Exhibit 4.2
EXECUTION COPY
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COLLATERAL AGENCY AND
INTERCREDITOR AGREEMENT
Dated as of June 1, 1999
among
AES IRONWOOD, L.L.C.,
IBJ WHITEHALL BANK & TRUST COMPANY,
as Trustee,
DRESDNER BANK AG, NEW YORK BRANCH,
as DSR LOC Provider,
DRESDNER BANK AG, NEW YORK BRANCH,
as CP LOC Provider,
IBJ WHITEHALL BANK & TRUST COMPANY,
as Collateral Agent,
and
IBJ WHITEHALL BANK & TRUST COMPANY,
as Depositary Bank
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705 MW (Net) Gas-Fired Combined Cycle Electric Generating Facility
South Lebanon Township, Lebanon County, Pennsylvania
TABLE OF CONTENTS
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ARTICLE I DEFINITIONS.............................................................................................2
SECTION 1.1 DEFINITIONS........................................................................................2
ARTICLE II SECURITY INTERESTS AND EXERCISE OF RIGHTS..............................................................8
SECTION 2.1 SHARING; PRIORITY OF SECURITY INTERESTS............................................................8
SECTION 2.2 SUBORDINATED DEBT..................................................................................8
SECTION 2.3 EXERCISE OF RIGHTS UNDER SECURITY DOCUMENTS........................................................9
SECTION 2.4 RIGHTS OF SENIOR PARTIES..........................................................................11
SECTION 2.5 CERTAIN AMENDMENTS................................................................................12
ARTICLE III ACCOUNTS.............................................................................................12
SECTION 3.1 ESTABLISHMENT OF PROJECT ACCOUNTS.................................................................12
SECTION 3.2 INVESTMENT OF FUNDS IN THE PROJECT ACCOUNTS.......................................................13
SECTION 3.3 VALUATION AND SALE OF INVESTMENTS.................................................................13
SECTION 3.4 POSSESSION OF ACCOUNTS; LIQUIDATION...............................................................14
SECTION 3.5 THE DEPOSITARY BANK; LIMITED COMPANY RIGHTS.......................................................14
SECTION 3.6 ADVANCES..........................................................................................16
SECTION 3.7 COLLECTION OF PROJECT REVENUES....................................................................17
SECTION 3.8 CONSTRUCTION ACCOUNT..............................................................................17
SECTION 3.9 PAYMENTS ON COMMERCIAL OPERATION DATE.............................................................19
SECTION 3.10 REVENUE ACCOUNT..................................................................................20
SECTION 3.11 OPERATING AND MAINTENANCE ACCOUNT................................................................22
SECTION 3.12 DEBT SERVICE RESERVE ACCOUNT.....................................................................22
SECTION 3.13 MAJOR MAINTENANCE RESERVE ACCOUNT................................................................25
SECTION 3.14 DISTRIBUTION ACCOUNT.............................................................................25
SECTION 3.15 RESTORATION ACCOUNT..............................................................................27
SECTION 3.16 FUEL CONVERSION VOLUME REBATE ACCOUNT............................................................30
SECTION 3.17 SUBORDINATED DEBT ACCOUNT........................................................................30
ARTICLE IV APPLICATION OF CERTAIN PROCEEDS.......................................................................30
SECTION 4.1 DIVISION OF FORECLOSURE PROCEEDS AND PROCEEDS UNDER THE WILLIAMS GUARANTY.........................30
SECTION 4.2 APPLICATION OF CASUALTY PROCEEDS AND EMINENT DOMAIN PROCEEDS......................................31
SECTION 4.3 APPLICATION OF BUY-DOWN AMOUNTS...................................................................33
ARTICLE V COLLATERAL AGENT; DEPOSITARY BANK......................................................................36
SECTION 5.1 APPOINTMENT AND DUTIES OF COLLATERAL AGENT AND DEPOSITARY BANK....................................36
SECTION 5.2 RIGHTS OF COLLATERAL AGENT........................................................................37
SECTION 5.3 LACK OF RELIANCE ON THE COLLATERAL AGENT..........................................................39
SECTION 5.4 INDEMNIFICATION...................................................................................40
SECTION 5.5 RESIGNATION OF THE COLLATERAL AGENT OR DEPOSITARY BANK............................................41
SECTION 5.6 REMOVAL OF THE COLLATERAL AGENT OR DEPOSITARY BANK................................................42
SECTION 5.7 MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS.......................................42
SECTION 5.8 POWER OF ATTORNEY.................................................................................42
ARTICLE VI REPRESENTATIONS AND WARRANTIES........................................................................43
SECTION 6.1 REPRESENTATIONS AND WARRANTIES....................................................................43
ARTICLE VII MISCELLANEOUS........................................................................................45
SECTION 7.1 AGREEMENT FOR BENEFIT OF PARTIES HERETO...........................................................45
SECTION 7.2 NO WARRANTIES.....................................................................................45
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TABLE OF CONTENTS
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SECTION 7.3 SEVERABILITY......................................................................................46
SECTION 7.4 NOTICES...........................................................................................46
SECTION 7.5 SUCCESSORS AND ASSIGNS............................................................................47
SECTION 7.6 COUNTERPARTS......................................................................................47
SECTION 7.7 GOVERNING LAW.....................................................................................47
SECTION 7.8 IMPAIRMENTS OF OTHER RIGHTS.......................................................................48
SECTION 7.9 AMENDMENT; WAIVER.................................................................................48
SECTION 7.10 HEADINGS.........................................................................................48
SECTION 7.11 TERMINATION......................................................................................48
SECTION 7.12 ENTIRE AGREEMENT.................................................................................48
SECTION 7.13 LIMITATION OF LIABILITY..........................................................................48
SECTION 7.14 REPLACEMENT AND/OR REMOVAL OF INDEPENDENT ENGINEER; PAYMENT OF INDEPENDENT ENGINEER..............49
SECTION 7.15 THIRD-PARTY ENGINEER DISPUTE RESOLUTION..........................................................49
EXHIBITS
Exhibit 2.1 Form of Designation Letter
Exhibit 2.2 Terms of Subordination
Exhibit 2.3 Form of Senior Party Certificate
Exhibit 3.6(a) Form of Guaranty
Exhibit 3.6(b) Form of Letter of Credit
Exhibit 3.8 Form of Requisition
Exhibit 3.15 Form of Restoration Certificate
Exhibit 4.3 Form of Performance Enhancement Certificate
Exhibit 7.14 Third-Party Engineers
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COLLATERAL AGENCY AND
INTERCREDITOR AGREEMENT
COLLATERAL AGENCY AND INTERCREDITOR AGREEMENT, dated as of June 1, 1999
(this "Agreement"), among AES IRONWOOD L.L.C., a Delaware limited liability
corporation (the "Company"), IBJ WHITEHALL BANK & TRUST COMPANY, as Trustee (the
"Trustee"), DRESDNER BANK AG, NEW YORK BRANCH, in its capacity as Agent for the
banks (including the DSR LOC Issuing Bank) under the DSR LOC Reimbursement
Agreement (the "DSR LOC Provider"), DRESDNER BANK AG, NEW YORK BRANCH, in its
capacity as Agent for the banks (including the CP LOC Issuing Bank) under the CP
LOC Reimbursement Agreement (the "CP LOC Provider"), IBJ WHITEHALL BANK & TRUST
COMPANY, as Collateral Agent (the "Collateral Agent") and IBJ WHITEHALL BANK &
TRUST COMPANY, as Depositary Bank (the "Depositary Bank").
W I T N E S S E T H:
WHEREAS, the Company is constructing and will own a gas-fired combined
cycle electric generating facility in South Lebanon Township, Lebanon County,
Pennsylvania, with a net design capacity of approximately 705 megawatts and
related property and facilities;
WHEREAS, the Company intends to finance the construction and equipping
of the Facility primarily through the issuance of the Bonds, the net proceeds of
which, shall be received by the Company;
WHEREAS, the Company has duly authorized the creation and issuance of
the Bonds pursuant to the Indenture;
WHEREAS, in connection with the authentication and delivery of the
first Bonds to be authenticated and delivered by the Trustee under the
Indenture, the Company will deliver (i) the DSR Letter of Credit, which the DSR
LOC Issuing Bank has agreed to issue subject to the terms and conditions
contained in the DSR LOC Reimbursement Agreement, and (ii) the CP Letter of
Credit, which the CP LOC Issuing Bank has agreed to issue subject to the terms
and conditions contained in the CP LOC Reimbursement Agreement;
WHEREAS, all obligations of the Company under the Indenture, the DSR
LOC Reimbursement Agreement, the CP LOC Reimbursement Agreement and this
Agreement will be secured as set forth in the Security Documents pursuant to
which the Collateral Agent has been granted a Security Interest in the
Collateral; and
WHEREAS, the parties hereto desire to enter into this Agreement to set
forth their mutual understanding with respect to (i) the exercise of certain
rights, remedies and options by the respective parties hereto under the above
described documents, (ii) the priority of their respective security interests
created by the Security Documents, (iii) the appointment of the Collateral Agent
and (iv) the appointment of the Depositary Bank.
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NOW, THEREFORE, for and in consideration of the premises and of the
covenants herein contained, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound, covenant and agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions.
The following terms shall have the meanings specified herein unless the
context otherwise requires. Capitalized terms not otherwise defined herein shall
have the meanings specified in the Indenture in the form of such terms as they
exist on the date hereof; provided, however, that defined terms from the
Indenture that have been added or amended subsequent to the date hereof shall
have such added or amended meanings herein upon compliance with the provisions
of Section 5.1(d). For the purposes of this Agreement, the rules of construction
set forth in the Indenture shall apply as if such rules were set forth herein.
"Acceptable Credit Provider" means (i) in the case of an unconditional
guaranty, AES (if and for so long as its long-term unsecured debt is rated at
least Investment Grade and not lower than the then current lowest rating of the
Bonds by each of S&P and Moody's) and (ii) in the case of an irrevocable letter
of credit, a bank or trust company with a combined capital and surplus of at
least $1,000,000,000 whose long-term unsecured debt is rated at least "A" by S&P
or "A2" by Moody's.
"Acceptable Credit Support" means (i) an unconditional guaranty
substantially in the form of Exhibit 3.6(a) or (ii) an irrevocable letter of
credit substantially in the form of Exhibit 3.6(b) (which is not an obligation
of the Company and is not secured by the Collateral), in each case from an
Acceptable Credit Provider. Each Acceptable Credit Support delivered under this
Agreement shall clearly specify the Advance to which such Acceptable Credit
Support relates.
"Advances" has the meaning specified in Section 3.6.
"Authorized Representative" of any Person means the individual or
individuals authorized to act on behalf of such Person by the board of
directors, management committee, board of control or any other governing body of
such Person as designated from time to time in a certificate of such Person with
specimen signatures and delivered to the Collateral Agent and upon which the
Collateral Agent may conclusively rely.
"Available Accounts" means the Project Accounts other than the
Construction Account and the Debt Service Reserve Account.
"Available Cash Flow" means, with respect to each application of funds
required under this Agreement as of any specified date, all funds remaining in
the Revenue Account as of such
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date and available to be applied as set forth in this Agreement after all prior
applications of funds in the Revenue Account required on such date.
"Bond Payment Date" means February 28, May 31, August 31 and November
30 of each year commencing on August 31, 1999, on which interest on and/or
principal of the Bonds shall be payable in accordance with the Indenture.
"Certificate as to Redemption" means the certificate filed by an
Authorized Representative of the Company in the case of an Event of Loss or an
Event of Eminent Domain in order to determine (i) whether the Facility can be
rebuilt, repaired or restored and (ii) the availability of Casualty Proceeds or
Eminent Domain Proceeds for such rebuilding, repairing or restoring.
"Claims" means with respect to any Person, any and all suits,
sanctions, legal proceedings, claims, assessments, judgments, damages,
penalties, fines, liabilities, demands, out-of-pocket costs, reasonable
out-of-pocket expenses of whatever kind (including reasonable attorneys' fees
and expenses) and losses incurred or sustained by or against such Person.
"Collateral Agent" has the meaning specified in the preamble of this
Agreement.
"Collateral Agent Claims" means all obligations of the Company, now or
hereafter existing, to pay fees, costs, expenses, liabilities or indemnities to
the Collateral Agent under the Collateral Agency Agreement.
"Combined Exposure" means, as of any date of calculation, the sum
(calculated without duplication) of the following, to the extent the same is
held by or represented by a Senior Party: (i) the aggregate principal amount of
all Outstanding Bonds; (ii) the aggregate principal amount of all outstanding
Permitted Indebtedness (other than the Bonds, DSR LOC Loans, DSR LOC Term Loans,
DSR Bonds, CP LOC Loans, Subordinated Debt and Affiliate Subordinated Debt);
(iii) the aggregate amount of all available undrawn financing commitments under
the documents governing the Permitted Indebtedness (other than the Bonds,
Subordinated Debt, Affiliate Subordinated Debt, the DSR LOC Reimbursement
Agreement and the CP LOC Reimbursement Agreement) which the creditors party to
such documents have no right to terminate; (iv) the maximum amounts available to
be drawn under the DSR Letter of Credit and the CP Letter of Credit (taking into
account, without duplication, in the case of the DSR Letter of Credit, the
maximum amount which may become available to be drawn in the future by reason of
an increase in the DSRA Required Balance); and (v) the amount, without
duplication, of unreimbursed drawings under the DSR Letter of Credit and the CP
Letter of Credit.
"Commercial Operation Certificate" has the meaning specified in Section
3.9.
"Company" has the meaning specified in the preamble of this Agreement.
"Construction Account" means the Construction Account established
pursuant to Section 3.1.
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"Contract" means any agreement, lease, license, evidence of Debt,
indenture or other contract (including any design, construction, equipment, or
other warranty or guarantee under any of the foregoing).
"CP LOC Loan" has the meaning specified in the CP LOC Reimbursement
Agreement.
"CP LOC Provider" has the meaning specified in the preamble of this
Agreement.
"CP LOC Reimbursement Fund" means the CP LOC Reimbursement Fund
established pursuant to Section 3.1.
"Debt Service Coverage Ratio" means for any period, without
duplication, a ratio the numerator of which is Cash Available for Debt Service
for that period and the denominator of which is principal, interest and
commitment fees, underwriting fees and other similar fees due for such period on
the Bonds and other Permitted Indebtedness which ranks pari passu with the
Bonds.
"Debt Service Reserve Account" means the Debt Service Reserve Account
established pursuant to Section 3.1.
"Depositary Bank" has the meaning specified in the preamble to this
Agreement.
"Designation Letter" means a "Designation Letter" in the form of
Exhibit 2.1, pursuant to which a Person agrees to be bound by the terms of this
Agreement.
"Distribution Account" means the Distribution Account established
pursuant to Section 3.1.
"Distribution Conditions" has the meaning specified in Section 3.14.
"DSR Bond" has the meaning specified in the DSR LOC Reimbursement
Agreement.
"DSR LOC Loan" has the meaning specified in the DSR LOC Reimbursement
Agreement.
"DSR LOC Provider" has the meaning specified in the preamble of this
Agreement.
"DSR LOC Reimbursement Fund" means the DSR Reimbursement Fund
established pursuant to Section 3.1.
"DSR LOC Term Loan" has the meaning specified in the DSR LOC
Reimbursement Agreement.
"Equity Contribution" means the equity contribution required to be made
by AES Ironwood under the Equity Subscription Agreement.
"Event of Default" means, so long as there are any Financing
Commitments or any Financing Liabilities outstanding under such documents, an
"Event of Default" as such term is
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defined in the Indenture, an "Event of Default" as such term is defined in the
DSR LOC Reimbursement Agreement, an "Event of Default" as such term is defined
in the CP LOC Reimbursement Agreement or an "Event of Default" or equivalent
term under any working capital facility.
"EWG" means "exempt wholesale generator," as defined in Section 32(a)
of PUHCA.
"Excess Amount" has the meaning specified in Section 3.12(j).
"Fair Market Value" has the meaning specified in the Power Purchase
Agreement.
"Financing Commitment" means any commitment pursuant to the Financing
Documents to provide credit to the Company including, but not limited to, (i)
the Stated Amount of the DSR Letter of Credit and the CP Letter of Credit and
(ii) the obligation of the DSR LOC Provider to issue the DSR Letter of Credit,
to reinstate the DSR Letter of Credit upon the reimbursement of drawings
thereunder, and to increase the amount of the DSR Letter of Credit from time to
time by reason of an increase in the DSRA Required Balance.
"Financing Liabilities" means all indebtedness, liabilities and
obligations of the Company (of whatsoever nature and howsoever evidenced
including, but not limited to, principal, interest, fees, reimbursement
obligations, collateralization or deposit obligations, penalties, indemnities
and legal expenses, whether due after acceleration or otherwise) under or
pursuant to the Indenture, the Bonds and any evidence of indebtedness thereunder
entered into, the DSR LOC Reimbursement Agreement and any evidence of
indebtedness thereunder entered into, the CP LOC Reimbursement Agreement and any
evidence of indebtedness thereunder entered into, the Collateral Agency
Agreement and any evidence of indebtedness thereunder entered into, any working
capital facility and any evidence of indebtedness thereunder entered into, and
the Security Documents, to the extent arising on or prior to the Final Maturity
Date, in each case, direct or indirect, primary or secondary, fixed or
contingent, now or hereafter arising out of or relating to any such agreements.
"Fuel Conversion Payment Volume Rebate Account" means the Fuel
Conversion Payment Volume Rebate Account established pursuant to Section 3.1.
"Indenture" means the Trust Indenture, by and among the Company, the
Trustee and the Depositary Bank.
"Liabilities" means, as to any Person, all Debt, obligations and any
other liabilities of such Person (whether absolute, accrued, contingent, fixed
or otherwise, and whether due or to become due).
"Major Maintenance Reserve Account" means the Major Maintenance Reserve
Account established pursuant to Section 3.1.
"Maximum Stated Amount" has the meaning specified in the DSR LOC
Reimbursement Agreement.
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"Operating and Maintenance Account" means the Operating and Maintenance
Account established pursuant to Section 3.1.
"Performance Enhancement Certificate" means a certificate of the
Company substantially in the form of Exhibit 4.3.
"Project Accounts" has the meaning specified in Section 3.1.
"PUHCA" means the Public Utility Holding Company Act of 1935.
"Required Senior Parties" means, at any time, Persons that at such time
hold at least a majority of the Combined Exposure.
"Requisition" has the meaning specified in Section 3.8(b).
"Responsible Officer" when used with respect to the Collateral Agent,
means any officer in the corporate trust and agency group (or any successor
group) of the Collateral Agent including without limitation, any vice president,
assistant vice president, assistant treasurer, assistant secretary or any other
officer of the Collateral Agent customarily performing functions similar to
those performed by any of the above designated officers, and with respect to a
particular corporate trust matter, also means any other officer to whom such
matter is referred because of his knowledge of and familiarity with the
particular subject.
"Restoration Account" means the Restoration Account established
pursuant to Section 3.1.
"Restoration Certificate" means a certificate of the Company
substantially in the form of Exhibit 3.15.
"Revenue Account" means the Revenue Account established pursuant to
Section 3.1.
"Secured Obligations" means, collectively, the Financing Liabilities,
the Trustee Claims, the DSR LOC Provider Claims, the CP LOC Provider Claims and
the Collateral Agent Claims.
"Security Interest" means any perfected and enforceable Lien on
Collateral granted to a Senior Party pursuant to any applicable Security
Document.
"Senior Debt Termination Date" means the date on which all Financing
Liabilities, other than contingent liabilities and obligations which are
unasserted at such date, have been paid and satisfied in full and all Financing
Commitments have been terminated, including, without limitation, the termination
or expiration of the DSR Letter of Credit and the CP Letter of Credit.
"Senior Documents" has the meaning specified in Section 6.1.
"Senior Parties" means, collectively, the Trustee, the Collateral
Agent, the Depositary Bank, the DSR LOC Provider, the CP LOC Provider and any
working capital provider and each successor to any of such Persons.
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"Senior Party Certificate" means a certificate of a Senior Party
substantially in the form of Exhibit 2.3, signed by an Authorized Representative
of such Senior Party, (i) setting forth the principal amount of the Financing
Liabilities owed to such Senior Party as of the date of such certificate and the
outstanding unutilized commitments to extend credit to the Company or the
Company by such Senior Party as of the date of such certificate, (ii) setting
forth a contact person for such Senior Party and including phone and facsimile
numbers for such person, (iii) directing the Collateral Agent to take a
specified action and (iv) stating specifically the action the Collateral Agent
is directed to take and the Security Document and the provision thereof pursuant
to which the Collateral Agent is being directed to act.
"Stated Amount" means in respect of the DSR Letter of Credit, the
"Stated Amount" as defined in the DSR LOC Reimbursement Agreement, and in
respect of the CP LOC Letter of Credit, the "Stated Amount" as defined in the CP
LOC Reimbursement Agreement.
"Step-Up Event" means, in respect of any DSR Letter of Credit, (i) such
DSR Letter of Credit has not been extended or replaced within 45 days prior to
the termination date of such DSR Letter of Credit or (ii) the credit rating of
the DSR LOC Issuing Bank is less than the Required Rating and such DSR Letter of
Credit has not been replaced within 45 days of the failure to satisfy the
requirements of the Required Rating with a replacement letter of credit issued
by an issuer that satisfies the requirements of the Required Rating, and, in
each case, the Collateral Agent has drawn on such DSR Letter of Credit in an
amount sufficient to fund the Debt Service Reserve Account up to the DSRA
Required Balance.
"Subordinated Debt Account" means the Subordinated Debt Account
established pursuant to Section 3.1.
"Tax Reimbursements" has the meaning specified in Section 3.14.
"Taxes" or "Tax" means any tax, charge, impost, tariff, duty or fee of
any kind charged, imposed or levied, directly or indirectly, by any Governmental
Authority, including any value-added tax, sales tax, stamp duty, import duty,
withholding tax (whether on income, dividends, interest payments, fees,
equipment rentals or otherwise), tax on foreign currency loans or foreign
exchange transactions, excise tax, property tax, registration fee or license,
water tax or environmental, energy or fuel tax including any interest, penalties
or other additions thereon.
"Terms of Subordination" means the Terms of Subordination attached
hereto as Exhibit 2.2.
"Trigger Event" means (i) an "Event of Default" under the Indenture and
an acceleration of the indebtedness issued thereunder, (ii) an "Event of
Default" under the DSR LOC Reimbursement Agreement and an acceleration of the
indebtedness incurred by the Company thereunder, (iii) an "Event of Default"
under the CP LOC Reimbursement Agreement and an acceleration of the indebtedness
incurred by the Company thereunder, (iv) an "Event of Default" or the equivalent
under any working capital facility and an acceleration of the indebtedness
entered into thereunder or (v) a Bankruptcy Event in respect of the Company and
the expiration of the shortest applicable grace period.
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"Trustee" has the meaning specified in the preamble of this Agreement.
"UCC" means the Uniform Commercial Code as is in effect from time to
time in the State of New York and any other jurisdiction the laws of which
control the creation or perfection of security interests under the Security
Documents.
ARTICLE II
SECURITY INTERESTS AND EXERCISE OF RIGHTS
SECTION 2.1 Sharing; Priority of Security Interests.
(a) Each Senior Party agrees that, (i) as among the Senior Parties, the
Security Interest of each Senior Party in any Collateral ranks and will rank
equally in priority with the Security Interest of the other Senior Parties in
the same Collateral and (ii) in respect of matters voted on by the Senior
Parties collectively, the Trustee shall vote all Bonds according to the votes of
a majority of Bondholders voting.
(b) The priorities specified herein are applicable irrespective of any
statement in any Security Document or in any other agreement to the contrary,
the time or order or method of attachment or perfection of Liens, the time or
order of filing of financing statements or the giving or failure to give notice
of the acquisition or expected acquisition of purchase money or other security
interests.
(c) The Company hereby covenants and agrees to cause each person
holding Senior Debt to become a party to this Agreement by executing a
Designation Letter and becoming a Senior Party hereunder.
SECTION 2.2 Subordinated Debt.
Notwithstanding any provision in any Transaction Document to the
contrary, the Senior Parties hereby agree that (i) the Subordinated Debt
Providers shall be entitled to share in the Collateral or any other payment,
security or guarantee from the Company or any of its Affiliates only to the
extent provided in, and only in accordance with, Articles III and IV and the
Terms of Subordination and (ii) the Subordinated Debt Providers shall not be
entitled to vote or take any actions pursuant to this Agreement or any other
Security Document, or take any other actions with respect to the Collateral
until such time as all of the Secured Obligations owing to all of the Senior
Parties have been satisfied in full. Each Subordinated Debt Provider agrees to
be bound by the Terms of Subordination and agrees that such Terms of
Subordination shall be explicitly incorporated into the Subordinated Loan
Agreement to which it is a party. Each party becoming a Subordinated Debt
Provider pursuant to a Designation Letter shall agree, in such Designation
Letter, to be bound by such Terms of Subordination.
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SECTION 2.3 Exercise of Rights Under Security Documents.
So long as any Secured Obligations remain outstanding, the following
provisions shall apply:
(a) Subject to Section 5.2(e), if a Trigger Event shall have occurred
and be continuing, and only in such event, upon the written direction of the
Required Senior Parties contained in Senior Party Certificates, the Collateral
Agent, on behalf of the Trustee, the DSR LOC Provider, the CP LOC Provider and
any other Senior Party that is a party to this Agreement, as applicable, shall
be permitted and is hereby authorized to take any and all actions and to
exercise any and all rights, remedies and options which it may have under the
Security Documents or this Agreement; provided, however, that if the underlying
event which caused the Trigger Event is a Bankruptcy Event in respect of the
Company of which the Collateral Agent shall have received written notice, no
written request of the Required Senior Parties shall be required in order for
the Collateral Agent following such Trigger Event to take any and all actions
and to exercise any and all rights and remedies specified in the Security
Documents or this Agreement to be taken in such circumstances. Nothing contained
herein shall be construed as restricting the right of any Senior Party to cause
the acceleration, in accordance with the applicable Senior Document, of the
Senior Debt held by such Party, or in the case of the DSR LOC Provider and the
CP LOC Provider, to terminate the DSR Letter of Credit or CP Letter of Credit
(after giving any required notice to the beneficiary thereof), as the case may
be, or to terminate the ability of the Company to continue any DSR Loans (as
defined in the DSR LOC Reimbursement Agreement) as, or to convert DSR Loans to
Eurodollar Loans (as defined in the DSR LOC Reimbursement Agreement), or in the
case of the DSR LOC Provider, to terminate the ability of the Company to cause
the reinstatement of the DSR Letter of Credit.
(b) The Senior Parties hereby agree to give each other and the
Collateral Agent written notice of the occurrence of an Event of Default and of
a Trigger Event as soon as practicable after the occurrence thereof; provided,
however, that the failure to provide such notice shall not limit or impair the
rights of the Senior Parties hereunder or under the Financing Documents.
(c) Each Senior Party hereby acknowledges and agrees that all funds
held by the Trustee in accordance with Article 5 of the Indenture are held for
the benefit of the Bondholders and that the Trustee shall hold such funds solely
for the benefit of such Bondholders.
(d) Each Senior Party hereby acknowledges and agrees that all funds
held in the Debt Service Reserve Account by the Collateral Agent in accordance
with this Agreement are held for the benefit of the Trustee (on behalf of the
Bondholders) and that the Collateral Agent shall hold such funds solely for the
benefit of such Persons.
(e) Each Senior Party hereby acknowledges and agrees that any DSR
Letter of Credit held by the Collateral Agent in accordance with this Agreement
is held for the benefit of the Trustee (on behalf of the Bondholders) and for
the benefit of the DSR LOC Provider to the extent of its interest in such DSR
Letter of Credit and that the Collateral Agent shall hold such letter of credit
(and the proceeds thereof) solely for the benefit of such Persons.
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(f) Each Senior Party hereby acknowledges and agrees that all funds
held in the DSR LOC Reimbursement Fund or the CP LOC Reimbursement Fund by the
Collateral Agent in accordance with this Agreement are held for the benefit of
the DSR LOC Provider or CP LOC Provider, as the case may be, and that the
Collateral Agent shall hold such funds solely for the benefit of such Persons.
(g) Each Senior Party hereby acknowledges and agrees that the
Collateral Agent, subject to Section 5.2(c) and (e), shall administer the
Collateral in the manner contemplated by the Security Documents and this
Agreement and the Collateral Agent shall exercise, as directed by the Required
Senior Parties in Senior Party Certificates in accordance with Section 2.3(a)
such rights and remedies with respect to the Collateral (including the curing of
defaults under the Transaction Documents) as are granted to it under the
Security Documents, this Agreement and Applicable Law. No Senior Party and no
class or classes of Senior Parties shall have any right (i) to direct the
Collateral Agent to take any action in respect of the Collateral other than in
accordance with Section 2.3(a) or (ii) to take any action with respect to the
Collateral (A) independently of the Collateral Agent or (B) other than to direct
the Collateral Agent in writing to take action in accordance with Section
2.3(a); provided, however, that nothing in this Section 2.3(g) shall be deemed
to limit the ability of any Senior Party to take any action in accordance with
Section 2.3(i).
(h) Each of the Company and each Senior Party covenants and agrees
that, upon the occurrence and during the continuation of a Trigger Event, the
Collateral Agent shall be entitled, as instructed by the Required Senior Parties
in Senior Party Certificates in accordance with Section 2.3(a), to give notices
or instructions that the Company would otherwise be entitled to give under this
Agreement.
(i) From time to time during the continuation of a Trigger Event, the
Collateral Agent shall, as instructed by the Required Senior Parties in Senior
Party Certificates in accordance with Section 2.3(a), direct the Depositary Bank
to render an accounting of the current balance of each Project Account or other
amounts or funds administered by the Depositary Bank under this Agreement, and
the Depositary Bank agrees to render the same, subject to the terms, conditions
and protections contained in this Agreement.
(j) The Company covenants and agrees that it shall not take any action
that would prohibit or impair the ability of the Collateral Agent from
participating in any objection to any foreclosure or similar proceeding
instituted by a junior lienor against the Company; provided, however, that
nothing in this Section 2.3(j) shall, or shall be deemed to, affect the
relationship among the Senior Parties or the relationship between the Senior
Parties and the Collateral Agent, nor shall anything in this Section 2.3(j)
affect any representation, warranty, covenant or agreement of any Senior Party
in this Agreement.
(k) The Company covenants and agrees that it shall send to the
Collateral Agent on or before five (5) days prior to each Bond Payment Date an
Officer's Certificate signed by an Authorized Representative of the Company
setting forth (i) the names of each Senior Party as of the date of the
certificate, (ii) the principal amount of the Financing Liabilities owed to each
such
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Senior Party as of the date of the certificate and (iii) the unutilized
outstanding commitments of each Senior Party to extend credit to the Company as
of the date of the certificate, including, but not limited to, (A) the Stated
Amount of the DSR Letter of Credit and the CP Letter of Credit and (B) the
obligation of the DSR LOC Provider to issue the DSR Letter of Credit, to
reinstate the DSR Letter of Credit upon the reimbursement of drawings thereunder
and increase the amount of the DSR Letter of Credit from time to time by reason
of an increase in the DSRA Required Balance. The Collateral Agent shall be
entitled to rely on the information contained in such certificate.
(l) Notwithstanding the foregoing provisions of this Article II, each
Senior Party individually shall be authorized to cure any default of the Company
under any Project Contract in accordance with the consent to assignment executed
in connection with such Project Contract; provided, however, that funds advanced
in connection with such cure shall not constitute Senior Debt unless such funds
would otherwise satisfy the requirements for the issuance of Senior Debt.
(m) Each Senior Party hereby acknowledges and agrees that if (i) there
is an Event of Default under the Indenture and such Event of Default is not
caused directly or indirectly by a default or event of default under the Power
Purchase Agreement, (ii) the Collateral Agent receives the written request of
the Required Senior Parties specified in Section 2.3(a), and (iii) the Trustee
has been directed by the required Bondholders to declare the aggregate principal
amount of the Outstanding Bonds, all interest accrued and unpaid thereon and all
premium payable thereon in accordance with the terms of the Indenture
immediately due and payable, the Collateral Agent at the direction of the
Required Senior Parties shall notify the Power Purchaser in writing at the
address provided in the Power Purchase Agreement of the opportunity to purchase
the Facility for an amount equal to the greater of (x) the Fair Market Value of
the Facility and (y) all Financing Liabilities due and owing to the Senior
Parties and any Subordinated Debt Provider. If the Power Purchaser has not
within 90 days of the date of such notice provided the Collateral Agent with a
binding written notice of its intent to purchase the Facility for such amount,
the Collateral Agent shall no longer have any obligation under this paragraph.
If the Power Purchaser offers within such period to purchase the Facility for
such amount within 120 days after the expiration of such 90 day period, the
Collateral Agent shall take such actions as required to consummate such sale
promptly as directed by the Required Senior Parties in Senior Party
Certificates.
SECTION 2.4 Rights of Senior Parties.
The Senior Parties and the Collateral Agent (upon receipt of Senior
Party Certificates from the Required Senior Parties) may, at any time and from
time to time, without any consent of or notice to any Subordinated Debt
Providers, (i) amend in any manner any Security Document or any agreement under
which any of the Financing Liabilities is outstanding in accordance with the
terms thereof, (ii) sell, exchange, release, not perfect and otherwise deal with
any property at any time pledged, assigned or mortgaged to secure the Financing
Liabilities in accordance with the Security Documents, (iii) release anyone
liable in any manner under or in respect of the Financing Liabilities, (iv)
exercise or refrain from exercising any rights against the Company and
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others and (v) apply any sums from time to time received to payment or
satisfaction of the Financing Liabilities.
SECTION 2.5 Certain Amendments.
Notwithstanding anything to the contrary in this Agreement or any
Security Document, if any consent or direction of the Required Secured Parties
is necessary in order for the Collateral Agent to exercise any rights or
remedies under any of the Security Documents or this Agreement, or to amend,
modify or supplement, give any consent under, or waive any provision of, any of
the Security Documents or this Agreement, and if any such exercise of rights or
remedies, or any such amendment, modification, supplement, consent or waiver
(either alone or together with each then effective amendment, modification,
supplement, consent or waiver not previously approved in accordance with this
paragraph by the CP LOC Provider or the DSR LOC Provider, as the case may be)
could reasonably be expected to have a material adverse effect on the CP LOC
Provider or the DSR LOC Provider (which material adverse effect is materially
different from the effect with respect to other Senior Parties), the Collateral
Agent shall not accept such consent or direction from the Required Senior
Parties unless the CP LOC Provider or the DSR LOC Provider, as the case may be,
shall have received written notice of such proposed consent or direction at
least fifteen days prior to the effectiveness thereof, and the CP LOC Provider
or the DSR LOC Provider, as the case may be, shall have approved such amendment,
modification or supplement, consent or waiver (which approval shall not be
unreasonably withheld).
ARTICLE III
ACCOUNTS
SECTION 3.1 Establishment of Project Accounts.
The Collateral Agent hereby confirms that it has established with the
Depositary Bank at its office at the address listed in Section 7.4, New York,
New York, the following special, segregated accounts (the "Project Accounts"):
(i) Construction Account;
(ii) Revenue Account;
(iii) Operating and Maintenance Account;
(iv) Debt Service Reserve Account;
(v) DSR LOC Reimbursement Fund;
(vi) CP LOC Reimbursement Fund;
(vii) Restoration Account;
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(viii) Major Maintenance Reserve Account;
(ix) Fuel Conversion Payment Volume Rebate Account;
(x) Subordinated Debt Account; and
(xi) Distribution Account.
All amounts from time to time held in each Project Account shall be
held (a) in the name of the Collateral Agent subject to the lien and security
interest of the Collateral Agent for the benefit of the Senior Parties or
certain of them as set forth herein and (b) in the custody of the Depositary
Bank for and on behalf of the Collateral Agent for the purposes and on the terms
set forth in this Agreement. All such amounts shall constitute a part of the
Collateral and shall not constitute payment of any Indebtedness or any other
obligation of the Company until applied as hereinafter provided.
SECTION 3.2 Investment of Funds in the Project Accounts.
(a) Amounts deposited in the Project Accounts (and each subaccount
thereof) and each other account or fund created hereunder (unless expressly
stated otherwise), at the written request and direction of the Company, shall be
invested by the Collateral Agent in Permitted Investments. Such investments
shall mature in such amounts and not later than such times as may be necessary
to provide funds when needed to make payments from such funds as provided in
this Agreement. Net interest or gain received from such investments shall be
applied as provided in this Agreement.
(b) So long as an outstanding balance shall remain in the Project
Accounts or any other account or fund created hereunder, the Collateral Agent
shall provide the Company, the DSR LOC Provider and the CP LOC Provider with
statements by the tenth (10th) Business Day of each month showing the amount of
all receipts, the net investment income or gain received and collected, all
disbursements and the amount then available as of the last Business Day of the
prior calendar month in the Project Accounts (and each subaccount thereof) and
each other account or fund created hereunder. The Depositary Bank agrees to
provide the Collateral Agent with such information as it may reasonably have
available to it in order to permit the Collateral Agent to provide such
statements in accordance with the requirements hereof.
SECTION 3.3 Valuation and Sale of Investments.
(a) Obligations purchased as an investment of funds in any Project
Account or any other separate account or fund created under the provisions
hereof shall be deemed at all times to be a part of such account or fund and,
unless otherwise specified herein, any profit realized from the liquidation of
such investment shall be credited to such Project Account or such other separate
account or fund created hereunder, and any loss resulting from the liquidation
of such investment shall be charged to the respective Project Account or such
other separate account or fund.
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(b) The Collateral Agent shall determine the value of all investments
in any of the Project Accounts or the Bond Payment Account as of the last
Business Day of each month, with any deficit in any account balance to be funded
from Project Revenues in accordance with Section 3.3, and any investments valued
in excess of the amounts required to be on deposit in an account shall be
liquidated and the amount of such excess shall be deposited in the Revenue
Account for application in accordance with Section 3.10.
(c) The Collateral Agent shall determine the value of all investments
in the Debt Service Reserve Account in accordance with Section 3.12.
(d) In computing the amount of any funds in any Project Account, or
other separate account or fund created under the provisions hereof for any
purpose provided in this Agreement, obligations purchased as an investment of
funds therein shall be valued at the market value of such obligations, exclusive
of accrued interest; provided, however, that if there is no readily determinable
market value for such obligations, the value of such obligations shall be
determined with reference to the acquisition price of such obligations, plus
accrued but unpaid interest.
(e) The Depositary Bank agrees to provide the Collateral Agent with
such information as it may reasonably have available to it in order to permit
the Collateral Agent to make such determinations and transfers as may be
required by this Section 3.3.
SECTION 3.4 Possession of Accounts; Liquidation.
(a) Each of the Project Accounts shall at all times be in the exclusive
possession of the Depositary Bank acting for and on behalf of the Collateral
Agent acting for and on behalf of the Senior Parties.
(b) Notwithstanding any provision hereof to the contrary, if a Trigger
Event shall have occurred and be continuing, the Collateral Agent shall promptly
liquidate all amounts in the Project Accounts and all related investments and
distribute all such monies so received in accordance with Section 4.1.
SECTION 3.5 The Depositary Bank; Limited Company Rights.
(a) The Depositary Bank.
(i) Establishment of Securities Accounts. The Depositary Bank
hereby agrees and confirms that (A) the Depositary Bank has established
the Project Accounts as set forth in Section 3.1, (B) each Project
Account is and will be maintained as a "securities account" (within the
meaning of Section 8-501 of the UCC), (C) the Company is the
"entitlement holder" (within the meaning of Section 8-102(a)(7) of the
UCC) in respect of the "financial assets" (within the meaning of
Section 8-102(a)(9) of the UCC) credited to the Project Accounts, (D)
all property delivered to the Depositary Bank pursuant to the
Transaction Documents or this Agreement will be held by the Depositary
Bank and promptly credited to a Project Account by an appropriate entry
in its records in accordance with this Agreement, (E) all "financial
assets" (within the meaning of Section
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8-102(a)(9) of the UCC) in registered form or payable to or to the
order of and credited to any Project Account shall be registered in the
name of, payable to or to the order of, or endorsed to, the Depositary
Bank or in blank, or credited to another securities account maintained
in the name of the Depositary Bank, and in no case will any financial
asset credited to any Project Account be registered in the name of,
payable to or to the order of, or endorsed to, the Company except to
the extent the foregoing have been subsequently endorsed by the Company
to the Depositary Bank or in blank and (F) the Depositary Bank shall
not change the name or account number of any Project Account without
the prior written consent of the Collateral Agent.
(ii) Financial Assets Election. The Depositary Bank agrees
that each item of property (excluding cash, but including any security,
instrument or obligation, share, participation, interest or other
property whatsoever) credited to any Project Account shall be treated
as a "financial asset" within the meaning of Section 8-102(a)(9) of the
UCC.
(iii) Entitlement Orders. If at any time the Depositary Bank
shall receive any "entitlement order" (within the meaning of Section
8-102(a)(8) of the UCC) or any other order from the Collateral Agent
acting in accordance with this Agreement directing the transfer or
redemption of any financial asset relating to the Project Accounts, the
Depositary Bank shall comply with such entitlement order or other order
without further consent by the Company or any other Person. The parties
hereto hereby agree that the Collateral Agent shall have "control"
(within the meaning of Section 8-106(d) of the UCC) of the Company's
"security entitlement" (within the meaning of Section 8-102(a)(17) of
the UCC) with respect to the financial assets credited to the Project
Accounts and the Company hereby disclaims any entitlement to claim
"control" of such "security entitlement".
(iv) Subordination of Lien; Waiver of Set-off. If the
Depositary Bank has or subsequently obtains by agreement, operation of
law or otherwise a lien or security interest in any Project Account or
any security entitlement credited thereto, the Depositary Bank agrees
that such lien or security interest shall be subordinate to the lien
and security interest of the Collateral Agent. The financial assets
standing to the credit of the Project Accounts will not be subject to
deduction, set-off, banker's lien, or any other right in favor of any
Person other than the Collateral Agent in its capacity as such (except
that the face amount of any checks which have been credited to any
Project Account but are subsequently returned unpaid because of
uncollected or insufficient funds).
(v) No Other Agreements. The Depositary Bank and the Company
have not entered into any agreement with respect to the Project
Accounts or any financial assets credited to any Project Account other
than this Agreement and the other Security Documents. The Depositary
Bank has not entered into any agreement with the Company or any other
Person purporting to limit or condition the obligation of the
Depositary Bank to comply with entitlement orders originated by the
Collateral Agent in accordance with this Section 3.5. In the event of
any conflict between this Section 3.5 or any other
15
Security Document or any other agreement now existing or hereafter
entered into, the terms of this Section 3.5 shall prevail.
(vi) Notice of Adverse Claims. Except for the claims and
interest of the Collateral Agent and the Company in each of the Project
Accounts, the Depositary Bank does not know of any claim to, or
interest in, any Project Account or in any financial asset credited
thereto. If any Person asserts any lien, encumbrance or adverse claim
(including any writ, garnishment, judgment, warrant of attachment,
execution or similar process) against any Project Account or in any
financial asset credited thereto, the Depositary Bank will promptly
notify the Collateral Agent and the Company thereof.
(vii) Rights and Powers of the Collateral Agent. The rights
and powers granted by the Collateral Agent to the Depositary Bank have
been granted in order to perfect its lien and security interests in the
Project Accounts, are powers coupled with an interest and will neither
be affected by the bankruptcy of the Company nor the lapse of time.
(viii) Choice of Law. Both this Agreement and each Project
Account (including all security entitlements relating thereto) shall be
governed by the law of the State of New York. Regardless of any
provision in any other agreement, for purposes of the UCC, the
"securities intermediary's jurisdiction" of the Depositary Bank with
respect to the Project Accounts is the State of New York.
(b) Limited Company Rights. The Company shall not have any rights
against or to monies held in the Project Accounts, as third-party beneficiary or
otherwise or any right to direct the Depositary Bank or the Collateral Agent to
apply or transfer monies in any Project Account, except the right to receive or
make requisitions of monies held in the Project Accounts, as permitted by this
Agreement and to direct the investment of monies held in the Project Accounts as
permitted by Section 3.2. Except as expressly provided in this Agreement, in no
event shall any amounts or Permitted Investments deposited in or credited to any
Project Account be registered in the name of the Company, payable to the order
of the Company or specially endorsed to the Company except to the extent that
the foregoing have been specially endorsed to the Collateral Agent or in blank.
SECTION 3.6 Advances.
(a) Notwithstanding any other provision hereof to the contrary, the
Company may, by delivering an Officer's Certificate to the Collateral Agent,
withdraw funds on deposit in or credited to any of the Available Accounts
("Advances"); provided, however, that, at the time of the making of such
Advance, (i) no Default or Event of Default shall have occurred and be
continuing and the Officer's Certificate of the Company shall so certify and
(ii) the Company's obligations to repay such Advances shall be supported by
Acceptable Credit Support. The Collateral Agent may conclusively rely on such
Officer's Certificate certifying that all conditions for withdrawals from the
Available Accounts have been met.
(b) The Company shall repay immediately or cause to be repaid any
Advances to the extent that the funds on deposit in such Available Accounts are,
on the Business Day next
16
preceding the day on which such funds are to be withdrawn or transferred from
such Available Accounts pursuant to this Article III, insufficient to make the
necessary withdrawals and transfers. In addition, the Company shall cause to be
repaid immediately the aggregate amount of all Advances upon the occurrence of
(i) a default in the payment of principal of, premium, if any, or interest on
the Bonds or pursuant to the DSR LOC Reimbursement Agreement, the CP LOC
Reimbursement Agreement or any working capital facility, (ii) any Event of
Default, (iii) any default by an Acceptable Credit Provider in respect of its
obligations under its Acceptable Credit Support or (iv) the failure of the
Company to provide, within five (5) Business Days, Acceptable Credit Support in
respect of its obligations to repay Advances upon the failure of the Acceptable
Credit Provider to meet the requirements of the definition thereof. Any amounts
so repaid shall be allocated to and deposited in the Available Accounts to which
such repayment is required to be made as directed by the Company in an Officer's
Certificate.
(c) If an Advance is repaid but the Acceptable Credit Support in
respect of such Advance remains outstanding, the Collateral Agent, upon receipt
of a written request of the Company, shall, and hereby is directed to, promptly
execute such documents and agreements as the Company may reasonably request in
order to terminate such Acceptable Credit Support upon expiration of all
obligations thereunder in respect of repayment of such Advance.
SECTION 3.7 Collection of Project Revenues.
The Company shall arrange for the direct payment to the Collateral
Agent of all Project Revenues, and to the extent any such Project Revenues are
at any time received by the Company prior to the Commercial Operation Date, the
Company shall hold all such revenues and other such amounts in trust for the
Collateral Agent and shall transfer to the Collateral Agent for deposit of such
Project Revenues in the Construction Account in each case as soon as reasonably
practical but no later than three (3) Business Days after receipt thereof (duly
endorsed, if necessary, to the Collateral Agent).
SECTION 3.8 Construction Account.
(a) On the Closing Date, the Company shall cause the Trustee to make
the transfer specified in the final sentence of Section 5.1 of the Indenture and
the Collateral Agent shall deposit the amount so received in the Construction
Account.
(b) On the Closing Date, upon receipt by the Collateral Agent of a
complete and properly executed requisition substantially in the form of Exhibit
3.8 (a "Requisition") signed by the Company (the contents of which shall be
confirmed by the Independent Engineer), the Collateral Agent shall apply the
amounts in the Construction Account to the payment, or reimbursement, to the
extent the same have been paid or satisfied by the Company, of Project Costs.
(c) Monthly after the Closing Date, or as frequently as may reasonably
be necessary, the Company may submit a Requisition to disburse monies from the
Construction Account; provided, that each Requisition (except for any
Requisition with respect to the initial drawing on the Closing Date) shall be
submitted to the Collateral Agent no less than three (3) Business Days
17
in advance of the drawing date and shall include the following: (i) a
certification that the proceeds thereof shall be used solely to pay Project
Costs in accordance with the Indenture; (ii) a certification that work performed
to date has been satisfactorily performed in a good and workmanlike manner and
according to the EPC Contract; (iii) a statement that undisbursed funds in the
Construction Account, together with funds available under the Equity
Subscription Agreement and other available sources of funds, are reasonably
expected to be sufficient to complete the Facility according to the EPC Contract
by the Date Certain; (iv) a statement that no Default or Event of Default under
the Indenture, the DSR LOC Reimbursement Agreement, the CP LOC Reimbursement
Agreement or any working capital facility has occurred and is continuing; (v) a
statement that all proceeds of prior Requisitions have been expended or applied
pursuant to the provisions of the Financing Documents and that the items for
which amounts are requested in the subject Requisition have not been the basis
for a previous Requisition; (vi) a certification that required insurance,
material Governmental Approvals and necessary Project Contracts are in full
force and effect; and (vii) a certification that the representations set forth
in Sections 3.1, 3.3, 3.4, 3.5, 3.8 and 3.10 of the Indenture are true and
correct in all material respects. Subject to the remaining provisions of this
Section 3.8, upon receipt of a properly delivered Requisition, the Collateral
Agent shall transfer funds from the Construction Account in accordance with such
Requisition.
(d) If the Company cannot satisfy the requirements of clauses (i) or
(v) of Section 3.8(c), the Collateral Agent shall not release funds from the
Construction Account in respect of such Requisition until such clauses are
satisfied. If the Company cannot satisfy clauses (ii), (iii), (iv), (vi) or
(vii) of Section 3.8(c), but the Collateral Agent receives a Requisition signed
by the Company (the contents of which shall be confirmed by the Independent
Engineer) (i) specifying and identifying the failure, and the causes for the
failure, to satisfy the requirements of such clauses (ii), (iii), (iv), (vi) or
(vii) of Section 3.8(c) and (ii) certifying that (A) the requirements of clauses
(i) and (v) of Section 3.8(c) are satisfied, (B) there exists no Bankruptcy
Event in respect of the Company or AES Ironwood, and (C) each of the EPC
Contract, the Power Purchase Agreement, required insurance policies and material
Governmental Approvals needed for construction of the Facility is in full force
and effect, then the Collateral Agent shall disburse funds in accordance with
such Requisition. Within fifteen (15) days of receipt of such Requisition, the
Collateral Agent shall give notice to the Senior Parties describing such failure
and specifying that, unless the Required Senior Parties give notice to the
Collateral Agent of their objection to payment of further Requisitions
containing any such specified failures, the Collateral Agent shall continue to
make payment of such Requisitions from available funds in the Construction
Account, unless the Collateral Agent shall have received, by the second Business
Day prior to the time of payment of such Requisition, notice of objection from
the Required Senior Parties.
(e) Notwithstanding the foregoing, the Collateral Agent will not
release funds from the Construction Account in respect of a requisition if a
Trigger Event shall have occurred and be known to the Collateral Agent and be
continuing until the Collateral Agent determines that such Trigger Event is no
longer continuing or the Required Senior Parties give instructions to the
Collateral Agent as to application of funds.
18
(f) If on the date that the Collateral Agent receives a Requisition
pursuant to Section 3.8(c) there are insufficient monies in the Construction
Account to fully satisfy the uses of funds set forth in such Requisition, the
Collateral Agent shall, and is hereby directed to, on the date such Requisition
is so received deliver a written notice in accordance with the Equity
Subscription Agreement requesting an Equity Contribution in accordance with
Section 2 of the Equity Subscription Agreement. The Collateral Agent shall apply
the proceeds of such Equity Contribution in accordance with the provisions of
Section 3.8 and the remaining provisions hereof.
SECTION 3.9 Payments on Commercial Operation Date.
Not later than ten (10) days after receipt by the Collateral Agent of
an Officer's Certificate (the "Commercial Operation Certificate") (the contents
of which shall be confirmed in writing by the Independent Engineer) certifying
that (i) all conditions precedent to the occurrence of the Commercial Operation
Date have been satisfied, (ii) except as stated in such certificate, all labor
and services required to acquire and complete the Facility have been paid for,
(iii) the amount, if any, required for the payment of any remaining portion of
the Project Costs not then due or payable (or which are being contested) to be
retained in the Construction Account, (iv) all permits, licenses, consents and
approvals required on such date by Governmental Authorities for the initial
operation of the Facility have been obtained, (v) the amounts to be transferred
from the Construction Account in accordance with Section 3.8, (vi) no Default or
Event of Default has occurred or is continuing and (vii) the CP Letter of Credit
has been terminated or drawn, the Collateral Agent shall, after retaining in the
Construction Account the amount, if any, specified by the Company pursuant to
clause (iii) above as necessary to pay Project Costs which are not then due and
payable (or which are being contested), transfer all remaining funds in the
Construction Account (plus, to the extent necessary, any amounts available under
and pursuant to the Equity Subscription Agreement to fund first through fifth
below) by wire transfer in accordance with such Officer's Certificate to the
following accounts and recipients in the following order of priority:
first, to the Operating and Maintenance Account, an amount to the
extent available, as specified by the Company but in any event, no less than
one-month's non-fuel Operating and Maintenance Costs;
second, to the Bond Payment Account, an amount, to the extent
available, as specified by the Company for funding of the Interest Payment
Subaccount and Principal Payment Subaccount;
third, to the Debt Service Reserve Account, an amount as specified by
the Company equal to the DSRA Required Balance to the extent not already funded
or provided through a DSR Letter of Credit;
fourth, if applicable, to the CP LOC Provider, an amount equal to the
principal of and interest on any CP LOC Loans outstanding on the Commercial
Operation Date;
19
fifth, to the Major Maintenance Reserve Account, an amount as specified
by the Company equal to any initial deposit required therein; and
sixth, to the Revenue Account, any remaining amounts.
SECTION 3.10 Revenue Account.
(a) The Revenue Account shall be funded (i) from transfers made from
the Construction Account in accordance with Sections 3.8 and 3.9, (ii) with all
Project Revenues received subsequent to the transfer to be made pursuant to
Section 3.9 and (iii) as otherwise specified in this Agreement.
(b) After the transfer specified in Section 3.9 and upon receipt by the
Collateral Agent, not less than three (3) Business Days prior to the date of the
proposed transfer, of an Officer's Certificate of the Company detailing the
amounts to be paid, the Collateral Agent shall transfer funds in the Revenue
Account by wire transfer in accordance with such Officer's Certificate and the
following order of priority:
first, as and when required, (i) to any working capital provider, an
amount certified by the Company as the amount, if any, then payable under any
working capital facility and (ii) as and when requested, to the Operating and
Maintenance Account, the amount certified by the Company as necessary for
payment of Operating and Maintenance Costs, including fees then due and owing to
the Operator except in the case of such fees, to the extent that there are
insufficient amounts in the Revenue Account to make the payments specified in
paragraphs first through sixth of this Section 3.10;
second, on a monthly basis, (i) to the Trustee and the Collateral
Agent, any amounts certified by the Company as the amounts then due and payable
in respect of Trustee Claims and Collateral Agent Claims, respectively, (ii) to
any DSR LOC Provider, any amounts certified by the Company as the amounts then
due and payable in respect of DSR LOC Provider Claims and (iii) to any CP LOC
Provider, any amounts certified by the Company as amounts then due and payable
in respect of CP LOC Provider Claims; provided, however, that if funds in the
Revenue Account are insufficient on any date to make the payments specified in
this paragraph second, distribution of funds shall be made ratably to the
specified recipients;
third, on a monthly basis, (i) to the Trustee, for deposit in the
Interest Payment Subaccount, an amount equal to one-third of the interest
becoming due on the Bonds on the next succeeding Bond Payment Date, (ii) to the
DSR LOC Reimbursement Fund, (a) an amount equal to one-third of the interest
becoming due on any DSR LOC Loan on the next succeeding Bond Payment Date, plus
one-third of any fees becoming due under the DSR LOC Reimbursement Agreement on
the next succeeding Bond Payment Date, (b) an amount equal to one-third of the
interest becoming due on any DSR Bond on the next succeeding Bond Payment Date
and (c) an amount equal to one-third of the interest becoming due on any DSR LOC
Term Loan on the next succeeding Bond Payment Date and (iii) to the CP LOC
Reimbursement Fund, an amount equal to one-third of the interest becoming due on
any CP LOC Loan on the next succeeding Bond Payment Date, plus one-third of any
fees becoming due under the CP LOC Reimbursement
20
Agreement on the next succeeding Bond Payment Date; provided, however, that if
funds in the Revenue Account are insufficient on any date to make the payments
specified in this paragraph third, distribution of funds shall be made ratably
to the specified recipients;
fourth, on a monthly basis, (i) to the Trustee, for deposit in the
Principal Payment Subaccount, an amount equal to one-third of the principal
becoming due on the Bonds on the next succeeding Bond Payment Date, (ii) to the
DSR LOC Reimbursement Fund, (a) an amount equal to one-third of the principal
becoming due on such DSR Bond on the next succeeding Bond Payment Date and (b)
an amount equal to one-third of the principal becoming due on any DSR LOC Term
Loan on the next succeeding Bond Payment Date and (iii) to the CP LOC
Reimbursement Fund, an amount equal to one-third of the principal becoming due
on any CP LOC Loan on the next succeeding Bond Payment Date; provided, however,
that if funds in the Revenue Account are insufficient on any date to make the
payments specified in this paragraph fourth, distribution of funds shall be made
ratably to the specified recipients;
fifth, on a monthly basis, first, to the DSR LOC Provider, an amount
equal to the outstanding principal amount of any DSR LOC Loans that have not
been converted into DSR LOC Term Loans or DSR Bonds and second, to the
Collateral Agent for deposit in the Debt Service Reserve Account, an amount
necessary to fund the Debt Service Reserve Account up to the DSRA Required
Balance (after taking into account any amounts remaining available to be drawn
under the DSR Letter of Credit); provided, however, that if amounts available
for drawing under the DSR Letter of Credit are not being reinstated to the full
extent of payment made to the DSR LOC Provider and funds in the Revenue Account
are insufficient on any date to make the payments specified in this paragraph
fifth, distribution of funds shall be made ratably to the specified recipients;
sixth, on a monthly basis, to the Major Maintenance Reserve Account,
amounts necessary to cause the balance thereof to be equal to the minimum
balance required at such time under the Annual Budget;
seventh, on a monthly basis, to the Company for payment by the Company
to the Power Purchaser, the amount, if any, certified by the Company as required
to make any Non-Dispatch Payments to the Power Purchaser pursuant to Appendix 1
to the Power Purchase Agreement;
eighth, on a monthly basis, to the Fuel Conversion Payment Volume
Rebate Account, an amount equal to one-twelfth of the amount specified by the
Company that would be owed to the Power Purchaser at the end of the then current
Fiscal Year pursuant to Appendix 1 to the Power Purchase Agreement;
ninth, on a monthly basis, if any Subordinated Debt is outstanding, to
the Subordinated Debt Account, an amount equal to (x) one-third or one-sixth
(depending on the interest payment schedule of such debt) of the interest
becoming due on such Subordinated Debt on the next succeeding interest payment
date for such debt, plus (y) one-third or one-sixth (depending on the
amortization schedule of such debt) of the principal becoming due on such
Subordinated Debt on the next applicable principal payment date;
21
tenth, on a monthly basis, to the Contractor, an amount equal to any
subordinated bonuses payable to the Contractor under the EPC Contract; and
eleventh, on a monthly basis, to the Distribution Account, any
remaining amounts for payment of distributions to holders of ownership interests
(including any payment in respect of principal or interest then due on Affiliate
Subordinated Debt); provided, that no such distribution from the Distribution
Account shall be made unless the Distribution Conditions set forth in Section
3.14 have been satisfied.
(c) When making the transfers specified in Section 3.10(b), each
transfer shall be adjusted as necessary, taking into account investment gains or
losses in such Project Account or Indenture Account and further adjusting such
transfers by the amount any prior over-fundings or any prior shortfalls in such
Project Account or Indenture Account, to ensure that the aggregate amounts so
transferred to such Project Accounts or Indenture Accounts are sufficient to pay
the amount due and payable from such Project Accounts and Indenture Accounts on
the applicable payment date.
SECTION 3.11 Operating and Maintenance Account.
(a) The Operating and Maintenance Account shall be funded from funds
transferred by the Collateral Agent from (i) the Construction Account pursuant
to Section 3.9 and (ii) the Revenue Account pursuant to Section 3.10; provided,
that at the beginning of each month, the Operating and Maintenance Account shall
contain an amount at least sufficient to pay one-month's non-fuel Operating and
Maintenance Costs.
(b) Upon receipt by the Collateral Agent of an Officer's Certificate of
the Company detailing the amounts to be paid, the Collateral Agent shall
transfer funds in the Operating and Maintenance Account to the Company or to
whomsoever the Company directs for application to the payment of Operating and
Maintenance Costs.
SECTION 3.12 Debt Service Reserve Account.
(a) The Company shall deliver, or cause to be delivered, to the
Collateral Agent the DSR Letter of Credit upon the earlier to occur of (i) the
Commercial Operation Date, (ii) the Guaranteed Completion Date, or (iii) the
Date Certain. The Collateral Agent shall hold the DSR Letter of Credit as
security agent for the Trustee and the DSR LOC Provider to the extent of its
interest therein. The Collateral Agent is hereby authorized to submit sight
drafts and other required documentation under the DSR Letter of Credit, in each
case, when and to the extent permitted under the DSR Letter of Credit and for
the purposes specified in this Section 3.12.
(b) Upon the occurrence of the Commercial Operation Date, the Debt
Service Reserve Account, shall be funded, if necessary after taking into account
the Outstanding Amount of the DSR Letter of Credit, from monies available in the
Construction Account for such purpose in accordance with Section 3.9 in an
amount up to the DSRA Required Balance.
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(c) Subsequent to the Commercial Operation Date, the Debt Service
Reserve Account shall be funded, if necessary, from monies transferred from the
Revenue Account as and when specified in Section 3.10.
(d) Notwithstanding any other provision hereof to the contrary, when
determining (i) the amount, if any, required to be deposited (or the amount so
required to be deposited) into the Debt Service Reserve Account from time to
time or (ii) whether the Debt Service Reserve Account has deposited therein the
DSRA Required Balance, amounts on deposit in the Debt Service Reserve Account
shall be aggregated with the amount available to be drawn on the DSR Letter of
Credit.
(e) When there are insufficient monies in the Bond Payment Account on
any Bond Payment Date to pay the interest or principal then due on the Bonds,
the Collateral Agent shall, upon receipt prior to such Bond Payment Date of an
Officer's Certificate of the Company and as directed on such certificate, in the
following order of priority: first, withdraw monies on deposit in the Debt
Service Reserve Account; and second, draw on the DSR Letter of Credit in
accordance with the terms and provisions thereof up to the amount available for
such purpose thereunder, in each case, to the extent necessary to make such
interest or principal payment on the Bonds and transfer such monies to the
Trustee for deposit in the Bond Payment Account for application against such
payment.
(f) If the Collateral Agent receives a written notice from the Company
stating that there has been a reduction in the long-term debt rating of the DSR
LOC Provider below the Required Rating, or if a Responsible Officer of the
Collateral Agent otherwise becomes aware of such reduction, and the DSR Letter
of Credit has not been replaced within the time period specified therefor, the
Collateral Agent shall draw on the DSR Letter of Credit in the amount necessary
to fund the Debt Service Reserve Account up to the DSRA Required Balance (as
certified in an Officer's Certificate of the Company delivered to the Collateral
Agent, calculated without aggregating therewith the amount available to be drawn
under the DSR Letter of Credit but taking into account amounts then on deposit
in or credited to the Debt Service Reserve Account), whereupon the Collateral
Agent shall deposit the proceeds of such drawing in the Debt Service Reserve
Account, and the DSR Letter of Credit shall thereupon automatically terminate.
The Company shall give the notice specified in this Section 3.12(f) within three
(3) Business Days of its actual knowledge of the event giving rise to such
notice.
(g) If the Collateral Agent receives a written notice from the DSR LOC
Provider substantially in the form of Annex 2 to the DSR Letter of Credit,
stating that the DSR LOC Provider shall terminate the DSR Letter of Credit on
the date specified in such notice (which termination date shall be no sooner
than 60 days following the giving of such notice), the Collateral Agent shall,
within three (3) Business Days of receipt of such notice, draw on the DSR Letter
of Credit in an amount equal to the amount necessary to fund the Debt Service
Reserve Account up to the DSRA Required Balance (calculated without aggregating
therewith the amount available to be drawn under the DSR Letter of Credit),
whereupon the Collateral Agent shall deposit the proceeds of such drawing in the
Debt Service Reserve Account, and the DSR Letter of Credit shall thereupon
automatically terminate.
23
(h) If a Trigger Event shall have occurred and be continuing and the
Collateral Agent has received the written request of the Required Senior Parties
contained in Senior Party Certificates and such notice has not been rescinded,
then the Collateral Agent, upon receipt of an Officer's Certificate of the
Company setting forth the DSRA Required Balance (calculated without aggregating
therewith the amount available to be drawn under the DSR Letter of Credit),
shall draw on the DSR Letter of Credit in an amount equal to the amount
necessary to fund the Debt Service Reserve Account up to the DSRA Required
Balance (calculated as described in the immediately preceding parenthetical),
whereupon the Collateral Agent shall distribute the proceeds of such drawing,
together with other amounts available in the Debt Service Reserve Account, to
the Trustee, and the DSR Letter of Credit shall thereupon automatically
terminate. The failure of the Collateral Agent to receive the written request of
the Required Senior Parties contained in Senior Party Certificates shall not
limit the rights or obligations of the Collateral Agent otherwise provided for
herein.
(i) If, subsequent to the Commercial Operation Date, monies transferred
to the DSR LOC Provider pursuant to Section 3.10(b) third are insufficient to
repay the interest on any DSR LOC Loans due or becoming due on the first day of
such month, the Collateral Agent, upon receipt of a certificate of an Authorized
Officer of the DSR LOC Provider notifying the Collateral Agent of the existence,
and setting forth the amount, of such shortfall, within two (2) Business Days of
receipt of such certificate shall draw on the DSR Letter of Credit in an amount
equal to the amount of such shortfall and transfer such amount to the DSR LOC
Provider in payment (in whole or part) of such interest on such DSR LOC Loans.
Notwithstanding the foregoing, in no event shall any draw on the DSR Letter of
Credit under this Section 3.12(i) individually or in the aggregate with all
other such draws less draws previously reimbursed exceed an amount (the
"Interest Portion") equal to six (6) months of interest on the Maximum Stated
Amount of the DSR Letter of Credit computed at a rate per annum equal to (x) 2%
plus (y) the three-month LIBOR rate as in effect two Business Days prior to the
date of issuance of the DSR Letter of Credit plus (z) 50 basis points; provided,
however, that to the extent amounts available to be drawn under the DSR Letter
of Credit have been reinstated due to reimbursement of prior draws on the DSR
Letter of Credit, draws on the DSR Letter of Credit under this Section 3.12(i)
may equal (in the aggregate with all other such draws) the sum of (x) the
Interest Portion plus (y) an amount equal to the aggregate amount of all
reinstatements of amounts available to be drawn under the DSR Letter of Credit
allocable to prior reimbursements of draws on the DSR Letter of Credit under
this Section 3.12(i) (such allocation shall be determined by multiplying the
aggregate amount of prior reimbursements of draws by a fraction, the numerator
of which is the aggregate amount of drawings under the DSR Letter of Credit
described in this paragraph and the denominator of which is the aggregate amount
of drawings under the DSR Letter of Credit for all purposes).
(j) Unless the DSR Letter of Credit is not extended or replaced or
unless there has been a DSR LOC Event of Default all as described under the DSR
LOC Reimbursement Agreement, amounts available for drawing under the DSR Letter
of Credit shall be reinstated immediately to the extent of any reimbursement of
principal in respect of DSR LOC Loans (but not DSR LOC Term Loans or DSR Bonds).
24
(k) If the Company and the DSR LOC Provider shall agree to issue or
reinstate the DSR Letter of Credit in an amount that, when aggregated with cash
on deposit in the Debt Service Reserve Account, would exceed the DSRA Required
Balance (the amount of such excess being referred to hereinafter as the "Excess
Amount"), the Collateral Agent shall, within two (2) Business Days of receipt by
the Collateral Agent of (i) such reissued or reinstated DSR Letter of Credit and
(ii) an Officer's Certificate of the Company, transfer an amount equal to the
Excess Amount to the Revenue Account for application in accordance with clause
eleventh of Section 3.10; provided, that the amount of the DSR Letter of Credit
may not exceed the DSRA Required Balance.
SECTION 3.13 Major Maintenance Reserve Account.
(a) The Major Maintenance Reserve Account shall be funded (i) from
funds transferred by the Collateral Agent from the Construction Account pursuant
to Section 3.9 and (ii) on a monthly basis pursuant to Section 3.10. The Company
shall specify funding of the Major Maintenance Reserve Account in light of the
Annual Budget and taking into account expected costs of major maintenance,
including costs under the Maintenance Services Agreement not included as an
Operating and Maintenance Cost and major maintenance intervals.
(b) Upon receipt by the Collateral Agent of an Officer's Certificate of
the Company detailing the amounts to be paid, the Collateral Agent shall
transfer funds in the Major Maintenance Reserve Account to the Company or to
whomsoever the Company directs for application to the payment of major
maintenance costs and expenses of the Facility that are not otherwise paid as
Operating and Maintenance Costs pursuant to Section 3.11.
(c) If Project Revenues are insufficient to pay Operating and
Maintenance Expenses and debt service, the Company may, through the delivery of
an Officer's Certificate to that effect, direct the Collateral Agent to apply
funds in the Major Maintenance Reserve Account to the payment of Operating and
Maintenance Expenses and debt service.
SECTION 3.14 Distribution Account.
(a) The Distribution Account shall be funded from funds transferred
from the Revenue Account in accordance with Section 3.10.
(b) On any date on which the conditions set forth below (the
"Distribution Conditions") are satisfied, funds on deposit in or credited to the
Distribution Account may be distributed to, or as directed by, the Company for
the payment of Affiliate Subordinated Debt, the making of distributions to the
holders of ownership interests in the Company or any other lawful purpose, upon
receipt by the Collateral Agent of an Officer's Certificate of the Company
requesting such a distribution and certifying that:
(i) all of the Project Accounts described in Section 3.10(b)
and the Bond Payment Account shall be funded to their required levels;
25
(ii) no (A) Default or Event of Default under the Indenture,
(B) default or event of default under the DSR LOC Reimbursement
Agreement, (C) default or event of default under any CP LOC
Reimbursement Agreement or (D) default under any working capital
arrangements, if any, shall have occurred and be continuing;
(iii) the Commercial Operation Date has occurred and at least
one complete fiscal quarter thereafter has elapsed;
(iv) if the requested distribution is to be made during the
PPA Term, (A) the Senior Debt Service Coverage Ratio for the preceding
four (4) fiscal quarters (or, with respect to any date prior to the
first anniversary of the Commercial Operation Date, for the number of
complete fiscal quarters since the Commercial Operation Date), measured
as one period, is greater than or equal to 1.2 to 1 and (B) based on
projections prepared by the Company on a reasonable basis, the
projected Senior Debt Service Coverage Ratio for the succeeding four
(4) fiscal quarters (including the quarter in which such distribution
is to be made) (or, with respect to any date within the twelve
(12)-month period prior to the end of the PPA Term, the number of
complete fiscal quarters, if any, until the end of the PPA Term) is
projected to be greater than or equal to 1.2 to 1; and
(v) if the requested distribution is to be made on or after
the date which is six (6) months prior to the end of the PPA Term, (A)
the Senior Debt Service Coverage Ratio for the preceding four (4)
fiscal quarters (or, with respect to any date within the first twelve
(12) months of the Post-PPA Period, the number of complete fiscal
quarters, if any, since the start of the Post-PPA Period), measured as
one period, is greater than or equal to 1.70 to 1.0 (or 1.2 to 1.0 with
respect to such period occurring prior to the end of the PPA Term) and
(B) based on projections prepared by the Company on a reasonable basis,
the projected Senior Debt Service Coverage Ratio for the succeeding
eight (8) fiscal quarters (including the fiscal quarter in which such
distribution is to be made) (or, with respect to any date within the
twenty-four (24)-month period prior to the Final Maturity Date, the
number of complete fiscal quarters, if any, until such Final Maturity
Date), in each case measured as one period, is projected to be greater
than or equal to 1.70 to 1 (or 1.2 to 1 with respect to such period
occurring prior to the end of the PPA Term), each as certified by an
authorized officer of the Company; provided, however, that,
(A) if distributions are blocked because the Company
fails to satisfy the conditions of clause (v)(B) above, then
in lieu of the coverage ratio test set forth in such clause,
the projected Senior Debt Service Coverage Ratio through the
Final Maturity Date, measured as one period, shall be 1.70 to
1 in order to satisfy such clause (v)(B) in respect of amounts
then on deposit in the Distribution Account;
(B) for purposes of calculating the projected Senior
Debt Service Coverage Ratios in clauses (v)(B) above, the
Company shall use (1) for electricity prices, either (x) the
electricity prices forecasted in the most recent Independent
26
Forecast furnished to the Trustee, in each case, during the
relevant period of calculation or (y) if and to the extent
that electricity sales during the relevant period of
calculation are made pursuant to one or more power sales
agreements at prices other than prices which are by their
terms market prices, the electricity prices under such power
sales agreements and (2) for gas prices, either (x) the gas
prices forecasted in the most recent Independent Forecast
furnished to the Trustee, in each case, during the relevant
period of calculation or (y) if and to the extent that gas
purchases during the relevant period of calculation are made
pursuant to one or more gas purchase agreements at prices
other than prices which are by their terms market prices, the
gas prices under such gas purchase agreements;
(C) if, and to the extent that, (x) at least 75% of
the Facility Capacity is subject to one or more power sales
agreements on terms (other than pricing) substantially similar
to the Power Purchase Agreement (but excluding the provision
for gas to be supplied for fuel conversion services by the
Power Purchaser) or on commercially reasonable terms (other
than pricing) typical of power sales agreements entered into
at such time for the same term, in each case with a term of
not less than one (1) year during the relevant period of
calculation, and (y) at least 75% of the gas supply for the
Facility is subject to one or more gas supply agreements on
commercially reasonable terms (other than pricing) typical of
gas supply agreements entered into at such time for the same
term, in each case with a term of not less than one (1) year
during the relevant period of calculation (compliance with
such requirements to be certified by the Company), then clause
(v) above shall be deemed satisfied, if the Senior Debt
Service Coverage Ratio and the projected Senior Debt Service
Coverage Ratio referred to in such clause (v) are each equal
to or greater than 1.30 to 1 for the portions of the time
periods referred to in such clause (v) in which such
agreements were or are to be in effect, as certified by the
Company; and
(D) if amounts on deposit in or credited to the
Revenue Account are insufficient to make the transfers
described in priorities first through sixth in Section 3.10,
amounts on deposit in or credited to the Distribution Account
will be transferred to the Revenue Account to the extent
necessary and applied in accordance with Section 3.10.
SECTION 3.15 Restoration Account.
(a) All Casualty Proceeds and Eminent Domain Proceeds shall be
deposited into the Restoration Account. Subject to Sections 3.15(d) and (e), the
Collateral Agent shall apply the amounts in the Restoration Account as directed
in writing by the Company to the payment, or reimbursement to the extent the
same have been paid or satisfied by the Company, of the costs of rebuilding,
repair and restoration of the Facility or any part thereof that has been
affected by an Event of Loss or an Event of Eminent Domain.
27
(b) The Collateral Agent is hereby authorized to disburse from the
Restoration Account the amount required to be paid for the repair or replacement
of the Facility or any part thereof as specified in Section 3.15(a). The
Collateral Agent is hereby authorized and directed to issue its checks or
transfer funds electronically for each disbursement from the Restoration
Account, upon receipt of a Restoration Certificate signed by an Authorized
Representative of the Company and approved by the Independent Engineer;
provided, however, that no such approval of the Independent Engineer shall be
required if less than $5,000,000 is requested pursuant to such requisition or
requisitions in any one Fiscal Year. The Collateral Agent shall be entitled to
rely on all certifications and statements in such Restoration Certificate. The
Collateral Agent shall keep and maintain adequate records pertaining to the
Restoration Account and all disbursements therefrom and shall file an accounting
thereof with the Company and the Independent Engineer within three months
following the last business day of each Fiscal Year.
(c) If an Event of Loss or an Event of Eminent Domain shall occur with
respect to any Collateral, the Company shall (i) diligently pursue all its
rights to compensation against any Person with respect to such Event of Loss or
Event of Eminent Domain, (ii) in the reasonable judgment of the Company,
compromise or settle any claim against any Person with respect to such Event of
Loss or Event of Eminent Domain and (iii) hold all amounts of Casualty Proceeds
or Eminent Domain Proceeds (including instruments) received in respect of any
Event of Loss or Event of Eminent Domain (after deducting all reasonable
expenses incurred by it in litigating, arbitrating, compromising or settling any
claims) in trust for the benefit of the Collateral Agent segregated from other
funds of the Company and will promptly transfer to the Collateral Agent for
deposit in the Restoration Account such Casualty Proceeds or Eminent Domain
Proceeds.
(d) If either an Event of Loss or an Event of Eminent Domain shall
occur, as soon as reasonably practicable but no later than the date of receipt
by the Company or the Collateral Agent of Eminent Domain Proceeds or Casualty
Proceeds, as the case may be, the Company shall make a reasonable good faith
determination as to whether (i) the Facility or any portion thereof can be
rebuilt, repaired or restored to permit operation of the Facility or a portion
thereof on a commercially feasible basis and (ii) the Casualty Proceeds or the
Eminent Domain Proceeds, as the case may be, together with any other amounts
that are available to the Company for such rebuilding, repair or restoration,
are sufficient to permit such rebuilding, repair or restoration of the Facility
or a portion thereof, including the making of all required payments of interest
and principal on the Company's Debt during such rebuilding, repair or
restoration. The determination of the Company shall be evidenced by a
Certificate as to Redemption filed with the Collateral Agent which, in the event
the Company determines that the Facility or a portion thereof can be rebuilt,
repaired or restored to permit operation thereof on a commercially feasible
basis and that the Casualty Proceeds or the Eminent Domain Proceeds, as the case
may be, together with any other amounts that are available to the Company for
such rebuilding, repair or restoration, are sufficient, shall also set forth a
reasonable good faith estimate by the Company of the total cost of such
rebuilding, repair or restoration. The Company shall deliver to the Collateral
Agent at the time it delivers the Certificate as to Redemption referred to above
a certificate of the Independent Engineer, dated the date of the Certificate as
to Redemption, stating that, based upon reasonable investigation and review of
the determination made by the
28
Company, the Independent Engineer believes the determination and the estimate of
the total cost set forth in the Certificate as to Redemption to be reasonable.
(e) (i) If, following an Event of Loss or an Event of Eminent
Domain, the determination is made pursuant to Section 3.15(d) above
that the Facility cannot be rebuilt, repaired or restored to permit
operation on a commercially feasible basis or that the Casualty
Proceeds or the Eminent Domain Proceeds, together with any other
amounts that are available to the Company for such rebuilding, repair
or restoration, are not sufficient to permit such rebuilding, repair or
restoration, all of the Casualty Proceeds or the Eminent Domain
Proceeds, as the case may be, shall be distributed in accordance with
Section 4.2(a).
(ii) If, following an Event of Loss or an Event of Eminent
Domain, the determination is made pursuant to Section 3.15(d) above
that the entire Facility can be rebuilt, repaired or restored to permit
operation on a commercially feasible basis and that the Casualty
Proceeds or the Eminent Domain Proceeds, together with any other
amounts that are available to the Company for such rebuilding, repair
or restoration, are sufficient to permit such rebuilding, repair or
restoration, all of the Casualty Proceeds or the Eminent Domain
Proceeds, as the case may be, together with such other amounts as are
available to the Company for such rebuilding, repair or restoration,
shall be deposited in the Restoration Account in accordance with
Section 3.15(a) and applied in accordance with Section 3.15(b).
(iii) If, following an Event of Loss or an Event of Eminent
Domain, the determination is made pursuant to Section 3.15(d) above
that a portion of the Facility can be rebuilt, repaired or restored to
permit operation on a commercially feasible basis and that the Casualty
Proceeds or the Eminent Domain Proceeds, together with any other
amounts that are available to the Company for such rebuilding, repair
or restoration, are sufficient to permit such rebuilding, repair or
restoration, (A) an amount equal to the estimate of the total cost of
such rebuilding, repair or restoration set forth in the Certificate as
to Redemption filed with the Collateral Agent pursuant to Section
3.15(d) above shall be deposited in the Restoration Account in
accordance with Section 3.15(a) and applied in accordance with Section
3.15(b) and (B) the amount, if any, by which all of the Casualty
Proceeds or the Eminent Domain Proceeds, as the case may be, exceed the
estimate of the total cost shall be distributed in accordance with
Section 4.2(a).
(f) In the event the Company receives Casualty Proceeds or Eminent
Domain Proceeds, as the case may be, from an Event of Loss or an Event of
Eminent Domain that do not exceed in the aggregate $5,000,000 during any Fiscal
Year of the Company, the Company shall not have to comply with the provisions of
Sections 3.15(d) or (e) and the Casualty Proceeds or the Eminent Domain
Proceeds, as the case may be, shall be deposited in the Restoration Account in
accordance with Section 3.15(a) and applied in accordance with Section 3.15(b).
29
SECTION 3.16 Fuel Conversion Volume Rebate Account.
(a) The Fuel Conversion Volume Rebate Account shall be funded from
funds transferred by the Collateral Agent from the Revenue Account as and when
specified in Section 3.10.
(b) Upon receipt of an Officer's Certificate of the Company detailing
the amounts to be paid, funds in the Fuel Conversion Volume Rebate Account shall
be transferred to the Power Purchaser in accordance with Annex 1 to the Power
Purchase Agreement and as set forth in such Officer's Certificate within two (2)
Business Days of receipt of such Officer's Certificate.
SECTION 3.17 Subordinated Debt Account.
(a) The Subordinated Debt Account shall be funded from funds
transferred by the Collateral Agent from the Revenue Account as and when
specified in Section 3.10.
(b) Upon receipt of an Officer's Certificate of the Company detailing
the amounts to be paid, funds in the Subordinated Debt Account shall be
transferred to the appropriate Subordinated Debt Providers as set forth in such
Officer's Certificate within two (2) Business Days of receipt of such Officer's
Certificate.
ARTICLE IV
APPLICATION OF CERTAIN PROCEEDS
SECTION 4.1 Division of Foreclosure Proceeds and Proceeds Under the
Williams Guaranty.
(a) Following (i) the receipt of proceeds under the Williams Guaranty
as a result of a termination of the Power Purchase Agreement or (ii) a
foreclosure or bother exercise of remedies following a Trigger Event, the
proceeds of any sale, disposition or other realization by the Collateral Agent
or by any Senior Party upon the Collateral (or any portion thereof) pursuant to
the Security Documents shall be distributed in the following order of
priorities:
first, to the Collateral Agent, the Trustee, the DSR LOC
Provider and the CP LOC Provider, ratably, all administrative fees,
costs and expenses owed to such Parties under the Financing Documents;
provided, that prior to any such distribution to the Trustee, the DSR
LOC Provider or the CP LOC Provider, the Collateral Agent shall have
received a certificate signed by an Authorized Representative of the
Trustee, the DSR LOC Provider or the CP LOC Provider (as the case may
be), in form and substance satisfactory to the Collateral Agent,
setting forth the amount payable to the Trustee, the DSR LOC Provider
or the CP LOC Provider (as the case may be) as of the date of such
distribution;
second, to the Senior Parties, ratably (based on the amount
owing to specified recipients), an amount equal to the unpaid amount of
all Financing Liabilities owed to the
30
Senior Parties by the Company; provided, that prior to any such such
distribution, the Collateral Agent shall have received a certificate
executed by an Authorized Representative of each such Senior Party, in
form and substance reasonably satisfactory to the Collateral Agent,
setting forth the amount payable to such Senior Party pursuant to this
clause as of the date of such distribution;
third, to any Subordinated Debt Providers, ratably, an amount
equal to the unpaid obligations owed to such Subordinated Debt
Providers by the Company under any Subordinated Loan Agreement;
provided, that prior to any such distribution, the Collateral Agent
shall have received a certificate executed by an Authorized
Representative of each such Subordinated Debt Provider, in form and
substance reasonably satisfactory to the Collateral Agent, setting
forth the amount payable to such Subordinated Debt Provider pursuant to
this clause as of the date of such distribution; and
fourth, to the Company (or its successors or assigns) or to
whomever may be lawfully entitled to receive the same or as a court of
competent jurisdiction may direct, any surplus then remaining from such
proceeds.
(b) As used in this Section 4.1, "proceeds" of Collateral shall mean
cash, securities and other property realized in respect of, and distributions in
kind of, Collateral, including any thereof received under any reorganization,
liquidation or adjustment of Debt of the Company or any issuer of or obligor on
any of the Collateral.
(c) The Collateral Agent shall, upon receipt of indemnity satisfactory
to it, use reasonable efforts to join in any foreclosure or similar proceeding
instituted by a junior lienor with respect to the Collateral. The Collateral
Agent shall hold all proceeds of the Collateral received by it in connection
with such proceeding instituted by a junior lienor and not consolidated with any
action by the Collateral Agent on behalf of the Senior Parties pending
application of such proceeds by the Collateral Agent in accordance with the
written instructions of the Required Senior Parties.
SECTION 4.2 Application of Casualty Proceeds and Eminent Domain
Proceeds.
(a) If the determination is made pursuant to Section 3.15(d) above that
all or a portion of the Facility is incapable of being rebuilt, repaired or
restored to permit operation on a commercially feasible basis, all Casualty
Proceeds or Eminent Domain Proceeds received by the Collateral Agent and not
deposited in the Restoration Account pursuant to Section 3.15(e)(iii) shall be
distributed by the Collateral Agent within five (5) Business Days of receipt in
the following order of priorities:
first, to the Collateral Agent, the Trustee, the DSR LOC
Provider and the CP LOC Provider, ratably, in an amount equal to the
amounts owed in respect of the Collateral Agent Claims, the Trustee
Claims, the DSR LOC Provider Claims and the CP LOC Provider Claims,
respectively, due and payable as of the date of such distribution;
provided, that, prior to any such distribution to the Collateral Agent,
the Trustee, the DSR LOC Provider or the CP LOC Provider, the
Collateral Agent shall have received a certificate signed by an
31
Authorized Representative of the Trustee, the DSR LOC Provider or the
CP LOC Provider (as the case may be), in form and substance
satisfactory to the Collateral Agent, setting forth the amount payable
to the Trustee, the DSR LOC Provider or the CP LOC Provider (as the
case may be) as of the date of such distribution;
second, to the Senior Parties, ratably (based on the amount
owing to the specified recipients), an amount equal to the unpaid
amount of all Financing Liabilities owed to or required to be deposited
for the account of such Senior Parties, including the amount required
to be applied to a mandatory redemption of the Bonds pursuant to the
Indenture; provided, that prior to any such distribution the Collateral
Agent shall have received a certificate executed by an Authorized
Representative of each such Senior Party, in form and substance
reasonably satisfactory to the Collateral Agent, setting forth the
amount payable to such Senior Party pursuant to this clause as of the
date of such distribution;
third, to the Subordinated Debt Providers, ratably, an amount
equal to the unpaid amounts owed to or required to be deposited for the
account of such Subordinated Debt Providers by the Company under any
Subordinated Loan Agreement; provided, that prior to any such
distribution, the Collateral Agent shall have received a certificate
executed by an Authorized Representative of each such Subordinated Debt
Provider, in form and substance reasonably satisfactory to the
Collateral Agent, setting forth the amount payable to such Subordinated
Debt Provider pursuant to this clause as of the date of such
distribution; and
fourth, to the Company or their successors or assigns or to
whomever may be lawfully entitled to receive the same or as a court of
competent jurisdiction may direct, any surplus then remaining from such
proceeds.
(b) At the time the Collateral Agent is to make a distribution pursuant
to Section 4.2(a) paragraph second, the Collateral Agent shall deposit, with the
same priority as such distribution, ratably, into a separate trust account to be
maintained by the Collateral Agent an amount up to the maximum amount available
to be drawn under the DSR Letter of Credit (taking into account, without
duplication in the case of the DSR Letter of Credit, the maximum amount which
may become available to be drawn in the future by reason of an increase in the
DSRA Required Balance), and not represented by a DSR LOC Loan, DSR LOC Term Loan
or DSR Bond; provided, however, that if funds available are insufficient to make
all payments required under Section 4.2(a) paragraph second and the required
deposits provided for in this sentence, distribution of funds shall be made
ratably to the specified recipients. The Collateral Agent shall hold the funds
in such separate account until receipt of a written notice or notices from the
DSR LOC Provider (which such notice or notices shall be contemporaneously
delivered by the DSR LOC Provider to the other Senior Parties) executed by an
Authorized Representative of the DSR LOC Provider to the effect that either (i)
the Collateral Agent has made a drawing on the DSR Letter of Credit or (ii) the
DSR Letter of Credit has expired or terminated without a drawing being made
thereunder. Upon receipt of a notice specified in clause (i) of the preceding
sentence, the Collateral Agent shall distribute to the DSR LOC Provider that
proportionate share of the amount in the relevant separate account referred to
above, equal to such drawing's proportionate share of the DSR Letter of Credit
collateralized by such account. Upon receipt of a notice
32
specified in clause (ii) of the second preceding sentence, the Collateral Agent
shall distribute from the relevant separate account (in accordance with Section
4.2(a) paragraphs second, third and fourth and without regard to this Section
4.2(b)) to the appropriate Persons an amount equal to the amount in such
separate account.
(c) At the time the Collateral Agent is to make a distribution pursuant
to Section 4.2(a) paragraph second, the Collateral Agent shall deposit, with the
same priority as such distribution, ratably, into a separate trust account to be
maintained by the Collateral Agent an amount up to the amount available to be
drawn under the CP Letter of Credit (and not represented by a CP LOC Loan);
provided, however, that if funds available are insufficient to make all payments
required under Section 4.2(a) paragraph second and the required deposits
provided for in this sentence, distribution of funds shall be made ratably to
the specified recipients. The Collateral Agent shall hold the funds in such
separate account until receipt of a written notice or notices from the CP LOC
Provider (which such notice or notices shall be contemporaneously delivered by
the CP LOC Provider to the other Senior Parties) executed by an Authorized
Representative of the CP LOC Provider to the effect that either (i) the
Collateral Agent has made a drawing on the CP Letter of Credit or (ii) the CP
Letter of Credit has expired or terminated without a drawing being made
thereunder. Upon receipt of a notice specified in clause(i) of the preceding
sentence, the Collateral Agent shall distribute to the CP LOC Provider that
proportionate share of the amount in the relevant separate account referred to
above, equal to such drawing's proportionate share of the CP Letter of Credit
collateralized by such account. Upon receipt of a notice specified in clause(ii)
of the second preceding sentence, the Collateral Agent shall distribute from the
relevant separate account (in accordance with Section 4.2(a) paragraphs second,
third and fourth and without regard to this Section 4.2(c)) to the appropriate
Persons an amount equal to the amount in such separate account.
(d) The Company and the Senior Parties hereby authorize the Collateral
Agent to establish the separate account described in Sections 4.2(b) and 4.2(c)
for the purposes specified in such Sections.
(e) The DSR LOC Provider hereby covenants and agrees to use reasonable
efforts to send the written notice specified in clause (ii) of Section 4.2(b)
within three (3) Business Days following the termination or expiration of the
DSR Letter of Credit.
(f) The CP LOC Provider hereby covenants and agrees to use reasonable
efforts to send the written notice specified in clause (ii) of Section 4.2(c)
within three (3) Business Days following the termination or expiration of the CP
Letter of Credit.
SECTION 4.3 Application of Buy-Down Amounts.
(a) All Buy-Down Amounts shall be deposited into a separate account
maintained by the Depositary Bank on behalf of the Collateral Agent pending
application in accordance with the remaining provisions of this Section 4.3.
Subject to the remaining provisions of this Section 4.3, the Collateral Agent
shall apply the amounts in such separate account to the payment, or
reimbursement to the extent the same have been paid or satisfied by the Company,
of the costs of modification, repair and replacement of that portion of the
Facility that requires modification,
33
repair or replacement in order to remedy the circumstances giving rise to the
obligation of the Contractor to pay such Buy-Down Amounts.
(b) The Collateral Agent is hereby authorized to disburse from such
separate account the amount required to be paid for the modification, repair or
replacement of that portion of the Facility that requires modification, repair
or replacement in order to remedy the circumstances giving rise to the
obligation of the Contractor to pay such Buy-Down Amounts as specified in
Section 4.3(a). The Collateral Agent is hereby authorized and directed to issue
its checks or transfer funds electronically for each disbursement from such
separate account, upon receipt of a Performance Enhancement Certificate signed
by an Authorized Representative of the Company and approved by the Independent
Engineer. The Collateral Agent shall be entitled to rely on all certifications
and statements in such Performance Enhancement Certificate. The Collateral Agent
shall keep and maintain adequate records pertaining to such separate account and
all disbursements therefrom and shall file an accounting thereof with the
Company and the Independent Engineer within three months following the last
business day of each Fiscal Year. Upon receipt of an Officer's Certificate of
the Company, confirmed by the Independent Engineer, certifying that all
modifications, repairs or replacements of that portion of the Facility that
requires modification, repair or replacement in order to remedy the
circumstances giving rise to the obligation of the Contractor to pay Buy-Down
Amounts have been completed, the Collateral Agent shall transfer all funds
remaining in such separate account to the Revenue Account for application in
accordance with Section 3.10(b); provided, that if such funds or a portion
thereof are deposited in the Distribution Account in accordance with Section
3.10(b) eleventh, the provisions of Section 3.14(b)(iv) and (v) shall not apply
in respect of such funds.
(c) As soon as reasonably practicable following receipt by the Company
or the Collateral Agent of Buy-Down Amounts, the Company shall make a reasonable
good faith determination as to whether (i) it is technically feasible to modify,
repair or replace that portion of the Facility that requires modification,
repair or replacement in order to remedy the circumstances giving rise to the
obligation of the Contractor to pay such Buy-Down Amounts, (ii) the Buy-Down
Amounts, together with any other amounts that are available to the Company for
such modification, repair or replacement, are sufficient to permit such
modification, repair or replacement, including the making of all required
payments of interest and principal on the Company's Debt during such
modification, repair or replacement, (iii) the projected average Senior Debt
Service Coverage Ratio (after giving effect to such modification, repair or
replacement and the application of the Buy-Down Amounts to accomplish the same)
during the PPA Term (taken as one period) and the Post-PPA Period (taken as one
period) is equal to or greater than the projected average Senior Debt Service
Coverage Ratio set forth in the base case projections for each such period set
forth in the final offering circular dated on or before the Closing Date
relating to the Bonds and (iv) the projected minimum Senior Debt Service
Coverage Ratio (after giving effect to such modification, repair or replacement
and the application of the Buy-Down Amounts to accomplish the same) during the
PPA Term and the Post-PPA Period is equal to or greater than the projected
minimum Senior Debt Service Coverage Ratio set forth in the base case
projections for each such period set forth in the final offering circular dated
on or before the Closing Date relating to the Bonds. The determination of the
Company shall be evidenced by an Officer's Certificate (together with such
supporting detail
34
as the Collateral Agent or the Independent Engineer may reasonably request)
filed with the Collateral Agent which, in the event the Company determines that
such portion of the Facility can be modified, repaired or replaced and that the
other statements set forth in clauses (ii)-(iv) of this Section 4.3(c) are true,
shall also set forth a reasonable good faith estimate by the Company of the
total cost of such modification, repair or replacement. The Company shall
deliver to the Collateral Agent at the time it delivers the Officer's
Certificate referred to above a certificate of the Independent Engineer, dated
the date of the Officer's Certificate, stating that, based upon reasonable
investigation and review of the determinations, assumptions, conclusions and
estimates of costs made by the Company, the Independent Engineer believes the
determinations, assumptions, conclusions and estimates of costs set forth in the
Officer's Certificate to be reasonable.
(d) If the Company cannot provide the Officer's Certificate referred to
in Section 4.3(c) to permit the application of Buy-Down Amounts toward the
modification, repair or replacement of that portion of the Facility or the
Independent Engineer fails to confirm such Officer's Certificate as required by
Section 4.3(c), all of the Buy-Down Amounts received by the Company or the
Collateral Agent shall be distributed in accordance with Section 4.3(e).
(e) All Buy-Down Amounts to be distributed pursuant to this Section
4.3(e) shall be distributed by the Collateral Agent, ratably (based on the
amount owing to the specified recipient), to (i) the Trustee in respect of the
amount of the Outstanding Bonds for redemption of Bonds in accordance with the
Indenture, (ii) the DSR LOC Provider in respect of the outstanding amount of DSR
LOC Loans, DSR LOC Term Loans or DSR LOC Bonds and (iii) the CP LOC Provider in
respect of the outstanding amount of any CP LOC Loans.
(f) At the time the Collateral Agent is to make a distribution pursuant
to Section 4.3(e), the Collateral Agent shall deposit into a separate trust
account to be maintained by the Collateral Agent an amount up to the amount
available to be drawn under the DSR Letter of Credit (taking into account,
without duplication, in the case of the DSR Letter of Credit, the maximum amount
which may become available to be drawn in the future by reason of an increase in
the DSRA Required Balance), and not represented by a DSR LOC Loan, DSR LOC Term
Loan or DSR Bond; provided, however, that if funds available are insufficient to
make all payments required under Section 4.2(a) paragraph second and the
required deposits provided for in this sentence, distribution of funds shall be
made ratably to the specified recipients. The Collateral Agent shall hold the
funds in such separate account until receipt of a written notice or notices from
the DSR LOC Provider (which such notice or notices shall be contemporaneously
delivered by the DSR LOC Provider to the other Senior Parties) executed by an
Authorized Representative of the DSR LOC Provider to the effect that either (i)
the Collateral Agent has made a drawing on the DSR Letter of Credit or (ii) the
DSR Letter of Credit has expired or terminated without a drawing being made
thereunder. Upon receipt of a notice specified in clause (i) above, the
Collateral Agent shall distribute to the DSR LOC Provider that proportionate
share of the amount in the relevant separate account referred to above, equal to
such drawing's proportionate share of the DSR Letter of Credit collateralized by
such account. Upon receipt of a notice specified in clause (ii) above, the
Collateral Agent shall distribute from
35
the relevant separate account to the Trustee an amount equal to the amount in
such separate account.
(g) At the time the Collateral Agent is to make a distribution pursuant
to Section 4.3(e), the Collateral Agent shall deposit into a separate trust
account to be maintained by the Collateral Agent an amount available to be drawn
under the CP Letter of Credit (and not represented by a CP LOC Loan); provided,
however, that if funds available are insufficient to make all payments required
under Section 4.2(a) paragraph second and the required deposits provided for in
this sentence, distribution of funds shall be made ratably to the specified
recipients. The Collateral Agent shall hold the funds in such separate account
until receipt of a written notice or notices from the CP LOC Provider (which
such notice or notices shall be contemporaneously delivered by the CP LOC
Provider to the other Senior Parties) executed by an Authorized Representative
of the CP LOC Provider to the effect that either (i) the Collateral Agent has
made a drawing on the CP Letter of Credit or (ii) the CP Letter of Credit has
expired or terminated without a drawing being made thereunder. Upon receipt of a
notice specified in clause (i) above, the Collateral Agent shall distribute to
the CP LOC Provider that proportionate share of the amount in the relevant
separate account referred to above, equal to such drawing's proportionate share
of the CP Letter of Credit collateralized by such account. Upon receipt of a
notice specified in clause (ii) above, the Collateral Agent shall distribute
from the relevant separate account to the Trustee an amount equal to the amount
in such separate account.
ARTICLE V
COLLATERAL AGENT; DEPOSITARY BANK
SECTION 5.1 Appointment and Duties of Collateral Agent and Depositary
Bank.
(a) The Senior Parties hereby designate and appoint IBJ Whitehall Bank
& Trust Company to act as the Collateral Agent under the Security Documents and
this Agreement, and each of the Senior Parties hereby authorizes IBJ Whitehall
Bank & Trust Company, as the Collateral Agent, to take such actions on its
behalf under the provisions of the Security Documents and this Agreement and to
exercise such powers and perform such duties as are expressly delegated to the
Collateral Agent by the terms of the Security Documents and this Agreement,
together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in the Security
Documents and this Agreement, the Collateral Agent shall not have any duties or
responsibilities, except those expressly set forth in the Security Documents and
this Agreement, or any discretionary or fiduciary duties or responsibilities
with any Senior Party under this Agreement or any other Security Documents, and
no implied covenants, functions or responsibilities shall be read into the
Security Documents, this Agreement or otherwise exist against the Collateral
Agent. The Collateral Agent shall not be liable for any action taken or omitted
to be taken by it hereunder or under any Security Document, or in connection
herewith or therewith, or in connection with the Collateral, unless caused by
its gross negligence or willful misconduct.
36
(b) The Collateral Agent and each other Senior Party hereby designate
and appoint IBJ Whitehall Bank & Trust Company to act as the Depositary Bank
under this Agreement, and the Depositary Bank hereby agrees to act as
"securities intermediary" (within the meaning of Section 8-102(a)(14) of the
UCC) with respect to the Project Accounts. The Company hereby acknowledges that
the Depositary Bank shall act as securities intermediary with respect to the
Project Accounts and pursuant to this Agreement. The Depositary Bank shall not
have any duties or responsibilities except those expressly set forth in this
Agreement.
(c) The Collateral Agent will give notice to the Senior Parties of any
action taken, or notices received, hereunder or under any Security Document;
notice of action taken shall be given prior to the taking of such action unless
the Collateral Agent determines that to do so would be detrimental to the
interest of the Senior Parties, in which event such notice shall be given
promptly after the taking of such action.
(d) The Senior Parties agree that all liens and security interests in
the Collateral securing the Secured Obligations shall be held in the name of the
Collateral Agent and administered by and through the Collateral Agent and in
accordance with this Agreement and the other Security Documents. If, as of the
date hereof, or at any time in the future, any Senior Party at any time holds a
lien or security interest on any Collateral in its own name, it agrees to assign
it, without warranty or recourse, to the Collateral Agent (to be held by the
Collateral Agent as the collateral agent for the Senior Parties). The Collateral
Agent shall hold its security interests in and liens on the Collateral for the
benefit of the Senior Parties as provided herein and in the Security Documents.
(e) Notwithstanding anything to the contrary in this Agreement or any
Security Document, the Collateral Agent shall not be required to exercise any
rights or remedies under any of the Security Documents or this Agreement or give
any consent under any of the Security Documents or this Agreement or enter into
any agreement amending, modifying, supplementing or waiving any provision of any
Security Document unless it shall have been directed to do so in Senior Party
Certificates of the Required Senior Parties.
SECTION 5.2 Rights of Collateral Agent.
(a) The Collateral Agent may execute any of its duties under the
Security Documents or this Agreement by or through agents or attorneys-in-fact
and shall be entitled to advice of counsel concerning all matters pertaining to
such duties.
(b) Neither the Collateral Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact or affiliates shall be (i) liable for any
action lawfully taken or omitted to be taken by it under or in connection with
any Security Document or this Agreement (except for its gross negligence or
willful misconduct) or (ii) responsible in any manner to any of the Senior
Parties for any recitals, statements, representations or warranties made in any
Security Document or this Agreement or in any certificate, report, statement or
other document referred to or provided for in, or received by the Collateral
Agent under or in connection with, any Security Document or this Agreement or
for the value, validity, effectiveness, genuineness, enforceability or
sufficiency of the Security Documents or this Agreement or for any failure of
the Company or
37
any other Person to perform their obligations thereunder. The Collateral Agent
shall not be under any obligation to any Senior Party or any other Person to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, any Security Document or this
Agreement, or to inspect the properties, books or records of the Company.
(c) The Collateral Agent shall be entitled to rely, and shall be fully
protected in relying, upon any note, writing, resolution, request, direction,
certificate, notice, consent, affidavit, letter, cablegram, telegram, telecopy,
telex or teletype message, statement, order or other document or conversation
believed by it to be genuine and correct and to have been signed, sent or made
by the proper Person or Persons and/or upon advice and/or statements of legal
counsel (including, without limitation, counsel to the Company), independent
accountants and other experts selected by the Collateral Agent. In connection
with any request or direction of the Required Senior Parties, the Collateral
Agent shall be entitled to rely, and shall be fully protected in relying on any
Senior Party Certificate delivered by a Senior Party; provided, however, that in
the event the Collateral Agent receives conflicting directions contained in
Senior Party Certificates representing two or more groups of Required Senior
Parties, the Collateral Agent shall act in accordance with directions contained
in Senior Party Certificates representing the greatest percentage of the
Combined Exposure. The Collateral Agent shall be fully justified in failing or
refusing to take any action under any Security Document or this Agreement (i) if
such action would, in the opinion of the Collateral Agent (which may be based on
the opinion of legal counsel), be contrary to law or the terms of this Agreement
or the other Security Documents, (ii) if such action is not specifically
provided for in such Security Document or this Agreement or it shall not have
received any such advice or concurrence of the Required Senior Parties as it
deems appropriate, (iii) if, in connection with the taking of any such action
hereunder or under any Security Document that would constitute an exercise of
remedies under such Security Document or this Agreement, it shall not first be
indemnified to its satisfaction by the Senior Parties (other than the Trustee in
its individual capacity and the Collateral Agent) against any and all risk of
nonpayment, liability and expense which may be incurred by it by reason of
taking or continuing to take any such action or (iv) if, notwithstanding
anything to the contrary contained in Section 5.2(e), in connection with the
taking of any such action that would constitute a payment due under any
Transaction Document, it shall not first have received from the Senior Parties
funds equal to the amount payable. The Collateral Agent shall in all cases be
fully protected in acting, or in refraining from acting, under any Security
Document or this Agreement in accordance with a request of the Required Senior
Parties contained in Senior Party Certificates, and such request and any action
taken or failure to act pursuant thereto shall be binding upon all the Senior
Parties.
(d) If, with respect to a proposed action to be taken by it, the
Collateral Agent shall determine in good faith that the provisions of any
Security Document or this Agreement relating to the functions or
responsibilities or discretionary powers of the Collateral Agent are or may be
ambiguous or inconsistent, the Collateral Agent shall notify the Senior Parties,
identifying the proposed action, and may decline either to perform such function
or responsibility or to take the action requested unless it has received the
written confirmation of the Required Senior Parties executed by Authorized
Representatives of such Persons that the Required Senior Parties concur in the
circumstances that the action proposed to be taken by the Collateral Agent is
consistent
38
with the terms of this Agreement or such Security Document or is otherwise
appropriate. The Collateral Agent shall be fully protected in acting or
refraining from acting upon the confirmation of the Required Senior Parties in
this respect, and such confirmation shall be binding upon the Collateral Agent
and the other Senior Parties.
(e) The Collateral Agent shall not be deemed to have actual,
constructive, direct or indirect knowledge or notice of the occurrence of any
default or Event of Default or any other event unless and until a Responsible
Officer of the Collateral Agent has received a written notice or a certificate
from an Authorized Representative of a Senior Party or the Company stating that
a default or an Event of Default has occurred. The Collateral Agent shall have
no obligation whatsoever either prior to or after receiving such notice or
certificate to inquire whether a default or an Event of Default has in fact
occurred and shall be entitled to rely conclusively, and shall be fully
protected in so relying, on any notice or certificate so furnished to it. No
provision of this Agreement or any other Security Document shall require the
Collateral Agent to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties hereunder or under
any Security Document or the exercise of any of its rights or powers, if it
shall have reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability including an advance of funds
necessary to take the action requested is not reasonably assured to it, except
that in respect of any potential environmental liability or the taking of title
to any real property, the Collateral Agent may decline to act unless it receives
indemnity satisfactory to it in its sole discretion, including, but not limited
to, an advance of funds necessary to take the action requested. If the
Collateral Agent receives such a notice of the occurrence of any Event of
Default, the Collateral Agent shall give notice thereof to the Senior Parties.
The Senior Parties shall provide evidence of satisfactory indemnity to the
Collateral Agent for any action directed by the Required Senior Parties
including, but not limited to, an advance of funds necessary to take the action
requested. The Collateral Agent shall take such action with respect to such
Event of Default as so requested pursuant to Section 2.3(a) subject, however, to
the third sentence of this Section 5.2(e).
(f) The Company will pay upon demand to the Collateral Agent the amount
of any and all reasonable fees and out-of-pocket expenses, including the
reasonable fees and expenses of its counsel (and any one local counsel) and of
any experts and agents, which the Collateral Agent may incur in connection with
(i) the administration of this Agreement and the other Security Documents, (ii)
the custody or preservation of, or the sale of, collection from, or other
realization upon, any of the Collateral, (iii) the exercise or enforcement
(whether through negotiations, legal proceedings or otherwise) of any of the
rights of the Collateral Agent or the Senior Parties hereunder or under the
other Security Documents or (iv) the failure by the Company to perform or
observe any of the provisions hereof or of any of the other Security Documents.
The provision of this Section 5.2(f) shall survive the expiration or earlier
termination of this Agreement.
SECTION 5.3 Lack of Reliance on the Collateral Agent.
Each of the Senior Parties expressly acknowledges that neither the
Collateral Agent nor any of its officers, directors, employees, agents or
attorneys-in-fact has made any representations
39
or warranties to it and that no act by the Collateral Agent hereafter taken,
including, without limitation, any review of the Facility or of the affairs of
the Company, shall be deemed to constitute any representation or warranty by the
Collateral Agent to any Senior Party. Each Senior Party (other than the Trustee)
represents to the Collateral Agent that it has, independently and without
reliance upon the Collateral Agent or any other Senior Party, and based on such
documents and information as it has deemed appropriate, made its own appraisal
of and investigation into the business, operations, property, financial and
other condition and creditworthiness of the Facility and the Company. Each
Senior Party (other than the Trustee) also represents that it will,
independently and without reliance upon the Collateral Agent or any other Senior
Party, and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit analysis, appraisals and decisions
in taking or not taking action under this Agreement, and to make such
investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of the
Facility and the Company. Except for notices, reports and other documents
expressly required to be furnished to the Senior Parties by the Collateral Agent
hereunder, the Collateral Agent shall not have any duty or responsibility to
provide any Senior Party with any credit or other information concerning the
business, operations, property, financial and other condition or
creditworthiness of the Facility and the Company which may come into the
possession of the Collateral Agent or any of its officers, directors, employees,
agents or attorneys-in-fact.
SECTION 5.4 Indemnification.
(a) The Senior Parties (other than the Collateral Agent) severally
agree to indemnify the Collateral Agent in its capacity as such and in its
individual capacity (to the extent not reimbursed by the Company and without
limiting the obligation of the Company to do so), ratably according to the
aggregate amounts of their respective Secured Obligations on the date the
activities giving rise to the Collateral Agent's demand for indemnification
occurred, from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind whatsoever which may at any time be imposed on, incurred by or
asserted against the Collateral Agent in its capacity as such and in its
individual capacity in any way relating to or arising out of the Security
Documents or this Agreement, or the performance of its duties as Collateral
Agent hereunder or thereunder or any action taken or omitted by the Collateral
Agent in its capacity as such under or in connection with any of the foregoing
(including, but not limited to, any claim that the Collateral Agent is the owner
or operator of the Facility and liable as such pursuant to the Comprehensive
Environmental Response, Compensation and Liability Act or any other
Environmental Requirement); provided, that the Senior Parties shall not be
liable for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
to the extent that any of the foregoing result from the Collateral Agent's gross
negligence or willful misconduct. The agreements in this Section 5.4 shall
survive the payment or satisfaction in full of the Secured Obligations or any
other termination of this Agreement.
(b) The Company agrees to indemnify the Collateral Agent and each
Senior Party from and against any and all claims, losses and liabilities growing
out of or resulting from (i) any
40
Security Document or this Agreement (including, without limitation, enforcement
of such Security Document, but excluding any such claims, losses or liabilities
resulting from the Collateral Agent's or such Senior Party's gross negligence or
willful misconduct) or (ii) any refund or adjustment of any amount paid or
payable to the Collateral Agent or any Senior Party under or in respect of any
Transaction Document or any other Collateral, or any interest thereon, which may
be ordered or otherwise required by any Person. The agreements under this
Section 5.4(b) shall survive the payment in full of any secured obligation or
termination of this Agreement or any other Security Document.
SECTION 5.5 Resignation of the Collateral Agent or Depositary Bank.
(a) Either of the Collateral Agent or Depositary Bank may resign its
appointment hereunder at any time without providing any reason therefor by
giving not less than 60 days' prior written notice to that effect to each of the
other parties hereto, provided that no such resignation pursuant to this Section
5.5 or removal pursuant to Section 5.6 shall be effective until:
(i) a successor for the Collateral Agent or Depositary Bank is
appointed in accordance with (and subject to) the succeeding provisions
of this Section 5.5;
(ii) the resigning or removed Collateral Agent or Depositary
Bank has transferred to its successor all of its rights and obligations
in its capacity as Collateral Agent or Depositary Bank under this
Agreement and the other Transaction Documents; and
(iii) the successor Collateral Agent or Depositary Bank has
executed and delivered an agreement to be bound by the terms hereof and
the other Transaction Documents and perform all duties required of the
Collateral Agent or Depositary Bank hereunder and under the other
Transaction Documents.
(b) If the Collateral Agent or Depositary Bank has given notice of its
resignation pursuant to this Section 5.5 or if the Required Senior Parties give
the Collateral Agent, or the Collateral Agent gives the Depositary Bank, notice
of removal pursuant to Section 5.6, then a successor to the Collateral Agent or
Depositary Bank may be appointed by the Required Senior Parties during the
period of such notice but, if no such successor is so appointed within sixty
(60) days after the above notice, the Collateral Agent or Depositary Bank may
appoint such a successor which (i) is authorized under the laws of its
jurisdiction of formation to exercise corporation trust powers, (ii) shall have
a combined capital and surplus of at least U.S.$250,000,000 and (iii) shall be
acceptable to the Required Senior Parties (provided, that if the Required Senior
Parties do not confirm such acceptance or reject such appointee in writing
within thirty (30) days following selection of such successor by the Collateral
Agent or Depositary Bank, then they shall be deemed to have given acceptance
thereof and such successor shall be deemed appointed as the Collateral Agent or
Depositary Bank hereunder by and on behalf of the Senior Parties).
41
(c) If a successor to the Collateral Agent or Depositary Bank is
appointed under the provisions of clauses (a) or (b) above, then:
(i) the predecessor Collateral Agent or Depositary Bank shall
be discharged from any further obligation hereunder (but without
prejudice to any accrued liabilities);
(ii) the predecessor Collateral Agent or Depositary Bank's
resignation pursuant to this Section 5.5 or removal pursuant to Section
5.6 notwithstanding, the provisions of this Agreement shall inure to
its benefit as to any actions taken or omitted to be taken by it under
this Agreement and the other Transaction Documents while it was acting
as the Collateral Agent or Depositary Bank; and
(iii) the successor Collateral Agent or Depositary Bank and
each of the other parties hereto shall have the same rights and
obligations amongst themselves as they would have had if such successor
Collateral Agent or Depositary Bank had been an original party hereto.
SECTION 5.6 Removal of the Collateral Agent or Depositary Bank.
The Required Senior Parties may remove the Collateral Agent from its
appointment hereunder, and the Collateral Agent may remove the Depositary Bank
hereunder, in each case with or without cause by giving not less than 60 days'
prior written notice to that effect to the Collateral Agent (or to the
Depositary Bank, as the case may be); provided, that no such removal shall be
effective until a successor for the Collateral Agent (or the Depositary Bank, as
the case may be) is appointed in accordance with Section 5.5.
SECTION 5.7 Merger, Conversion, Consolidation or Succession to
Business.
Any corporation or bank into which the Collateral Agent may be merged
or converted or with which it may be consolidated, or any corporation or bank
resulting from any merger, conversion or consolidation to which the Collateral
Agent shall be a party, or any corporation or bank succeeding to all or
substantially all of the corporate trust business of the Collateral Agent, shall
be the successor of the Collateral Agent hereunder, provided such corporation or
bank shall be otherwise qualified and eligible under this Article V, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto.
SECTION 5.8 Power of Attorney.
Each Senior Party (other than the Collateral Agent) hereby gives a
power of attorney, coupled with an interest, to the Collateral Agent and
appoints, makes, constitutes and designates the Collateral Agent its true and
lawful attorney-in-fact, subject to Section 5.1, to consent on its behalf under
the Security Documents and the other Transaction Documents to which the
Collateral Agent is a party to the extent that the consent of the Required
Senior Parties (whether or not acting through the Collateral Agent) is required
under any agreement and upon the instructions of the Required Senior Parties
acting pursuant to this Agreement, and to take such actions on its behalf under
the provisions of such agreements as are reasonably incidental thereto,
42
to execute and deliver in the name of and on behalf of, or in its own name, as
the case may be, all documents required to be executed by such Senior Party (in
its capacity as such) in connection therewith and to do, take and perform each
and every act and thing whatsoever requisite, proper or necessary to be done, in
the exercise of any of the rights and powers herein granted, as fully to all
intents and purposes as such Senior Party (in its capacity as such) might or
could do, with full power of substitution or revocation, hereby ratifying and
confirming all that such attorney-in-fact, or its substitute or substitutes,
shall lawfully do or cause to be done by virtue of this power of attorney and
the rights and powers herein granted; provided, that the Collateral Agent shall
not so consent or take such other actions other than in accordance with this
Agreement, the Security Documents and the other Transaction Documents to which
the Collateral Agent is a party. The enumeration of specific items, rights, acts
or powers herein does not limit or restrict and is not intended to limit or
restrict, and is not to be construed or interpreted as limiting or restricting,
the powers herein granted to such attorney-in-fact. The rights, power and
authority of such attorney-in-fact herein granted shall commence and be in full
force and effect on the date hereof, and such rights, powers and authority shall
remain in full force and effect thereafter until this Agreement is terminated or
until the Collateral Agent's resignation or removal hereunder.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
SECTION 6.1 Representations and Warranties.
(a) The Company hereby makes the following representations and
warranties as of the date hereof with respect to itself for the benefit of the
Senior Parties:
(i) The Company (A) is a limited liability corporation duly
formed, validly existing and in good standing under the laws of the
State of Delaware and (B) is duly authorized, to the extent necessary,
to do business in the Commonwealth of Pennsylvania and in each other
jurisdiction where the character of its properties or the nature of its
activities makes such qualification necessary, except to the extent any
failure could not reasonably be expected to have a Material Adverse
Effect. The Company has all requisite power and authority to own and
operate the property it purports to own and to carry on its business as
now being conducted and as proposed to be conducted in respect of the
Facility.
(ii) The Company has all necessary power and authority to
execute, deliver and perform its obligations under this Agreement. All
action on the part of the Company that is required for the
authorization, execution, delivery and performance of this Agreement,
in each case has been duly and effectively taken; and the execution,
delivery and performance of this Agreement does not require the
approval or consent of any holder or trustee of any debt or other
obligations of the Company which has not been obtained.
43
(iii) This Agreement has been duly executed and delivered by
the Company. This Agreement constitutes a legal, valid and binding
obligation of the Company enforceable against them in accordance with
the terms thereof, except as such enforceability (A) may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium and other
laws affecting the enforcement of creditors' rights and remedies
generally and (B) is subject to general principles of equity
(regardless of whether enforceability is considered in a proceeding in
equity or at law).
(iv) Neither the execution, delivery and performance of this
Agreement nor the consummation of any of the transactions contemplated
hereby nor performance of or compliance with the terms and conditions
hereof (A) contravenes any material requirement of Applicable Law
applicable to the Company or any of the Collateral which contravention
would reasonably be expected to have a Material Adverse Effect, (B)
constitutes a default under or results in the violation of the
provisions of the certificate of formation or operating agreement, or
of any Transaction Documents that would reasonably be expected to have
a Material Adverse Effect or (C) results in the creation or imposition
of any Liens (other than Permitted Liens) on any of the Collateral
under, or results in the acceleration of, any obligation.
(v) Other than as set forth in the Indenture, there are no
actions, suits or proceedings at law or in equity or by or before any
Governmental Authority now pending against the Company or, to the best
of the Company's knowledge, threatened against the Company or any
property or other assets or rights of the Company or with respect to
this Agreement that would reasonably be expected to have a Material
Adverse Effect.
(b) Each of the Trustee, the DSR LOC Provider and the CP LOC Provider
hereby makes the following representations and warranties as of the date hereof
with respect to itself and for the benefit of the Collateral Agent and the
Depositary Bank:
(i) It is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and is
duly qualified to do business in, and is in good standing in all
jurisdictions where the nature of its business makes such qualification
necessary, except where the failure to effect such qualification would
not have a material adverse effect upon its ability to perform its
obligations pursuant to this Agreement or the Senior Documents (as
hereinafter defined) to which it is a party.
(ii) It has all necessary corporate power to execute, deliver
and perform under this Agreement and the Senior Documents. All action
on its part that is required for the authorization, execution, delivery
and performance of this Agreement and the Senior Documents has been
duly and effectively taken; and the execution, delivery and performance
of this Agreement and the Senior Documents do not require the approval
or consent of any shareholder or the holder or trustee of any debt or
other obligations which has not been obtained.
(iii) This Agreement and the Senior Documents have been duly
executed and delivered by each such Person and constitute the legal,
valid and binding obligation of
44
each such Person, enforceable against such Person in accordance with
the terms thereof, except as such enforceability (A) may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium and other
similar laws affecting the enforcement of creditors' rights and
remedies generally and (B) is subject to general principles of equity
(regardless of whether enforceability is considered in a proceeding in
equity or at law).
(iv) Neither the execution, delivery and performance of this
Agreement and the Senior Documents nor the consummation of any of the
transactions contemplated hereby or thereby nor performance of or
compliance with the terms and conditions hereof or thereof (A)
contravenes any material Applicable Law to such Person or (B)
constitutes a default under or results in the violation of the
provisions in the charter, certificate of incorporation or by-laws of
such Person or of any indenture, loan or credit agreement or any other
agreement, lease, instrument or document to which such Person is a
party or by which it or its properties may be bound.
(v) There are no actions, suits or proceedings at law or in
equity or by or before any Governmental Authority now pending or, to
the best of such Person's knowledge, threatened which could reasonably
be expected to have a material and adverse effect on the performance by
such Person of its obligations hereunder or under the Senior Documents
or which questions the validity, binding effect or enforceability
hereof or of the Senior Documents, any action to be taken pursuant
hereto or thereto or any transactions contemplated hereby or thereby.
For the purposes of this Section 6.1(b), the term "Senior Documents"
shall mean, with respect to the Trustee, the Indenture, with respect to the DSR
LOC Provider, the DSR LOC Reimbursement Agreement and with respect to the CP LOC
Provider, the CP LOC Reimbursement Agreement.
ARTICLE VII
MISCELLANEOUS
SECTION 7.1 Agreement for Benefit of Parties Hereto.
Nothing in this Agreement, express or implied, is intended or shall be
construed to confer upon, or to give to, any Person other than the parties
hereto and their respective successors and assigns, any right, remedy or claim
under or by reason of this Agreement or any covenant, condition or stipulation
hereof; and the covenants, stipulations and agreements contained in this
Agreement are and shall be for the sole and exclusive benefit of the parties
hereto and their respective successors and assigns.
SECTION 7.2 No Warranties.
Except as otherwise expressly provided herein, the Senior Parties have
not made to each other nor do they hereby or otherwise make to each other any
warranties, express or implied, nor
45
do they assume any liability to each other with respect to the enforceability,
validity, value or collectability of the Collateral (or any portion thereof). No
Senior Party shall be liable to any other Senior Party for any action or failure
to act or any error of judgment, negligence, or mistake, or oversight whatsoever
on the part of any Senior Party or any Senior Party's agents, officers,
employees or attorneys with respect to any transaction relating to any of the
notes or agreements evidencing or entered into with respect to any of the
Secured Obligations or any security therefor.
SECTION 7.3 Severability.
In case any one or more of the provisions contained in this Agreement
shall be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected and/or impaired thereby.
SECTION 7.4 Notices.
All notices, demands, certificates or other communications hereunder
shall be in writing and shall be deemed sufficiently given or served for all
purposes when delivered personally, when sent by certified or registered mail,
postage prepaid, return receipt requested or by private courier service, or, if
followed and confirmed by mail or courier service notice, when telecopied, in
each case, with the proper address as indicated below. Each party may, by
written notice given to the other parties, designate any other address or
addresses to which notices, certificates or other communications to them shall
be sent as contemplated by this Agreement. Until otherwise so provided by the
respective parties, all notices, certificates and communications to each of them
shall be addressed as follows:
Company: AES Ironwood, L.L.C.
829 Cumberland Street
Lebanon, PA 17042
Attention: Project Manager
Facsimile: 717-228-1271
Trustee: IBJ Whitehall Bank & Trust Company
One State Street
New York, NY 10004
Attention: Capital Markets Trust
Services
Facsimile: 212-858-2952
DSR LOC Provider: Dresdner Bank AG, New York Branch
75 Wall Street, 25th Floor
New York, NY 10005-2889
Attention: Andrew Schroeder
Facsimile: 212-429-2081
46
With copy to:
Attention: Michael Higgins
Facsimile: 212-429-2192
CP LOC Provider: Dresdner Bank AG, New York Branch
75 Wall Street, 25th Floor
New York, NY 10005-2889
Attention: Andrew Schroeder
Facsimile: 212-429-2081
With copy to:
Attention: Michael Higgins
Facsimile: 212-429-2192
Collateral Agent: IBJ Whitehall Bank & Trust Company
One State Street
New York, NY 10004
Attention: Capital Markets Trust
Services
Facsimile: 212-858-2952
Depositary Bank: IBJ Whitehall Bank & Trust Company
One State Street
New York, NY 10004
Attention: Capital Markets Trust
Services
Facsimile: 212-858-2952
SECTION 7.5 Successors and Assigns.
Whenever in this Agreement any party hereto is named or referred to,
the successors and assigns of such party shall be deemed to be included and all
covenants, promises and agreements in this Agreement by or on behalf of the
respective parties hereto shall bind and inure to the benefit of the respective
successors and assigns of such parties, whether so expressed or not.
SECTION 7.6 Counterparts.
This Agreement may be executed in any number of counterparts, each
executed counterpart constituting an original but all counterparts together
constituting only one instrument.
SECTION 7.7 Governing Law.
This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of New York applicable to contracts made
and to be performed in such state. All terms used herein which are not defined
herein and are defined in the UCC shall have the meanings therein stated, unless
the context otherwise requires.
47
SECTION 7.8 Impairments of Other Rights.
Subject to Section 7.13, nothing in this Agreement is intended or shall
be construed to impair, diminish or otherwise adversely affect any other rights
the Senior Parties may have or may obtain against the Company pursuant to the
Financing Documents.
SECTION 7.9 Amendment; Waiver.
No amendment, modification or supplement of this Agreement shall be
effective unless such amendment, modification or supplement was effected in
accordance with this Agreement. Any approval of an amendment to, or any waiver
of any provision of, this Agreement shall be effective only in the specific
instance and for the specific purpose for which such approval or waiver is
given. No delay on the part of any Senior Party in the exercise of any right,
power or remedy shall operate as a waiver thereof, nor shall any single or
partial waiver by such Senior Party of any right, power or remedy preclude any
further exercise thereof, or the exercise of any other right, power or remedy.
SECTION 7.10 Headings.
Headings herein are for convenience only and shall not be relied upon
in interpreting or enforcing this Agreement.
SECTION 7.11 Termination.
This Agreement shall remain in full force and effect until payment in
full of all the Financing Liabilities and termination of the Financing
Commitments. Following the Senior Debt Termination Date, this Agreement shall
continue in full force and effect among the Company, the Subordinated Debt
Providers, and the Collateral Agent, and the Subordinated Debt Providers shall
have all powers, duties and obligations granted hereunder to the Senior Parties
or the Senior Parties as if it were a Senior Party.
SECTION 7.12 Entire Agreement.
This Agreement, including the documents referred to herein, embodies
the entire agreement and understanding of the parties hereto and supersedes all
prior agreements and understandings of the parties hereto relating to the
subject matter herein contained.
SECTION 7.13 Limitation of Liability.
Satisfaction of the obligations of the Company under this Agreement and
each other Financing Documents, for the payment of the principal of or premium,
if any, or interest on any Financing Liability, or any part thereof, or for any
claim based thereon or otherwise in respect thereof or related thereto, shall be
had solely from the Collateral and the assets of the Company and no recourse
shall be had in the event of any non-performance by the Company of any such
obligations to (i) any assets or properties of the Members (or any Person that
controls any Member within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange
48
Act) or (ii) any Affiliate of the Company or any incorporators, officers,
directors or employees thereof, and no judgment for any deficiency upon the
obligations of the Company under this Agreement or any other Financing Document,
for the payment of the principal of or premium, if any, or interest on any
Financing Liability, or any part thereof, or for any claim based thereon or
otherwise in respect thereof or related thereto, shall be obtainable by the
Senior Parties or any of them against any Member or Affiliate of the Company or
any other incorporator, stockholder, officer, employee or director, past,
present or future of the Company or any Affiliate of the Company; provided,
however, that nothing contained herein shall prevent the taking of any action
permitted by law against the Company or any of its Affiliates, or in any way
affect or impair the rights of the Trustee or Bondholders to take any action
permitted by law, in either case to realize upon the Collateral and; provided,
further, that nothing herein shall be deemed to affect the obligations of any
Affiliate of the Company under any Transaction Document to which such Affiliate
is a party.
SECTION 7.14 Replacement and/or Removal of Independent Engineer;
Payment of Independent Engineer.
The Company shall in accordance with Section 1 of the Independent
Engineer Agreement, have the right to replace the then current Independent
Engineer at the expiration of the then current term of the Independent Engineer
Agreement and shall appoint a successor Independent Engineer from the engineers
listed on Exhibit 7.14. The Collateral Agent shall, upon receipt of a written
request contained in Senior Party Certificates of the Required Senior Parties,
remove the Independent Engineer if at any time the Independent Engineer becomes
incapable of acting or is, or is reasonably likely to be, adjudged bankrupt or
insolvent or a receiver is appointed for, or any public officer shall take
charge or control of, the Independent Engineer or its property or its affairs
for the purpose of rehabilitation, conservation or liquidation, and shall
appoint a successor Independent Engineer from those engineers then listed on
Exhibit 7.14. Within thirty (30) days of receipt by the Collateral Agent of a
written notification from the Company to the effect that the Independent
Engineer has failed to carry out its obligations in a timely manner, the
Collateral Agent shall, unless directed in Senior Party Certificates of the
Required Senior Parties not to do so, remove the Independent Engineer and
appoint a successor Independent Engineer from those engineers then listed on
Exhibit 7.14. The Company shall pay for all services performed by the
Independent Engineer and its reasonable costs and expenses related thereto.
SECTION 7.15 Third-Party Engineer Dispute Resolution.
(a) If the Company and the Independent Engineer are in dispute in
respect of a notice, plan, report, certificate or budget and they are unable to
resolve the dispute within seven (7) days of the Independent Engineer expressing
its disagreement with such notice, plan, report, certificate or budget, a single
independent engineer (the "Third-Party Engineer") shall be designated to
consider and decide the issues raised by such dispute. The selection of such
Third-Party Engineer shall be made from the list of engineers described below,
the initial version of which is attached as Exhibit 7.14. The Company, as the
case may be, shall designate the Third-Party Engineer from such list not later
than the third (3rd) day following the expiration of the seven (7)
49
day period described above and such designation shall become effective in three
(3) days. Within three (3) days of the designation of a Third-Party Engineer,
each of the Company and the Independent Engineer shall submit to the Third-Party
Engineer a notice setting forth in detail such Person's position in respect of
the issues in dispute. Such notice shall include supporting documentation, if
appropriate.
(b) The Third-Party Engineer shall complete all proceedings and issue
his decision with regard to the issues in dispute as promptly as reasonably
possible, but in any event within ten (10) days of the date on which he is
designated as the Third-Party Engineer unless the Third-Party Engineer
reasonably determines that additional time is required in order to give adequate
consideration to the issues raised. In such case the Third-Party Engineer shall
state in writing his reasons for believing that additional time is needed and
shall specify the additional period required, which such period shall not exceed
ten (10) days without the Company's agreement.
(c) If the Third-Party Engineer determines that the position set forth
in the Independent Engineer's notice is correct, it shall so state and shall
state the corrective actions to be taken by the Company. In such case, the
Company shall promptly take such actions. The Company shall thereafter bear all
costs which may arise from actions taken pursuant to the Third-Party Engineer's
decision. If the Third-Party Engineer determines that the position set forth in
the Independent Engineer's notice is not correct, it shall so state and shall
state the appropriate actions to be taken by the Company. In such case, the
Company shall take such actions and for purposes of the Financing Documents, the
Independent Engineer and the Collateral Agent shall be deemed to have approved,
confirmed, concurred in or consented to the notice, plan, report, certificate or
budget in dispute. The decision of the Third-Party Engineer shall be final and
non-appealable. The Company shall bear all reasonable costs incurred by the
Third-Party Engineer in connection with this dispute resolution mechanism.
(d) The Third-Party Engineer shall be chosen from the list of qualified
engineers set forth in Exhibit 7.14. Such list shall be used by the Collateral
Agent (upon written direction of the Required Senior Parties) to choose a
successor Independent Engineer as well. At any time either the Company or the
Collateral Agent (upon written direction of the Required Senior Parties) may
remove a particular engineer from the list by obtaining the other Person's
reasonable consent to such removal. However, neither the Company nor the
Collateral Agent may remove a name or names from the list if such removal would
leave the list without at least two (2) names, unless, concurrently therewith,
the Company and the Collateral Agent (upon direction of the Required Senior
Parties) reasonably agree to the addition of one (1) or more names to such list.
(e) During January of each year, each of the Company and the Collateral
Agent (upon direction of the Required Senior Parties) shall review the current
list of Third-Party Engineers and give notice to the other of any proposed
additions to the list and any intended deletions. Intended deletions shall
automatically become effective forty-five (45) days after notice is received by
the other Person unless written objection is made by such other Person within
thirty (30) days and provided that such deletions do not leave the list without
at least two (2) names. Proposed additions to the list shall automatically
become effective thirty forty-five (45) after
50
notice is received by the other Person unless written objection is made by such
other Person within thirty (30) days. By mutual agreement between the Company
and the Collateral Agent (upon direction of the Required Senior Parties), a new
name or names may be added to the list of Third-Party Engineers at any time.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
51
IN WITNESS WHEREOF, the parties hereto have caused this Collateral
Agency and Collateral Agency Agreement to be duly executed by their respective
officers thereunto duly authorized, as of the day and year first above written.
AES IRONWOOD, L.L.C.
By: /s/ Patricia L. Rollin
-------------------------------
Name: Patricia L. Rollin
Title: Vice President
IBJ WHITEHALL BANK & TRUST COMPANY,
as Trustee
By: /s/ Thomas McCutcheon
-------------------------------
Name: Thomas McCutcheon
Title: Assistant Vice President
DRESDNER BANK AG, NEW YORK BRANCH,
as DSR LOC Provider
By: /s/ Kirk Edelman Andrew Schroeder
---------------------------------------
Name: Kirk Edelman Andrew Schroeder
Title: Vice President Vice President
DRESDNER BANK AG, NEW YORK BRANCH,
as CP LOC Provider
By: /s/ Kirk Edelman Andrew Schroeder
---------------------------------------
Name: Kirk Edelman Andrew Schroeder
Title: Vice President Vice President
[COLLATERAL AGENCY AND INTERCREDITOR AGREEMENT]
IBJ WHITEHALL BANK & TRUST COMPANY,
as Collateral Agent
By: /s/ Thomas McCutcheon
-------------------------------
Name: Thomas McCutcheon
Title: Assistant Vice President
IBJ WHITEHALL BANK & TRUST COMPANY,
as Depositary Bank
By: /s/ Thomas McCutcheon
-------------------------------
Name: Thomas McCutcheon
Title: Assistant Vice President
[COLLATERAL AGENCY AND INTERCREDITOR AGREEMENT]
EXHIBIT 2.1
FORM OF DESIGNATION LETTER
[Date]
IBJ Whitehall Bank & Trust Company,
as Collateral Agent
One State Street
New York, NY 10004
Re: AES Ironwood Project
Ladies and Gentlemen:
Reference is made to the Collateral Agency and Intercreditor Agreement
(the "Collateral Agency Agreement") dated as of June 1, 1999 among AES Ironwood
L.L.C. (the "Company"), IBJ Whitehall Bank & Trust Company, as Trustee, Dresdner
Bank AG, as DSR LOC Provider, Dresdner Bank AG, as CP LOC Provider, IBJ
Whitehall Bank & Trust Company, as Collateral Agent, and IBJ Whitehall Bank &
Trust Company, as Depositary Bank. Capitalized terms used herein and not defined
herein shall have the meanings set forth in the Collateral Agency Agreement.
The Company and the undersigned have agreed that the undersigned shall
be [an additional Lender] [the Agent for additional Lenders] under the
Collateral Agency Agreement ([each such Lender,] an "Additional Lender") under
the [describe new debt document].
The undersigned is delivering this Designation Letter pursuant to the
Collateral Agency Agreement in order to permit (i) [the undersigned] [each
Additional Lender] to become a [Senior] [Subordinated] Party thereunder and (ii)
the undersigned [and the Additional Lender] to become secured parties under the
Collateral Agency Agreement and the other Financing Documents and to benefit
from the Collateral under the other Security Documents in accordance with the
terms of the Collateral Agency Agreement and the other Security Documents.
Attached hereto is a copy of the Collateral Agency Agreement.
The undersigned [on behalf of itself and the Additional Lenders]
accedes to and agrees to be bound by all of the terms and provisions of the
Collateral Agency Agreement, the Security Documents and the other Financing
Documents. You are hereby instructed to deliver a copy of this Designation
Letter to each Person party to the Collateral Agency Agreement.
2.1 - 1
Our address for notices is:
[Insert information]
Our wire transfer instructions are:
[Insert Information]
[Insert in the case of Additional Lenders that are to be Subordinated
Debt Providers only: Attached hereto as Annex A are the Terms of Subordination
set forth in the Collateral Agency Agreement, and the undersigned [on behalf of
the Additional Lenders] agrees that such Terms of Subordination shall be
incorporated herein and that [it] [the Additional Lenders] shall be bound by the
terms thereof.] If there is any conflict between such Terms of Subordination and
the lending documents between the Company and the undersigned, such Terms of
Subordination shall govern.
This Designation Letter may be executed in any number of counterparts,
each executed counterpart constituting an original but all counterparts together
constituting only one instrument.
THIS DESIGNATION LETTER SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK EXCLUDING (TO THE GREATEST
EXTENT A NEW YORK COURT WOULD PERMIT) ANY RULE OF LAW THAT WOULD CAUSE THE
APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK.
[ADDITIONAL LENDER]
By:
-------------------------------
Name:
Title:
ACKNOWLEDGED:
AES IRONWOOD, L.L.C.
By:
-------------------------------
Name:
Title:
2.1 - 2
ACKNOWLEDGED:
IBJ WHITEHALL BANK & TRUST COMPANY,
as Collateral Agent
By:
-------------------------------
Name:
Title:
2.1 - 3
EXHIBIT 2.2
TERMS OF SUBORDINATION
Reference is made herein to a certain Collateral Agency and
Intercreditor Agreement, dated as of June 1, 1999 (as amended and in effect from
time to time, the "Collateral Agency Agreement"), entered into among IBJ
Whitehall Bank & Trust Company, as Collateral Agent (in such capacity, together
with its successors and permitted assigns in such capacity, the "Collateral
Agent"), IBJ Whitehall Bank & Trust Company, (in such capacity, together with
its successors and permitted assigns in such capacity, the "Depositary Bank "),
IBJ Whitehall Bank & Trust Company, as Trustee under the Indenture named
therein, on its own behalf and on behalf of the Bondholders described therein
(in such capacity, together with its successors and permitted assigns in such
capacity, the "Trustee"), the other Senior Parties identified therein, the
Subordinated Debt Providers referred to therein, and AES Ironwood, L.L.C. (the
"Company"). Capitalized terms used but not defined herein shall have the
respective meanings ascribed thereto in the Collateral Agency Agreement, the
terms of which are incorporated herein.
(i) Subordination of Subordinated Obligations. The Company, for itself
and its successors and assigns, covenants and agrees, and each Subordinated Debt
Provider that has entered into these Terms of Subordination set forth in this
annex or appendix (the "Terms of Subordination"), who then through the
incorporation of these terms into an executed agreement or otherwise, on its own
behalf and on behalf of each subsequent holder of the Subordinated Obligations
(defined below), likewise covenants and agrees, that, to the extent and in the
manner set forth in these Terms of Subordination, the Subordinated Debt, whether
of principal of and interest and premium (including any Make-Whole Premium) or
prepayment or liquidation penalty (if any) on the Subordinated Debt and fees and
expenses incurred in enforcement of the same (collectively, the "Subordinated
Obligations"), are hereby expressly made subordinate and subject in right of
payment to the prior payment in full in cash of all obligations in respect of
Senior Debt, whether of principal, interest or premium (including any Make-Whole
Premium), if any, and fees and expenses incurred in the enforcement of the same
and the fees, expenses and indemnities to be paid to the Collateral Agent and
the Depositary Bank pursuant to the Collateral Agency Agreement (collectively,
the "Senior Obligations"); provided, however, that nothing in these Terms of
Subordination shall be deemed to prohibit any Subordinated Debt Provider from
receiving payments in accordance with the terms of the Collateral Agency
Agreement, including but not limited to Section 3.10 and Article IV thereof.
(ii) Payment of Proceeds Upon Dissolution. In the event of (i) any
insolvency or bankruptcy case or proceeding, or any receivership, liquidation,
reorganization or other similar case or proceeding in connection therewith,
relative to the Company or to its creditors, as such, or to its assets, or (ii)
any liquidation, dissolution or other winding up of the Company, whether
voluntary or involuntary and whether or not involving insolvency or bankruptcy,
or (iii) any assignment for the benefit of creditors or any other marshalling of
assets and liabilities of the Company, then and in any such event:
2.2 - 1
(A) the Senior Parties shall be entitled to receive payment in
full in cash of all amounts due or to become due on or in respect of
all Senior Obligations, or provision shall be made for such payment,
before any Subordinated Debt Provider shall be entitled to receive any
payment of the Subordinated Obligations;
(B) any payment or distribution of assets of the Company of
any kind or character, whether in cash, property or securities, by
set-off or otherwise, to which any Subordinated Party would be entitled
but for the provisions of these Terms of Subordination, including any
such payment or distribution that may be payable or deliverable by
reason of the payment of any other indebtedness of the Company being
subordinated to the payment of the Subordinated Obligations, shall be
paid by the liquidating trustee or agent or other Person making such
payment or distribution, whether a trustee in bankruptcy, a receiver or
liquidating trustee or otherwise, to the Collateral Agent for
distribution in accordance with the terms of the Collateral Agency
Agreement.
(C) if, notwithstanding the foregoing provisions of this
clause (ii) of these Terms of Subordination, any Subordinated Debt
Provider shall have received, before all Senior Obligations are paid in
full in cash or payment thereof provided for, any such payment or
distribution of assets of the Company of any kind or character, whether
in cash, property or securities, including any such payment or
distribution arising out of the exercise by any Subordinated Debt
Provider of a right of set-off or counterclaim and any such payment or
distribution received by reason of any other indebtedness of the
Company being subordinated to the Subordinated Obligations, then, and
in such event, such payment or distribution shall be held in trust for
the benefit of, and shall be immediately paid over or delivered to, the
Collateral Agent for distribution in accordance with the terms of the
Collateral Agency Agreement; and
(D) if any Subordinated Debt Provider shall have failed to
file claims or proofs of claim with respect to the Subordinated
Obligations earlier than [15] days prior to the deadline for any such
filing, the Subordinated Debt Provider shall execute and deliver to the
Senior Parties such powers of attorney, assignments or other
instruments as the Required Senior Parties may reasonably request to
file such claims or proofs of claim.
The consolidation of the Company with, or the merger of the Company
into, another entity or the liquidation or dissolution of the Company following
the conveyance or transfer of its properties and assets substantially as an
entirety to another entity upon the terms and conditions set forth in the
Indenture or the correlative provisions of any other Financing Document shall
not be deemed a dissolution, winding up, liquidation, reorganization, assignment
for the benefit of creditors or marshalling of assets and liabilities of the
Company for purposes of these Terms of Subordination if the entity formed by
such consolidation or into which the Company is merged or the entity that
acquires by conveyance or transfer such properties and assets substantially as
an entirety, as the case may be, shall, as a part of such consolidation, merger,
conveyance or transfer, comply with the conditions set forth in the Indenture or
such correlative provisions of any other Financing Document.
2.2 - 2
(iii) No Payment. Each Subordinated Debt Provider hereby agrees that,
unless and until the Senior Obligations shall have been paid in full in cash,
(i) no payment on account of the Subordinated Obligations or any judgment with
respect thereto (and no payment on account of the purchase or redemption or
other acquisition of the Subordinated Obligations) shall be made by the Company
or by the Collateral Agent or the Depositary Bank on behalf of the Company and
(ii) no Subordinated Debt Provider shall (A) ask, demand, sue for, take or
receive from the Company, by set-off or in any other manner, or (B) seek any
other remedy allowed at law or in equity against the Company for breach of the
Company's obligations under the instruments representing such Subordinated
Obligations, provided that nothing herein shall be deemed to prohibit payment of
any of the Subordinated Obligations on any day that, under the terms thereof, is
a scheduled payment date to the extent expressly permitted by Section 3.10 of
the Collateral Agency Agreement and the correlative provisions of any other
Financing Document and solely to the extent of available funds.
In the event that, notwithstanding the foregoing provisions of this
clause (iii) of these Terms of Subordination, any Subordinated Debt Provider
shall have received any payment prohibited by the foregoing provisions of this
clause (iii) including, without limitation, any such payment arising out of the
exercise by any Subordinated Debt Provider of a right of set-off or counterclaim
and any such payment received by reason of other indebtedness of the Company
being subordinated to the Subordinated Obligations, then, and in any such event,
such payment shall be held in trust for the benefit of, and shall be immediately
paid over or delivered to, the Collateral Agent for application in accordance
with the Collateral Agency Agreement.
The provisions of this clause (iii) of these Terms of Subordination
shall not alter the rights of the Senior Parties under the provisions of clause
(ii) of these Terms of Subordination.
(iv) Subrogation. Subject to the payment in full in cash of all Senior
Obligations, the Subordinated Debt Providers shall be subrogated (equally and
ratably with the holders of all indebtedness of the Company that by its express
terms is subordinated to Senior Obligations of the Company to the same extent as
the Subordinated Obligations are subordinated and that is entitled to like
rights of subrogation) to the rights of the Senior Parties to receive payments
and distributions of cash, property and securities applicable to the Senior
Obligations until the Subordinated Obligations shall be paid in full in cash.
For purposes of such subrogation, no payments or distributions to the Senior
Parties of any such, property or securities to which any Subordinated Debt
Provider would be entitled except for the provisions of these Terms of
Subordination, and no payments over pursuant to the provisions of these Terms of
Subordination to the Senior Parties by any Subordinated Debt Providers, shall be
deemed to be a payment or distribution by the Company to or on account of the
Senior Obligations.
(v) Provisions Solely to Define Relative Rights. The provisions of
these Terms of Subordination are and are intended solely for the purpose of
defining the relative rights of the Subordinated Debt Providers on the one hand
and the Senior Parties and the Collateral Agent on the other hand. Nothing
contained in these Terms of Subordination or elsewhere in any of the Financing
Documents relating to the Subordinated Obligations is intended to or shall:
2.2 - 3
(A) affect, as among the Company, its creditors other than the
Senior Parties and the Subordinated Debt Providers, the obligation of
the Company to pay to the Subordinated Debt Providers, the Subordinated
Obligations as and when the same shall become due and payable in
accordance with their terms;
(B) affect the relative rights against the Company of the
Subordinated Debt Providers and creditors of the Company other than the
Senior Parties;
(C) vitiate the occurrence of an "Event of Default" under the
Indenture or the correlative provisions of any other Financing Document
to the extent that any failure to make a payment of principal of, or
interest on, any Subordinated Obligations by reason of the conditions
specified in clause (ii) or (iii) of these Terms of Subordination would
otherwise constitute such an Event of Default; or
(D) prevent any Subordinated Debt Provider from exercising all
remedies otherwise permitted by Applicable Law upon default under any
of the Financing Documents relating to the Subordinated Obligations,
subject to the rights, if any, under these Terms of Subordination of
the Senior Parties, (i) in the event of any proceeding, dissolution,
liquidation or other winding up, assignment for the benefit of
creditors or other marshalling of assets and liabilities of the Company
referred to in clause (ii) of these Terms of Subordination, to receive,
pursuant to and in accordance with such clause (ii), cash, property and
securities otherwise payable or deliverable to the Subordinated Debt
Providers, or (ii) under the conditions specified in clause (iii) of
these Terms of Subordination, to prevent any payment or action
prohibited by such clause (iii).
(vi) No Waiver of Subordination Provisions. No right of any present or
future Senior Party or the Collateral Agent to enforce subordination as herein
provided shall at any time in any way be prejudiced or impaired by any act or
failure to act on the part of the Company or by any act or failure to act, in
good faith, by such Senior Party, or by any non-compliance by the Company with
the terms, provisions and covenants of these Terms of Subordination, regardless
of any knowledge thereof such Senior Party may have or be otherwise charged
with.
Without in any way limiting the generality of the foregoing paragraph,
the occurrence of any one or more of the following (without the consent of or
notice to any Subordinated Debt Provider), shall not cause any Senior Party to
incur any responsibility to any Subordinated Debt Provider or the obligations
hereunder of any Subordinated Debt Provider to the Senior Parties:
(A) at any time or from time to time, the time for any
performance of or compliance with any Subordinated Obligation or any
Senior Obligation shall be extended, or such performance or compliance
shall be waived;
(B) any of the acts mentioned in any of the provisions of any
of the Collateral Agency Agreement, the Indenture, any other
Transaction Document, any other Financing Document or any other
agreement or instrument referred to herein or therein shall be done or
omitted;
2.2 - 4
(C) the maturity of any Subordinated Obligation or Senior
Obligation shall be accelerated, or any Subordinated Obligation or any
Senior Obligation shall be modified, supplemented or amended in any
respect, or any right under any of the Collateral Agency Agreement, the
Indenture, any other Transaction Document, any other Financing Document
or any other agreement or instrument referred to herein or therein
shall be waived or any other guarantee of any Subordinated Obligation
or any Senior Obligation or any security therefor shall be released or
exchanged in whole or in part or otherwise dealt with; or
(D) any lien or security interest granted to, or in favor of,
the Collateral Agent, the Depositary Bank or any Senior Party as
security for any Subordinated Obligation or any Senior Obligation shall
fail to be perfected.
(vii) Notice to Subordinated Debt Providers. The Company shall give
prompt written notice to each Subordinated Debt Provider of any fact known to
the Company that would prohibit the making of any payment to it in respect of
the Subordinated Obligations. Notwithstanding the provisions of these Terms of
Subordination, no Subordinated Debt Provider shall be charged with knowledge of
the existence of any facts that would prohibit the making of any payment to it
in respect of the Subordinated Obligations, unless and until such Subordinated
Debt Provider shall have received written notice thereof from the Company or a
Senior Party or from any trustee, fiduciary or agent therefor; and, prior to the
receipt of any such written notice, each Subordinated Debt Provider shall be
entitled in all respects to assume that no such facts exist.
Each Subordinated Debt Provider shall be entitled to rely on the
delivery to it of a written notice by a Person representing itself to be a
Senior Party (or a trustee, fiduciary or agent therefor) or the Collateral Agent
to establish that such notice has been given by a Senior Party (or a trustee,
fiduciary or agent therefor).
(viii) Reliance on Judicial Order or Certificate of Liquidation Agent.
Upon any payment or distribution of assets of the Company referred to in these
Terms of Subordination, the Subordinated Debt Providers shall be entitled to
rely upon any order or decree entered by any court of competent jurisdiction in
which such insolvency, bankruptcy, receivership, liquidation, reorganization,
dissolution, winding up or similar case or proceeding is pending, or a
certificate of the trustee in bankruptcy, receiver, liquidating trustee,
custodian, assignee for the benefit of creditors, agent or other Person making
such payment or distribution, delivered to the Subordinated Debt Providers, for
the purpose of ascertaining the Persons entitled to participate in such payment
or distribution, the Senior Parties and other indebtedness of the Company, the
amount thereof or payable thereon, the amount or amounts paid or distributed
thereon and all other facts pertinent thereto or to these Terms of
Subordination.
(ix) Specific Performance. Each of the Senior Parties may demand
specific performance of these terms of subordination, whether or not the Company
shall have complied with any of the provisions hereof applicable to them at any
time when the Subordinated Debt Provider shall have failed to comply with any of
such provisions applicable to it. The
2.2 - 5
Subordinated Debt Providers hereby irrevocably waive any defense based on the
adequacy of a remedy at law, which might be asserted as a bar to such remedy of
specific performance.
(x) Participation of Subordinated Debt Providers. So long as any of the
Senior Obligations shall remain unpaid or otherwise unsatisfied, no Subordinated
Debt Provider shall commence or join with any creditor other than the Collateral
Agent in commencing any proceeding referred to above for the payment of any
amounts which otherwise would be payable or deliverable upon or with respect to
the Subordinated Obligations.
(xi) Survival. The obligations of the Company under these Terms of
Subordination shall survive the repayment of the Subordinated Obligations.
(xii) Headings. The section headings appearing herein are included
solely for convenience of reference and are not intended to affect the
interpretation of any provision of these Terms of Subordination.
2.2 - 6
EXHIBIT 2.3
FORM OF SENIOR PARTY CERTIFICATE
IBJ Whitehall Bank & Trust Company AES Ironwood Project
as Collateral Agent Senior Party Certificate
[Date]
Reference is made to that certain Collateral Agency and Intercreditor
Agreement, dated as of June 1, 1999 (as amended, modified or supplemented from
time to time, the "Collateral Agency Agreement"), among AES Ironwood, L.LC.,
(together with its successors and assigns, the "Company") and IBJ Whitehall Bank
& Trust Company, as trustee and depositary bank (together with its successors in
such capacity, the "Collateral Agent") and Dresdner Bank AG, New York Branch, as
DSR LOC Provider and CP LOC Provider. Each capitalized term used herein and not
otherwise defined herein shall have the meaning assigned to it in the Indenture.
The undersigned, [INSERT NAME OF SENIOR PARTY], is a Senior Party under
the Collateral Agency Agreement and hereby certifies the following:
(a) a Trigger Event has occurred and is continuing [insert description
of Trigger Event];
(b) the aggregate principal amount of Senior Debt owed to the Senior
Party by the Company is $[INSERT AMOUNT];
(c) the aggregate amount of all undrawn financing commitments from the
Senior Party to the Company is $[INSERT AMOUNT]1.
The undersigned hereby directs the Collateral Agent to, in accordance
with the terms of the Security Documents, take the following actions:
[INSERT DESCRIPTION OF THE ACTION TO BE TAKEN BY THE COLLATERAL AGENT]
[NAME OF SENIOR PARTY]
By:
-------------------------------
Name:
Title:
__________________
1 Include the principal amount of any undrawn letter of credit here.
2.3 - 1
EXHIBIT 3.6(a)
FORM OF GUARANTY
GUARANTY (this "Guaranty"), made and delivered as of ___________, ____
by THE AES CORPORATION, a Delaware corporation (the "Guarantor").
RECITALS
A. AES Ironwood, L.L.C. (the "Company"), a Delaware limited liability
company and an indirect subsidiary of Guarantor (the "Guaranteed Party"),
certain parties providing financing to the Company (the "Financing Parties") and
IBJ Whitehall Bank & Trust Company, as Collateral Agent on behalf of the
Financing Parties, have entered into a Collateral Agency and Intercreditor
Agreement, dated as of June 1, 1999 (as the same may be amended, supplemented or
otherwise modified from time to time, the ("Collateral Agency Agreement").
B. Section 3.6 of the Collateral Agency Agreement provides that the
Company may from time to time under certain circumstances and upon certain
conditions, one of which is the provision of this Guaranty to the Guaranteed
Party, withdraw monies on deposit in, or credited to, any of the Available
Accounts.
C. The Guarantor is entering into this Guaranty in order to support the
repayment obligations of the Company under Section 3.6 of the Collateral Agency
Agreement for the Advance made on [INSERT DATE] in the amount of $[INSERT
AMOUNT] (the "Guaranteed Obligations").
AGREEMENT
In consideration of the foregoing and of other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Guarantor hereby agrees for the benefit of the Guaranteed Party as follows:
SECTION 1. Definitions. Unless otherwise defined herein, all terms used
herein which are defined in the Collateral Agency Agreement shall have their
respective meanings as therein defined.
SECTION 2. Guaranty. The Guarantor hereby unconditionally and
irrevocably guarantees, as the primary obligor and not merely as surety, to and
for the benefit of the Guaranteed Party, punctual and full payment by the
Company of the Guaranteed Obligations as and when the same shall become due and
payable in accordance with the terms of the Collateral Agency Agreement. The
guaranty contained herein is an absolute, unconditional, present and continuing
guaranty of payment, and not of collection, is in no way conditioned or
contingent upon any attempt to collect from or enforce payment by the Company or
upon any other event, contingency or circumstance whatsoever, and shall be
binding upon and against the Guarantor without regard to the validity or
enforceability of the Collateral Agency Agreement. If, for any reason
whatsoever, the Company shall fail or be unable duly, punctually and fully to
pay any
3.6(a)-1
Guaranteed Obligation as and when the same shall become due and payable, the
Guarantor shall forthwith pay or cause to be paid such Guaranteed Obligation
to the Guaranteed Party. Such amount will not be paid out of funds or other
assets of the Company.
SECTION 3. Obligations Absolute and Unconditional, Continuing, Etc. The
Guarantor agrees that the obligations of the Guarantor set forth in this
Guaranty shall be direct obligations of the Guarantor, and such obligations
shall be absolute and unconditional, shall not be subject to any counterclaim,
set-off, deduction, diminution, abatement, recoupment, suspension, deferment,
reduction or defense (other than full and strict compliance by the Guarantor
with its obligations hereunder) based upon any claim the Guarantor or any other
Person may have against the Guaranteed Party, the Company or any other Person,
and shall remain in full force and effect without regard to, and shall not be
released, discharged or in any way affected or impaired by, any circumstance or
condition whatsoever (other than full and strict compliance by the Guarantor
with its obligations hereunder), whether or not the Guarantor shall have any
knowledge or notice thereof, including, without limitation: (i) any amendment or
modification of or supplement to or other change in the Collateral Agency
Agreement or any other Financing Document; (ii) any failure, omission or delay
on the part of the Company or the Guaranteed Party to conform or comply with any
term of the Collateral Agency Agreement; (iii) any waiver, consent, extension,
indulgence, compromise, release or other action or inaction under or in respect
of the Collateral Agency Agreement or any other Financing Document or any
obligation or liability of the Company or the Guaranteed Party, or any exercise
or non-exercise of any right, remedy, power or privilege under or in respect of
any such instrument or agreement or any such obligation or liability; (iv) any
bankruptcy, insolvency, reorganization, arrangement, readjustment, liquidation
or similar proceeding with respect to the Company or the Guaranteed Party or any
of their respective properties, or any action taken by any Guaranteed Party or
receiver or by any court in any such proceeding; (v) any discharge, termination,
cancellation, frustration, irregularity, invalidity or unenforceability, in
whole or in part, of the Collateral Agency Agreement or any other Financing
Document or any term or provision thereof; (vi) any merger or consolidation of
the Company or the Guarantor into or with any other corporation or any sale,
lease or transfer of all or any of the assets of the Company or the Guarantor to
any other Person; (vii) any change in the ownership of the Company; (viii) to
the extent as may be waived under Applicable Law, the benefit of all principles
or provisions of law, statutory or otherwise, which may be in conflict with the
terms hereof; (ix) the occurrence of any condition affecting (adversely or
otherwise) the value of the Guarantor's or the Company's property; or (x) to the
extent permitted under Applicable Law, any other occurrence or circumstance
whatsoever, whether similar or dissimilar to the foregoing, which might
otherwise constitute a legal or equitable defense or discharge of the
liabilities of a guarantor or surety or which might otherwise limit recourse
under this Guaranty against the Guarantor. The obligations of the Guarantor set
forth herein constitute the full recourse obligations of the Guarantor
enforceable against it to the full extent of all its assets and properties.
Without limiting the generality of the foregoing, the Guarantor agrees that (a)
repeated and successive demands may be made and recoveries may be had hereunder
as and when, from time to time, the Company shall default under or fail to
comply with the terms of Section 3.6 of the Collateral Agency Agreement and that
notwithstanding the recovery hereunder for or in respect of any given default or
failure to so comply by the Company under the Collateral Agency Agreement, this
Guaranty shall remain in force and effect and shall apply to each and
3.6(a)-2
every subsequent default, and (b) if any Guaranteed Obligation is paid by the
Company, and thereafter all or any part of such payment is recovered from the
Guaranteed Party upon the insolvency, bankruptcy or reorganization of the
Company, the liability of the Guarantor hereunder with respect to such
Guaranteed Obligation so paid and recovered shall, notwithstanding any prior
release or termination hereof, continue and remain in full force and effect, or
shall be reinstated, as the case may be, as if, to the extent of such recovery,
such payment had not been made. If (x) an event permitting the exercise of
remedies under the Collateral Agency Agreement shall at any time have occurred
and be continuing and (y) such exercise, or any consequences thereof provided in
the Collateral Agency Agreement shall at any time be prevented by reason of the
pendency against the Company of a case or proceeding under any bankruptcy or
insolvency law, the Guarantor agrees that, solely for purposes of this Guaranty
and its obligations hereunder, the Collateral Agency Agreement shall be deemed
to have been declared in default and all amounts thereunder shall be deemed to
be due and payable, with all the attendant consequences as provided in the
Collateral Agency Agreement as if declaration of default and the consequence
thereof had been accomplished in accordance with the terms thereof, and the
Guarantor shall forthwith pay any amounts guaranteed hereunder.
SECTION 4. Waiver of Demands, Notices, Etc. The Guarantor hereby
unconditionally waives, to the extent permitted by Applicable Law, (i) notice of
any of the matters referred to in the first sentence of Section 3 hereof; (ii)
all notices which may be required by statute, rule of law or otherwise, now or
hereafter in effect, to preserve any rights against the Guarantor hereunder,
including, without limitation, any demand, proof or notice of non-payment of any
Guaranteed Obligation; (iii) any right to the enforcement, assertion or exercise
of any right, remedy, power or privilege under or in respect of the Collateral
Agency Agreement; (iv) notice of acceptance of this Guaranty, demand, protest,
presentment, notice of default and any requirement of diligence; (v) any
requirement to exhaust any remedies or to mitigate any damages resulting from
default by the Company under the Collateral Agency Agreement; (vi) the benefit
of any and all Applicable Laws which are or might be in conflict with the terms
of this Guaranty; and (vii) any other circumstance whatsoever which might
otherwise constitute a legal or equitable discharge, release or defense of a
guarantor or surety, or which might otherwise limit recourse under this Guaranty
against the Guarantor.
SECTION 5. Subrogation. The Guarantor shall be subrogated to all rights
of the Guaranteed Party in respect of any amounts paid by the Guarantor pursuant
to the provisions of this Guaranty; provided, however, that the Guarantor shall
be entitled to enforce, or to receive any payments arising out of or based upon,
such right of subrogation only after all of the Guaranteed Obligations and any
other payment obligations under the Financing Documents have been paid in full.
Without prejudice to the rights set forth in the preceding sentence, the
Guarantor acknowledges and agrees that no proper payment by the Guarantor under
this Guaranty shall give rise to (i) any claim by the Guarantor against the
Guaranteed Party or (ii) any indebtedness of the Guaranteed Party.
SECTION 6. Certain Rights and Powers of Guaranteed Party. The
Guaranteed Party shall have all of the rights and remedies available under
Applicable Law and may proceed by appropriate court action to enforce the terms
hereof and to recover damages for the breach
3.6(a)-3
hereof. Each and every remedy of the Guaranteed Party shall, to the extent
permitted by law, be cumulative and shall be in addition to any other remedy now
or hereafter existing at law or in equity. At the option of the Guaranteed Party
and upon notice to the Guarantor, the Guarantor may be joined in any action or
proceeding commenced by such Guaranteed Party against the Company in respect of
any Guaranteed Obligation, and recovery may be had against the Guarantor in such
action or proceeding or in any independent action or proceeding against the
Guarantor, without any requirement that such Guaranteed Party first assert,
prosecute or exhaust any remedy or claim against the Company.
SECTION 7. Representations, Warranties. The Guarantor represents and
warrants to the Guaranteed Party, on and as of the date hereof:
(d) The Guarantor is duly organized and validly existing in good
standing under the laws of the State of Delaware and has all requisite corporate
power and authority to enter into and perform its obligations under this
Guaranty;
(e) No governmental action is required to be taken, given or obtained,
as the case may be, by or from any Governmental Authority, and no filing,
recording, publication or registration in any public office or any other place
is necessary to authorize the execution, delivery and performance by the
Guarantor of this Guaranty or for the legality, validity, binding effect or
enforceability hereof;
(f) The execution and delivery of this Guaranty by the Guarantor and
the performance of its obligations hereunder will not contravene any Applicable
Law, or any judgment or order applicable to or binding on it, or contravene or
result in any breach of, or constitute any default under its certificate of
incorporation or its bylaws or any mortgage, contract, agreement or instrument
to which the Guarantor is a party or by which any of its properties may be
bound;
(g) The execution, delivery and performance of this Guaranty by the
Guarantor have been duly authorized by all necessary corporate action; this
Guaranty has been duly executed and delivered by the Guarantor and constitutes
the legal, valid and binding obligation of the Guarantor enforceable against the
Guarantor in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, fraudulent conveyance,
liquidation or similar laws affecting creditors' rights generally and by general
principles of equity; and
(h) There is no action, suit or proceeding pending or, to the knowledge
of the Guarantor, threatened against the Guarantor before or by any Governmental
Authority that questions the validity or enforceability of this Guaranty or if
adversely determined would materially impair the ability (financial or
otherwise) of the Guarantor to perform its obligations hereunder.
SECTION 8. Corporate Existence, Etc. The Guarantor agrees that, so long
as this Guaranty is in effect, the Guarantor shall (i) preserve and maintain its
corporate existence; (ii) preserve and maintain all of its material rights,
privileges and franchises, except where the failure to preserve and maintain any
such right, privilege or franchise would not materially and adversely affect the
ability of the Guarantor to perform its obligations under this Guaranty; and
3.6(a)-4
(iii) comply with all the requirements of all Applicable Laws, rules,
regulations and orders of governmental or regulatory authorities except where
the failure to comply with any such requirement would not materially and
adversely affect the ability of the Guarantor to perform its obligations under
this Guaranty.
SECTION 9. Payments. The Guarantor shall make all payments of amounts
owing pursuant to this Guaranty in immediately available funds to the Guaranteed
Party by wire or electronic transfer to [ ] at ABA No. [ ], for credit to [ ],
Attention: [ ], or to such other account as the Guaranteed Party may specify
from time to time by notice to the Guarantor, by not later than noon (New York
City time) on the due date for such payment. Any such payment shall, to the
extent so made, discharge the obligations of the Guarantor hereunder.
SECTION 10. Termination. This Guaranty and all obligations of the
Guarantor hereunder shall terminate upon the repayment of the Advance to which
this Guaranty relates.
SECTION 11. Notices. All notices and other communications required or
permitted under the terms and provisions hereof shall be given to the Guarantor
in writing, addressed to the Guarantor at 1001 North 19th Street, Arlington, VA
22209, Attention: General Counsel, Facsimile: 703-528-4510, or at such other
address or addresses as the Guarantor may provide from time to time in writing
to the Guaranteed Party.
SECTION 12. Amendments, Waiver, Assignment, etc. Neither this Guaranty
nor any of the terms hereof may be terminated, amended, supplemented, waived or
modified orally but only by an instrument in writing signed by the Guarantor and
the Guaranteed Party. The obligations of the Guarantor under this Guaranty may
not be assigned or otherwise transferred without the prior written consent of
the Guaranteed Party.
SECTION 13. Section Headings, etc. The headings of the various sections
of this Guaranty are for the convenience of reference only and shall not modify,
define, expand or limit any of the terms or provisions hereof.
SECTION 14. Severability of Provisions. Any provision of this Guaranty
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
SECTION 15. Successors and Assigns. This Guaranty shall be binding upon
the Guarantor and its successors and assigns and shall inure to the benefit of
the Guaranteed Party and its successors and assigns as Collateral Agent under
the Collateral Agency Agreement. This Guaranty shall not be deemed to create any
right in any Person other than the Guaranteed Party and its successors and
assigns and shall not be construed in any respect to be a contract in whole or
in part for the benefit of any Person other than the Guaranteed Party and its
successors and assigns.
3.6(a)-5
SECTION 16. GOVERNING LAW. THIS GUARANTY SHALL IN ALL RESPECTS BE
GOVERNED, INTERPRETED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK WITHOUT GIVING EFFECT TO ANY CONFLICTS OF LAWS PROVISIONS OF SUCH LAWS.
SECTION 17. SUBMISSION OF JURISDICTION; VENUE; WAIVER OF JURY TRIAL.
(a) ANY LEGAL ACTION OR PROCEEDING AGAINST THE GUARANTOR WITH RESPEC TO
THIS GUARANTY MAY BE BROUGHT IN THE COURTS OF THE UNITED STATES FOR THE SOUTHERN
DISTRICT OF NEW YORK AND, BY EXECUTION AND DELIVERY OF THIS GUARANTY, THE
GUARANTOR HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY,
GENERALLY AND UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF THE AFORESAID
COURTS. THE GUARANTOR HEREBY IRREVOCABLY DESIGNATES, APPOINTS AND EMPOWERS CT
CORPORATION SYSTEM, WITH OFFICES ON THE DATE HEREOF AT 1633 BROADWAY, NEW YORK,
NY 10019, AS ITS DESIGNEE, APPOINTEE AND AGENT WITH RESPECT TO ANY ACTION OR
PROCEEDING IN NEW YORK TO RECEIVE, ACCEPT AND ACKNOWLEDGE FOR AND ON ITS BEHALF,
AND IN RESPECT OF ITS PROPERTY, SERVICE OF ANY AND ALL LEGAL PROCESS, SUMMONS,
NOTICES AND DOCUMENTS WHICH MAY BE SERVED IN ANY SUCH ACTION OR PROCEEDING AND
AGREES THAT THE FAILURE OF SUCH AGENT TO GIVE ANY ADVICE OF ANY SUCH SERVICE OF
PROCESS TO THE COMPANY SHALL NOT IMPAIR OR AFFECT THE VALIDITY OF SUCH SERVICE
OR OF ANY CLAIM BASED THEREON. IF FOR ANY REASON SUCH DESIGNEE, APPOINTEE AND
AGENT SHALL CEASE TO BE AVAILABLE TO ACT AS SUCH, THE GUARANTOR AGREES TO
DESIGNATE A NEW DESIGNEE, APPOINTEE AND AGENT IN NEW YORK CITY ON THETERMS AND
FOR THE PURPOSES OF THIS PROVISION SATISFACTORY TO THE AGENT. THE GUARANTOR
FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE
AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES
THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE COMPANY AT ITS
ADDRESS SET FORTH IN SECTION 11, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER
SUCH MAILING.
(b) THE GUARANTOR HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT
MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE
AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN
CONNECTION WITH THIS GUARANTY BROUGHT IN THE COURTS REFERRED
TO IN SECTION 17(a) ABOVE AND HEREBY FURTHER IRREVOCABLY
WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT
ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM.
3.6(a)-6
(c) THE GUARANTOR HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY
JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF
OR RELATING TO ANY OF THIS GUARANTY.
SECTION 18. Entire Agreement. This Guaranty constitutes the entire
agreement and supersedes all prior agreements and understandings, both written
and oral, between the Guarantor and the Guaranteed Party with respect to the
subject matter hereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
3.6(a)-7
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly
executed and delivered by its officer thereunder duly authorized on the date
first above written.
THE AES CORPORATION
By:
-------------------------------
Name:
Title:
[FORM OF AES GUARANTY]
EXHIBIT 3.6(b)
FORM OF LETTER OF CREDIT
[INSERT DATE OF ISSUE]
Beneficiary: IBJ Whitehall Bank & Trust Company,
as Collateral Agent
One State Street
New York, NY 10004
________________________________________
Attention: ______________________
________________________
Subject: Irrevocable Standby Letter of Credit No. [L/C______]
Gentlemen:
We hereby issue in your favor our Irrevocable Letter of Credit No. __________
(this "Letter of Credit") for the account of [INSERT NAME OF AFFILIATE OF
IRONWOOD], an affiliate of AES Ironwood, L.L.C. (the "Company") for an amount
(the "Stated Amount") on any date equal to the difference between (x) $[INSERT
AMOUNT TO BE WITHDRAWN FROM ACCOUNTS] (the "Maximum Stated Amount") and (y) the
total amount of prior draws received and honored by us pursuant to this Letter
of Credit. This Letter of Credit relates to the Advance made pursuant to and as
defined in the Collateral Agency Agreement referred to below of [INSERT DATE] in
the amount of $[INSERT AMOUNT].
We understand that this Letter of Credit is being issued to you in connection
with that certain Collateral Agency and Intercreditor Agreement, dated as of
June 1, 1999 (as the same may be amended, modified or supplemented from time to
time, the "Collateral Agency Agreement"), among the Company, certain parties
providing financing to the Company named therein (the "Financing Parties") and
IBJ Whitehall Bank & Trust Company, as Collateral Agent on behalf of the
Financing Parties (the "Collateral Agent").
Prior to the Termination Date (as hereinafter defined) of this Letter of Credit,
you may draw from time to time an amount not exceeding the Stated Amount, on the
conditions set forth herein against presentation of this Letter of Credit in the
manner provided herein and your sight draft on us (marked "Drawn under Letter of
Credit No. L/C ") accompanied by a signed Drawing Certificate in the form
attached hereto as Annex A appropriately completed (such sight draft and Drawing
Certificate being referred to hereinafter collectively as the "Documents").
Presentation of this Letter of Credit and such draft and certificate shall be
made at our office, __________________________________________________ (fax no.
__________) Attn: Letter of Credit Department, either by physical delivery of
such documents or by facsimile transmission of such documents to the office
stated above. Upon such presentation, the payment
3.6(b) - 1
of a drawing shall be made in accordance with the terms herein. Such documents
shall be sent to our office by overnight courier for receipt by us within one
Business Day of the date of such facsimile transmission. Our only obligation
with regard to a drawing under this Letter of Credit shall be to examine the
Documents and to pay in accordance therewith, and we shall not be obligated to
make any inquiry in connection with the presentation of the Documents.
If this Letter of Credit and the requisite Documents are presented to us at or
prior to 12:00 noon (New York time) on a Business Day (as hereinafter defined),
and provided that such Documents conform to the terms and conditions hereof,
payment of the amount specified shall be made to you in immediately available
funds on or prior to 3:00 p.m. (New York time) on such day. If a drawing is made
hereunder after 12:00 noon (New York time) on a Business Day, and provided that
such Documents conform to the terms and conditions hereof, payment of the amount
specified shall be made to you in immediately available funds, not later than
12:00 noon (New York time), on the following Business Day. If a demand for
payment made hereunder does not, in any instance, conform to the terms and
conditions of this Letter of Credit, we shall give you prompt notice that the
Documents were not in accordance with the terms and conditions of this Letter of
Credit, stating the reasons therefor and that we will hold the Documents at your
disposal or return the same to you. Upon being notified that the Documents were
not in conformity with this Letter of Credit, you may attempt to correct any
such nonconforming Documents if and to the extent that you are entitled and able
to do so.
This Letter of Credit is effective immediately and, unless terminated earlier in
accordance with the provisions hereof, expires at the close of business at our
office in _______________ three hundred sixty four (364) days from today's date
(the "Stated Expiration Date") but such Stated Expiration Date shall be
automatically extended for a period of three hundred sixty four (364) days
effective upon the Stated Expiration Date and each annual anniversary of the
Stated Expiration Date (each such annual anniversary date being referred to
herein as the "New Stated Expiration Date") unless, thirty days prior to the
Stated Expiration Date or any such New Stated Expiration Date, we notify you, by
registered mail or courier service at the above address, that this Letter of
Credit shall not be extended beyond the Stated Expiration Date or the New Stated
Expiration Date, as the case may be; provided that this Letter of Credit shall
not be extended for more than three (3) such additional periods. If you are so
notified that this Letter of Credit will not be extended, you may on or within
fifteen (15) Business Days before the Stated Expiration Date or the New Stated
Expiration Date, as the case may be, draw the full Stated Amount then available
hereunder. Any drawing under this Letter of Credit will be paid with our own
funds and not out of funds or other assets of the Company.
Only you may make a drawing under this Letter of Credit. Multiple drawings may
be made under this Letter of Credit. Upon the payment of a drawing, we shall be
fully discharged of our obligation under this Letter of Credit in respect of any
amount in excess of the Stated Amount, as the case may be, after giving effect
to such drawing, and we shall not thereafter be obligated to make any further
payments under this Letter of Credit in respect of any amount in excess of the
Stated Amount, as the case may be, after giving effect to such drawing.
3.6(b) - 2
Upon payment of any drawing hereunder, if any amount remains to be drawn
hereunder, the new Stated Amount shall be evidenced by an endorsement on the
reverse of the original Letter of Credit and we shall promptly return such
endorsed Letter of Credit by overnight courier to you at the address specified
herein, provided that we receive the original Letter of Credit for such
endorsement.
Upon the earliest of (i) the close of business at our office in ______________
on the New Stated Expiration Date or, if there is none, the Stated Expiration
Date, (ii) the date we have paid the Maximum Stated Amount under all drawings
made hereunder or (iii) the date of our receipt of a certificate in the form of
Annex B purportedly signed by an Authorized Officer (a "Certificate as to
Defeasance"), (which earliest date of (i), (ii) or (iii) is referred to herein
as the "Termination Date") this Letter of Credit shall automatically terminate
and expire and the original of this Letter of Credit shall be immediately
delivered to us for cancellation.
Communications with respect to this Letter of Credit shall be in writing and
shall be addressed to us at ______________________________________, specifically
referring therein to this Letter of Credit by number.
As used herein (a) "Authorized Officer" shall mean any of your Vice Presidents
and (b) "Business Day" shall mean any day on which commercial banks in New York,
New York are open for the purpose of conducting commercial banking business.
This Letter of Credit sets forth in full our undertaking, and such undertaking
shall not in any way be modified, amended, amplified or limited by reference to
any document, instrument or agreement referred to herein, except only the
certificates referred to herein, and any such reference shall not be deemed to
incorporate herein by reference any documents, instrument or agreement except
for such certificates.
This Letter of Credit shall be subject to the provisions (to the extent that
such provisions are not inconsistent with this Letter of Credit) of the Uniform
Customs and Practice for Documentary Credits, 1993 Revision, International
Chamber of Commerce Publication No. 500. To the extent that the provisions of
this Letter of Credit are not covered by such Uniform Customs and Practice, this
Letter of Credit shall be governed by, and enforced and construed in accordance
with, the laws of the State of New York.
Very truly yours,
[-------------------- ---------------------
Vice President Vice President]
3.6(b) - 3
ANNEX A
(Form of Drawing Certificate)
Date:
TO: [Letter of Credit Provider] ("Issuing Bank")
Attn: Letter of Credit Department
RE: Irrevocable Letter of Credit No. ____________ (the "Letter of Credit")
The undersigned, duly authorized officers of [INSERT NAME OF COLLATERAL AGENT],
in its capacity as Collateral Agent hereby, certifies to Issuing Bank with
reference to the Letter of Credit that:
(1)
_____ No Certificate as to Defeasance (as defined in the Letter of
Credit) has been delivered and the Company has become
obligated to make or cause to be made a payment in respect of
the Advance to which the Letter of Credit relates pursuant to
Section 3.6 of the Collateral Agency Agreement referred to in
the Letter of Credit in the amount of $[INSERT AMOUNT OF
PAYMENT DUE], which amount does not exceed $___________, such
amount being the current Stated Amount under the Letter of
Credit; and
[or (1)]
_____ No Certificate as to Defeasance has been delivered and the
Letter of Credit will expire within fifteen (15) Business Days
and the Company has not furnished Acceptable Credit Support
(as defined in the Collateral Agency Agreement) in
substitution for the Letter of Credit and as a consequence
thereof the entire Stated Amount of $___________ is due and
payable; and
[or (1)]
_____ No Certificate as to Defeasance has been delivered and the
Acceptable Credit Provider has ceased to have a long-term
unsecured debt rating of at least "A" by S&P or "A2" by
Moody's and the Company has not furnished an Acceptable Credit
Support from a replacement Acceptable Credit Provider.
3.6(b) - 4
(2) The amount of the sight draft accompanying this certificate equals the
amount due and payable as set forth above and does not exceed the
Stated Amount (as defined in the Letter of Credit).
IBJ WHITEHALL BANK & TRUST COMPANY,
as Collateral Agent
By:
-------------------------------
Name:
Title:
By:
-------------------------------
Name:
Title:
3.6(b) - 5
ANNEX B
(Form of Certificate as to Defeasance)
Date:
TO: [Letter of Credit Provider] ("Issuing Bank")
Attn: Letter of Credit Department
RE: Irrevocable Letter of Credit No. ____________ (the "Letter of Credit")
The undersigned, duly authorized officers of IBJ Whitehall Bank & Trust Company,
in its capacity as Collateral Agent (the "Collateral Agent") hereby certifies to
Issuing Bank with reference to the Letter of Credit that:
_____ the amount of the Advance (as defined in the Collateral Agency
Agreement referred to in the Letter of Credit) to which the
Letter of Credit relates has been repaid as a result of
drawings on the Letter of Credit or payments by others; or
_____ Acceptable Credit Support (as defined in the Collateral Agency
Agreement referred to in the Letter of Credit) in replacement
for the Letter of Credit has been provided to the Collateral
Agent by or on behalf of the Company;
and as a result of the foregoing, the Letter of Credit may be terminated.
IBJ WHITEHALL BANK & TRUST COMPANY,
as Collateral Agent
By:
-------------------------------
Name:
Title:
3.6(b) - 6
EXHIBIT 3.8
FORM OF REQUISITION
Requisition No.______
Date:________________
IBJ Whitehall Bank & Trust Company,
as Collateral Agent
[address]
Reference is hereby made to the Collateral Agency and Intercreditor
Agreement, dated as of June 1, 1999, among AES Ironwood, L.L.C. (the "Company"),
IBJ Whitehall Bank & Trust Company, as Collateral Agent, Trustee and Depositary
Bank, and Dresdner Bank AG, New York Branch, as DSR LOC Provider and CP LOC
Provider (as the same may be amended, modified or supplemented from time to
time, the "Collateral Agency Agreement"). Each capitalized term used herein and
not otherwise defined herein shall have the meaning assigned to it in the
Collateral Agency Agreement.
The Company hereby requests, pursuant to Section 3.8 of the Collateral
Agency Agreement, that the Collateral Agent make a disbursement from the
Construction Account in the aggregate amount of $_________ (the "Company
Requested Disbursement").
The total funding to date from the Construction Account is equal to
$__________.
The date that the Company Requested Disbursement is to be made is
________.
Proceeds of the Company Requested Disbursement shall be used as
follows:
Cash to be Paid to Contractor $______________
Cash to be Paid to the Senior Parties $______________
Cash to be Paid to Trustee for deposit in the
Construction Interest Account $______________
Cash for Other Project Costs $______________
Total Funds in This Requisition $______________
Total Equity Funding to Date $______________
Total Funding to Date $______________
Cash disbursement instructions (including wire and account
information) for the Company Requested Disbursement are set forth in
Annex 1 hereto.
The date that the Company Requested Disbursement is to be made
is ________.
The Company hereby certifies, in connection with this
Requisition, that:
3.8 - 1
(a) the proceeds of the requested disbursements will
be used solely to pay Project Costs in accordance with the
Indenture;
(b) all work performed to date has been
satisfactorily performed in a good and workmanlike manner and
according to the EPC Contract;
(c) undisbursed funds in the Construction Account,
together with funds available under the Equity Subscription
Agreement or other available sources of funds, are reasonably
expected to be sufficient to complete the Facility according
to the EPC Contract by the Date Certain;
(d) no Default or Event of Default under the
Indenture has occurred and is continuing;
(e) all proceeds of prior Requisitions have been
expended or applied pursuant to provisions of the Financing
Documents and the items for which amounts are requested in
this Requisition have not been the basis for a previous
Requisition;
(f) the insurance policies required pursuant to
Schedule 6.2 of the Indenture, the material Governmental
Approvals required to have been obtained as of the date of
this Requisition, and all necessary Project Contracts are in
full force and effect; and
(g) the representations set forth in Sections 3.1,
3.3, 3.4, 3.5, 3.8 and 3.10 of the Indenture are true and
correct in all material respects.
This Requisition is accompanied by the following items:
(a) if any amount of the Company Requested
Disbursement is to be applied to any payment under the EPC
Contract, a payment request under the EPC Contract (which
request is attached hereto), approved by the Company;
(b) if any amount of a Company Requested Disbursement
is to be applied to the payment of a Project Cost other than
the payment of interest, fees, expenses or other costs
required to be paid by the obligors under the Financing
Documents or the EPC Contract, a statement detailing such
amounts and describing the services rendered, together with
attached bills for individual Project Costs in excess of
$100,000, except for estimated amounts which represent a
Project Cost which as of the date of this Requisition is not
due and payable but which will become due and payable prior to
the next scheduled requested disbursement ("Estimated Project
Costs") and for which bills for such Estimated Project costs
will be attached to the next Requisition for individual
Project Costs in excess of $100,000; and
3.8 - 2
(c) bills for any Project Costs which as of the date
of the last Requisition were Estimated Project Costs and are
required pursuant to such last Requisition to be attached
hereto.
3.8 - 3
[A certificate of the Independent Engineer, substantially in the form
of Exhibit A hereto, will be submitted to the Collateral Agent by the time
required under the Collateral Agency Agreement.]1
AES IRONWOOD, L.L.C.
By:
-------------------------------
Name:
Title:
__________________
1 A certificate of the Independent Engineer is required to be delivered only as
contemplated by Section 3.8(d).
3.8 - 4
FORM OF INDEPENDENT ENGINEER CONFIRMATION
Requisition No. _____
Date:________________
IBJ Whitehall Bank & Trust Company,
as Collateral Agent
[address]
Reference is hereby made to the Collateral Agency and Intercreditor
Agreement, dated as of June 1, 1999, among AES Ironwood, L.L.C. (the "Company"),
IBJ Whitehall Bank & Trust Company, as Collateral Agent, Trustee and Depositary
Bank, and Dresdner Bank AG, New York Branch, as DSR LOC Provider and CP LOC
Provider (as the same may be amended, modified or supplemented from time to
time, the "Collateral Agency Agreement"). Each capitalized term used herein and
not otherwise defined herein shall have the meaning assigned to it in the
Collateral Agency Agreement.
[ ], as Independent Engineer (the "Independent Engineer") confirms
receipt of Requisition No. _________ (the "Subject Requisition") and confirms
that, to the best of its knowledge and belief, the matters set forth in the
Subject Requisition are [correct] [incorrect in the following respects:]
3.8 - 5
EXHIBIT 3.15
FORM OF RESTORATION CERTIFICATE
IBJ Whitehall Bank & Trust Company AES Ironwood Project
as Collateral Agent Restoration Certificate
[Date]
Reference is made to that certain Collateral Agency and Intercreditor
Agreement, dated as of June 1, 1999 (as amended, modified or supplemented from
time to time, the "Collateral Agency Agreement"), among AES Ironwood, L.LC.,
(together with its successors and assigns, the "Company") and IBJ Whitehall Bank
& Trust Company, as trustee and depositary bank (together with its successors in
such capacity, the "Collateral Agent") and Dresdner Bank AG, New York Branch, as
DSR LOC Provider and CP LOC Provider. Each capitalized term used herein and not
otherwise defined herein shall have the meaning assigned to it in the Indenture.
The Company hereby requests, pursuant to Section 3.15(b) of the
Collateral Agency Agreement, that the Collateral Agent make a disbursement from
the Restoration Account in the aggregate amount of _________ (the "Requested
Disbursement").
The date that the Requested Disbursement is to be made is ________.
Cash disbursement instructions for the Requested Disbursement are set forth in
Annex 1 hereto.
All monies released from the Restoration Account pursuant to this
Certificate shall be secured by the Security Documents, including, without
limitation, the Mortgage.
The undersigned, an authorized representative of the Company hereby
certifies, in connection with this Certificate, that the proceeds of the
Requested Disbursement will be used solely for the payment (or reimbursement, to
the extent the same have been paid or satisfied by the Company) of the costs of
repair and replacement of the Facility or portion thereof that has been affected
by an Event of Loss or an Event of Eminent Domain
The Requested Disbursement, together with all other such requisitions
in the current Fiscal Year, totals $______ in the aggregate, and the approval of
the Independent Engineer hereto [is/is not] required pursuant to Section 3.15(b)
of the Indenture.
The Company hereby certifies that all conditions precedent to the
Requested Disbursement as set forth in the Collateral Agency Agreement have been
satisfied.
AES IRONWOOD, L.L.C.
By:
-------------------------------
Name:
Title:
3.15 - 1
Approved this ___ day of ______, ___.1
STONE & WEBSTER MANAGEMENT CONSULTANTS, INC.
By:
-------------------------------
Name:
Title:
__________________
1 Required only if aggregate amount of disbursements requested in any one Fiscal
Year exceeds $5,000,000.
3.15 - 2
EXHIBIT 4.3
FORM OF PERFORMANCE ENHANCEMENT CERTIFICATE
IBJ Whitehall Bank & Trust Company AES Ironwood Project
as Collateral Agent Performance Enhancement Certificate
[Date]
Reference is made to that certain Collateral Agency and Intercreditor
Agreement, dated as of June 1, 1999 (as amended, modified or supplemented from
time to time, the "Collateral Agency Agreement"), among AES Ironwood, L.LC.,
(together with its successors and assigns, the "Company") and IBJ Whitehall Bank
& Trust Company, as trustee and depositary bank (together with its successors in
such capacity, the "Collateral Agent") and Dresdner Bank AG, New York Branch, as
DSR LOC Provider and CP LOC Provider. Each capitalized term used herein and not
otherwise defined herein shall have the meaning assigned to it in the Indenture.
The Company hereby requests, pursuant to Section 4.3(b) of the
Collateral Agency Agreement, that the Collateral Agent make a disbursement from
a separate account maintained by the Depositary Bank on behalf of the Collateral
Agent in the aggregate amount of _________ (the "Requested Disbursement").
The date that the Requested Disbursement is to be made is ________.
Cash disbursement instructions for the Requested Disbursement are set forth in
Annex 1 hereto.
All monies released from such account pursuant to this Certificate
shall be secured by the Security Documents, including, without limitation, the
Mortgage.
The undersigned, an authorized representative of the Company hereby
certifies, in connection with this Certificate, that the proceeds of the
Requested Disbursement will be used solely for the payment (or reimbursement, to
the extent the same have been paid or satisfied by the Company) of the costs of
modification, repair and replacement of that portion of the Facility that
requires modification, repair or replacement in order to remedy the
circumstances giving rise to the obligation of the Contractor to pay Buy-Down
Amounts.
The Company hereby certifies that all conditions precedent to the
Requested Disbursement as set forth in the Collateral Agency Agreement have been
satisfied.
AES IRONWOOD, L.L.C.
By:
-------------------------------
Name:
Title:
4.3 - 1
Approved this ___ day of ______, ___.
STONE & WEBSTER MANAGEMENT CONSULTANTS, INC.
By:
---------------------------
Name:
Title:
4.3 - 2
EXHIBIT 7.14
THIRD-PARTY ENGINEERS
Black & Veatch - Kansas City Office
R.W. Beck - Framingham (Boston) Office
Sergeant & Lundy
Stone & Webster (to the extent not the Independent Engineer)
7.14 - 1