EXHIBIT 4.2
EXECUTION COPY
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COLLATERAL AGENCY AND
INTERCREDITOR AGREEMENT
Dated as of March 1, 2000
among
AES RED OAK, L.L.C.,
THE BANK OF NEW YORK,
as Trustee,
DRESDNER BANK AG,
acting through its New York Branch,
as DSR LOC Provider,
DRESDNER BANK AG,
acting through its New York Branch,
as PPA LOC Provider,
DRESDNER BANK AG,
acting through its New York Branch,
as Working Capital Provider
THE BANK OF NEW YORK,
as Collateral Agent,
and
THE BANK OF NEW YORK,
as Depositary Bank
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830 MW (Net) Gas-Fired Combined Cycle Electric Generating Facility
Borough of Sayreville, Middlesex County, New Jersey
TABLE OF CONTENTS
PAGE
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..................................................................................9
SECTION 2.3 EXERCISE OF RIGHTS UNDER SECURITY DOCUMENTS........................................................9
SECTION 2.4 RIGHTS OF SENIOR PARTIES..........................................................................12
SECTION 2.5 CERTAIN AMENDMENTS................................................................................12
ARTICLE III ACCOUNTS.............................................................................................13
SECTION 3.1 ESTABLISHMENT OF PROJECT ACCOUNTS.................................................................13
SECTION 3.2 INVESTMENT OF FUNDS IN THE PROJECT ACCOUNTS.......................................................14
SECTION 3.3 VALUATION AND SALE OF INVESTMENTS.................................................................14
SECTION 3.4 POSSESSION OF ACCOUNTS; LIQUIDATION...............................................................15
SECTION 3.5 THE DEPOSITARY BANK; LIMITED COMPANY RIGHTS.......................................................15
SECTION 3.6 ADVANCES..........................................................................................17
SECTION 3.7 COLLECTION OF PROJECT REVENUES....................................................................18
SECTION 3.8 CONSTRUCTION ACCOUNT..............................................................................18
SECTION 3.9 PAYMENTS ON COMMERCIAL OPERATION DATE.............................................................20
SECTION 3.10 REVENUE ACCOUNT..................................................................................21
SECTION 3.11 OPERATING AND MAINTENANCE ACCOUNT................................................................23
SECTION 3.12 DEBT SERVICE RESERVE ACCOUNT.....................................................................23
SECTION 3.13 MAJOR MAINTENANCE RESERVE ACCOUNT................................................................26
SECTION 3.14 DISTRIBUTION ACCOUNT.............................................................................26
SECTION 3.15 RESTORATION ACCOUNT..............................................................................28
SECTION 3.16 FUEL CONVERSION PAYMENT VOLUME REBATE ACCOUNT....................................................31
SECTION 3.17 SUBORDINATED DEBT ACCOUNT........................................................................31
ARTICLE IV APPLICATION OF CERTAIN PROCEEDS.......................................................................31
SECTION 4.1 DIVISION OF FORECLOSURE PROCEEDS AND PROCEEDS UNDER THE WILLIAMS GUARANTY.........................31
SECTION 4.2 APPLICATION OF CASUALTY PROCEEDS AND EMINENT DOMAIN PROCEEDS......................................32
SECTION 4.3 APPLICATION OF BUY-DOWN AMOUNTS...................................................................35
ARTICLE V COLLATERAL AGENT; DEPOSITARY BANK......................................................................38
SECTION 5.1 APPOINTMENT AND DUTIES OF COLLATERAL AGENT AND DEPOSITARY BANK....................................38
SECTION 5.2 RIGHTS OF COLLATERAL AGENT........................................................................39
SECTION 5.3 LACK OF RELIANCE ON THE COLLATERAL AGENT..........................................................41
SECTION 5.4 INDEMNIFICATION...................................................................................42
SECTION 5.5 PREPAYMENT OF CONSTRUCTION CONTRACT...............................................................42
SECTION 5.6 RESIGNATION OF THE COLLATERAL AGENT OR DEPOSITARY BANK............................................45
SECTION 5.7 REMOVAL OF THE COLLATERAL AGENT OR DEPOSITARY BANK................................................46
SECTION 5.8 MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS.......................................46
SECTION 5.9 POWER OF ATTORNEY.................................................................................46
ARTICLE VI REPRESENTATIONS AND WARRANTIES........................................................................47
SECTION 6.1 REPRESENTATIONS AND WARRANTIES....................................................................47
ARTICLE VII MISCELLANEOUS........................................................................................49
SECTION 7.1 AGREEMENT FOR BENEFIT OF PARTIES HERETO...........................................................49
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SECTION 7.2 NO WARRANTIES.....................................................................................50
SECTION 7.3 SEVERABILITY......................................................................................50
SECTION 7.4 NOTICES...........................................................................................50
SECTION 7.5 SUCCESSORS AND ASSIGNS............................................................................52
SECTION 7.6 COUNTERPARTS......................................................................................52
SECTION 7.7 GOVERNING LAW.....................................................................................52
SECTION 7.8 IMPAIRMENTS OF OTHER RIGHTS.......................................................................52
SECTION 7.9 AMENDMENT; WAIVER.................................................................................52
SECTION 7.10 HEADINGS.........................................................................................53
SECTION 7.11 TERMINATION......................................................................................53
SECTION 7.12 ENTIRE AGREEMENT.................................................................................53
SECTION 7.13 LIMITATION OF LIABILITY..........................................................................53
SECTION 7.14 REPLACEMENT AND/OR REMOVAL OF INDEPENDENT ENGINEER; PAYMENT
OF INDEPENDENT ENGINEER.......................................................................54
SECTION 7.15 THIRD-PARTY ENGINEER DISPUTE RESOLUTION..........................................................54
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 5.5 Form of EPC Contract Prepayment Letter of Credit
Exhibit 7.14 Third-Party Engineers
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COLLATERAL AGENCY AND
INTERCREDITOR AGREEMENT
COLLATERAL AGENCY AND INTERCREDITOR AGREEMENT, dated as of March 1,
2000 (this "AGREEMENT"), among AES RED OAK L.L.C., a Delaware limited
liability company (the "COMPANY"), THE BANK OF NEW YORK, as Trustee (the
"TRUSTEE"), DRESDNER BANK AG, acting through its New York Branch, in its
capacity as Agent on behalf of and for the benefit of the banks (including
the DSR LOC Issuing Bank) under and pursuant to the terms of the DSR LOC
Reimbursement Agreement (the "DSR LOC PROVIDER"), DRESDNER BANK AG, acting
through its New York Branch, in its capacity as Agent on behalf of and for
the benefit of the banks (including the PPA LOC Issuing Bank) under and
pursuant to the terms of the PPA LOC Reimbursement Agreement (the "PPA LOC
PROVIDER"), DRESDNER BANK AG, acting through its New York Branch, in its
capacity as Agent on behalf of and for the benefit of the banks under and
pursuant to the terms of the Working Capital Agreement (the "WORKING CAPITAL
PROVIDER"), THE BANK OF NEW YORK, as Collateral Agent (the "COLLATERAL
AGENT") and THE BANK OF NEW YORK, as Depositary Bank (the "DEPOSITARY BANK").
W I T N E S S E T H:
WHEREAS, the Company is constructing and will own and lease a gas-fired
combined cycle electric generating facility in Borough of Sayreville, Middlesex
County, New Jersey, with a net design capacity of approximately 830 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 PPA Letter of
Credit, which the PPA LOC Issuing Bank has agreed to issue subject to the terms
and conditions contained in the PPA LOC Reimbursement Agreement;
WHEREAS, all obligations of the Company under the Indenture, the
Working Capital Agreement, the DSR LOC Reimbursement Agreement, the PPA 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
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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.
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
and "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.
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"AVAILABLE ACCOUNTS" means the Project Accounts other than the
Construction Account and the Distribution 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 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 for each year commencing on May 31, 2000, 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, PPA LOC Loans, loans under the Working Capital Agreement,
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 Working Capital Agreement, the DSR LOC Reimbursement
Agreement and the PPA 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 Working Capital Agreement, the DSR Letter of Credit and the
PPA 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 Working
Capital Agreement, the DSR Letter of Credit and the PPA Letter of Credit.
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"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.
"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).
"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.
"EPC CONTRACT CHANGE" has the meaning specified in Section 5.5(h).
"EPC CONTRACT PREPAYMENT" has the meaning specified in Section 5.5.
"EPC CONTRACT PREPAYMENT AMOUNT" means $290,800,000.
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"EPC CONTRACT PREPAYMENT COORDINATION AGREEMENT" means the EPC Contract
Prepayment Coordination Agreement, dated as of March 14, 2000, between the
Contractor and the Company.
"EPC CONTRACT PREPAYMENT LETTER OF CREDIT" means an irrevocable letter
of credit or letters of credit in the form to be attached as Exhibit 5.5, issued
for the benefit of the Company and for the account of the Contractor in the
stated amount of the EPC Contract Prepayment Amount (as such amount may be
reduced), by a domestic or foreign commercial bank whose outstanding senior
unsecured long-term debt is rated at least "A" by S&P and "A2" by Moody's.
"EPC CONTRACT REDUCTION AMOUNT" has the meaning specified in Section
5.5(d).
"EQUITY CONTRIBUTION" means the equity contributions to be made by AES
Red Oak 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 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 PPA LOC Reimbursement
Agreement or an "Event of Default" as such term is defined in the Working
Capital Agreement.
"EWG" means "exempt wholesale generator," as defined in Section 32(a)
of PUHCA.
"EXCESS AMOUNT" has the meaning specified in Section 3.12(k).
"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 PPA Letter of Credit, (ii)
the obligation of the DSR LOC Provider 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 and (iii) the Commitments under and as defined in the Working
Capital Agreement.
"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 Working Capital Agreement and any evidence of indebtedness
thereunder entered into, the DSR LOC Reimbursement Agreement and any evidence of
indebtedness thereunder entered into, the PPA LOC Reimbursement Agreement and
any evidence of indebtedness thereunder entered into, the Collateral Agency
Agreement 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
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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.
"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.
"PPA LOC LOAN" has the meaning specified in the PPA LOC Reimbursement
Agreement.
"PPA LOC PROVIDER" has the meaning specified in the preamble of this
Agreement.
"PPA LOC REIMBURSEMENT FUND" means the PPA LOC Reimbursement Fund
established pursuant to Section 3.1.
"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
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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 PPA LOC Provider Claims,
the Working Capital 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, the PPA Letter of Credit and the
termination of the Commitments under and as defined in the Working Capital
Agreement.
"SENIOR DOCUMENTS" has the meaning specified in Section 6.1(b).
"SENIOR PARTIES" means, collectively, the Trustee, the Collateral
Agent, the Depositary Bank, the DSR LOC Provider, the PPA LOC Provider, the
Working Capital Provider and each successor to any of such Persons.
"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 PPA LOC Letter of Credit, the "Stated Amount" as defined in the
PPA LOC Reimbursement Agreement.
"SUBORDINATED DEBT ACCOUNT" means the Subordinated Debt Account
established pursuant to Section 3.1.
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"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 PPA LOC Reimbursement Agreement and an acceleration of the
indebtedness incurred by the Company thereunder, (iv) an "Event of Default" or
the equivalent under the Working Capital Agreement and an acceleration of the
indebtedness incurred by the Company thereunder or (v) a Bankruptcy Event in
respect of the Company or AES URC and the expiration of the shortest applicable
grace period.
"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.
"WORKING CAPITAL LOAN" means a loan made to the Company pursuant to
Section 2.2 of the Working Capital Agreement.
"WORKING CAPITAL PROVIDER" has the meaning specified in the preamble of
this Agreement, including any successors or assigns thereto as Agent for the
banks under the Working Capital Agreement.
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
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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.
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 PPA LOC Provider, the
Working Capital 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 PPA LOC Provider, to terminate the DSR
Letter of Credit or PPA 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 Rate Loans (as
9
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 or in the case of the Working
Capital Provider, to declare the obligation of each Bank under and as defined
in the Working Capital Agreement to make Working Capital Loans to be
terminated, or to terminate the ability of the Company to continue any
Working Capital Loans as, or to convert Working Capital Loans to Eurodollar
Rate Loans (as defined in the Working Capital Agreement).
(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 or upon
their obtaining actual knowledge of an Event of Default or Trigger Event;
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.
(f) Each Senior Party hereby acknowledges and agrees that all funds
held in the DSR LOC Reimbursement Fund or the PPA LOC Reimbursement Fund by the
Collateral Agent in accordance with this Agreement are held for the benefit of
the DSR LOC Provider or PPA 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
10
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 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 PPA Letter of Credit and, (B) the
obligation of the DSR LOC Provider 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 and (C) the unutilized Outstanding Commitment under and as defined in
the Working Capital Agreement. The Collateral Agent shall be entitled to rely
conclusively 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
11
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 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 Senior 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 a Senior Party) could reasonably be expected to have a material
adverse effect on a Senior Party (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 such Senior Party shall have received written notice of such
proposed consent or direction at least fifteen days prior to the effectiveness
thereof, and such Senior Party shall have approved such amendment,
12
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) PPA LOC Reimbursement Fund;
(vii) Restoration Account;
(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.
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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, the PPA LOC Provider and the
Working Capital 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.
(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
14
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, and the Collateral Agent shall have
received written notice thereof, 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 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.
15
(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 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.
16
(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 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 any default in payment of loans due
and payable under the DSR LOC Reimbursement Agreement, the PPA LOC Reimbursement
Agreement or the Working Capital Agreement, (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.
17
(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). Unless otherwise specified
herein or in another Financing Document, all Project Revenues received by the
Collateral Agent prior to the Commercial Operation Date shall be deposited in
the Construction Account and all Project Revenues received by the Collateral
Agent shall be deposited in the Revenue Account.
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
including, but not limited to, fees payable under the Working Capital Agreement.
(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 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 PPA LOC Reimbursement
Agreement or the Working Capital Agreement has occurred and is continuing; (v) a
statement that all proceeds of prior Requisitions have been expended or applied
18
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. The Requisition shall be accompanied by a
Title Continuation (as hereinafter defined) dated the date of the requested
disbursements. Subject to the remaining provisions of this Section 3.8, upon
receipt of a properly delivered Requisition and the Title Continuation, the
Collateral Agent shall transfer funds from the Construction Account in
accordance with such Requisition. As used herein, the term "Title Continuation"
shall mean an endorsement to the title policy issued by Stewart Title Insurance
Company in the amount of $438,500,000 in favor of Collateral Agent ensuring the
lien of the Mortgage (the "Title Policy") indicating that, since the last
preceding disbursement, there has been no change in the state of title to the
Site and the Facility, including no Liens or survey exceptions not theretofore
approved by Collateral Agent, which endorsement shall contain no exceptions for
inchoate mechanic's liens and shall have the effect of continuing the Title
Policy to the date of such Requisition and increasing the coverage of the Title
Policy by an amount equal to the disbursement then being made if the Title
Policy does not by its terms provide for such an increase.
(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, AES URC or AES Red Oak, and (C) each of the EPC
Contract, the Power Purchase Agreement, the Operations 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 a Responsible Officer of the
Collateral Agent and be continuing until the Collateral Agent has been given
written notice that such Trigger Event is no longer continuing or the Required
Senior Parties give instructions to the Collateral Agent as to application of
funds.
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(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 PPA Letter of
Credit has been reduced in accordance with the terms of the Power Purchase
Agreement, 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, the Base Equity Contribution, to the extent not already made,
and, to the extent necessary, any other amounts available under and pursuant to
the Equity Subscription Agreement to fund items 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, equal to interest and principal accrued on the Bonds from the
immediately preceding Bond Payment Date to the Commercial Operation Date for
funding of the Interest Payment Subaccount and Principal Payment Subaccount;
THIRD, to the Debt Service Reserve Account, an amount 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 PPA LOC Provider, an amount equal to the
principal of and interest on any PPA LOC Loans outstanding on the Commercial
Operation Date;
20
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 the Working Capital Provider, an
amount certified by the Company as the amount, if any, then payable in respect
of principal of or interest on loans and commitment fees under the Working
Capital Agreement 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 (iii) to any PPA LOC
Provider, any amounts certified by the Company as amounts then due and payable
in respect of PPA LOC Provider Claims and (iv) to any Working Capital Provider,
any amounts certified by the Company as amounts then due and payable in respect
of Working Capital 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 PPA LOC
Reimbursement Fund, an amount equal
21
to one-third of the interest becoming due on any PPA LOC Loan on the next
succeeding Bond Payment Date, plus one-third of any fees becoming due under
the PPA LOC Reimbursement 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 PPA LOC
Reimbursement Fund, an amount equal to one-third of the principal becoming due
on any PPA 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 third-party 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 third-party Subordinated Debt on the next
succeeding interest payment date for such debt, PLUS (y) one-third
22
or one-sixth (depending on the amortization schedule of such debt) of the
principal becoming due on such third-party Subordinated Debt on the next
applicable principal payment date;
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) After it is issued, the Company shall deliver, or cause to be
delivered, to the Collateral Agent the DSR Letter of Credit, which shall be
available for drawing by the Collateral Agent upon the earlier to occur of (i)
the Commercial Operation Date or (ii) the Guaranteed Provisional Acceptance
Date. 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 Stated Amount of the
23
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.
(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 2 Business Days prior to such Bond
Payment Date of an Officer's Certificate of the Company and as directed in 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
24
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.
(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
25
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).
(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 amounts in the Revenue Account and the Debt Service Reserve
Account (including amounts available under a DSR Letter of Credit) are
insufficient to pay Operating and Maintenance Expenses and debt service on all
Financing Liabilities in levels FIRST through FOURTH in Section 3.10(b), 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
26
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 are funded to their required
levels;
(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 the PPA LOC
Reimbursement Agreement or (D) default or event of default under the
Working Capital Agreement, has occurred and is 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 during the
Post-PPA Period, (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;
27
(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
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; and
(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.
(c) If amounts on deposit in or credited to the Revenue Account are
insufficient to make the transfers described in priorities FIRST through EIGHTH
in Section 3.10, amounts on deposit in or credited to the Distribution Account
shall (in the case of amounts necessary to make the transfers described in
priorities FIRST through SIXTH), and may, at the option of the Company (in the
case of amounts necessary to make the transfers described in priorities SEVENTH
and EIGHTH), 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
28
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.
(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 conclusively 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
29
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 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).
30
SECTION 3.16 FUEL CONVERSION PAYMENT VOLUME REBATE ACCOUNT.
(a) The Fuel Conversion Payment 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 Payment 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 other 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 within five (5) Business Days of
receipt in the following order of priorities:
FIRST, to the Collateral Agent, the Trustee, the Working
Capital Provider, the DSR LOC Provider and the PPA LOC Provider,
ratably, in an amount equal to the amounts owed in respect of the
Collateral Agent Claims, the Trustee Claims, the Working Capital
Provider Claims, the DSR LOC Provider Claims and the PPA LOC Provider
Claims, respectively, due and payable as of the date of such
distribution; PROVIDED, that prior to any such distribution to the
Trustee, the Working Capital Provider, the DSR LOC Provider or the PPA
LOC Provider, the Collateral Agent shall have received a certificate
signed by an Authorized Representative of the Trustee, the Working
Capital Provider, the DSR LOC Provider or the PPA LOC Provider (as the
case may be), in either case in form satisfactory
31
to the Collateral Agent, setting forth the amount payable to the
Trustee, the Working Capital Provider, the DSR LOC Provider or the PPA
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 Senior Parties by the Company;
PROVIDED, that prior to any such distribution, the Collateral Agent
shall have received (a) in the case of clause (i) above an Officer's
Certificate or (b) in the case of clause (ii) above, a certificate
executed by an Authorized Representative of each such Senior Party, in
either case in form 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) in the case of clause (i) above an Officer's
Certificate or (b) in the case of clause (ii) above, a certificate
executed by an Authorized Representative of each such Subordinated Debt
Provider, in either case in form 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 direction from the
Required Senior Parties and an 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)
32
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 Working
Capital Provider, the DSR LOC Provider and the PPA LOC Provider,
ratably, in an amount equal to the amounts owed in respect of the
Collateral Agent Claims, the Trustee Claims, the Working Capital
Provider Claims, the DSR LOC Provider Claims and the PPA LOC Provider
Claims, respectively, due and payable as of the date of such
distribution; PROVIDED, that, two (2) Business Days prior to any such
distribution to the Collateral Agent, the Trustee, the Working Capital
Provider, the DSR LOC Provider or the PPA LOC Provider, the Collateral
Agent shall have received a certificate signed by an Authorized
Representative of the Trustee, the Working Capital Provider, the DSR
LOC Provider or the PPA 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 Working Capital Provider, the DSR
LOC Provider or the PPA 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 two (2) Business Days 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 two (2) Business Days 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
33
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 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 PPA Letter of Credit (and not represented by a PPA 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 PPA LOC
Provider (which such notice or notices shall be contemporaneously delivered by
the PPA LOC Provider to the other Senior Parties) executed by an Authorized
Representative of the PPA LOC Provider to the effect that either (i) the
Collateral Agent has made a drawing on the PPA Letter of Credit or (ii) the PPA
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 PPA 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 PPA 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.
34
(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 PPA 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
PPA 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, 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, but shall not be required to do so until at least one Business
Day after 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
35
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 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 PPA LOC Provider in
respect of the outstanding amount of any PPA 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
36
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 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 PPA Letter of Credit (and not represented by a PPA 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 PPA LOC
Provider (which such notice or notices shall be contemporaneously delivered by
the PPA LOC Provider to the other Senior Parties) executed by an Authorized
Representative of the PPA LOC Provider to the effect that either (i) the
Collateral Agent has made a drawing on the PPA Letter of Credit or (ii) the PPA
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 PPA 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 PPA 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.
37
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 The Bank of New
York to act as the Collateral Agent under the Security Documents and this
Agreement, and each of the Senior Parties hereby authorizes The Bank of New
York, 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.
(b) The Collateral Agent and each other Senior Party hereby
designate and appoint The Bank of New York 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 give such notice prior
to taking such action could result in the loss of any of the rights of the
Senior Parties under any Security Documents, 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
38
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 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
39
action would, in the opinion of the Collateral Agent (which may be based on
the advice or 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 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
40
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.
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 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.
41
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 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 PREPAYMENT OF CONSTRUCTION CONTRACT.
(a) The Company may, if the conditions set forth in Section 5.5(c) are
satisfied, on or after the Closing Date elect to prepay (the "EPC CONTRACT
PREPAYMENT") the then remaining "Contract Price" under the EPC Contract.
(b) The EPC Contract Prepayment shall be effected by submission of a
Requisition, in the form of Exhibit 3.8, that includes a request that the
Collateral Agent disburse to the Contractor from the Construction Account the
EPC Contract Prepayment Amount.
(c) In order to effect an EPC Contract Prepayment, the Company shall
have first satisfied the following conditions and shall have delivered to the
Collateral Agent an Officer's Certificate stating that such conditions have been
satisfied:
42
(i) The Company shall have caused to be delivered to the
Collateral Agent by the Contractor an EPC Contract Prepayment Letter of
Credit with a stated amount equal to the EPC Contract Prepayment
Amount;
(ii) The EPC Contract Prepayment Letter of Credit shall be
substantially in the form of Exhibit 5.5 and shall provide that such
letter of credit may be drawn upon: (A) in full, if (1) the EPC
Contract is terminated in accordance with the terms thereof, or (2) an
event of default of the Contractor under the EPC Contract has occurred
and is continuing, or (3) a suspension of the performance of the
obligations of the Contractor under the EPC Contract has occurred and a
result of such suspension has been an increase in the time of
performance of the obligations of the Contractor under the EPC Contract
for a period in excess of six (6) months, or (4) an event of force
majeure affecting the performance of the obligations of the Contractor
under the EPC Contract has occurred and a result of such event of force
majeure has been an increase in the time of performance of the
obligations of the Contractor under the EPC Contract for a period in
excess of six (6) months; (B) in full, if a Trigger Event shall have
occurred and be continuing; (C) in full, if such letter of credit will
expire within 30 days, no replacement EPC Contract Prepayment Letter of
Credit has been provided and the Final Acceptance Date has not occurred
under the EPC Contract; (D) in full, if the long-term unsecured debt
rating of the issuer of the EPC Contract Prepayment Letter of Credit
has fallen below "A" (as rated by Standard & Poor's), and the
Contractor has failed within 45 days to deliver a replacement letter of
credit from a financial institution which has a long-term unsecured
debt rating of at least "A" by Standard & Poor's; or (E) in part, if
there is a change order which reduces the "Contract Price" under the
EPC Contract and the payment required of the Contractor in respect
thereof has not been made within 10 days of such change order as
described in Section 5.5(i);
(iii) The Contractor shall have agreed in writing that upon
the occurrence of an EPC Contract Delay Event (as such term is defined
in the EPC Contract Prepayment Coordination Agreement), Contractor
shall be liable to pay to the Collateral Agent (for deposit in the
Construction Account) for each day during the continuance of such EPC
Contract Delay Event an amount equal to the product of (X) .000173 and
(Y) the amount of the applicable EPC Contract Prepayment Letter of
Credit outstanding during such EPC Contract Delay Event, such amount to
be paid to the Collateral Agent within three (3) Business Days
following the earlier to occur of resumption of work under the EPC
Contract or a drawing in full on the EPC Contract Prepayment Letter of
Credit;
(iv) The Raytheon Company shall have agreed in writing that
amounts required to be paid by the Contractor pursuant to clause (iii)
above shall be guaranteed obligations under Section 2 of the Raytheon
Guaranty;
(v) The Contractor shall have confirmed in writing that the
amount of Provisional Acceptance Late Completion Payments, Performance
Guarantee Payments and Rebates (as such terms are defined in the EPC
Contract), if any, under the EPC
43
Contract for which the Contractor potentially may be liable and any
liability limitations under the EPC Contract will not be reduced due
solely to the EPC Contract Prepayment;
(vi) The Contractor shall have confirmed in writing that the
cost of obtaining, maintaining and reimbursing drawings on the EPC
Contract Prepayment Letter of Credit shall be solely for the account of
the Contractor and that the Company shall bear no cost in respect of
such EPC Contract Prepayment Letter of Credit; and
(vii) 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 the PPA LOC
Reimbursement Agreement, or (D) Default or Event of Default under the
Working Capital Agreement, shall have occurred and be continuing.
(d) Following the EPC Contract Prepayment, the amount of the EPC
Contract Prepayment Letter of Credit shall be reduced from time to time if and
to the extent that:
(i) The Company shall have delivered a Requisition (other
than a Requisition involving an EPC Contract Prepayment pursuant to
Section 5.5(b)) in accordance with Section 3.8;
(ii) The applicable Requisition shall specifically state
the amount (the "EPC CONTRACT REDUCTION AMOUNT"), not exceeding the
amount of the Requisition, by which each EPC Contract Prepayment
Letter of Credit is to be reduced;
(iii) The applicable Requisition shall have attached
thereto the supporting documentation relating to the work performed
under the EPC Contract described in Section 4.2.2 of the EPC
Contract; and
(iv) The applicable Requisition shall have been confirmed
by the Independent Engineer to the extent required under Section
3.8(d) hereof.
(e) Upon satisfaction of the conditions set forth in Section 5.5(d),
the Collateral Agent shall send written notice to the issuer of the EPC Contract
Prepayment Letter of Credit specifying that the issued amount of such EPC
Contract Prepayment Letter of Credit may be reduced by the applicable EPC
Contract Reduction Amount.
(f) Upon delivery to the Collateral Agent of an Officer's Certificate
stating that the conditions set forth in Section 2.6(b) of the EPC Contract
Prepayment Coordination Agreement have been met, the Collateral Agent shall send
written notice to the issuer of the EPC Contract Prepayment Letter of Credit
specifying that such letter of credit may be cancelled.
(g) If at any time the conditions set forth in Section 5.5(d) cannot be
satisfied, the EPC Contract Prepayment Letter of Credit shall not be reduced
unless and until the conditions set forth in Section 5.5(d) are satisfied.
44
(h) If, subsequent to the EPC Contract Prepayment, a change order under
and in accordance with the EPC Contract and the Financing Documents is entered
into (each, an "EPC CONTRACT CHANGE") which increases the Contract Price (as
such term is defined in the EPC Contract), the amount of such EPC Contract
Change shall be paid from moneys in the Construction Account pursuant to
Requisitions delivered and approved in accordance with the provisions of Section
3.8 hereof.
(i) If, subsequent to the EPC Contract Prepayment, there is an EPC
Contract Change which decreases the "Contract Price" under the EPC Contract, as
a condition to any such EPC Contract Change, the Company shall cause the
Contractor to pay to the Collateral Agent for deposit in the Construction
Account an amount equal to the amount of such EPC Contract Change. If the
Collateral Agent fails to receive such amount within 10 days of any such EPC
Contract Change, the Collateral Agent shall be entitled to draw upon the EPC
Contract Prepayment Letter of Credit in an amount equal to the amount of such
EPC Contract Change.
SECTION 5.6 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
5.6 or removal pursuant to Section 5.7 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 5.6;
(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 5.6 or if the Required Senior Parties give
the Collateral Agent, or the Collateral Agent gives the Depositary Bank, notice
of removal pursuant to Section 5.7, 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
petition a court of competent jurisdiction to 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
45
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).
(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 5.6 or removal pursuant to
Section 5.7 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 5.7 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 5.6.
SECTION 5.8 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 5.9 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
46
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 such 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, 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
47
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.
(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, the PPA LOC Provider and
the Working Capital 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
48
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 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) to the
best of such party's knowledge, contravenes any material Applicable Law
in respect of 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, with respect to the PPA LOC
Provider, the PPA LOC Reimbursement Agreement and with respect to the Working
Capital Provider, the Working Capital 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
49
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 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 Red Oak, L.L.C.
1001 North 19th Street
Arlington, VA 22209
Attention: Project Manager
Facsimile: 703-528-4510
Trustee: The Bank of New York
101 Barclay Street
Floor 21W
New York, NY 10286
Attention: Corporate Trust Administration
Facsimile: 212-815-3878
50
DSR LOC Provider: Dresdner Bank AG,
acting through its 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
PPA LOC Provider: Dresdner Bank AG,
acting through its 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
Working Capital Provider:
Dresdner Bank AG,
acting through its 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: The Bank of New York
101 Barclay Street
Floor 21W
New York, NY 10286
Attention: Corporate Trust Administration
Facsimile: 212-815-3878
51
Depositary Bank: The Bank of New York
101 Barclay Street
Floor 21W
New York, NY 10286
Attention: Corporate Trust Administration
Facsimile: 212-815-3878
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.
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.
52
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 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
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 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.
53
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 as directed by the Required Senior Parties. 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 or certificate and they are unable to resolve
the dispute within seven (7) days of the Independent Engineer expressing its
disagreement with such notice, plan, report or certificate, 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) 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.
54
(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 or certificate
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 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. 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]
55
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 RED OAK, L.L.C.
By: /s/ Charles B. Falter
--------------------------------------
Name: Charles B. Falter
Title: Vice President
THE BANK OF NEW YORK,
as Trustee
By: /s/ Mary Beth Lewicki
--------------------------------------
Name: Mary Beth Lewicki
Title: Vice President
DRESDNER BANK AG, acting through its
New York Branch,
as DSR LOC Provider
By: /s/ Andrew Schroeder
--------------------------------------
Name: Andrew Schroeder
Title: Vice President
DRESDNER BANK AG, acting through its
New York Branch,
as PPA LOC Provider
By: /s/ Andrew Schroeder
--------------------------------------
Name: Andrew Schroeder
Title: Vice President
[COLLATERAL AGENCY AND INTERCREDITOR AGREEMENT]
DRESDNER BANK AG, acting through its
New York Branch,
as Working Capital Provider
By: /s/ Andrew Schroeder
--------------------------------------
Name: Andrew Schroeder
Title: Vice President
THE BANK OF NEW YORK,
as Collateral Agent
By: /s/ Mary Beth Lewicki
--------------------------------------
Name: Mary Beth Lewicki
Title: Vice President
THE BANK OF NEW YORK,
as Depositary Bank
By: /s/ Mary Beth Lewicki
--------------------------------------
Name: Mary Beth Lewicki
Title: Vice President
[COLLATERAL AGENCY AND INTERCREDITOR AGREEMENT]
EXHIBIT 2.1
FORM OF DESIGNATION LETTER
[Date]
The Bank of New York,
as Collateral Agent
101 Barclay Street
Floor 21W
New York, NY 10286
Re: AES Red Oak Project
Ladies and Gentlemen:
Reference is made to the Collateral Agency and Intercreditor Agreement
(the "COLLATERAL AGENCY AGREEMENT") dated as of March 1, 2000 among AES Red Oak
L.L.C. (the "COMPANY"), The Bank of New York, as Trustee, Dresdner Bank AG,
acting through its New York Branch, as DSR LOC Provider, Dresdner Bank AG,
acting through its New York Branch, as PPA LOC Provider, Dresdner Bank AG,
acting through its New York Branch, as Working Capital Provider, The Bank of New
York, as Collateral Agent, and The Bank of New York, 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 RED OAK, L.L.C.
By:
------------------------------------
Name:
Title:
2.1 - 2
ACKNOWLEDGED:
THE BANK OF NEW YORK,
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 March 1, 2000 (as amended and in effect
from time to time, the "COLLATERAL AGENCY AGREEMENT"), entered into among The
Bank of New York, as Collateral Agent (in such capacity, together with its
successors and permitted assigns in such capacity, the "COLLATERAL AGENT"), The
Bank of New York, (in such capacity, together with its successors and permitted
assigns in such capacity, the "DEPOSITARY BANK "), The Bank of New York, 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 Red Oak, 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
The Bank of New York AES Red Oak Project
as Collateral Agent Senior Party Certificate
[Date]
Reference is made to that certain Collateral Agency and Intercreditor
Agreement, dated as of March 1, 2000 (as amended, modified or supplemented from
time to time, the "COLLATERAL AGENCY AGREEMENT"), among AES Red Oak, L.LC.,
(together with its successors and assigns, the "COMPANY"), The Bank of New York,
as trustee and depositary bank (together with its successors in such capacity,
the "COLLATERAL AGENT") and Dresdner Bank AG, acting through its New York
Branch, as DSR LOC Provider, PPA LOC Provider and Working Capital 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 Red Oak, 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
The Bank of New York, as Collateral Agent on behalf of the Financing Parties,
have entered into a Collateral Agency and Intercreditor Agreement, dated as of
March 1, 2000 (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:
(a) 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;
(b) 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;
(c) 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;
(d) 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
(e) 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 RESPECT
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 THE TERMS 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: The Bank of New York,
as Collateral Agent
101 Barclay Street
Floor 21W
New York, NY 10286
--------------------------
Attention: Corporate Trust Administration
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 RED
OAK], an affiliate of AES Red Oak, 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
March 1, 2000 (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
The Bank of New York, 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 The Bank of New York, 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).
THE BANK OF NEW YORK,
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 The Bank of New York, 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.
THE BANK OF NEW YORK,
as Collateral Agent
By:
----------------------------
Name:
Title:
By:
----------------------------
Name:
Title:
3.6(b) - 6
EXHIBIT 3.8
FORM OF REQUISITION
Requisition No.______
Date:________________
The Bank of New York,
as Collateral Agent
[address]
Reference is hereby made to the Collateral Agency and Intercreditor
Agreement, dated as of [_________, 2000], among AES Red Oak, L.L.C. (the
"COMPANY"), The Bank of New York, as Collateral Agent, Trustee and Depositary
Bank, and Dresdner Bank AG, acting through its New York Branch, as DSR LOC
Provider, PPA LOC Provider and Working Capital 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, the DSR LOC Reimbursement Agreement, PPA LOC
Reimbursement Agreement or Working Capital Agreement 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.
[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 RED OAK, 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 - 3
FORM OF INDEPENDENT ENGINEER CONFIRMATION
Requisition No. _____
Date:________________
The Bank of New York,
as Collateral Agent
[address]
Reference is hereby made to the Collateral Agency and Intercreditor
Agreement, dated as of March 1, 2000, among AES Red Oak, L.L.C. (the "COMPANY"),
The Bank of New York, as Collateral Agent, Trustee and Depositary Bank, and
Dresdner Bank AG, acting through its New York Branch, as DSR LOC Provider, PPA
LOC Provider and Working Capital 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 - 4
EXHIBIT 3.15
FORM OF RESTORATION CERTIFICATE
The Bank of New York AES Red Oak Project
as Collateral Agent Restoration Certificate
[Date]
Reference is made to that certain Collateral Agency and Intercreditor
Agreement, dated as of March 1, 2000 (as amended, modified or supplemented from
time to time, the "COLLATERAL AGENCY AGREEMENT"), among AES Red Oak, L.LC.
(together with its successors and assigns, the "COMPANY"), and The Bank of New
York, as Trustee, Collateral Agent and Depositary Bank (together with its
successors in such capacity, the "COLLATERAL AGENT") and Dresdner Bank AG,
acting through its New York Branch, as DSR LOC Provider, PPA LOC Provider and
Working Capital 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 RED OAK, 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
The Bank of New York AES Red Oak Project
as Collateral Agent Performance Enhancement Certificate
[Date]
Reference is made to that certain Collateral Agency and
Intercreditor Agreement, dated as of March 1, 2000 (as amended, modified or
supplemented from time to time, the "COLLATERAL AGENCY AGREEMENT"), among AES
Red Oak, L.LC., (together with its successors and assigns, the "COMPANY"),
and The Bank of New York, as Trustee, Collateral Agent and Depositary Bank
(together with its successors in such capacity, the "COLLATERAL AGENT") and
Dresdner Bank AG, acting through its New York Branch, as DSR LOC Provider,
PPA LOC Provider and Working Capital 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 RED OAK, 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 5.5
FORM OF EPC CONTRACT PREPAYMENT LETTER OF CREDIT
__________ __, 2000
Beneficiary:
The Bank of New York, as Collateral Agent
Corporate Trust Administration
101 Barclay Street, Floor 21W
New York, NY 10286
IRREVOCABLE STANDBY LETTER OF CREDIT NO.
We hereby issue in your favor our Irrevocable Letter of Credit No. __________
(this "Letter of Credit") for the account of Raytheon Company on behalf of
Raytheon Engineers & Constructors, Inc. in an aggregate amount of
$237,665,537.15 (Two Hundred Thirty-Seven Million, Six Hundred Sixty-Five
Thousand, Five Hundred Thirty-Seven and Fifteen Cents) (the "Stated Amount of
Credit").
We understand that this Letter of Credit is being issued to you in connection
with that certain Agreement for Engineering, Procurement and Construction
Services, dated as of October 15, 1999 (the "Agreement") between AES Red Oak,
L.L.C. ("AES") and Raytheon Engineers & Constructors, Inc. ("Contractor").
The Stated Amount of Credit shall decrease automatically at any time and from
time to time to no less than $30,782,500 (which amount corresponds to the
retention amount under the Agreement), upon each receipt by us of a Reduction
Certificate in the form of Annex C attached hereto stating the amount of the
applicable reduction and setting forth the applicable new Stated Amount of
Credit for this Letter of Credit to be effected by such Reduction
Certificate. Notice of each such reduction shall be given by us to AES and
Contractor.
The outstanding value of this Letter of Credit will be further automatically
reduced from $30,782,500 to zero, upon receipt by us of a Certificate of
Final Acceptance, substantially in the form of Annex D attached hereto.
Notice of such reduction shall be given by us to Contractor and AES.
Prior to or on the Termination Date (as hereunder defined) of this Letter of
Credit, you may draw from time to time an amount not exceeding the Stated
Amount of Credit then in effect 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 BankBoston, N.A., Letter of Credit No.
__________") accompanied by a signed Drawing Certificate in the form attached
herein as Annex A appropriately completed and executed by purported
Authorized Officers of The Bank of New York, as Collateral Agent and, as
applicable, confirmed by AES.
5.5 - 1
Presentation of this Letter of Credit and such draft and Drawing Certificate
shall be made at our office at 150 Federal Street, Boston, MA 02110 (fax no.
(617) 434-5414) (with telephone confirmation on (617) 434-3062), Attn: Mr.
Navin Bhojani, either by physical delivery of such documents or by facsimile
transmission of such documents to the office stated above. Upon such
presentation, the payment 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 any facsimile
transmission. Our only obligation with regard to a drawing under this Letter
of Credit shall be to examine the draft and Drawing Certificate received by
fax and to pay in accordance therewith, and we shall not be obligated to make
any inquiry in connection with the presentation of the draft and Drawing
Certificate.
If this Letter of Credit and the requisite draft and Drawing Certificate are
presented to us at or prior to 10:00 a.m. (Boston time) on a Business Day (as
hereinafter defined), and provided that such drawing and the documents and
other items presented in connection therewith 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 4:00 p.m. (Boston time) on such
day. If a drawing is made hereunder after 10:00 a.m. (Boston time) on a
Business Day, and provided that such drawing and the documents and other
items presented in connection therewith conform to the terms and conditions
hereof, payment of the amount specified shall be made to you in immediately
available funds, not later than 2:00 p.m. (Boston 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 demand for payment was not affected in
accordance with the terms and conditions of this Letter of Credit, stating
the reasons therefor and that we will upon your instructions hold the
documents at your disposal or return the same to you. Upon being notified
that the demand for payment was not effected in conformity with this Letter
of Credit, you may attempt to correct any such nonconforming demand if and to
the extent that you are entitled and able to do so.
This Letter of Credit shall become operative, without any further action by
any party, upon our receipt of the sum of U.S.$290,800,000, by inter-bank
wire transfer, for credit to the account on our books of Contractor, Account
No. 55007030, BankBoston, N.A., Boston, MA, ABA #011000390, quoting this
Letter of Credit No. ____ to the attention of Mr. Navin Bhojani, as payment
due under the Agreement. Written confirmation of our receipt of such amount
shall be given by us to the Beneficiary, AES Red Oak, L.L.C. at: 1001 North
19th Street, Arlington, VA 22209 and Contractor. Unless terminated earlier in
accordance with the provisions hereof, this Letter of Credit expires at the
close of business at our office in Boston, Massachusetts on March 14, 2002
(the "Stated Expiration Date"). Any drawing under this Letter of Credit will
be paid with our own funds and not out of funds or other assets of the
Contractor.
Only you may make a drawing under this Letter of Credit. Multiple drawings
may be made under this Letter of Credit.
The payment of any drawing hereunder shall automatically reduce the Stated
Amount of Credit available under this Letter of Credit on a dollar-for-dollar
basis.
5.5 - 2
Upon the earlier of (i) the close of business at our office in Boston,
Massachusetts, on the Stated Expiration Date, (ii) the date we have paid an
amount equal to the sum of the Stated Amount of Credit then in effect or
(iii) the date of our receipt of a certificate in the form of Annex B
attached hereto purportedly signed by an Authorized Officer of The Bank of
New York, as Collateral Agent (a "Certificate as to Cancellation")
accompanied by this original Letter of Credit (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 150 Federal Street, Boston, MA 02110, specifically
referring therein to this Letter of Credit by number.
As used herein (a) "Authorized Officer of The Bank of New York, as Collateral
Agent" shall mean any of your Vice Presidents (and as applicable of AES' Vice
Presidents) and (b) "Business Day" shall mean any day on which commercial banks
in the State of Massachusetts 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, instruments or agreements 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.
Notwithstanding anything to the contrary contained in this agreement, the
parties hereto hereby acknowledge and agree that any and all references therein
to "BankBoston, N.A." or "BankBoston Corp." shall be deemed to refer to "Fleet
National Bank" and "Fleet Boston Corporation", respectively.
Very truly yours,
--------------------------
Name:
Title:
5.5 - 3
ANNEX A
(FORM OF DRAWING CERTIFICATE)
Date: __________________
TO: BankBoston, N.A.
150 Federal Street
Boston, MA 02110
Attn: Letter of Credit Department
RE: Irrevocable Letter of Credit No. __________ (the "Letter of Credit")
The undersigned, Authorized Officer(s) [of AES and](1) of The Bank of New
York ("Collateral Agent") in its capacity as Collateral Agent, hereby certify
to BankBoston, N.A. with reference to the Letter of Credit that:
(Check one of the following)
(1) ____ No Certificate as to Cancellation (as defined in the
Letter of Credit) has been delivered, and
(Check one of the following)
____ the Agreement (as defined in the Letter of Credit) has
been terminated in accordance with its terms; or
____ an event of default of the Contractor as defined in
Section 16.1 of the Agreement has occurred and is
continuing; or
____ a suspension of the performance of the obligations of the
Contractor under Section 15.1 of the Agreement has
occurred and a result of such suspension has been to
increase the time of performance of the obligations of
the Contractor under the Agreements for a period in
excess of six (6) months; or
____ an event of force majeure effecting the performance of
the obligations of the Contractor under the Agreement has
occurred and the result of such event of force majeure
has been to increase the time of performance of the
obligations of the Contractor under the Agreement for a
period in excess of six (6) months;
- ------------------------------
(1) Use bracketed language only if paragraph (3) below is NOT included.
5.5 - 4
accordingly, the Collateral Agent is entitled to draw
$___________ under the Letter of Credit (such amount
being up to the then Stated Amount of Credit of the
Letter of Credit, less any portion thereof corresponding
to Retainage not then proper for draw under the terms and
conditions of the Agreement);
or (Check one of the following)
(1) ____ No Certificate as to Cancellation has been
delivered and there has occurred and is continuing a Trigger Event
under and as defined in that certain Collateral Agency and
Intercreditor Agreement, dated as of March 1, 2000 among AES Red
Oak, L.L.C., The Bank of New York, as Trustee, Dresdner Bank AG,
acting through its New York Branch, as DSR LOC Provider, Dresdner
Bank AG, acting through its New York Branch, as PPA LOC Provider,
Dresdner Bank AG, acting through its New York Branch, as Working
Capital Provider, The Bank of New York, as Collateral Agent and The
Bank of New York, as Depositary Bank; accordingly, the Collateral
Agent is entitled to draw $__________ under the Letter of Credit
(such amount being the then Stated Amount of Credit of the Letter of
Credit); or
(1) ____ No Certificate as to Cancellation has been
delivered and the Letter of Credit will expire within 30 days after
the date hereof and the Contractor has not furnished a required
replacement Letter of Credit and Final Acceptance has not occurred
under the Agreement, accordingly, the Collateral Agent is entitled
to draw $________ under the Letter of Credit (such amount being the
then Stated Amount of Credit of the Letter of Credit); or
(1) ____ No Certificate as to Cancellation has been
delivered and there has been a change order which reduces the
"Contract Price" under and as defined in the Agreement and the
payment required of the Contractor in respect thereof has not been
made within thirty (30) days of such Scope Change Order,
accordingly, the Collateral Agent is entitled to draw $___________
under the Letter of Credit (such amount being equal to the amount of
the payment referred to above); or
(1) ____ The long-term unsecured debt rating of BankBoston,
N.A. has fallen below "A" (as rated by Standard & Poor's Rating
Group), and the Contractor has failed within 45 days to deliver a
replacement letter of credit from a financial institution which has
a long-term unsecured debt rating of at least "A" by Standard &
Poor's Rating Group;
(2) The amount of the sight draft accompanying this certificate equals
the amount to be drawn under the Letter of Credit as set forth above
and does not exceed the Stated Amount of Credit (as defined in the
Letter of Credit).
5.5 - 5
[OPTIONAL]
[(3) The conditions set forth in Section 3.8(c) of that certain Collateral
Agency and Intercreditor Agreement, dated as of March 1, 2000 among
AES Red Oak, L.L.C., The Bank of New York, as Trustee, Dresdner Bank
AG, acting through its New York Branch, as DSR LOC Provider,
Dresdner Bank AG, acting through its New York Branch, as PPA LOC
Provider, Dresdner Bank AG, acting through its New York Branch, as
Working Capital Provider, The Bank of New York, as Collateral Agent
and The Bank of New York, as Depositary Bank have not been
satisfied, accordingly the signature of AES Red Oak, L.L.C. is NOT
required.]
THE BANK OF NEW YORK,
as Collateral Agent
By: _________________________________
Name:
Title:
Acknowledged and Agreed:(2)
AES RED OAK, L.L.C.
By: ______________________________
Name:
Title:
- ----------------------------------
(2) This signature line only required if the certificate in item (3) above is
NOT included.
5.5 - 6
ANNEX B
(FORM OF CERTIFICATE AS TO CANCELLATION)
Date: _______________
TO: BankBoston, N.A.
150 Federal Street
Boston, MA 02110
Attn: Letter of Credit Department
RE: IRREVOCABLE LETTER OF CREDIT NO. __________ (THE "LETTER OF CREDIT")
The undersigned, Authorized Officer of The Bank of New York (the "Collateral
Agent") in its capacity as Collateral Agent, hereby certify to BankBoston,
N.A. with reference to the Letter of Credit that:
_____ The Contractor is no longer required to maintain in favor of
the Collateral Agent an EPC Prepayment Letter of Credit
under, and as defined in, that certain Collateral Agency and
Intercreditor Agreement, dated as of March 1, 2000 among AES
Red Oak, L.L.C., The Bank of New York, as Trustee, Dresdner
Bank AG, acting through its New York Branch, as DSR LOC
Provider, Dresdner Bank AG, acting through its New York
Branch, as PPA LOC Provider, Dresdner Bank AG, acting
through its New York Branch, as Working Capital Provider,
The Bank of New York, as Collateral Agent and The Bank of
New York, as Depositary Bank; or
_____ A replacement EPC Prepayment Letter of Credit has been
provided to the Collateral Agent by or on behalf of the
Contractor.
THE BANK OF NEW YORK,
as Collateral Agent
By: __________________________________
Name:
Title:
5.5 - 7
ANNEX C
(Form of Reduction Certificate)
Date: ___________________
TO: BankBoston, N.A.
150 Federal Street
Boston, MA 02110
Attn: Letter of Credit Department
RE: IRREVOCABLE LETTER OF CREDIT NO. __________ (THE "LETTER OF CREDIT")
The undersigned, Authorized Officer of The Bank of New York
("Collateral Agent") in its capacity as Collateral Agent, hereby certify to
BankBoston, N.A. with reference to the Letter of Credit that:
AES Red Oak, L.L.C. has delivered a Requisition and the conditions
set forth in Section 5.5(d) in that certain Collateral Agency and
Intercreditor Agreement, dated as of March 1, 2000 among AES Red Oak, L.L.C.,
The Bank of New York, as Trustee, Dresdner Bank AG, acting through its New
York Branch, as DSR LOC Provider, Dresdner Bank AG, acting through its New
York Branch, as PPA LOC Provider, Dresdner Bank AG, acting through its New
York Branch, as Working Capital Provider, The Bank of New York, as Collateral
Agent and The Bank of New York, as Depositary Bank have been met.
Accordingly, the available amount of the Letter of Credit is
automatically reduced by $_____________ to a new Stated Amount of Credit of
$_____________, which amount shall not be less than $30,782,500.
THE BANK OF NEW YORK,
as Collateral Agent
By: __________________________________
Name:
Title:
5.5 - 8
ANNEX D
(FORM OF CERTIFICATE OF FINAL ACCEPTANCE)
Date: _______________
TO: BankBoston, N.A.
150 Federal Street
Boston, MA 02110
Attn: Letter of Credit Department
RE: IRREVOCABLE LETTER OF CREDIT NO. __________ (THE "LETTER OF CREDIT")
The undersigned, Authorized Officer of The Bank of New York (the "Collateral
Agent") in its capacity as Collateral Agent hereby certify to BankBoston,
N.A. with reference to the Letter of Credit that:
_____ The conditions set forth in Section 5.5(f) of that
certain Collateral Agency and Intercreditor Agreement,
dated as of March 1, 2000 among AES Red Oak, L.L.C., The
Bank of New York, as Trustee, Dresdner Bank AG, acting
through its New York Branch, as DSR LOC Provider,
Dresdner Bank AG, acting through its New York Branch, as
PPA LOC Provider, Dresdner Bank AG, acting through its
New York Branch, as Working Capital Provider, The Bank of
New York, as Collateral Agent and The Bank of New York,
as Depositary Bank have been met. Accordingly, the Stated
Amount of Credit of the Letter of Credit is automatically
reduced to zero.
THE BANK OF NEW YORK,
as Collateral Agent
By: ___________________________________
Name:
Title:
5.5 - 9
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)