As of December 18, 1996
EQUITY LOAN FACILITY
LETTER AGREEMENT
Panda Brandywine Corporation
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Panda Energy Corporation (a Delaware corporation)
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Ladies and Gentlemen:
For purposes hereof, reference is hereby made to:
(1) the Construction Loan Agreement and Lease
Commitment, dated as of March 30, 1995 (the "Construction
Loan Agreement"), among Panda-Brandywine, L.P., a limited
partnership organized under the laws of Delaware (the
"Partnership"), Panda Brandywine Corporation, a Delaware
corporation, and the sole general partner of the Partnership
(the "General Partner") and General Electric Capital
Corporation, a New York corporation, in its individual
capacity ("GE Capital"), pursuant to which GE Capital
agreed, subject to the terms and conditions set forth
therein, to make loans to the Partnership, issue letters of
credit and make available to you a commitment to issue
equity loans (an "Equity Loan Facility"); and
(2) the Participation Agreement, dated as of December
18, 1996 (the "Participation Agreement"), among the
Partnership, the General Partner, GE Capital in its
individual capacity and as owner participant (in such
capacity, the "Owner Participant"), Fleet National Bank
(formerly known as Shawmut Bank Connecticut, National
Association), a national banking association, not in its
individual capacity but solely as owner trustee (in such
capacity, the "Owner Trustee") under the Trust Agreement and
as security agent under the Security Deposit Agreement,
First Security Bank, National Association, a national
banking association, not in its individual capacity but
solely as indenture trustee (in such capacity, the
"Indenture Trustee") under the Indenture, Credit Suisse, a
bank organized and existing under the laws of Switzerland,
acting by and through its New York branch ("Credit Suisse"),
as administrative agent (in such capacity, the
"Administrative Agent") for the entities listed on Schedule
I thereto as the "Loan Participants". Capitalized terms
used herein and not otherwise defined shall have the
meanings assigned to them in Annex A to the Participation
Agreement.
The parties hereto are entering into this Letter
Agreement to maintain the commitment of GE Capital to make
available the Equity Loan Facility after the Construction Loan
Agreement is terminated, subject to the terms and conditions
herein. The obligation of GE Capital to make available the
Equity Loan Facility shall be subject to the fulfillment to the
satisfaction of, or waiver by, GE Capital of the following
conditions precedent on or prior to the Date of Final Completion:
1. the occurrence of the Date of Final Completion and
the delivery by the Partnership to GE Capital of the Final
Completion Certificate.
2. the execution and delivery of (A) a loan agreement
in form and substance satisfactory to GE Capital, reflecting
the terms set forth in Exhibit A and having substantially
the same terms and provisions contained in the Participation
Agreement and the Construction Loan Agreement, including
without limitation, with respect to representations,
conditions precedent, covenants and defaults, (B)
subordinated pledge agreements executed by each borrower
under the Equity Loan Facility in form and substance
satisfactory to GE Capital and having substantially the same
terms as the Pledge Agreements (together with appropriate
subordination documentation in form and substance
satisfactory to the Administrative Agent, together with such
other documents and opinions as the Administrative Agent
shall reasonably request) and (C) amendments to the
Transaction Documents reasonably required by GE Capital to
reflect the making of the Equity Loans; provided, however,
that each such agreement referred to in clauses (A) and (B)
and any such amendment referred to in clause (C) shall
require the prior written consent of the Administrative
Agent, which consent shall not be unreasonably withheld or
delayed.
3. the execution and delivery by the Limited Partner
and/or the General Partner, as the case may be, of a note,
in form and substance satisfactory to GE Capital and the
Administrative Agent, in an amount equal to the Equity Loan
Commitment.
4. the delivery to GE Capital of updated Operating
Projections for the Partnership which shall be satisfactory
in form and substance to GE Capital and shall show, among
other things, an Operating Cash Flow Ratio (for this
purpose, taking into account (A) required debt service on
the Equity Loans, assuming the drawing in full of all
amounts available under the Equity Loan Facility on the Date
of Final Completion and the amortization thereof in
accordance with Exhibit A, (B) required deposits into the
Rent Reserve Account and the Maintenance Reserve Account and
(C) the effect of the capacity payment clawback under the
Power Purchase Agreement and, if the actual amount thereof
has not yet been determined, assuming the maximum clawback)
of at least 1.35 to 1.0 for each Quarterly Measurement
Period to occur during the Basic Term and an average
Operating Cash Flow Ratio of not less than 1.40 to 1.0 for
the Basic Term; provided that to the extent the foregoing
restrictions would prevent the Equity Loan Facility from
being made available in the full amount of the Equity Loan
Commitment, the Partners shall nevertheless have the right
to establish the Equity Loan Facility in a lesser amount
meeting the foregoing restrictions.
Without limiting the provisions of Section 8 of the
Participation Agreement, the Limited Partner and the General
Partner, jointly and severally agree (a) to indemnify and hold
harmless GE Capital and the Administrative Agent and Indenture
Trustee and its respective officers, directors, employees,
affiliates, advisors, agents and controlling persons (each, an
"indemnified person") from and against any and all losses, claims
damages and liabilities to which any such indemnified person may
become subject arising out of or in connection with this Letter
Agreement, the Equity Loan Facility, the use of the proceeds
thereof, or any related transaction or any claim, litigation,
investigation or proceeding relating to any of the foregoing,
regardless of whether any indemnified person is a party thereto,
and to reimburse each indemnified person upon demand for any
legal or other expenses incurred in connection with investigating
or defending any of the foregoing, provided that the foregoing
indemnity will not, as to any indemnified person, apply to
losses, claims, damages, liabilities or related expenses to the
extent they arise from the willful misconduct or gross negligence
of such indemnified person, and (b) to reimburse GE Capital and
its affiliates upon presentation of reasonable documentation for
all reasonable out-of-pocket expenses (including reasonable fees,
charges and disbursements of counsel) incurred in connection with
the Equity Loan Facility and any related documentation (including
this Letter Agreement and the definitive financing
documentation). No indemnified person shall be liable for any
indirect or consequential damages in connection with its
activities related to the Equity Loan Facility.
This Letter Agreement shall not be assignable by the
Limited Partner nor the General Partner without the prior written
consent of GE Capital and the Administrative Agent (and any
purported assignment without such consent shall be null and
void), is intended to be solely for the benefit of the parties
hereto and is not intended to confer any benefits upon, or create
any rights in favor of, any person other than the parties hereto
(and, to the extent specified herein, the Administrative Agent on
behalf of the Holders). This Letter Agreement may not be amended
or waived except by an instrument in writing signed by the
parties hereto and with the prior written consent of the
Administrative Agent. This Letter Agreement may be executed in
any number of counterparts, each of which shall be an original,
and all of which, when taken together, shall constitute one
agreement. Delivery of an executed signature page of this Letter
Agreement by facsimile transmission shall be effective as
delivery of a manually executed counterpart hereof.
This Letter Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.
Very truly yours,
GENERAL ELECTRIC CAPITAL
CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Manager of Operations
Accepted and agreed to
as of the date first
written above by:
PANDA BRANDYWINE CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Senior Vice President
PANDA ENERGY CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Senior Vice President
Exhibit A to
Equity Loan Facility
Letter Agreement
Equity Loan Terms
Capitalized terms used herein are defined in Annex A to
the Participation Agreement.
Borrower: The Limited Partner and/or the General Partner.
Availability: The Equity Loan Facility will be available
for up to four years from the Date of Final
Completion in amounts not less than $4.0 million
per draw with a limit of [four] draws.
Equity Loan
Commitment: Up to a maximum of $17,511,355.
Description;
Conditions
to Draws: Upon the Date of Final Completion, GE
Capital (or assignees/designees) would make
available the Equity Loan Commitment of up to
$17,511,355 in accordance with Equity Loan
Facility Letter Agreement, dated as of December
18, 1996 (the "Letter Agreement"). Funding of
each draw under the Equity Loan Facility would be
subject to the satisfaction of each of the
applicable conditions precedent set forth in
subsection 5.1 of the Participation Agreement and
the conditions described in the Letter Agreement.
In addition, each draw will be subject to the
maintenance of an Operating Cash Flow Ratio
(taking into account (i) required deposits into
the Rent Reserve Account and the Maintenance
Reserve Account and (ii) the effect of the
capacity payment clawback under the Power Purchase
Agreement and, if the actual amount thereof has
not yet been determined, assuming the maximum
clawback) of at least 1.35 to 1.0 for each
Quarterly Measurement Period to occur during the
Basic Term and an average Operating Cash Flow
Ratio of not less than 1.40 to 1.0 for the Basic
Term, assuming the amortization schedule set forth
in Appendix 1 hereto.
Interest Rate: The interest rate would be fixed at 515
basis points over the applicable treasury rate in
effect at the time of Equity Loan funding.
Amortization: As per Appendix 1.
Maturity Date: 15 years from the Lease Commencement Date.
Security: The Equity Loan Facility shall be secured
solely by a pledge by the General Partner and the
Limited Partner of their partnership interests in
the Partnership in each case subordinated to the
interests of the Owner Trustee and Indenture
Trustee therein.
Documentation: The Equity Loan Facility will be documented by (a)
a new loan agreement with the Partners having
substantially the same terms and provisions as
contained in the Construction Loan Agreement,
including, without limitation, with respect to
representations, conditions precedent, covenants
and defaults and (b) new subordinated pledge
agreements having substantially the same
provisions as the Pledge Agreements, in each case
satisfactory in form and substance to the
Administrative Agent, together with such other
documentation as the Administrative Agent shall
reasonably request. The parties will also make
any appropriate modifications to the Transaction
Documents as shall be reasonably required by GE
Capital, provided, however, that no such
modifications shall be made without the prior
written consent of the Administrative Agent, which
consent shall not be unreasonably withheld or
delayed.
Appendix 1 to Exhibit A
Equity Loan Amortization Schedule
Year Equity Loan Principal Repayment
(Starting from the Date (expressed as an annual percentage
Date of Final Completion) of total Equity Loans)
1*/ 4.75%
2 4.84%
3 5.11%
4 5.38%
5 8.37%
6 8.89%
7 8.89%
8 7.33%
9 6.09%
10 4.87%
11 4.97%
12 4.89%
13 5.06%
14 6.53%
15 14.03%
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Total 100.00%
*/ In the event an Equity Loan is made in years two, three or
four, the amortization payments which were required for the
preceding years (e.g. if an Equity Loan is made in year
three, those payments which were required in years one and
two) shall be evenly distributed over the three years
immediately succeeding the year in which such Equity Loan is
made.
