion
designates to perform an environmental assessment (including, reviewing
documents; interviewing knowledgeable employees and representatives of the
Borrower; and sampling and analyzing soil, air, surface water, groundwater,
and/or other media in or about property owned or leased by the Borrower, or
on which operations of the Borrower otherwise take place). Such
environmental assessment shall be in form, scope and substance reasonably
satisfactory to the Administrative Agent. The Borrower shall cooperate
fully in the conduct of such environmental assessment upon written demand
by the Administrative Agent. The Administrative Agent shall perform, or
cause its agents and representatives to perform, the environmental
assessment in such a manner as to minimize to the extent practicable any
disruption with the conduct of operations of the involved property.
Pursuant to this
-50-
Section 8.1.8(b), the Administrative Agent shall have the right, but
----------------
shall not have any duty, to request and/or obtain such environmental
assessment; and
(c) provide copies of such information to evidence compliance with
this Section 8.1.8 as the Administrative Agent may reasonably request from
-------------
time to time.
SECTION 8.1.9 Further Assurances. Upon the request of the
------------------
Administrative Agent, the Borrower shall, and shall cause each of the other Loan
Parties to, promptly perform or cause to be performed any and all acts and
execute or cause to be executed any and all documents (including, financing
statements and continuation statements) for filing under the provisions of the
Uniform Commercial Code or any other Requirement of Law which are necessary or
advisable to maintain in favor of the Collateral Agent, for the benefit of the
Secured Parties, Liens on the Collateral that are duly perfected in accordance
with all applicable Requirements of Law.
SECTION 8.1.10 Additional Collateral. With respect to any assets
---------------------
acquired after the Effective Date by any Loan Party that are intended to be
subject to the Lien created by any of the Security Documents but which are not
so subject, promptly (and in any event within 30 days after the acquisition
thereof): (a) execute and deliver to the Collateral Agent such amendments to
the relevant Security Documents or such other documents as the Administrative
Agent shall deem necessary or advisable to grant to the Collateral Agent, for
the benefit of the Secured Parties, a Lien on such assets; and (b) take all
actions necessary or advisable to cause such Lien to be duly perfected in
accordance with all applicable Requirements of Law, including the filing of
financing statements in such jurisdictions as may be requested by the
Administrative Agent.
SECTION 8.1.11 Use of Proceeds. (a) The Borrower shall use the
---------------
proceeds of the 364-Day Term Loans to finance a portion of the Acquisition.
(b) The Borrower shall use the proceeds of the Construction Term
Loans to finance costs associated with certain pollution control equipment to be
installed in the Generating Station pursuant to the Environmental Capital
Expenditure Program.
(c) The Borrower shall use the proceeds of the Revolving Loans for
general working capital purposes.
SECTION 8.1.12 Recovery Events. Not more than 30 days after the
---------------
occurrence of any Recovery Event, the Borrower shall give notice thereof to the
Administrative Agent and the Collateral Agent and follow the procedures
indicated below as applicable:
(a) if the settlement or payment related to such Recovery Event is
under $50,000,000, the Borrower shall, or shall cause EME Homer City to,
apply the Net Cash Proceeds of such Recovery Event to the payment of the
cost of restoration or replacement of the asset or assets in respect of
which such Recovery Event occurred within 12 months from the date of
receipt of such proceeds, provided that the Administrative Agent and the
--------
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Collateral Agent receive from the Borrower, within 45 days of the Recovery
Event, a notice (a "Reinvestment Notice") executed by an Authorized
-------------------
Representative of the Borrower (i) setting forth in reasonable detail the
nature of such restoration or replacement and the estimated cost and time
to complete such restoration or replacement and (ii) stating that (A) no
Default or Event of Default has occurred and is continuing, (B) such
restoration or replacement is technologically and economically feasible,
(C) the Net Cash Proceeds of such Recovery Event, together with other
resources available to the Borrower or EME Homer City, are sufficient to
pay the estimated cost of completing such restoration or replacement and
(D) the Borrower has sufficient resources (through business interruption
insurance or otherwise) to pay all Debt Service projected to become due and
payable prior to the completion of such restoration or replacement; or
(b) if the settlement or payment related to such Recovery Event is
$50,000,000 or more, then no later than six months following such
occurrence, the Borrower shall either:
(i) make a prepayment of all Net Cash Proceeds of such Recovery
Event pursuant to Section 3.1.2(b); or
---------------
(ii) deliver to the Administrative Agent and the Collateral
Agent: (A) a Reinvestment Notice confirming the Borrower's decision
to apply the Net Cash Proceeds of such Recovery Event to the payment
of the cost of restoration or replacement of the asset or assets in
respect of which such Recovery Event occurred; and (B) a report of an
independent engineer, such engineer and such report to be satisfactory
to the Administrative Agent, confirming the information set forth in
clauses (i) and (ii)(B) of the Borrower's Reinvestment Notice relating
thereto.
SECTION 8.2 Negative Covenants. The Borrower agrees with the
------------------
Administrative Agent and each Lender that, until the Commitments have terminated
and all Obligations have been paid and performed in full, the Borrower will, and
will cause each of the other Loan Parties to, perform the obligations set forth
in this Section 8.2.
-----------
SECTION 8.2.1 Restrictions on Indebtedness. The Borrower shall not,
----------------------------
and shall not permit any other Loan Party to, create, incur, assume or suffer to
exist any Indebtedness other than:
(a) Capitalized Lease Liabilities entered into by EME Homer City in
the ordinary course of business not to exceed at any time an aggregate
principal amount equal to $10,000,000;
(b) Indebtedness of the Borrower under Interest Rate Hedging
Transactions entered into with respect to the Loans with any Lender;
-52-
(c) Indebtedness of the Borrower incurred after repayment of the 364-
Day Term Loans and the termination of the 364-Day Term Loan Commitments,
provided that(i) the Borrower shall have delivered to the Lenders a pro
-------- ---
forma calculation of the Debt Service Coverage Ratio for the preceding 12-
-----
month period (or, if such calculation is being delivered prior to the first
anniversary of the Effective Date, for such shorter period of not less than
six months) indicating that, had such Indebtedness been outstanding and had
the maximum amount of Indebtedness available to be drawn under the
Commitments been outstanding during such period, the Debt Service Coverage
Ratio for such period would have been greater than 2.75 to 1.00 and (ii)
the Borrower shall have received written confirmation that the incurrence
of such Indebtedness would not result in a downgrade of the Borrower's
senior secured Debt Rating below BBB- or Baa3 from S&P and Xxxxx'x,
respectively;
(d) Indebtedness consisting of reimbursement obligations of any Loan
Party with respect of (i) letters of credit, surety bonds and performance
bonds used by such Loan Party in the ordinary course of business in an
aggregate amount not to exceed $15,000,000 at any time, or (ii) letters of
credit used by the Borrower to meet the Debt Service Reserve Requirement or
analogous requirements in connection with the incurrence of any
Indebtedness described in clause (e) below; provided that the aggregate
--------- --------
amount of outstanding reimbursement obligations of all Loan Parties under
this clause (d) shall not be in excess of $65,000,000 at any time;
----------
(e) Indebtedness of the Borrower incurred to refinance the 364-Day
Term Loans or any other existing Indebtedness of the Borrower, provided
--------
that either: (i) (A) the average life of such Indebtedness shall not be
less than, in the case of Indebtedness incurred to refinance the 364-Day
Term Loans, 5 years, or, in the case of Indebtedness incurred to refinance
other Indebtedness of the Borrower, the average life of the Indebtedness so
refinanced and (B) the principal amount of such Indebtedness shall not
exceed the amount of the Indebtedness so refinanced, plus an amount for
fees and expenses of issuance, provided, further, in the case of
-------- -------
Indebtedness incurred to refinance the 364-Day Term Loans, the principal
amount of such Indebtedness may exceed the aggregate principal amount of
the 364-Day Term Loan by an amount up to $75,000,000, inclusive of an
amount for fees and expenses of issuance, so long as (i) (A) the amount
available to be drawn under the EME Credit Support Guarantee is increased
by an amount equal to the amount by which the Borrower's projected Cashflow
Available for Debt Service for the period from the anticipated date of
incurrence of such Indebtedness through December 31, 2001, would need to be
increased in order for the projected Debt Service Coverage Ratio for such
period to equal 2.00 to 1.00 and (B) the Borrower shall have received
written confirmation that such Indebtedness is rated at BBB- or Baa3 or
better from S&P and Xxxxx'x, respectively; or (ii) (A) the Borrower shall
have delivered to the Lenders a pro forma calculation of the Debt Service
--- -----
Coverage Ratio for the preceding 12-month period (or, if such calculation
is being delivered prior to the first anniversary of the Effective Date,
for such shorter period of not less than six months)
-53-
indicating that, had such Indebtedness been outstanding and had the maximum
amount of Indebtedness available to be drawn under the Commitments been
outstanding during such period, the Debt Service Coverage Ratio for such
period would have been greater than2.75 to 1.00 and (B) the Borrower shall
have received written confirmation that such Indebtedness is rated BBB- or
Baa3 or better from S&P and Xxxxx'x, respectively;
(f) Indebtedness in the form of subordinated, unsecured intercompany
loans between the Loan Parties that is subject to the Intercompany Loan
Subordination Agreement;
(g) Indebtedness in the form of guarantees made by the Borrower in the
ordinary course of business related to the Generating Station in connection
with (i) fuel procurement or sales, (ii) purchases, sales or exchanges made
by Affiliates of the Borrower related to physical capacity and energy from
the Generating Station and financial instruments related thereto and (iii)
purchases, sales or exchanges of energy or emissions credits, so long as,
in the case of each of clauses (i), (ii) and (iii) above, such activities
---------------- ---
are not entered into for speculative purposes; and
(h) other unsecured Indebtedness of the Loan Parties not to exceed
$20,000,000 in the aggregate outstanding at any time.
SECTION 8.2.2 Liens. The Borrower shall not, and shall not permit
-----
any other Loan Party to, create, incur, assume or suffer to exist any Lien upon
any of such Loan Party's respective property, revenues or assets, whether now
owned or hereafter acquired, except:
(a) Liens for taxes, assessments or other governmental charges or
levies not at the time delinquent or thereafter payable without penalty or
which are being diligently contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with GAAP shall
have been set aside on its books;
(b) Liens of carriers, warehousemen, mechanics, materialmen and
landlords incurred in the ordinary course of business for sums not overdue
or which are being diligently contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with GAAP shall
have been set aside on its books;
(c) Liens incurred in the ordinary course of business in connection
with workmen's compensation, unemployment insurance or other forms of
governmental insurance or benefits;
(d) Liens granted as security for the performance of tenders,
statutory obligations, leases and contracts (other than for borrowed money)
entered into in the ordinary course of business or to secure obligations on
surety or appeal bonds;
-54-
(e) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount and which do not in any case
materially detract from the value of the property subject thereto or
materially interfere with the ordinary conduct of the business of such Loan
Party;
(f) judgment Liens in existence less than 30 days after the entry
thereof or with respect to which execution has been stayed or the payment
of which is covered in full (subject to a customary deductible) by
insurance maintained with responsible insurance companies;
(g) extensions or renewals of any Lien otherwise permitted to be
incurred under this Section 8.2.2 securing Indebtedness in an amount not
-------------
exceeding the principal amount of, and accrued interest on, the
Indebtedness secured by such Lien as so extended or renewed at the time of
such extension or renewal; provided that such Lien shall apply only to the
--------
same property theretofore previously securing such Indebtedness;
(h) Liens, title defects and adverse claims that neither individually
nor in the aggregate materially diminish the use or value of the Loan
Party's property affected thereby;
(i) Liens created pursuant to the Loan Documents; and
(j) Liens securing Indebtedness permitted by Section 8.2.1(b), (c) or
---------------------
(e).
---
SECTION 8.2.3 Consolidation, Merger. The Borrower shall not, and
---------------------
shall not permit any other Loan Party to, liquidate or dissolve, consolidate
with, or merge into or with, any other Person, or purchase or otherwise acquire
all or substantially all of the assets of any Person (or of any division
thereof), except, provided that no Default or Event of Default is then
--------
continuing or would occur after giving effect thereto (including, without
limitation, a Change in Control), the Borrower may consolidate with or merge
into any other Person if the Borrower is the surviving corporation.
SECTION 8.2.4 Asset Dispositions. The Borrower shall not, and shall
------------------
not permit any other Loan Party to, sell, transfer, lease, contribute or
otherwise convey, or grant options, warrants or other rights with respect to,
all or any substantial part of its assets (including accounts receivable and
capital stock of or other ownership interests in Subsidiaries) to any Person,
unless:
(a) such sale, transfer, lease, contribution or conveyance is in the
ordinary course of its business, including sales of worn-out or obsolete
equipment; or
(b) the net book value of all such assets, together with the net book
value of all other assets sold, transferred, leased, contributed or
conveyed otherwise than in the
-55-
ordinary course of business by any Loan Party pursuant to this Section
-------
8.2.4(b) during the most recent consecutive four quarter period since the
--------
Effective Date, does not exceed $10,000,000 in the aggregate;
provided, however, that notwithstanding anything to the contrary contained
-------- -------
herein, any Loan Party may sell or otherwise dispose of (i) assets as and to the
extent necessary to comply with Requirements of Law and (ii) Cash Equivalent
Investments and provided, further, that any sale or disposition of assets
-------- -------
pursuant to clause (ii) of this proviso shall not be included in the calculation
-----------
of the aggregate net book value of assets sold pursuant to this Section 8.2.4.
--------------
SECTION 8.2.5 Subsidiaries, Investments. The Borrower shall not
-------------------------
create or acquire any Subsidiaries other than those identified on Schedule 7.18.
--------------
The Borrower shall not, and shall not permit any other Loan Party to, create or
acquire or, make, incur, assume or suffer to exist any Investment in any other
Person, except:
(a) Investments in EME Homer City for purposes of enabling it to
implement the Environmental Capital Expenditure Program;
(b) Investments in EME Homer City on any Quarterly Payment Date for
purposes of enabling it to make other capital expenditures for improvements
to the Generating Station, provided that (i) no Default or Event of Default
--------
shall be in existence or shall occur after giving effect to the making of
such Investment, (ii) the actual Debt Service Coverage Ratio for the 12-
month period (or, in the case of Investments proposed to be made prior to
April 1, 2000, such shorter period commencing April 1, 1999, and) ended on
the last day of the immediately preceding Fiscal Quarter, (iii) the
projected Debt Service Coverage Ratio for the 12-month period commencing on
the first day of the then current Fiscal Quarter, (iv) the projected Debt
Service Coverage Ratio for the 12-month period commencing on the first
anniversary of the first day of the then current Fiscal Quarter, in each
case shall be no less than 1.50 to 1.00 through December 31, 2001, and 1.70
to 1.00 thereafter, (v) the Debt Service Reserve Requirement is satisfied
and (vi) any debt service reserve requirement then applicable to Senior
Debt other than the Loans is satisfied; and
(c) Cash Equivalent Investments, provided that any Investment which
--------
when made complies with the requirements of the definition of the term
"Cash Equivalent Investment" may continue to be held notwithstanding that
--------------------------
such Investment if made thereafter would not comply with such requirements.
SECTION 8.2.6 Transactions with Affiliates. The Borrower shall not,
----------------------------
and shall not permit any other Loan Party to, enter into, or cause, suffer or
permit to exist, any arrangement or contract with any of their respective
Affiliates unless such arrangement or contract is (i) fair and reasonable to the
Borrower or such other Loan Party and is an arrangement or contract of the kind
which would be entered into by a prudent Person in the position of the Borrower
or such
-56-
other Loan Party with a Person which is not one of its Affiliates and (ii)
transactions otherwise permitted under Section 8.2. The Borrower shall not
-----------
permit EME Homer City to amend, supplement or otherwise modify the Energy Sales
Agreement without the written consent of the Required Lenders, which consent
shall not be unreasonably withheld.
SECTION 8.2.7 Restricted Payments. The Borrower shall not, and shall
-------------------
not permit any other Loan Party to, declare or pay any dividend (other than
dividends payable solely in common stock of the Person making such dividend) on,
or make any payment on account of, or set apart assets for a sinking or other
analogous fund for, the purchase, redemption, defeasance, retirement or other
acquisition of, any shares of any class of capital stock of or other ownership
interest in any Loan Party or any warrants or options to purchase any such stock
or ownership interest, whether now or hereafter outstanding, or make any other
distribution in respect thereof, either directly or indirectly, whether in cash
or property or in obligations of any Loan Party (such declarations, payments,
setting apart, purchases, redemptions, defeasances, retirements, acquisitions
and distributions being herein called "Restricted Payments"); provided,
------------------- --------
however, that: (a) any Subsidiary of the Borrower may make Restricted Payments
-------
to the Borrower or any wholly owned Subsidiary of the Borrower; and (b) the
Borrower may make Restricted Payments in respect of its capital stock on any
Restricted Payment Date if: (i) the Borrower has paid all amounts then due and
payable in respect of the Senior Debt; (ii) no Default or Event of Default shall
have occurred and be continuing or will occur after giving effect to the making
of such payment; (iii) (A) the actual Debt Service Coverage Ratio for the 12-
month period (or, in the case of Restricted Payments proposed to be made prior
to April 1, 2000, such shorter period commencing April 1, 1999, and) ended on
the last day of the immediately preceding Fiscal Quarter, (B) the projected Debt
Service Coverage Ratio for the 12-month period commencing on the first day of
the then current Fiscal Quarter and (C) the projected Debt Service Coverage
Ratio for the 12-month period commencing on the first anniversary of the first
day of the then current Fiscal Quarter, in each case shall be no less than 1.50
to 1.00 through December 31, 2001, and 1.70 to 1.00 thereafter; (iv) the Debt
Service Reserve Requirement is satisfied; and (v) any debt service reserve
requirement then applicable to Senior Debt other than the Loans is satisfied.
SECTION 8.2.8 ERISA. The Borrower shall not, and shall not permit
-----
any other Loan Party to, engage in any prohibited transactions under Section 406
of ERISA or under Section 4975 of the Code, which would subject the Borrower or
such other Loan Party to any tax, penalty or other liabilities that, in each
case, would have a Material Adverse Effect.
SECTION 8.2.9 Restrictive Agreements. The Borrower shall not, and
----------------------
shall not permit any other Loan Party to, enter into any agreement (excluding
any Loan Document and any agreement governing any Indebtedness permitted by
clause (b) of Section 8.2.1 as to the assets financed with the proceeds of such
---------- -------------
Indebtedness) prohibiting:
(a) the ability of the Borrower to amend or otherwise modify any Loan
Document; or
-57-
(b) the ability of any Loan Party other than the Borrower to make any
payments, directly or indirectly, to the Borrower by way of dividend,
advances, repayments of loans or advances, reimbursements of management and
other intercompany charges, expenses and accruals or other returns on
investments, or any other agreement or arrangement which restricts the
ability of any such Loan Party to make any payment, directly or indirectly,
to the Borrower where such prohibition or restriction has a Material
Adverse Effect.
SECTION 8.2.10 Limitation on Lines of Business. The Borrower shall
-------------------------------
not, and shall not allow any other Loan Party to, change its legal form or
Organic Documents, change its Fiscal Year or engage in any business other than
the ownership, maintenance and operation of Generating Station, the sale of
wholesale electric power therefrom and related products and services and such
other business as may be reasonably incidental thereto.
SECTION 8.2.11 Regulation of Parties. The Borrower shall not, and
---------------------
shall not permit any other Loan Party to, take any action which could reasonably
be expected to result in (a) any Loan Party (i) being subject to regulation as a
"public utility", "public utility company", "public utility holding company",
"electric corporation" or a subsidiary or affiliate of any of the foregoing
under the laws of the State of Pennsylvania or the State New York or (ii) being
a "holding company" or a "subsidiary company" or an "affiliate" of a "holding
company" under PUHCA (except to the extent that each Loan Party is a "subsidiary
company" of Edison International, which is a "holding company" that is exempt
from all regulation under PUHCA (except for Section 9(a)(2) thereof) pursuant to
Section 3(a) thereof), (b) the failure of EME Homer City to (i) be an "exempt
wholesale generator" under PUHCA, (ii) be a member of, or otherwise have the
right and authority to sell electric power and related products and services
into, the NY Pool and PJM or (iii) have the authority to sell wholesale electric
power at market- based rates (not subject to any price cap or other market power
mitigation measure).
SECTION 8.2.12 Limitation on Electricity Market Risk Exposure. The
----------------------------------------------
Borrower shall not, and shall not permit any other Loan Party to, engage in
transactions for any speculative purpose, including speculative transactions
relating to (i) fuel procurement or sales, (ii) purchases, sales or exchanges
related to capacity and energy from the Generating Station or financial
instruments related thereto or (iii) purchases, sales or exchanges of energy or
emissions credits.
ARTICLE IX
EVENTS OF DEFAULT
SECTION 9.1 Listing of Events of Default. Each of the following
----------------------------
events or occurrences described in this Section 9.1 shall constitute an "Event
----------- -----
of Default".
----------
SECTION 9.1.1 Non-Payment of Obligations. The Borrower shall default
--------------------------
in (i) the payment or mandatory prepayment when due of any principal of any
Loan or (ii) the payment
-58-
of interest on any Loan or any facility fee or of any other Obligation, within
five Business Days after any such interest or other amount becomes due in
accordance with the terms thereof or hereof.
SECTION 9.1.2 Breach of Warranty. (a) Any representation or warranty
------------------
of any Loan Party made or deemed to be restated or remade in any Loan Document
or any other writing or certificate furnished by or on behalf of such Loan Party
to the Administrative Agent or any Lender for the purposes of or in connection
with any such Loan Document (including any certificates delivered pursuant to
Article VI) is or shall be incorrect when made or deemed made in any material
----------
respect or (b) any representation or warranty of Edison Mission Energy made in
the EME Credit Support Guarantee is or shall be incorrect when made in any
material respect.
SECTION 9.1.3 Non-Performance of Certain Covenants and Obligations.
----------------------------------------------------
The Borrower shall default in the due performance and observance of any of its
obligations under Section 8.1.1(f) or 8.2.
---------------- ---
SECTION 9.1.4 Non-Performance of Other Covenants and Obligations.
--------------------------------------------------
Any Loan Party shall default in the due performance and observance of any other
covenant or agreement contained in any Loan Document, and such default shall
continue unremedied for a period of 30 days after written notice thereof shall
have been given to such Loan Party by the Administrative Agent.
SECTION 9.1.5 Default on Other Indebtedness. A default shall occur
-----------------------------
in the payment when due (subject to any applicable grace period), whether by
acceleration or otherwise, of any Indebtedness (other than Indebtedness
----------
described in Section 9.1.1) of any Loan Party having a principal amount,
-------------
individually or in the aggregate, at least $15,000,000, or a default shall occur
in the performance or observance of any obligation or condition with respect to
such Indebtedness if the effect of such default is to accelerate the maturity of
any such Indebtedness or such default shall continue unremedied for any
applicable period of time sufficient to permit the holder or holders of such
Indebtedness, or any trustee or agent for such holders, to cause such
Indebtedness to become due and payable prior to its expressed maturity.
SECTION 9.1.6 Bankruptcy, Insolvency. Any Loan Party shall:
----------------------
(a) become insolvent or generally fail to pay, or admit in writing its
inability or unwillingness to pay, debts as they become due;
(b) apply for, consent to, or acquiesce in, the appointment of a
trustee, receiver, sequestration or other custodian for any Loan Party or a
substantial portion of a Loan Party's property, or make a general
assignment for the benefit of creditors;
(c) in the absence of such application, consent or acquiescence,
permit or suffer to exist the appointment of a trustee, receiver,
sequestration or other custodian for a
-59-
Loan Party or for a substantial part of its property, and such trustee,
receiver, sequestration or other custodian shall not be discharged within
60 days, provided that nothing in the Loan Documents shall prohibit or
--------
restrict any right the Administrative Agent, the Collateral Agent or any
Lender may have under applicable law to appear in any court conducting any
relevant proceeding during such 60-day period to preserve, protect and
defend its rights under the Loan Documents (and the Loan Party shall not
object to any such appearance);
(d) permit or suffer to exist the commencement of any bankruptcy,
reorganization, debt arrangement or other case or proceeding under any
bankruptcy or insolvency law, or any dissolution, winding up or liquidation
proceeding, in respect of a Loan Party, and, if any such case or proceeding
is not commenced by the Loan Party such case or proceeding shall be
consented to or acquiesced in by the Loan Party or shall result in the
entry of an order for relief or shall remain for 60 days undismissed,
provided that nothing in the Loan Documents shall prohibit or restrict any
--------
right the Administrative Agent, Collateral Agent or any Lender may have
under applicable law to appear in any court conducting any such case or
proceeding during such 60-day period to preserve, protect and defend its
rights under the Loan Documents (and the Borrower shall not object to any
such appearance); or
(e)take any corporate action authorizing, or in furtherance of, any of
the foregoing.
SECTION 9.1.7 Pension Plans. Any of the following events shall occur
-------------
with respect to any Pension Plan:
(a)the institution of any steps by the Borrower, any member of the
Controlled Group or any other Person to terminate a Pension Plan or the
occurrence of any other event or condition with respect to any Pension
Plan, Welfare Plan or Multiemployer Plan if, as a result of such
termination or such other event or condition, together with all other such
terminations, events or conditions, if any, any Loan Party or any
Controlled Group member could reasonably expect to incur, individually or
in the aggregate, a liability or obligation in excess of $15,000,000; or
(b)a contribution failure occurs with respect to any Pension Plan
sufficient to give rise to a Lien under Section 302(f) of ERISA or Section
412 of the Code.
SECTION 9.1.8 Judgments. Any judgment or order for the payment of
---------
money in excess of $15,000,000 (taking into account any Insurance proceeds
payable under a policy where the insurer has accepted coverage without
reservation) shall be rendered against any Loan Party and such judgments or
decrees shall not have been vacated, discharged, stayed or bonded pending appeal
within 60 days from the entry thereof.
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SECTION 9.1.9 Control of the Borrower; Ownership of EME Homer City.
----------------------------------------------------
Any Change in Control shall occur or the Borrower shall cease to own, directly
or indirectly, 100% of the general and limited partnership interests of EME
Homer City.
SECTION 9.1.10 Edison Mission Energy. Until the termination of the
---------------------
EME Credit Support Guarantee or while any guarantee by Edison Mission Energy is
in effect pursuant to Section 5.2:
-----------
(a) Edison Mission Energy shall:
(i) become insolvent or generally fail to pay, or admit in
writing its inability or unwillingness to pay, debts as they become
due;
(ii) apply for, consent to, or acquiesce in, the appointment of
a trustee, receiver, sequestrator or other custodian for Edison
Mission Energy or a substantial portion of its property, or make a
general assignment for the benefit of creditors;
(iii) in the absence of such application, consent or
acquiescence, permit or suffer to exist the appointment of a trustee,
receiver, sequestration or other custodian for Edison Mission Energy
or for a substantial part of its property, and such trustee, receiver,
sequestration or other custodian shall not be discharged within 60
days, provided that nothing in the Loan Documents shall prohibit or
--------
restrict any right the Administrative Agent or any Lender may have
under applicable law to appear in any court conducting any relevant
proceeding during such 60-day period to preserve, protect and defend
its rights under the Loan Documents (and Edison Mission Energy shall
not object to any such appearance);
(iv) permit or suffer to exist the commencement of any
bankruptcy, reorganization, debt arrangement or other case or
proceeding under any bankruptcy or insolvency law, or any dissolution,
winding up or liquidation proceeding, in respect of Edison Mission
Energy, and, if any such case or proceeding is not commenced by Edison
Mission Energy, such case or proceeding shall be consented to or
acquiesced in by it or shall result in the entry of an order for
relief or shall remain for 60 days undismissed, provided that nothing
--------
in the Loan Documents shall prohibit or restrict any right the
Administrative Agent or any Lender may have under applicable law to
appear in any court conducting any such case or proceeding during such
60-day period to preserve, protect and defend its rights under the
Loan Documents (and Edison Mission Energy shall not object to any such
appearance); or
(v) take any corporate action authorizing, or in furtherance of,
any of the foregoing; or
-61-
(b) a default shall occur in the payment when due (subject to any
applicable grace period), whether by acceleration or otherwise, of any
Indebtedness of Edison Mission Energy having a principal amount,
individually or in the aggregate, in excess of $20,000,000, or a default
shall occur in the performance or observance of any obligation or condition
with respect to such Indebtedness if the effect of such default is to
accelerate the maturity of any such Indebtedness or such default shall
continue unremedied for any applicable period of time sufficient to permit
the holder or holders of such Indebtedness, or any trustee or agent for
such holders, to cause such Indebtedness to become due and payable prior to
its expressed maturity.
SECTION 9.2 Action if Bankruptcy. If any Event of Default described
--------------------
in clauses (a) through (e) of Section 9.1.6 shall occur with respect to the
---------- --- -------------
Borrower, the Commitments (if not theretofore terminated) shall automatically
terminate and the outstanding principal amount of all outstanding Loans and all
other Obligations shall automatically be and become immediately due and payable,
without notice or demand.
SECTION 9.3 Action if Other Event of Default. If any Event of
--------------------------------
Default (other than any Event of Default described in clauses (a) through (e) of
----------- ---
Section 9.1.6) shall occur for any reason, whether voluntary or involuntary, and
--------------
be continuing, the Administrative Agent, upon the direction of the Required
Lenders, shall by written notice to the Borrower declare all or any portion of
the outstanding principal amount of the Loans and other Obligations to be due
and payable and/or the Commitments (if not theretofore terminated) to be
terminated, whereupon the full unpaid amount of such Loans and other Obligations
which shall be so declared due and payable shall be and become immediately due
and payable, without further notice, demand or presentment, and/or, as the case
may be, the Commitments shall terminate. The rights provided for in the Loan
Documents are cumulative and are not exclusive of any other rights, powers,
privileges or remedies provided by law or in equity, or under any other
instrument, document or agreement now existing or hereafter arising.
SECTION 9.4 Rescission of Declaration. Any declaration made pursuant
-------------------------
to Section 9.3 may, should the Required Lenders in their sole and absolute
-----------
discretion so elect, be rescinded by written notice to the Borrower at any time
after the principal of the Loans and the Notes shall have become due and
payable, but before any judgment or decree for the payment of the monies so due,
or any part thereof, shall have been entered; provided that the Borrower shall
--------
have paid all arrears of interest upon the Loans and all other amounts then owed
to the Administrative Agent and the Lenders including all costs, expenses and
liabilities incurred by the Administrative Agent and the Lenders in respect of
such declaration and all consequences thereof (except that principal of the
Loans which by such declaration shall have become payable) and every other Event
of Default shall have been made good, waived or cured; provided that no such
--------
rescission or annulment shall extend to or affect any subsequent Event of
Default or impair any right consequent thereon.
-62-
ARTICLE X
THE AGENT
SECTION 10.1 Actions. (a) Each Lender hereby appoints CUSA as its
-------
Administrative Agent under and for purposes of each Loan Document. Each Lender
authorizes the Administrative Agent to act on behalf of such Lender under each
Loan Document and, in the absence of other written instructions from the
Required Lenders received from time to time by the Administrative Agent (with
respect to which the Administrative Agent agrees that it will comply, except as
otherwise provided in this Section or as otherwise advised by counsel), to
exercise such powers hereunder and thereunder as are specifically delegated to
or required of the Administrative Agent by the terms hereof and thereof,
together with such powers as may be reasonably incidental thereto. Without
limiting the generality of the foregoing, each Lender hereby authorizes the
Administrative Agent to designate and appoint United States Trust Company of New
York as Collateral Agent for the Lenders and the other Secured Parties under the
Security Documents and to designate and appoint any successor thereto.
Notwithstanding any provision to the contrary contained elsewhere in any Loan
Document, the Administrative Agent shall not have any duties or
responsibilities, except those expressly set forth herein, nor shall the
Administrative Agent have or be deemed to have any fiduciary relationship with
any Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into any Loan Document or otherwise
exist against the Administrative Agent. Without limiting the generality of the
foregoing sentence, the use of the term "agent" in this Agreement with reference
to the Administrative Agent is not intended to connote any fiduciary or other
implied (or express) obligations arising under agency doctrine of any applicable
law. Instead, such term is used merely as a matter of market custom, and is
intended to create or reflect only an administrative relationship between
independent contracting parties.
(b) Each Lender hereby agrees to indemnify (which indemnity shall
survive any termination of this Agreement) the Agent-Related Persons and the
Collateral Agent pro rata according to such Lender's Commitment's percentage of
--------
the Total Commitment Amount, from and against any and all liabilities,
obligations, losses, damages, claims, costs or expenses of any kind or nature
whatsoever which may at any time be imposed on, incurred by, or asserted
against, the Agent-Related Persons or the Collateral Agent in any way relating
to or arising out of any Loan Document, including reasonable attorneys' fees,
and as to which the Administrative Agent or the Collateral Agent, as the case
may be, is not reimbursed by the Borrower; provided, however, that no Lender
-------- -------
shall be liable for the payment of any portion of such liabilities, obligations,
losses, damages, claims, costs or expenses which are determined by a court of
competent jurisdiction in a final proceeding to have resulted from the Agent-
Related Person's or Collateral Agent's, as the case may be, gross negligence or
willful misconduct. Neither any Agent-Related Person nor the Collateral Agent
shall be required to take any action under any Loan Document, or to prosecute or
defend any suit in respect of any Loan Document, unless it is indemnified
hereunder to its satisfaction. If any indemnity in favor of the Administrative
Agent or the Collateral Agent shall be or become, in its determination,
inadequate, the Agent-Related
-63-
Person or the Collateral Agent, as the case may be, may call for additional
indemnification from the Lenders and cease to do the acts indemnified against
hereunder until such additional indemnity is given.
SECTION 10.2 Funding Reliance. Unless the Administrative Agent shall
----------------
have been notified by telephone, confirmed in writing, by any Lender, (i) with
respect to LIBO Rate Loans, by 12:00 Noon, New York City time, on the Business
Day prior to a Borrowing or (ii) with respect to Base Rate Loans, by 2:00 p.m.,
New York City time, on the same day of a Borrowing, or that such Lender will not
make available the amount which would constitute its Percentage of such
Borrowing on the date specified therefor, the Administrative Agent may assume
that such Lender has made such amount available to the Administrative Agent and,
in reliance upon such assumption, may, but shall not be required to, make
available to the Borrower a corresponding amount. If and to the extent that
such Lender shall not have made such amount available to the Administrative
Agent, such Lender and the Borrower severally agree to repay the Administrative
Agent forthwith on demand such corresponding amount together with interest
thereon, for each day from the date the Administrative Agent made such amount
available to the Borrower to the date such amount is repaid to the
Administrative Agent, at the interest rate applicable at the time to Loans
comprising such Borrowing; provided, that if such Lender makes available the
--------
amount which is its Percentage of such Borrowing on or before the next Business
Day following the day when due, the interest rate payable on such amount shall
be the Federal Funds Rate.
SECTION 10.3 Exculpation. No Agent-Related Person shall be liable to
-----------
any Lender for any action taken or omitted to be taken by it under any Loan
Document, or in connection therewith, except for its own willful misconduct or
gross negligence, nor responsible for any recitals or warranties herein or
therein, nor for the effectiveness, enforceability, validity or due execution of
any Loan Document, nor to make any inquiry respecting the performance by the
Borrower of its obligations under any Loan Document. Any such inquiry which may
be made by the Administrative Agent shall not obligate it to make any further
inquiry or to take any action. Each Agent-Related Person shall be entitled to
rely upon advice of counsel concerning legal matters and upon any notice,
consent, certificate, statement or writing which the Administrative Agent
believes to be genuine and to have been presented by a proper Person.
SECTION 10.4 Successor. The Administrative Agent may resign as such
---------
at any time upon at least 30 days' prior notice to the Borrower and all Lenders.
If the Administrative Agent at any time shall resign, the Required Lenders may,
within ten days after such notice and with the consent of the Borrower (not to
be unreasonably withheld), appoint another Lender as a successor Administrative
Agent which shall thereupon become the Administrative Agent hereunder. If no
successor Administrative Agent shall have been so appointed by the Required
Lenders, and shall have accepted such appointment, within 30 days after the
retiring Administrative Agent's giving notice of resignation, then the retiring
Administrative Agent may, on behalf of the Lenders, after notice to and
consultation with the Borrower, appoint a successor Administrative Agent, which
shall be one of the Lenders or an Eligible Assignee, and shall have a
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combined capital and surplus of at least $250,000,000. Upon the acceptance of
any appointment as Administrative Agent hereunder by a successor Administrative
Agent, such successor Administrative Agent shall be entitled to receive from the
retiring Administrative Agent such documents of transfer and assignment as such
successor Administrative Agent may reasonably request, and shall thereupon
succeed to and become vested with all rights, powers, privileges and duties of
the retiring Administrative Agent, and the retiring Administrative Agent shall
be discharged from its duties and obligations under this Agreement. After the
effective date of any retiring Administrative Agent's resignation hereunder as
the Administrative Agent, the provisions of (a) this Article X shall inure to
---------
its benefit as to any actions taken or omitted to be taken by it while it was
the Administrative Agent under this Agreement; and (b) Section 11.3 and Section
------------ --------
11.4 shall continue to inure to its benefit.
----
SECTION 10.5 Loans by CUSA. CUSA shall have the same rights and
-------------
powers with respect to the Loans made by it or any of its Affiliates as any
other Lender and may exercise the same as if it were not the Administrative
Agent. CUSA and its Affiliates may accept deposits from, lend money to, and
generally engage in any kind of business with the Borrower or any Subsidiary or
Affiliate of the Borrower as if CUSA were not the Administrative Agent
hereunder.
SECTION 10.6 Reliance by Administrative Agent. (a) The
--------------------------------
Administrative Agent shall be entitled to rely, and shall be fully protected in
relying, upon any writing, resolution, notice, consent, certificate, affidavit,
letter, telegram, facsimile, telex or telephone message, statement or other
document or conversation believed by it to be genuine and correct and to have
been signed, sent or made by the proper Person or Persons, and upon advice and
statements of legal counsel (including counsel to the Company), independent
accountants and other experts selected by the Administrative Agent. The
Administrative Agent shall be fully justified in failing or refusing to take any
action under any Loan Document unless it shall first receive such advice or
concurrence of the Required Lenders as it deems appropriate and, if it so
requests, it shall first be indemnified to its satisfaction by the Lenders
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action. The Administrative Agent shall
in all cases be fully protected in acting, or in refraining from acting, under
any Loan Document in accordance with a request or consent of the Required
Lenders and such request and any action taken or failure to act pursuant thereto
shall be binding upon all of the Lenders.
(b) For purposes of determining compliance with the conditions
specified in Section 6.1, each Lender that has executed this Agreement shall be
-----------
deemed to have consented to, approved or accepted or to be satisfied with, each
document or other matter either sent by the Administrative Agent to such Lender
for consent, approval, acceptance or satisfaction, or required thereunder to be
consented to or approved by or acceptable or satisfactory to the Lender.
SECTION 10.7 Notice of Default. The Administrative Agent shall not
-----------------
be deemed to have knowledge or notice of the occurrence of any Default or Event
of Default, except with respect to defaults in the payment of principal,
interest and fees required to be paid to the
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Administrative Agent for the account of the Lenders, unless the Administrative
Agent shall have received written notice from a Lender or the Borrower referring
to this Agreement, describing such Default or Event of Default and stating that
such notice is a "notice of default". The Administrative Agent will notify the
Lenders of its receipt of any such notice. The Administrative Agent shall take
such action with respect to such Default or Event of Default as may be requested
by the Required Lenders in accordance with Article IX; provided, however, that
---------- -------- -------
unless and until the Administrative Agent has received any such request, the
Administrative Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable or in the best interest of the Lenders.
SECTION 10.8 Credit Decisions. Each Lender acknowledges that it has,
----------------
independently of the Agent-Related Person and each other Lender, and based on
such Lender's review of the financial information of the Borrower, the Loan
Documents (the terms and provisions of which being satisfactory to such Lender)
and such other documents, information and investigations as such Lender has
deemed appropriate, made its own credit decision to extend its Commitments.
Each Lender also acknowledges that it will, independently of the Administrative
Agent and each other Lender, and based on such other documents, information and
investigations as it shall deem appropriate at any time, continue to make its
own credit decisions as to exercising or not exercising from time to time any
rights and privileges available to it under any Loan Document.
SECTION 10.9 Copies. The Administrative Agent shall give prompt
------
notice to each Lender of each notice or request required or permitted to be
given to the Administrative Agent by the Borrower pursuant to the terms of this
Agreement (unless concurrently delivered to the Lenders by the Borrower). The
Administrative Agent will distribute to each Lender each document or instrument
received for its account and copies of all other communications received by the
Administrative Agent from the Borrower for distribution to the Lenders by the
Administrative Agent in accordance with the terms of this Agreement.
SECTION 10.10 Interest of Lenders in Collateral. Each Lender hereby
---------------------------------
acknowledges and consents that such Lender's right or interest in the Collateral
(or any portion thereof) shall be subject to the terms of the Collateral Agency
and Intercreditor Agreement and the other Security Documents, including the
requisite level of consent by holders of Senior Debt to enforce upon the
Collateral.
ARTICLE XI
MISCELLANEOUS PROVISIONS
SECTION 11.1 Waivers, Amendments. (a) The provisions of each
-------------------
Security Document may from time to time be amended, modified or waived as
necessary or advisable in connection with any incurrence of Senior Debt if such
amendment, modification or waiver is in writing and consented to by each Loan
Party party thereto and the Administrative Agent; provided, however, that no
such amendment, modification or waiver shall release all or any
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material portion of the Collateral from the Liens of the Security Documents or
release any Loan Party from its obligations under the Guarantee and Collateral
Agreement or release Edison Mission Energy from its obligations under the EME
Credit Support Guarantee or amend, modify or waive any provision of the Security
Deposit Agreement or the Collateral Agency and Intercreditor Agreement relating
to the order of priority or amounts of transfers of cash and other property to
be made thereunder or, except as contemplated by Section 8.6 of the Collateral
Agency and Intercreditor Agreement, amend or modify the definition of "Required
Secured Parties" thereunder or the percentages required for any action to be
taken thereunder, in each case without the written consent of all of the
Lenders. The provisions of each other Loan Document may from time to time be
amended, modified or waived, if such amendment, modification or waiver is in
writing and consented to by each Loan Party party thereto and the Required
Lenders; provided, however, that no such amendment, modification or waiver
-------- -------
shall: (A) forgive the principal amount or extend the final scheduled date of
maturity of any Loan, reduce the stated rate of any interest or fee payable
hereunder or extend the scheduled date of any payment thereof, or increase the
amount or extend the expiration date of any Lender's Revolving Loan Commitment
or Term Loan Commitment, in each case without the consent of each Lender
directly affected thereby; (B) amend, modify or waive any provision of this
Section 11.1 or amend or modify the definition of Required Lenders or consent to
------------
the assignment or transfer by any Loan Party of any of its rights and
obligations under the Loan Documents without the written consent of the Lenders;
(C) amend, modify or waive any provision of Section 4.9, or any provision in
-----------
such Loan Documents which provides for amounts paid in respect of the
Obligations to be shared among the Lenders ratably, without the consent of all
of the Lenders. Any such waiver and any such amendment, supplement or
modification shall apply equally to each of the Lenders and shall be binding
upon the Loan Parties, the Lenders, the Administrative Agent and all future
holders of the Loans and Commitments. In the case of any waiver, the Loan
Parties, the Lenders and the Administrative Agent shall be restored to their
former position and rights under the Loan Documents, and any Default or Event of
Default waived shall be deemed to be cured and not continuing; but no such
waiver shall extend to any subsequent or other Default or Event of Default, or
impair any right consequent thereon.
(b) No failure or delay on the part of the Administrative Agent or any
Lender in exercising any power or right under any Loan Document shall operate as
a waiver thereof, nor shall any single or partial exercise of any such power or
right preclude any other or further exercise thereof or the exercise of any
other power or right. No notice to or demand on the Borrower in any case shall
entitle it to any notice or demand in similar or other circumstances. No waiver
or approval by the Administrative Agent or any Lender under any Loan Document
shall, except as may be otherwise stated in such waiver or approval, be
applicable to subsequent transactions. No waiver or approval hereunder shall
require any similar or dissimilar waiver or approval thereafter to be granted
hereunder.
SECTION 11.2 Notices. All notices and other communications provided
-------
to any party hereto under any Loan Document shall be in writing or by facsimile
and addressed, delivered or transmitted to such party at its address or
facsimile number set forth on Schedule 1.1(b) or set
---------------
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forth in the Lender Assignment Agreement or at such other address or facsimile
number as may be designated by such party in a written notice to the other
parties. Any notice, if mailed and properly addressed with postage prepaid
shall be effective five Business Days after being sent or if properly addressed
and sent by pre-paid courier service, shall be deemed given when received; any
notice, if transmitted by facsimile, shall be deemed given when transmitted (if
confirmed).
SECTION 11.3 Payment of Costs and Expenses. (a) The Borrower agrees
-----------------------------
to pay promptly on demand all reasonable out-of-pocket costs and expenses of the
Lead Arrangers and the Administrative Agent (including the reasonable fees and
out-of-pocket costs and expense of counsel to the Administrative Agent) in
connection with:
(i) the negotiation, preparation, execution and delivery of each
Loan Document, including schedules and exhibits, and any amendments,
waivers, consents, supplements or other modifications to any Loan
Document as may from time to time hereafter be required; and
(ii) the preparation and review of the form of any document or
instrument relevant to any Loan Document; provided, however, that the
-------- -------
Borrower shall have no obligation to pay for the cost of the
documentation of assignments or participations as provided in Section
-------
11.11 (unless such assignment is made pursuant to Section 4.11);
----- ------------
in each case, upon presentation of a statement of account, whether or not the
transactions contemplated hereby are consummated.
(b) The Borrower further agrees to pay upon demand, and to save the
Administrative Agent and the Lenders harmless from all liability for, any stamp
or other taxes which may be payable in connection with the execution, delivery
or enforcement of any Loan Documents or with the Borrowings hereunder. The
Borrower also agrees to reimburse the Administrative Agent and each Lender, as
applicable, promptly upon demand for (x) all reasonable out-of-pocket costs and
expenses (including fees and out-of-pocket costs and expenses of counsel)
incurred by the Administrative Agent and each Lender in connection with the
negotiation of any restructuring or work-out, whether or not consummated, of any
Obligations and (y) all out-of-pocket costs and expenses (including fees and
out-of-pocket costs and expenses of counsel) incurred by the Administrative
Agent and each Lender in connection with the enforcement of any Obligations
after an Event of Default; provided that, in either case, the Borrower shall not
--------
be obligated to reimburse such costs and expenses that are found in a final
judgment by a court of competent jurisdiction to have been incurred in an
attempt to enforce such rights and remedies that were pursued by such
Administrative Agent or Lender in bad faith and without any reasonable basis in
fact or law.
SECTION 11.4 Indemnification. (a) In consideration of the execution
---------------
and delivery of this Agreement by each Lender and the extension of the
Commitments, the Borrower
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hereby indemnifies, exonerates and holds the Administrative Agent, the Lead
Arrangers and each Lender and each of their respective affiliates, officers,
directors and employees (collectively, the "Indemnified Parties") free and
-------------------
harmless from and against any and all losses, costs, actions, causes of action,
suits, liabilities, damages and out-of-pocket costs and expenses incurred in
connection therewith (irrespective of whether any such Indemnified Party is a
party to the action for which indemnification hereunder is sought), including
any amounts paid to any Agent-Related Person pursuant to Section 10.1(b) and
---------------
reasonable attorneys' fees and disbursements but excluding claims for lost
profits (collectively, the "Indemnified Liabilities"), joint or several, that
-----------------------
may be incurred by or asserted or awarded against any Indemnified Party, in each
case arising out of or in connection with or relating to:
(i) any transaction financed or to be financed in whole or in
part, directly or indirectly, with the proceeds of any Loan;
(ii) the entering into and performance of this Agreement and any
other Loan Document by any of the Indemnified Parties (including any
action brought by or on behalf of the Borrower as the result of any
determination by the Required Lenders pursuant to Article VI not to
----------
fund any Borrowing);
(iii)any investigation, litigation, proceeding, or obligation
related to any Environmental Law or other matter in any case arising
out of the relationship of the parties under this Agreement; or
(iv)the presence on or under, or the escape, seepage, leakage,
spillage, discharge, emission or release from, any real property
owned, leased or operated by any Loan Party thereof of any Hazardous
Material (including any losses, liabilities, damages, injuries, costs,
expenses or claims asserted or arising under any Environmental Law),
or at any other locations regardless of whether caused by, or within
the control of, such Loan Party, where such claim or liability arises
out of the relationship of the parties under this Agreement;
whether or not such investigation, litigation or proceeding is brought by the
Borrower or its Affiliates, any of their respective shareholders or creditors,
an Indemnified Party or any other person, or an Indemnified Party is otherwise a
party thereto and whether or not the transactions contemplated hereby are
consummated, except for (A) any such Indemnified Liabilities arising for the
account of a particular Indemnified Party by reason of the relevant Indemnified
Party's (i) gross negligence or willful misconduct or (ii) breach of such
Indemnified Party's obligations under this Agreement; (B) any such Indemnified
Liabilities that result solely from action or the failure to act by any
Indemnified Party more than 90 days after Lenders acquire title to the
Generating Station through foreclosure or otherwise which action or failure to
act violates applicable Environmental Law; and (C) the increase in any
Indemnified Liabilities if, and only to the extent that, such increase results
from action or the failure to act by any Indemnified Party more than 90 days
after Lenders acquire title to the Generating Station through foreclosure or
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otherwise, which action or failure to act violates applicable Environmental Law
and thereby causes an increase in any Indemnified Liabilities. If and to the
extent that the foregoing undertaking may be unenforceable for any reason, the
Borrower hereby agrees to make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities which is permissible under
applicable law.
(b) To the extent permitted by applicable law, no Indemnified Party
shall have any liability to the Borrower or its Affiliates or any of their
respective shareholders or creditors under any theory of liability, for special,
indirect, consequential or punitive damages (as opposed to direct or actual
damages) arising out of, in connection with, or as a result of, this Agreement
or any agreement or instrument contemplated hereby, any Loan or the use of the
proceeds thereof.
SECTION 11.5 Survival. The obligations of the Borrower under
--------
Sections 4.3, 4.4, 4.5, 4.6, 4.7, 11.3 and 11.4, and the obligations of the
------------ --- --- --- --- ---- ----
Lenders under Section 10.1, shall in each case survive any termination of this
------------
Agreement, the payment in full of all Obligations and the termination of all
Term Loan Commitments and Revolving Loan Commitments. The representations and
warranties made by the Borrower in each Loan Document shall survive the
execution and delivery of such Loan Document.
SECTION 11.6 Severability. Any provision of any Loan Document which
------------
is prohibited or unenforceable in any jurisdiction shall, as to such provision
and such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of such Loan
Document or affecting the validity or enforceability of such provision in any
other jurisdiction.
SECTION 11.7 Headings. The various headings of each Loan Document
--------
are inserted for convenience only and shall not affect the meaning or
interpretation of such Loan Document or any provisions thereof.
SECTION 11.8 Execution in Counterparts. This Agreement may be
-------------------------
executed by the parties hereto in several counterparts, each of which shall be
executed by the Borrower and the Administrative Agent and be deemed to be an
original and all of which shall constitute together but one and the same
agreement.
SECTION 11.9 Governing Law; Entire Agreement. This Agreement, the
-------------------------------
Notes and the rights and obligations of the parties under this Agreement shall
be governed by, and construed and interpreted in accordance with, the law of the
state of New York. The Loan Documents, together with the fee letter referred to
in Section 3.3.2 and the commitment letter of even date therewith, represent the
-------------
agreement of the Borrower, the Administrative Agent and the Lenders and
supersede any and all prior agreements and understandings, oral or written,
relative or with respect to the subject matter hereof, and there are no
promises, undertakings, representations or warranties by the Administrative
Agent or any Lender relative to subject matter hereof not expressly set forth or
referred to herein or in the other Loan Documents.
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SECTION 11.10 Successors and Assigns. This Agreement shall be
----------------------
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns; provided, however, that:
-------- -------
(a) the Borrower may not assign or transfer its rights or obligations
hereunder without the prior written consent of the Administrative Agent
and all Lenders; and
(b) the rights of sale, assignment and transfer of the Lenders are
subject to Section 11.11.
-------------
SECTION 11.11 Sale and Transfer of Loans and Notes; Participations in
-------------------------------------------------------
Loans and Notes. Each Lender may assign, or sell participations in, its Loans
---------------
and Term Loan Commitments or Revolving Loan Commitments to one or more other
Persons in accordance with this Section 11.11.
-------------
SECTION 11.11.1 Assignments. (a) Any Lender (an "Assignor") may, in
----------- --------
accordance with applicable law, at any time and from time to time assign to any
Eligible Assignee, with the consent of the Administrative Agent and, except at
any time a Default or Event of Default shall have occurred and be continuing,
the Borrower (which, in each case, shall not be unreasonably withheld or
delayed), all or any part of its rights and obligations under this Agreement
pursuant to a Lender Assignment Agreement, executed by such Eligible Assignee,
such Assignor and any other Person whose consent is required pursuant to this
paragraph, and delivered to the Administrative Agent for its acceptance and
recording in the Register; provided that no such assignment to an Eligible
--------
Assignee (other than any Lender or any affiliate thereof) shall be in an
aggregate principal amount of less than $10,000,000 (other than in the case of
an assignment of all of a Lender's interests under this Agreement), unless
otherwise agreed by the Borrower and the Administrative Agent and; provided,
--------
further, that after giving effect to any such assignment the assigning Lender
-------
shall have Commitments remaining of at least $10,000,000 in the aggregate amount
(other than in the case of an assignment of all of a Lender's interests under
this Agreement). Any such assignment need not be ratable as among the 364-Day
Term Loans, the Construction Term Loans and the Revolving Loans. Upon such
execution, delivery, acceptance and recording, from and after the effective date
determined pursuant to such Lender Assignment Agreement, (x) the Eligible
Assignee thereunder shall be a party hereto and, to the extent provided in such
Lender Assignment Agreement, have the rights and obligations of a Lender
hereunder with a Term Loan Commitment or Revolving Loan Commitment, as the case
may be, and/or Loans as set forth therein, and (y) the Assignor thereunder
shall, to the extent provided in such Lender Assignment Agreement, be released
from its obligations under this Agreement (and, in the case of a Lender
Assignment Agreement covering all of an Assignor's rights and obligations under
this Agreement, such Assignor shall cease to be a party hereto).
Notwithstanding any provision of this Section 11.11.1 the consent of the
---------------
Borrower shall not be required for any assignment that occurs when a Default or
an Event of Default pursuant to Section 9.1.6 shall have occurred and be
-------------
continuing with respect to the Borrower.
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(b) The Administrative Agent shall, on behalf of the Borrower,
maintain at its address referred to on Schedule 1.1(b) a copy of each Lender
---------------
Assignment Agreement delivered to it and a register (the "Register") for the
--------
recordation of the names and addresses of the Lenders and the 364-Day Term Loan
Commitment, Construction Term Loan Commitment or Revolving Loan Commitment of,
and the principal amount of the Loans owing to, each Lender from time to time.
The entries in the Register shall be conclusive, in the absence of manifest
error, and the Borrower, each other Loan Party, the Administrative Agent and the
Lenders shall treat each Person whose name is recorded in the Register as the
owner of the Loans and any Notes evidencing the Loans recorded therein for all
purposes of this Agreement. Any assignment of any Loan, whether or not evidenced
by a Note, shall be effective only upon appropriate entries with respect thereto
being made in the Register (and each Note shall expressly so provide). Any
assignment or transfer of all or part of a Loan evidenced by a Note shall be
registered on the Register only upon surrender for registration of assignment or
transfer of the Note evidencing such Loan, accompanied by a duly executed Lender
Assignment Agreement, and thereupon one or more new Notes shall be issued to the
designated Eligible Assignee.
(c) Upon its receipt of a Lender Assignment Agreement executed by an
Assignor, an Eligible Assignee and any other Person whose consent is required by
Section 11.11.1(a), together with payment to the Administrative Agent of a
------------------
registration and processing fee of $3,000, the Administrative Agent shall (i)
promptly accept such Lender Assignment Agreement and (ii) record the information
contained therein in the Register on the effective date determined pursuant
thereto.
(d) For avoidance of doubt, the parties to this Agreement acknowledge
that the provisions of this Section 11.11.1 concerning assignments of Loans
---------------
relate only to absolute assignments and that such provisions do not prohibit
assignments creating security interests, including any pledge or assignment by a
Lender of any Loan or Note to any Federal Reserve Bank in accordance with
applicable law.
(e) The Borrower, upon receipt of written notice from the relevant
Lender, agrees to issue Notes to any Lender requiring Notes to facilitate
transactions of the type described in paragraph (d) of this Section 11.11.1.
------------- ---------------
SECTION 11.11.2 Participations. Any Lender may at any time sell to
--------------
one or more commercial banks or other Persons (each of such commercial banks and
other Persons being herein called a "Participant") participating interests in
-----------
any of the Loans, Commitments, or other interests of such Lender hereunder;
provided, however, that:
-------- -------
(a) no participation contemplated in this Section 11.11.2 shall
---------------
relieve such Lender from its Commitments or its other obligations under any
Loan Document;
(b) such Lender shall remain solely responsible for the performance of
its Commitments and such other obligations;
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(c) the Borrower and the Administrative Agent shall continue to deal
solely and directly with such Lender in connection with such Lender's
rights and obligations under each of the Loan Documents;
(d) no Participant, unless such Participant is an Affiliate of such
Lender, or is itself a Lender, shall be entitled to require such Lender to
take or refrain from taking any action hereunder or under any other Loan
Document, except as provided in clause (f) of this Section 11.11.2;
---------- ----------------
(e) the Borrower shall not be required to pay any amount under
Sections 4.3, 4.4, 4.5, 4.6, 4.7, 11.3 and 11.4, that is greater than the
------------ --- --- --- --- ---- ----
amount which it would have been required to pay had no participating
interest been sold;
(f) in no event shall any Participant under any such participation
have any right to approve any amendment or waiver of any provision of any
Loan Document, or any consent to any departure by any Loan Party therefrom,
except to the extent that such amendment, waiver or consent would reduce
the principal of, or interest on, the Loans or any fees payable hereunder,
extend the due date of such principal, interest or fee payments, or
increase the amount or extend the Commitment Termination Date of such
Loans, in each case to the extent subject to such participation;
(g) the Borrower agrees that if amounts outstanding under this
Agreement and the Loans are due or unpaid, or shall have been declared or
shall have become due and payable upon the occurrence of an Event of
Default, each Participant shall, to the maximum extent permitted by
applicable law, be deemed to have the right of setoff in respect of its
participating interest in amounts owing under this Agreement to the same
extent as if the amount of its participating interest were owing directly
to it as a Lender under this Agreement, provided that, in purchasing such
--------
participating interest, such Participant shall be deemed to have agreed to
share with the Lenders the proceeds thereof as provided in Section 4.10 as
------------
fully as if it were a Lender hereunder; and
(h) the Borrower also agrees that each Participant shall be entitled
to the benefits of Sections 4.3, 4.4, 4.5, 4.6 and 4.7 with respect to its
------------ --- --- --- ---
participation in the Term Loan Commitments or the Revolving Loan
Commitments, and the Loans outstanding from time to time as if it was a
Lender; provided that, in the case of Section 4.7, such Participant shall
-------- -----------
have complied with the requirements of said Section and provided, further,
-------- -------
that no Participant shall be entitled to receive any greater amount
pursuant to any such Section than the transferor Lender would have been
entitled to receive in respect of the amount of the participation
transferred by such transferor Lender to such Participant had no such
transfer occurred.
SECTION 11.12 Other Transactions. Nothing contained herein shall
------------------
preclude the Administrative Agent or any other Lender from engaging in any
transaction, in addition to those
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contemplated by any Loan Document, with the Borrower or any of its Affiliates in
which the Borrower or such Affiliate is not restricted hereby from engaging with
any other Person.
SECTION 11.13 Submission To Jurisdiction; Waivers. Each of the
-----------------------------------
Borrower, the Administrative Agent and the Lenders hereby irrevocably and
unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to the Loan Documents to which it is a party, or for
recognition and enforcement of any judgment in respect thereof, to the non-
exclusive general jurisdiction of the courts of the State of New York, the
courts of the United States for the Southern District of New York, and
appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have to
the venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form of mail), postage prepaid, to such
Person at its address set forth on Schedule 1.1(b) or at such other address
---------------
of which the Administrative Agent shall have been notified pursuant to
Section 11.2;
------------
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to xxx in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right it
may have to claim or recover in any legal action or proceeding referred to
in this Section any special, exemplary, punitive or consequential damages.
SECTION 11.14 WAIVERS OF JURY TRIAL. THE BORROWER, THE
---------------------
ADMINISTRATIVE AGENT AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT
OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
SECTION 11.15 Non-Recourse Persons. The Lenders acknowledge that no
--------------------
Non- Recourse Person shall have any responsibility or liability for the
Obligations.
SECTION 11.16 Acknowledgments. The Borrower hereby acknowledges
---------------
that:
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(a) it has been advised by counsel in the negotiation, execution and
delivery of the Loan Documents;
(b) neither the Administrative Agent nor any Lender has any fiduciary
relationship with or duty to the Borrower arising out of or in connection
with the Loan Documents, and the relationship between Administrative Agent
and Lenders, on one hand, and the Borrower, on the other hand, in
connection herewith or therewith is solely that of debtor and creditor; and
(c) no joint venture is created by any of the Loan Documents or
otherwise exists by virtue of the transactions contemplated hereby among
the Lenders or among the Borrower and the Lenders.
SECTION 11.17 Releases of Guarantees and Liens. (a) Notwithstanding
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anything to the contrary contained in any Loan Document, the Collateral Agent is
hereby irrevocably authorized by each Lender (without requirement of notice to
or consent of any Lender except as expressly required by Section 11.1) to take
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any action requested by the Borrower having the effect of releasing any
Collateral or guarantee obligations (i) to the extent necessary to permit
consummation of any transaction not prohibited by any Loan Document or that has
been consented to in accordance with Section 11.1 or (ii) under the
------------
circumstances described in paragraph (b) below.
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(b) At such time as the Loans and the other obligations under the
Loan Documents shall have been paid in full and the Commitments have been
terminated, the Administrative Agent shall instruct the Collateral Agent (i) to
return to the Borrower any Collateral then held in fulfillment of the Debt
Service Reserve Requirement, (ii) to release the Lien on the capital stock of
the Borrower granted pursuant to Section 3(b) of the Guarantee and Collateral
Agreement and to return to the Borrower all stock certificates pledged in
connection therewith and (iii) to release Edison Mission Energy from its
obligations under the Guarantee and Collateral Agreement.
SECTION 11.18 Confidentiality. Each of the Administrative Agent and
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each Lender agrees to keep confidential all non-public information provided to
it by any Loan Party pursuant to this Agreement; provided that nothing herein
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shall prevent the Administrative Agent or any Lender from disclosing any such
information (a) to the Administrative Agent, any other Lender or any affiliate
of any Lender, (b) to any transferee or prospective transferee that agrees to
comply with the provisions of this Section 11.18, (c) to its employees,
-------------
directors, agents, attorneys, accountants and other professional advisors or
those of any of its affiliates, (d) upon the request or demand of any
Governmental Authority, (e) in response to any order of any court or other
Governmental Authority or as may otherwise be required pursuant to any
Requirement of Law, (f) if requested or required to do so in connection with any
litigation or similar proceeding, (g) that has been publicly disclosed, (h) to
the National Association of Insurance Commissioners or any similar organization
or any nationally recognized rating agency that requires access to
-75-
information about a Lender's investment portfolio in connection with ratings
issued with respect to such Lender, or (i) in connection with the exercise of
any remedy under any Loan Document.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers as of the day and year first above
written.
EDISON MISSION HOLDINGS CO.
By:
--------------------------------------
Name: Xxxxx X. Xxxxx
Title: Vice President and Treasurer
CITICORP USA, INC.,
as Administrative Agent and Initial Lender
By:
--------------------------------------
Title: Managing Director
CREDIT SUISSE FIRST BOSTON,
as Initial Lender
By:
--------------------------------------
Title:
By:
--------------------------------------
Title:
XXXXXX COMMERCIAL PAPER INC.,
as Initial Lender
By:
--------------------------------------
Title:
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SOCIETE GENERALE,
as Initial Lender
By:_____________________
Title:
-78-
ANNEX I
Pricing Grid
364-Day Term Loans
BASIS FOR XXXXX 0 XXXXX 0 XXXXX 0 XXXXX 0 XXXXX 5
PRICING
Applicable Margin 87.50 bps 100.00 bps 112.50 bps 200.00 bps 250.00 bps
(LIBO Rate
Loans)
Applicable Margin 0.00 bps 0.00 bps 0.00 bps 0.00 bps 0.00 bps
(Base Rate
Loans)
bps = basis points per annum
Pricing Grid
Construction Term Loans
BASIS FOR XXXXX 0 XXXXX 0 XXXXX 0 XXXXX 0 XXXXX 5
PRICING
Applicable Margin 85.00 bps 92.50 bps 100.00 bps 175.00 bps 225.00 bps
(LIBO Rate
Loans)
Applicable Margin 0.00 bps 0.00 bps 0.00 bps 0.00 bps 0.00 bps
(Base Rate
Loans)
Facility Fee (1) 15.00 bps 20.00 bps 25.00 bps 50.00 bps 50.00 bps
(1) Paid quarterly in arrears on each bank's commitment irrespective of usage.
bps = basis points per annum
Pricing Grid
Revolving Loans
BASIS FOR XXXXX 0 XXXXX 0 XXXXX 0 XXXXX 0 XXXXX 5
PRICING
Applicable Margin 85.00 bps 92.50 bps 100.00 bps 175.00 bps 225.00 bps
(LIBO Rate
Loans)
Applicable Margin 0.00 bps 0.00 bps 0.00 bps 0.00 bps 0.00 bps
(Base Rate
Loans)
Facility Fee (1) 15.00 bps 20.00 bps 25.00 bps 50.00 bps 50.00 bps
(1) Paid quarterly in arrears on each bank's commitment irrespective of usage.
bps = basis points per annum
The following applies to each of the three Pricing Grids above.
The Applicable Margin shall be determined at Level 1 so long as the Borrower's
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Debt Rating is Baa1 or better by Moody's and BBB+ or better by S&P.
The Applicable Margin shall be determined at Level 2 so long as the Borrower's
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Debt Rating is Baa2 by Moody's and BBB by S&P.
The Applicable Margin shall be determined at Level 3 so long as the Borrower's
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Debt Rating is Baa3 by Moody's and BBB- by S&P.
The Applicable Margin shall be determined at Level 4 so long as the Borrower's
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Debt Rating is Ba1 by Moody's and BB+ by S&P.
The Applicable Margin shall be determined at Level 5 so long as the Borrower's
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Debt Rating is lower than Ba1 by Moody's and BB+ by S&P, or if the Borrower has
not received a final Debt Rating before June 1, 1999.
In the event that the Debt Rating established by Xxxxx'x is at a different Level
than the Debt Rating established by S&P, the lower Debt Rating shall apply and
the Level associated with such lower rating shall be the Applicable Margin,
except that, in the event that the difference is greater than one rating Level,
the average of the two Debt Ratings by Moody's and by S&P shall apply to
determine the Applicable Margin.
Changes in the Level for determining the Applicable Margin resulting from a
change in rating(s) shall become effective on the day such change in the ratings
is announced by the relevant rating agency. In the event that the Borrower does
not maintain a Debt Rating with both Moody's and S&P, the Borrower may, with the
reasonable consent of Required Lenders, select Duff & Xxxxxx, Fitch Investor
Services Inc. or another nationally recognized rating agency to replace Moody's
or S&P, and such replacement agency and the Debt Rating established by such
agency shall be used thereafter in the calculation of Applicable Margin in the
same fashion as the agency which no longer maintains such Debt Rating. From the
date which the Debt Rating of Moody's or S&P ceases to be current until the date
which is 120 days thereafter, the Applicable Margin shall be determined by
reference to the Debt Ratings of Moody's and S&P most recently in effect. In
the event that such replacement agency has not established a Debt Rating within
120 days after the Debt Rating of Moody's or S&P ceases to be current, then,
until such time as such Debt Rating is established, the Applicable Margin shall
be determined at one Level lower than the Level otherwise established based on
the remaining Debt Rating.
