EXHIBIT 4.6
GILROY ENERGY CENTER, LLC
Issuer
CREED ENERGY CENTER, LLC
Guarantor
GOOSE HAVEN ENERGY CENTER, LLC
Guarantor
$301,658,000 4.00% SENIOR SECURED NOTES DUE AUGUST 15, 2011
INDENTURE
DATED AS OF SEPTEMBER 30, 2003
WILMINGTON TRUST COMPANY
Trustee and Collateral Agent
TABLE OF CONTENTS
Page
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ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE...................... 1
Section 1.01 Definitions.............................................. 1
Section 1.02 Other Definitions........................................ 23
Section 1.03 Trust Indenture Act Provisions........................... 24
Section 1.04 Rules of Construction.................................... 24
ARTICLE 2 THE SENIOR SECURED NOTES........................................ 25
Section 2.01 Form and Dating.......................................... 25
Section 2.02 Execution and Authentication............................. 26
Section 2.03 Registrar and Paying Agent............................... 27
Section 2.04 Paying Agent to Hold Money in Trust...................... 27
Section 2.05 Holder Lists............................................. 27
Section 2.06 Transfer and Exchange.................................... 27
Section 2.07 Replacement Senior Secured Notes......................... 38
Section 2.08 Outstanding Senior Secured Notes......................... 38
Section 2.09 Treasury Notes........................................... 39
Section 2.10 Temporary Senior Secured Notes........................... 39
Section 2.11 Cancellation............................................. 39
Section 2.12 Defaulted Interest....................................... 39
ARTICLE 3 REDEMPTION AND PREPAYMENT....................................... 40
Section 3.01 Notices to Trustee....................................... 40
Section 3.02 Selection of Senior Secured Notes to Be Redeemed......... 40
Section 3.03 Notice of Redemption..................................... 40
Section 3.04 Effect of Notice of Redemption........................... 41
Section 3.05 Deposit of Redemption Price.............................. 41
Section 3.06 Senior Secured Notes Redeemed In Part.................... 41
Section 3.07 Optional Redemption...................................... 42
Section 3.08 Mandatory Redemption..................................... 42
Section 3.09 Repurchase at the Option of Holders Upon a
Change of Control........................................ 43
Section 3.10 Special Mandatory Redemption............................. 43
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ARTICLE 4 COVENANTS ........................................................ 44
Section 4.01 Payment of Senior Secured Notes............................ 44
Section 4.02 Maintenance of Office or Agency............................ 44
Section 4.03 Reports.................................................... 45
Section 4.04 Compliance Certificate..................................... 45
Section 4.05 Stay, Extension and Usury Laws............................. 46
Section 4.06 Restricted Payments........................................ 46
Section 4.07 Incurrence Of Indebtedness/Liens........................... 46
Section 4.08 Limitations On Guarantees.................................. 46
Section 4.09 Prohibitions On Assignments................................ 46
Section 4.10 Books And Records.......................................... 47
Section 4.11 Prohibitions On Fundamental Changes........................ 47
Section 4.12 Corporate Existence........................................ 47
Section 4.13 Compliance With Laws....................................... 47
Section 4.14 Sale of Assets............................................. 47
Section 4.15 Insurance.................................................. 48
Section 4.16 Maintenance of EWG Status.................................. 48
Section 4.17 Governmental Approvals; Title.............................. 48
Section 4.18 Revenue Account............................................ 48
Section 4.19 Transactions with Affiliates............................... 48
Section 4.20 Exercise of Rights......................................... 49
Section 4.21 Amendments to Contracts.................................... 49
Section 4.22 Project Documents.......................................... 49
Section 4.23 Taxes...................................................... 49
Section 4.24 Additional Documents; Filings and Recordings............... 50
Section 4.25 Zero Liquid Discharge Facility............................. 50
Section 4.26 Budget and Expenditures.................................... 50
Section 4.27 Payments for Consent....................................... 50
Section 4.28 CDWR Contract Payment Invoices............................. 50
ARTICLE 5 DEFAULTS AND REMEDIES............................................. 51
Section 5.01 Events of Default.......................................... 51
Section 5.02 Enforcement of Remedies.................................... 53
Section 5.03 Enforcement of Remedies by Ambac Assurance................. 55
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Section 5.04 Other Remedies............................................. 55
Section 5.05 Waiver of Past Defaults.................................... 56
Section 5.06 Control by Majority........................................ 56
Section 5.07 Limitation on Suits........................................ 56
Section 5.08 Rights of Holders of Senior Secured Notes to
Receive Payment............................................ 57
Section 5.09 Collection Suit by Trustee................................. 57
Section 5.10 Trustee May File Proofs of Claim........................... 57
Section 5.11 Priorities................................................. 57
Section 5.12 Undertaking for Costs...................................... 58
ARTICLE 6 TRUSTEE .......................................................... 58
Section 6.01 Duties of Trustee.......................................... 58
Section 6.02 Rights of Trustee.......................................... 59
Section 6.03 Individual Rights of Trustee............................... 60
Section 6.04 Trustee's Disclaimer....................................... 60
Section 6.05 Notice of Defaults......................................... 60
Section 6.06 Reports by Trustee to Holders of the Senior Secured Notes.. 61
Section 6.07 Compensation and Indemnity................................. 61
Section 6.08 Replacement of Trustee..................................... 62
Section 6.09 Successor Trustee by Merger, etc........................... 63
Section 6.10 Eligibility; Disqualification.............................. 63
Section 6.11 Preferential Collection of Claims Against Issuer........... 63
Section 6.12 Default Rate of Interest................................... 63
Section 6.13 Receipt of Documents....................................... 63
ARTICLE 7 LEGAL DEFEASANCE AND COVENANT DEFEASANCE.......................... 64
Section 7.01 Option to Effect Legal Defeasance or Covenant Defeasance... 64
Section 7.02 Legal Defeasance and Discharge............................. 64
Section 7.03 Covenant Defeasance........................................ 64
Section 7.04 Conditions to Legal or Covenant Defeasance................. 65
Section 7.05 Deposited Money to be Held in Trust; Other
Miscellaneous Provisions................................... 66
Section 7.06 Repayment to Issuer........................................ 66
Section 7.07 Reinstatement.............................................. 66
Section 7.08 Payments pursuant to Financial Guaranty Insurance.......... 67
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ARTICLE 8 AMENDMENT, SUPPLEMENT AND WAIVER.................................. 67
Section 8.01 Consent of Ambac Assurance................................. 67
Section 8.02 Without Consent of Holders of Senior Secured Notes......... 67
Section 8.03 With Consent of Holders of Senior Secured Notes............ 68
Section 8.04 Revocation and Effect of Consents.......................... 69
Section 8.05 Notation on or Exchange of Senior Secured Notes............ 69
Section 8.06 Trustee to Sign Amendments, etc............................ 69
Section 8.07 Authorization and Direction to Trustee to Release Certain
Liens and Consent to Certain Modifications of the Project
Documents.................................................. 70
Section 8.08 Conformity with Trust Indenture Act........................ 70
ARTICLE 9 GUARANTEE ........................................................ 70
Section 9.01 Guarantee.................................................. 70
Section 9.02 Limitation on Guarantor Liability.......................... 71
Section 9.03 Execution and Delivery of Guarantee........................ 71
Section 9.04 Guarantors May Not Merge, Consolidate, etc................. 71
ARTICLE 10 SATISFACTION AND DISCHARGE....................................... 72
Section 10.01 Satisfaction and Discharge................................. 72
Section 10.02 Application of Trust Money................................. 73
ARTICLE 11 MISCELLANEOUS.................................................... 73
Section 11.01 Trust Indenture Act Controls............................... 73
Section 11.02 Notices.................................................... 73
Section 11.03 Communication by Holders of Senior Secured Notes with
Other Holders of Senior Secured Notes...................... 76
Section 11.04 Certificate and Opinion as to Conditions Precedent......... 77
Section 11.05 Statements Required in Certificate or Opinion.............. 77
Section 11.06 Rules by Trustee and Agents................................ 77
Section 11.07 No Personal Liability of Directors, Officers,
Employees and Stockholders................................. 77
Section 11.08 Governing Law.............................................. 77
Section 11.09 No Adverse Interpretation of Other Agreements.............. 78
Section 11.10 Successors................................................. 78
Section 11.11 Severability............................................... 78
Section 11.12 Counterpart Originals...................................... 78
Section 11.13 Table of Contents, Headings, etc........................... 78
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ARTICLE 12 FINANCIAL GUARANTY INSURANCE..................................... 78
Section 12.01 Payments Pursuant to Financial Guaranty Insurance.......... 78
Section 12.02 Notices to be sent to Surveillance Department of
Ambac Assurance............................................ 80
Section 12.03 Notices to be sent to General Counsel of Ambac Assurance... 80
Section 12.04 Miscellaneous.............................................. 80
(i) THE SENIOR DEBT SHALL FIRST BE ENTITLED TO RECEIVE PAYMENT
IN FULL IN DOLLARS OF THE PRINCIPAL THEREOF, INTEREST
THEREON, AND ALL OTHER AMOUNTS PAYABLE THEREON OR
THEREUNDER (INCLUDING, WITHOUT LIMITATION, FEES, EXPENSES
AND INDEMNITIES), ACCRUING BEFORE AND AFTER THE
COMMENCEMENT OF THE PROCEEDINGS, BEFORE THE SUBORDINATED
CREDITOR IS ENTITLED TO RECEIVE ANY PAYMENT ON ACCOUNT OF
THE SUBORDINATED DEBT;
AND................................................................... 2
(ii) ANY PAYMENT OR DISTRIBUTION OF ASSETS OF [THE
ISSUER/CREED/GOOSE HAVEN] OF ANY KIND OR CHARACTER, WHETHER
IN CASH, PROPERTY OR SECURITIES TO WHICH THE SUBORDINATED
CREDITOR WOULD BE ENTITLED, BUT FOR THE PROVISIONS OF THIS
AGREEMENT, SHALL BE PAID OR DISTRIBUTED 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 OTHER TRUSTEE OR AGENT, DIRECTLY
TO THE TRUSTEE IN RESPECT OF THE SENIOR DEBT, TO THE EXTENT
NECESSARY TO MAKE PAYMENT IN FULL OF ALL PRINCIPAL,
INTEREST (ACCRUING BEFORE OR AFTER COMMENCEMENT OF
PROCEEDINGS) AND ALL OTHER AMOUNTS PAYABLE ON THE SENIOR
DEBT, AND ALL FEES, EXPENSES AND INDEMNITIES RELATING
THERETO, REMAINING UNPAID, AFTER GIVING EFFECT TO ANY PRIOR
OR CONCURRENT PAYMENT OR DISTRIBUTION IN RESPECT OF THE
SENIOR DEBT........................................................... 2
EXHIBITS
Exhibit A: FORM OF NOTES DUE AUGUST 15, 2011
Exhibit B: FORM OF CERTIFICATE OF TRANSFER
Exhibit C: FORM OF CERTIFICATE OF EXCHANGE
Exhibit D: FORM OF CERTIFICATE OF ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
Exhibit E: FORM OF GUARANTEE
Exhibit F: FORM OF SUBORDINATION AGREEMENT
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INDENTURE dated as of September 30, 2003 among Gilroy Energy Center, LLC,
a Delaware limited liability company ("Issuer"), Creed Energy Center, LLC, a
Delaware limited liability company ("Creed"), Goose Haven Energy Center, LLC, a
Delaware limited liability company ("Goose Haven", together with Creed,
individually, a "Guarantor" and, collectively, the "Guarantors") and Wilmington
Trust Company, a banking corporation (in its capacity as trustee hereunder, the
"Trustee"; and in its capacity as collateral agent hereunder, the "Collateral
Agent").
Issuer, the Guarantors and Trustee agree as follows for the benefit of
each other and for the equal and ratable benefit of the Holders of the 4.00%
Senior Secured Notes due August 15, 2011 (the "Senior Secured Notes"):
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01 Definitions.
"144A Global Note" means a global note in the form of Exhibit A1 hereto
bearing the Global Note Legend and the Private Placement Legend and deposited
with or on behalf of, and registered in the name of, the Depositary or its
nominee that will be issued in a denomination equal to the outstanding principal
amount of the Senior Secured Notes sold in reliance on Rule 144A.
"Acceptable Letter of Credit Issuer" means a financial institution whose
senior long-term unsecured and unenhanced debt is rated at least A by S&P and A2
by Moody's and who maintains an office or corresponding bank in the United
States; provided that if the credit rating of such financial institution's
senior long-term unsecured and unenhanced debt fails at any time to be equal to
the ratings set forth herein, Issuer shall, within 30 days following such
ratings downgrade, cause such financial institution's letter of credit to be
replaced with one or a combination of cash, Permitted Investments and a
Qualifying Letter of Credit.
"Accounts" means the Operating Account and the Depositary Accounts
established under the Depositary Agreement.
"Additional Project Documents" means, with respect to a Project, any
material contracts or agreements related to the construction, testing,
maintenance, repair, operation or use of such Project entered into by, or
assigned to, Issuer or either Guarantor owning or leasing such Project and any
other Person; provided that, unless such contracts and agreements are not
readily replaceable in the ordinary course of business, all such contracts and
agreements providing for the noncontingent payments by Issuer or such Guarantor
of less than $2,500,000 per annum or $5,000,000 in the aggregate among Issuer
and the Guarantors per annum, or the provision to Issuer or such Guarantor of
less than $2,500,000 per annum or $5,000,000 in the aggregate among Issuer and
the Guarantors per annum in value of goods or services, or providing for a
maximum term of less than one year shall be deemed to not constitute an
Additional Project Document.
"Affiliate" means, with respect to a Person, any other Person that,
directly or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with such first Person. The term
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of a Person, whether
through the ownership of voting securities, by contract or otherwise.
"Affiliated Party Subordination Agreement" means, for each Affiliate of
Calpine Corporation providing goods or services to a Project, the contract or
agreement entered into by such Affiliate in favor of Collateral Agent for the
subordination of fees as provided therein.
"Agent" means any Registrar, Paying Agent, co-registrar or additional
paying agent.
"Ambac Assurance" shall mean Ambac Assurance Corporation, a
Wisconsin-domiciled stock insurance company.
"Applicable Procedures" means, with respect to any transfer or exchange of
or for beneficial interests in any Global Note, the rules and procedures of the
Depositary, Euroclear and Clearstream that apply to such transfer or exchange.
"Bankruptcy Event" shall be deemed to occur, with respect to Issuer or
either Guarantor, (1) if Issuer or such Guarantor, pursuant to or within the
meaning of Bankruptcy Law (A) commences a voluntary case, (B) consents to the
entry of an order for relief against it in an involuntary case, (C) consents to
the appointment of a custodian of it or for all or substantially all of its
property, (D) makes a general assignment for the benefit of its creditors, or
(E) generally is not paying its debts as they become due; or (2) if a court of
competent jurisdiction enters an order or decree under any Bankruptcy Law that:
(A) is for relief against Issuer or either Guarantor; (B) appoints a custodian
of Issuer or either Guarantor or for all or substantially all of the property of
Issuer or either Guarantor; or (C) orders the liquidation of Issuer or either
Guarantor; and the order or decree remains unstayed and in effect for 60
consecutive days.
"Bankruptcy Law" means Title 11, United States Code, and any other state
or federal insolvency, reorganization, moratorium or similar law for the relief
of debtors, or any successor statute.
"Business Day" means any day other than a Legal Holiday.
"Calpine Corporation" means Calpine Corporation, a Delaware corporation.
"Calpine Energy Services" means Calpine Energy Services, L.P., a Delaware
limited partnership.
"Cash Flow Available for Debt Service" means, for any period, (a) all
revenues (including interest and the proceeds of any business interruption
insurance but excluding any other insurance proceeds and other similar
non-recurring receipts), including all Project Revenues received in such period
by Issuer and the Guarantors, less (b) O&M Costs paid in such period.
"Casualty Event" means an event which causes all or a portion of any
Project to be damaged, destroyed or rendered unfit for normal use for any reason
whatsoever, other than a Condemnation Event or a Title Event.
"Casualty Insurance Proceeds" means any and all proceeds of any insurance,
indemnity, warranty or guarantee payable from time to time with respect to any
Casualty Event, other than proceeds of business interruption insurance.
"CCEF" means Calpine California Energy Finance, LLC, a Delaware limited
liability company.
"Change of Control" means the occurrence of any of the following: (i) the
sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or a series of related transactions, of all or
substantially all of the assets of Issuer or either Guarantor to any "person" or
2
"group" (as each such term is used in Section 13(d)(3) and 14(d)(2) of the
Exchange Act) other than Calpine, its Related Parties and/or any Qualified
Transferee; (ii) the adoption of a plan relating to the liquidation or
dissolution of Issuer or either Guarantor; or (iii) the consummation of any
transaction (including, without limitation, any merger or consolidation) the
result of which is that any person, other than Calpine, its Related Parties
and/or any Qualified Transferee, becomes the "beneficial owner" (as such term is
defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that a
person shall be deemed to have "beneficial ownership'" of all securities that
such person has the right to acquire, whether such right is currently
exercisable or is exercisable only upon the occurrence of a subsequent
condition) of any ownership interest in the manager of Holding Company; provided
that, notwithstanding the foregoing clauses (i), (ii) and (iii), a Change of
Control will not occur if Moody's and S&P confirm that no Ratings Downgrade will
occur as a result of any of the foregoing events.
"Clearstream" means Clearstream Banking, SA.
"Closing Date" means the date the Senior Secured Notes are issued and
delivered to the Initial Purchaser.
"Collateral" means, collectively, all real, personal and mixed property
which is subject or is intended to become subject to the security interests or
Liens granted pursuant to any of the Collateral Documents.
"Collateral Agent" means Wilmington Trust Company, as collateral agent for
the benefit of the Secured Parties, together with its successors and assigns.
"Collateral Documents" means, collectively, the Deeds of Trust, the
Depositary Agreement, the Pledge and Security Agreements, the Security
Agreements, each consent to assignment of a Project Document, the Escrow
Agreement, if any, and any other agreement or instrument granting a Lien on the
real, personal and/or mixed property and ownership interests of Issuer or either
Guarantor in favor of Collateral Agent for the benefit of the Secured Parties
and any fixture filings, financing statements or other certificates filed or
recorded in connection with the foregoing.
"Condemnation Event" means any compulsory transfer or taking or transfer
under threat of compulsory transfer or taking of any material part of the
Collateral or any Project by any Governmental Authority.
"Condemnation Proceeds" means any and all payments (in any form
whatsoever) made or due and payable from time to time in connection with any
Condemnation Event by any Governmental Authority (or any person acting under
color of Governmental Authority).
"Corporate Trust Office of the Trustee" shall be at the address of the
Trustee specified in Section 11.02 hereof or such other address as to which the
Trustee may give notice to the Issuer.
"Co-Tenancy and O&M Agreement" means that certain Cotenancy, Operating and
Maintenance Agreement among Issuer, Delta Energy Center, LLC, a Delaware limited
liability company, Los Medanos Energy Center LLC, a Delaware limited liability
company, and CPN Pipeline Company, dated as of September 12, 2003.
"Creed Project" means that certain Unit comprising an approximately 45MW
gas fired, simple cycle power generation plant and associated tangible and
intangible personal property and real property located in unincorporated area in
Solano County, California.
3
"Creed" means Creed Energy Center, LLC, a Delaware limited liability
company.
"Creed Site Lease" means that certain Amended and Restated Lease (Tract 1)
dated as of February 11, 2002, by and between Creed (formerly known as Solano
Energy Center I, LLC), as lessee, and Richard M. Emigh, as lessor, (which lessor
interest was assigned under that certain Amended and Restated Assignment of
Lessor's Interest in Leases, effective as of February 11, 2002, by and between
Richard M. Emigh and Lambie Industrial Park, Inc.), as amended by the First
Amendment to Amended and Restated Lease (Tract 1), dated as of May 20, 2003,
among Creed, Richard M. Emigh and Lambie Industrial Park, Inc., and as further
amended by the Second Amendment to Amended and Restated Lease (Tract 1), dated
as of the Closing Date.
"Debt Payment Account" means the account of such name created under the
Depositary Agreement.
"Debt Service Coverage Ratio" for any period means the ratio of the (i)
sum of all Cash Flow Available for Debt Service for such period to (ii) the
aggregate of scheduled principal and interest payments on the Senior Secured
Notes and all other Permitted Indebtedness for such period.
"Debt Service Reserve Account" or "DSRA" means the account of such name
created under the Depositary Agreement.
"Debt Service Reserve Letter of Credit" means a Qualifying Letter of
Credit provided with respect to the Debt Service Reserve Account.
"Deed of Trust" means (a) that certain Gilroy Deed of Trust, Assignment of
Rents, Security Agreement and Fixture Filing, dated as of the Closing Date by
Issuer to Stewart Title Company for the benefit of Collateral Agent, (b) that
certain Lambie Deed of Trust, Assignment of Rents, Security Agreement and
Fixture Filing dated as of the Closing Date by Issuer to Stewart Title Company
for the benefit of Collateral Agent, (c) that certain Feather River Deed of
Trust, Assignment of Rents, Security Agreement and Fixture Filing dated as of
the Closing Date by Issuer to Stewart Title Company for the benefit of
Collateral Agent, (d) that certain King City Deed of Trust, Assignment of Rents,
Security Agreement and Fixture Filing dated as of the Closing date by Issuer to
Stewart Title Company for the benefit of Collateral Agent, (e) that certain Yuba
City Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing
dated as of the Closing Date by Issuer to Stewart Title Company for the benefit
of Collateral Agent, (f) that certain Wolfskill Deed of Trust, Assignment of
Rents, Security Agreement and Fixture Filing dated as of the Closing Date by
Issuer to Stewart Title Company for the benefit of Collateral Agent, (g) that
certain Riverview Deed of Trust, Assignment of Rents, Security Agreement and
Fixture Filing dated as of the Closing Date by Issuer to Stewart Title Company
for the benefit of Collateral Agent, (h) that certain Deed of Trust, Assignment
of Rents, Security Agreement and Fixture Filing dated as of the Closing Date by
Goose Haven to Stewart Title Company for the benefit of Collateral Agent and (i)
that certain Deed of Trust, Assignment of Rents, Security Agreement and Fixture
Filing dated as of the Closing Date by Creed to Stewart Title Company for the
benefit of Collateral Agent.
"Default" means an event or condition that, with the giving of notice,
lapse of time or failure to satisfy certain specified conditions, or any
combination thereof, would become an Event of Default.
"Definitive Note" means a certificated Senior Secured Note registered in
the name of the Holder thereof and issued in accordance with Section 2.06
hereof, in the form of Exhibit A hereto except that
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such Senior Secured Note shall not bear the Global Note Legend and shall not
have the "Schedule of Exchanges of Interests in the Global Note" attached
thereto.
"Depositary" means Wilmington Trust Company, as Depositary under the
Depositary Agreement.
"Depositary Accounts" means the accounts of such name established under
the Depositary Agreement.
"Depositary Agent" means, with respect to the Senior Secured Notes
issuable or issued in whole or in part in global form, the Person specified in
Section 2.03 hereof as the Depositary Agent with respect to the Senior Secured
Notes, and any and all successors thereto appointed as depositary agent
hereunder and having become such pursuant to the applicable provision of this
Indenture.
"Depositary Agreement" means the Deposit and Disbursement Agreement, dated
as of the Closing Date, among Issuer, the Guarantors, Collateral Agent and
Depositary.
"Distribution Account" means the account of such name created under the
Depositary Agreement.
"Dollars" and "$" means lawful money of the United States.
"Due for Payment" means, when referring to the principal of the Senior
Secured Notes, when the scheduled maturity date or applicable scheduled payment
date has been reached and does not refer to any earlier date on which payment is
due by reason of call for redemption, acceleration or other advancement of
maturity; and, when referring to interest on the Senior Secured Notes, when the
applicable scheduled date for payment of interest has been reached.
"DWR" means the State of California Department of Water Resources.
"DWR Contract" means, collectively, (a) that certain Master Power Purchase
and Sale Agreement comprised of (i) the EEI form of Master Power Purchase and
Sale Agreement (Version 2.1; modified 4/25/00) and (ii) a Cover Sheet thereto
dated as of February 6, 2001, as amended and restated on February 26, 2001, as
further amended and restated on April 22, 2002 (collectively, the "Master
Purchase and Sale Agreement"), (b) that certain Master Power Purchase and Sale
Agreement Confirmation Letter (Peaking Capacity), dated as of February 27, 2001,
as such confirmation letter was amended and restated on April 22, 2002, by that
Master Power Purchase and Sale Agreement Amended and Restated Confirmation
Letter for 495MW for the period ending July 31, 2011, commonly referred to as
"Calpine 3", in each case between Issuer (as assignee to Calpine Energy
Services) and DWR and (c) that certain letter agreement dated as of July 21,
2003, between Issuer (as assignee to Calpine Energy Services) and DWR; provided
that, for the avoidance of doubt, the term "DWR Contract shall not include (i)
any confirmation letter entered into between Calpine Energy Services and DWR
other than the confirmation letter expressly referenced in (b) above (the
"Calpine 3 Confirmation") or (ii) the Master Purchase and Sale Agreement except
to the extent that it applies to the Calpine 3 Confirmation.
"Electric Interconnection Agreement" means each of (1) those certain
agreements between PG&E and Issuer necessary to maintain the electrical
interconnects that provide service to and from the Issuer Projects, (2) those
certain agreements between PG&E and Creed necessary to maintain the electrical
interconnects that provide service to and from the Creed Project and (3) those
certain agreements between
5
PG&E and Goose Haven necessary to maintain the electrical interconnects that
provide service to and from the Goose Haven Project.
"Eligible Facility" means an "eligible facility" as that term is defined
in 15 U.S.C.ss.79z-5a(a-2).
"Environmental Law" means any and all Government Rules relating to human
health or the environment, or the release of Hazardous Materials into the indoor
or outdoor environment including, without limitation, ambient air, surface
water, groundwater, wetlands, land or subsurface strata or otherwise relating to
the use of Hazardous Material, whether now or hereafter in effect. Environmental
Laws shall include, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, the Toxic
Substances Control Act, as amended, the Hazardous Materials Transportation Act,
as amended, the Resource Conservation and Recovery Act, as amended, the Clean
Water Act, as amended, the Safe Drinking Water Act, as amended, the Federal
Clean Air Act of 1955, as amended, the Occupational Safety and Health Act, as
amended, and all analogous laws promulgated or issued by any state or other
Governmental Authority.
"Escrow Account" means the account of such name created under the Escrow
Agreement, if any.
"Escrow Agent" means Wilmington Trust Company, as escrow agent under the
Escrow Agreement, if any.
"Escrow Agreement" means that certain Escrow and Security Agreement, if
any, that is dated as of the Closing Date between Issuer and Escrow Agent.
"Euroclear" means Euroclear Bank S.A./N.V., as operator of the Euroclear
system.
"Event of Default" shall have the meaning set forth in Section 5.01
hereof.
"EWG" means an "exempt wholesale generator" as that term is defined in 15
U.S.C. ss. 79z-5a(a-1).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Feather River" means Feather River Energy Center, LLC, Delaware limited
liability company.
"Feather River Project" means that certain Unit comprising an
approximately 45 MW gas fired, simple cycle power generation plant and
associated tangible and intangible personal property and real property located
in the City of Yuba City, Sutter County, California.
"Feather River Site Lease" means that certain Ground Lease and Easement,
dated as of May 2, 2002, by and between the City of Yuba City, California, as
lessor, and Feather River, as lessee (which lessee interest was assigned under
that certain Assignment of Interests in Lease and Easement, dated as of June 23,
2003, by and between Feather River and Issuer), as amended by that certain First
Amendment to Ground Lease and Easement, dated as of the Closing Date, by and
between Issuer and the City of Yuba City, California.
"FERC" means the United States Federal Energy Regulatory Commission.
"Final Maturity Date" means August 15, 2011.
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"Final Payment Reserve Account" means the account of such name created
under the Depositary Agreement.
"Final Payment Reserve Schedule" means the schedule attached to the
Depositary Agreement setting forth the remaining payments to be made for the
development, construction and commissioning of the Projects.
"Financial Guaranty Insurance" means the financial guaranty insurance
policy issued by Ambac Assurance insuring the payment of scheduled principal and
interest on the Senior Secured Notes as provided therein.
"Financing Documents" means the Senior Secured Notes, this Indenture, the
Note Purchase Agreement, the Guarantees, the Collateral Documents and any
Affiliated Party Subordination Agreements.
"Fixed O&M Costs" means any O&M Costs that do not vary or increase as a
result of the dispatch of one or more Projects, it being acknowledged and agreed
that the dispatch levels of the Projects assumed in each Operating Budget shall
be zero.
"GAAP" means generally accepted accounting principles in the United States
of America, as in effect from time to time.
"Gas Interconnection Agreement" means each of (1) those certain agreements
between PG&E and Issuer necessary to maintain the gas interconnects that provide
service to the Issuer Projects, (2) those certain agreements between PG&E and
Creed necessary to maintain the gas interconnects that provide service to the
Creed Project, and (3) those certain agreements between PG&E and Goose Haven
necessary to maintain the gas interconnects that provide service to the Goose
Haven Project.
"Gilroy Pledge Agreement" means that certain Gilroy Energy Center LLC
Pledge and Security Agreement (Pledged Equity Interests), dated as of the
Closing Date, by and among Holding Company, Issuer and Collateral Agent.
"Gilroy Project" means those certain three Units comprising an
approximately 135 MW gas fired, simple cycle power generation plant and
associated tangible and intangible personal property and real property located
in the City of Gilroy, County of Santa Clara, California.
"Gilroy Shared Facilities Agreements" means each of (i) that certain
Shared Facilities Agreement, dated as of May 10, 2002, by and between Calpine
Gilroy Cogen, L.P., a Delaware limited partnership and Issuer and (ii) that
certain Shared Facilities Agreement, dated as of May 10, 2002, by and among
Calpine Gilroy Cogen, L.P., Issuer and ConAgra Foods, Inc., a Delaware
corporation.
"Gilroy Shared Use Agreement" means that certain Shared Permit Agreement
dated as of May 14, 2002, between Calpine Gilroy Cogen, L.P., Issuer and Calpine
Corporation.
"Global Notes" means, individually and collectively, each of the
Restricted Global Notes and the Unrestricted Global Notes, in the form of
Exhibit A hereto issued in accordance with the terms hereof.
"Global Note Legend" means the legend set forth in Section 2.06(f)(ii),
which is required to be placed on all Global Notes issued under this Indenture.
7
"Goose Haven Project" means that certain Unit comprising an approximately
45MW gas fired, simple cycle power generation plant and associated tangible and
intangible personal property and real property located in an unincorporated area
in Solano County, California.
"Goose Haven" means Goose Haven Energy Center, LLC, a Delaware limited
liability company.
"Goose Haven Site Lease" means that certain Amended and Restated Lease
(Tract 3) dated as of February 11, 2002, by and between Goose Haven (formerly
known as Solano Energy Center III, LLC), as lessee, and Richard M. Emigh, as
lessor (which lessor interest was assigned under that certain Amended and
Restated Assignment of Lessor's Interest in Leases, effective as of February 11,
2002, by and between Richard M. Emigh and Lambie Industrial Park, Inc.), as
amended by the First Amendment to Amended and Restated Lease (Tract 3), dated as
of May 20, 2003, among Goose Haven, Richard M. Emigh and Lambie Industrial Park,
Inc., and as further amended by the Second Amendment to Amended and Restated
Lease (Tract 3), dated as of the Closing Date.
"Governmental Approvals" means all governmental approvals, authorizations,
consents, decrees, permits, waivers, privileges and filings with all
Governmental Authorities required at a particular time to be obtained for the
construction, operation and maintenance of the Projects.
"Governmental Authority" means the government of any federal, state,
municipal or other political subdivision in which a Project is located, and any
other government or political subdivision thereof exercising jurisdiction over a
Project or any party to any of the Project Documents, including all agencies and
instrumentalities of such governments and political subdivisions.
"Government Rule" means any statute, law, regulation, ordinance, rule,
judgment, order, decree, permit, concession, grant, franchise, code, license,
directive, guideline, policy or rule of common law, requirement of, or other
governmental restriction or any judicial or administrative order, consent decree
or judgment or similar form of decision of or determination by, or any
interpretation or administration of any of the foregoing by, any Governmental
Authority, whether now or hereafter in effect.
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America, and the payment for which the
United States pledges its full faith and credit.
"Guarantee" means the unconditional and irrevocable guarantee by each of
the Guarantors of the obligations of Issuer under this Indenture, a notation of
which will be executed on the Closing Date by each of the Guarantors,
substantially in the form attached hereto as Exhibit E.
"Guarantor Pledge Agreements" means (a) that certain Creed Energy Center
LLC Pledge and Security Agreement (Pledged Equity Interests), dated as of the
Closing Date, by and among Issuer, Creed and Collateral Agent and (b) that
certain Goose Haven Energy Center LLC Pledge and Security Agreement (Pledged
Equity Interests), dated as of the Closing Date, by and among Issuer, Goose
Haven and Collateral Agent.
"Guarantors" means Creed and Goose Haven, as guarantors under the
Guarantees executed in accordance with the provisions of this Indenture, and
their respective successors and assigns.
"Hazardous Material" means: (i) any petroleum or petroleum products,
flammable explosives, radioactive materials, asbestos in any form that is or
could become friable, urea formaldehyde foam insulation and transformers or
other equipment that contain dielectric fluid containing polychlorinated
biphenyls (PCBs), (ii) any chemicals or other materials or substances which are
now or hereafter become
8
defined as or included in the definition of "hazardous substances," "hazardous
wastes," "hazardous materials," "extremely hazardous wastes," "restricted
hazardous wastes," "toxic substances," "toxic pollutants," "contaminants",
"pollutants", or words of similar import under any Environmental Law and (iii)
any other chemical or other material or substance, exposure to which is now or
hereafter prohibited, limited or regulated as such under any Environmental Law
including the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901 et
seq., the Comprehensive Environmental Response Compensation and Liability Act,
42 U.S.C. Section 6901 et seq., or any similar state statute.
"Holder" means a Person in whose name a Senior Secured Note is registered.
"Holding Company" means GEC Holdings, LLC, a Delaware limited liability
company.
"IAI Global Notes" means a Global Note substantially in the form of
Exhibit A1 hereto bearing the Global Note Legend and the Private Placement
Legend and deposited with or on behalf of and registered in the name of the
Depositary or its nominee that will be issued in a denomination equal to the
outstanding principal amount of the Notes sold to Institutional Accredited
Investors.
"Indebtedness" of any Person means, at any date, without duplication, (i)
all obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments
(excluding "deposit only" endorsements on checks payable to the order of such
Person), (iii) all obligations of such Person to pay the deferred purchase price
of property or services (except accounts payable and similar obligations arising
in the ordinary course of business shall not be included herein), (iv) all
obligations of such Person as lessee under capital leases to the extent required
to be capitalized on the books of such Person in accordance with GAAP and (v)
all obligations of others of the type referred to in clause (i) through (iv)
above guaranteed by such Person, whether or not secured by a lien or other
security interest on any asset of such Person.
"Indenture" means this Indenture to be dated as of the Closing Date, among
Issuer, the Guarantors and the Trustee providing for the issuance of Senior
Secured Notes.
"Independent Engineer" means R.W. Beck, Inc., or another widely recognized
independent engineering firm or engineer retained as Independent Engineer by
Issuer.
"Independent Engineer's Report" means the Independent Engineer's Report
prepared by the Independent Engineer and included as Appendix B in the Offering
Circular.
"Independent Investment Banker" means one of the Reference Treasury
Dealers appointed by the Issuer.
"Indirect Participant" means a Person who holds a beneficial interest in a
Global Note through a Participant.
"Initial Purchaser" means Goldman Sachs International.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act, who is not also a QIB.
"Insurance Consultant" means Marsh USA, Inc., or its successors.
9
"Insurance Trustee" means The Bank of New York, New York, New York or any
successor thereto, under the Financial Guaranty Insurance.
"Insurer Default" means (i) Ambac Assurance fails to make a scheduled
payment under any Financial Guaranty Insurance with respect to all or a portion
of the Senior Secured Notes when such payment becomes due and payable, or (ii)
Ambac Assurance becomes subject to bankruptcy, insolvency, rehabilitation or
other delinquency proceedings.
"Issuer" means Gilroy Energy Center, LLC, a Delaware limited liability
company.
"Issuer Projects" means, collectively, the Gilroy Project, the King City
Project, the Yuba City Project, the Feather River Project, the Lambie Project,
the Riverview Project and the Wolfskill Project.
"King City Project" means that certain Unit comprising an approximately 45
MW gas fired, simple cycle power generation plant and associated tangible and
intangible personal property and real property located in King City, Monterey
County, California.
"King City Shared Use Agreement" means that certain Shared Permit
Agreement, dated as of March 31, 2003, by and among Calpine King City Cogen,
LLC, Issuer and Calpine Corporation.
"Lambie" means Lambie Energy Center, LLC, a Delaware limited liability
company.
"Lambie Project" means that certain Unit comprising an approximately 45MW
gas fired, simple cycle power generation plant and associated tangible and
intangible personal property and real property located in an unincorporated area
in Solano County, California.
"Lambie Site Lease" means that certain Amended and Restated Lease (Tract
2) dated as of February 11, 2002, by and between Lambie (formerly known as
Solano Energy Center II, LLC), as lessee, and Richard M. Emigh, as lessor (which
lessor interest was assigned under that certain Amended and Restated Assignment
of Lessor's Interest in Leases, effective as of February 11, 2002, by and
between Richard M. Emigh and Lambie Industrial Park, Inc.), as amended by the
First Amendment to Amended and Restated Ground Lease (Tract 2), dated as of June
7, 2002, among Lambie, Richard M. Emigh and Lambie Industrial Park, Inc., as
further amended by the certain Second Amendment to Amended and Restated Lease
(Tract 2), dated as of May 20, 2003, and as further amended by the Third
Amendment to Amended and Restated Lease (Tract 2), dated as of the Closing Date,
among Issuer, as lessee (which lessee interest was assigned under that certain
Assignment of Interest in Lease, dated as of June 23, 2003, by and between
Lambie and Issuer), Richard M. Emigh, and Lambie Industrial Park, Inc.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York or at a place of payment are authorized by
law, regulation or executive order to remain closed. If a payment date is a
Legal Holiday at a place of payment, payment may be made at that place on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue on
such payment for the intervening period.
"Legal Requirements" means, as to any Person, the articles of
incorporation, bylaws or other organizational or governing documents of such
Person, and any requirement under a Governmental Approval, and any Government
Rule in each case applicable to or binding upon such Person or any of its
properties or to which such Person or any of its properties is subject.
10
"Lien" means any mortgage, pledge, hypothecation, assignment, mandatory
deposit arrangement with any Person owning Indebtedness of the debtor,
encumbrance, lien (statutory or other), preference, priority or other security
agreement of any kind or nature whatsoever which has the substantial effect of
constituting a security interest, including, without limitation, any conditional
sale or other title retention agreement, any financing lease having
substantially the same effect as any of the foregoing and the filing of any
financing statement or similar instrument under the Uniform Commercial Code or
comparable law of any jurisdiction, domestic or foreign.
"Loss Proceeds" means, collectively, Casualty Insurance Proceeds and
Condemnation Proceeds.
"Loss Proceeds Account" means the account of such name created under the
Depositary Agreement.
"Major Maintenance" means labor, materials and other direct expenses for
any overhaul or major maintenance procedure for the Projects (including major
maintenance such as turbine overhauls) which require significant disassembly or
shutdown of the relevant facility or portion thereof pursuant to manufacturers'
guidelines or recommendations, engineering or operating considerations or the
requirements of any applicable Legal Requirement.
"Major Maintenance Costs" means all costs for labor, materials and other
direct expenses for any Major Maintenance.
"Major Maintenance Reserve Account" means the account of such name created
under the Depositary Agreement.
"Major Maintenance Schedule" means the schedule provided by Operator in
accordance with the O&M Agreement setting forth the four-year forecast of Major
Maintenance Costs and specifying the Minimum Major Maintenance Reserve Amount,
if any, for each Payment Date in such year and each of the succeeding two years
in order to cause sufficient amounts to be available for performance of Major
Maintenance.
"Make Whole Premium" means a premium equal to the excess, if any, of (a)
the present value of all scheduled principal and interest payments on all Senior
Secured Notes to be redeemed (discounted at a rate equal to the sum of the yield
to maturity of U.S. Treasury securities having an average life equal to the
remaining average life of the Senior Secured Notes, plus 50 basis points) over
(b) the principal amount of the Senior Secured Notes to be redeemed.
"Material Adverse Effect" means a material adverse effect (taking into
account all then concurrent material adverse effects) on (i) the results of
operations or financial condition of Issuer and the Guarantors taken as a whole
or the Projects taken as a whole, (ii) the validity or priority of the liens on
the Collateral, (iii) the ability of Issuer and the Guarantors, taken as a
whole, to observe and perform their respective material obligations under the
Transaction Documents to which they are a party or (iv) the ability of the
Trustee or the Collateral Agent to enforce any of the payment or other material
obligations of Issuer or either Guarantor under the Financing Documents to which
they are parties.
"Megawatt" or MW" means one million watts.
"Minimum Debt Service Reserve Amount" means an amount equal to the amount
of scheduled principal and interest on the Senior Secured Notes that will be due
and payable on the next succeeding Payment Date pursuant to the Indenture.
11
"Minimum Final Payment Reserve Amount" means the amount, if any, required
to be on deposit in the Final Payment Reserve Account pursuant to the Final
Payment Reserve Schedule.
"Minimum Major Maintenance Reserve Amount" means, as of each Payment Date,
the amount, if any, required to be on deposit in the Major Maintenance Account
pursuant to the Major Maintenance Schedule.
"Monthly Date" means the fifteenth day of each calendar month.
"Moody's" means Moody's Investors Service, Inc., a corporation organized
and existing under the laws of the State of Delaware, and its successors and
assigns.
"Nonpayment" means the failure of Issuer to have provided sufficient funds
to the Trustee, Paying Agent or Depositary for payment in full of all principal
of and interest on the Senior Secured Notes which are Due for Payment.
"Note Custodian" means the Trustee, as custodian with respect to the
Senior Secured Notes in global form, or any successor entity thereto.
"Note Purchase Agreement" means the Note Purchase Agreement among Issuer,
the Guarantors and the Initial Purchaser for the sale and purchase of the Senior
Secured Notes.
"O&M Agreement" means the operation and maintenance agreement among the
Operator, Issuer and the Guarantors.
"O&M Costs" means, with respect to a Project at any time, all actual cash
maintenance and operation costs incurred and paid for such Project in any
particular calendar or fiscal year or period to which said term is applicable,
including any payment under any Project Document, capital expenditures (except
for capital expenditures in connection with the repair or restoration of any
casualty suffered by such Project to the extent funded with insurance or similar
proceeds applied pursuant to the Depositary Agreement, or infusions of equity),
payments for fuel, additives or chemicals and transportation costs related
thereto, Issuer's or the applicable Guarantor's franchise, sales, property, and
real estate taxes, insurance premiums, consumables, payments made in connection
with the requirements of any Governmental Approval or Legal Requirement,
payments under any lease, payments pursuant to the agreements for the
management, operation and maintenance of such Project, payments for goods or
services provided or rendered to Issuer or the applicable Guarantor for such
Project, legal and other consulting fees and expenses paid by Issuer or the
applicable Guarantor in connection with the management, maintenance or operation
of such Project, fees paid in connection with obtaining, transferring,
maintaining or amending any Governmental Approvals and reasonable general and
administrative expenses, but exclusive in all cases of non-cash charges,
including depreciation or obsolescence charges or reserves therefor,
amortization of intangibles or other bookkeeping entries of a similar nature,
and also exclusive of all interest charges and charges for the payment or
amortization of principal of indebtedness of Issuer. O&M Costs with respect to a
Project shall not include (a) any payments of the Subordinated Operating Fee,
(b) Restricted Payments of any kind to Issuer or its Affiliates, (c)
depreciation, (d) payments for restoration or repair of such Project from the
Loss Proceeds Account in accordance with the terms of the Depositary Agreement
or (e) Major Maintenance Costs. Any fees payable pursuant to the terms of any
future operation and maintenance agreement entered into between Issuer and any
operator which is not an Affiliate of Issuer, in accordance with the terms of
this Indenture, shall constitute O&M Costs.
12
"Offering" means the offering of the Senior Secured Notes by Issuer.
"Offering Circular" means that certain offering circular dated September
25, 2003 offering the Senior Secured Notes for sale.
"Officer" means, with respect to any Person, the Chairman of the Board,
the Chief Executive Officer, the President, the Chief Operating Officer, the
Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Controller,
the Secretary or any Vice-President of such Person.
"Operating Account" means the account of such name created under the
Depositary Agreement.
"Operating Account Bank" means Union Bank of California, N.A., together
with its successors and permitted assigns in such capacity.
"Operating Budget" means the annual budget of O&M Costs and the Major
Maintenance Schedule, as prepared in good faith by Issuer for each fiscal year,
or part thereof, showing such costs by category.
"Operator" means Calpine Operating Services Company, Inc., a Delaware
corporation, or any successor thereto under the O&M Agreement.
"Opinion of Counsel" means an opinion from legal counsel who is reasonably
acceptable to the Trustee, that meets the requirements of Section 11.05 hereof.
The counsel may be an employee of or counsel to Issuer, any Affiliate of Issuer
or the Trustee.
"Outstanding," in connection with the Senior Secured Notes, means, as of
the time in question, all Senior Secured Notes authenticated and delivered under
this Indenture, except (i) Senior Secured Notes theretofore canceled or required
to be canceled under this Indenture; (ii) Senior Secured Notes for which
provision for payment shall have been made in accordance with this Indenture;
and (iii) Senior Secured Notes in substitution for which other Senior Secured
Notes have been authenticated and delivered pursuant to this Indenture;
provided, however, in the event that any principal and/or interest due on the
Senior Secured Notes shall be paid by Ambac Assurance pursuant to the Financial
Guaranty Insurance, the Senior Secured Notes shall remain Outstanding for all
purposes.
"Participant" means, with respect to the Depositary, Euroclear or
Clearstream, a Person who has an account with the Depositary, Euroclear or
Clearstream, respectively (and, with respect to The Depository Trust Company,
shall include Euroclear and Clearstream).
"Payment Date" means each February 15 and August 15, commencing February
15, 2004 and concluding on the Final Maturity Date.
"Permitted Escrow Investments" means the following investments which trade
at par on a daily basis:
(1) overnight deposits with entities whose unsecured commercial
paper or other unsecured short-term debt obligations have, at the time of such
investment, credit ratings of at least P-1 (or its equivalent) or higher from
Moody's and A-1 (or its equivalent) or higher from S&P; and
13
(2) investments in money market funds or money market mutual funds
which have, at the time of such investment, credit ratings of at least P-1 (or
its equivalent) or higher from Moody's and A-1 (or its equivalent) or higher
from S&P.
"Permitted Guarantees" means each of that certain (i) Guaranty, dated as
of the Closing Date, made by Holding Company and Issuer, for the benefit of the
lessor under the Creed Site Lease (ii) Guaranty, dated as of the Closing Date,
made by Holding Company and Issuer, for the benefit of the lessor under the
Goose Haven Site Lease, (iii) Guaranty, dated as of the Closing Date, made by
Holding Company, for the benefit of the lessor under the Lambie Site Lease, (iv)
Guaranty, dated as of the Closing Date, made by Holding Company, for the benefit
of the City of Fairfield, California, under the Wolfskill Site Lease, (v)
Guarantee, dated as of the Closing Date, made by Issuer, for the benefit of the
Solano County Farmlands and Open Space Foundation doing business as Solano Land
Trust, a California nonprofit, public benefit corporation, (vi) Mechanics Lien
Indemnity Agreement dated on or before the Closing Date, between Issuer and
Title Insurer and (vii) reimbursement obligations of Issuer described in clause
(vii) of "Permitted Indebtedness".
"Permitted Holder" means (i) a sophisticated institutional investor with
experience investing in structured or project finance transactions, and having a
tangible net worth, as determined in accordance with GAAP, of at least $75
million, or (ii) an entity controlled by, and whose obligations under the
Holding Company limited liability company agreement are guaranteed by, such a
sophisticated institutional investor with such tangible net worth.
"Permitted Indebtedness" means, with respect to a Person:
(i) Indebtedness to make capital improvements to the Projects directly
owned by such Person or any of its subsidiaries as required by law,
so long as taking into account the incurrence of such Indebtedness:
(A) the Independent Engineer confirms (1) the calculations
of Issuer that demonstrate that the minimum Projected
Debt Service Coverage Ratio for (x) the two consecutive
semiannual periods, commencing with the period in which
such Indebtedness is incurred taken as one annual period
and (y) for each subsequent semi-annual period, through
the final maturity of the Senior Secured Notes, will not
be less than 1.25 to 1.0; and (2) that the capital
expenditures proposed by Issuer to conform to such legal
or Project Document requirements are reasonable, and
(B) each Rating Agency shall confirm that there will be no
Ratings Downgrade as a result of such incurrence;
(ii) Indebtedness for the following purposes, such Indebtedness not to
exceed $20,000,000 in the aggregate among Issuer and the Guarantors
and so long as taking into account the incurrence of such
Indebtedness, Issuer certifies (and the Independent Engineer
confirms) that the minimum Projected Debt Service Coverage Ratio for
each subsequent fiscal year, through the final maturity of the
Senior Secured Notes, will not be less that 1.45 to 1.0:
(A) Indebtedness not to exceed $10 million in the aggregate
among Issuer and the Guarantors to make capital
improvements to the Projects, other than those described
in clause (i), so long as taking into account the
incurrence of such Indebtedness:
(1) no Event of Default has occurred and is existing,
14
(2) Issuer certifies (and the Independent Engineer
confirms) that the minimum Projected Debt Service
Coverage Ratio for each subsequent fiscal year,
through the final maturity of the Senior Secured
Notes, will not be less than 1.45 to 1.0; and
(3) each Rating Agency shall confirm that there will
be no Ratings Downgrade as a result of such
incurrence;
(B) Indebtedness in an amount not to exceed $10 million and
which is Subordinated Indebtedness;
(C) Indebtedness in respect of a working capital line of
credit in an amount not to exceed $3 million;
(D) Indebtedness constituting purchase money obligations or
leases incurred to finance items of equipment that
extend only to the equipment being financed in an
aggregate amount of secured principal and capital lease
obligations not exceeding $5 million at any one time
outstanding; and
(E) Indebtedness constituting obligations in respect of
surety or appeal bonds and standby letters of credit or
documentary letters of credit provided by Issuer and the
Guarantors in the ordinary course of business;
(iii) with respect to Issuer, the Senior Secured Notes;
(iv) with respect to each Guarantor, its respective Guarantee;
(v) Indebtedness of Issuer which is owed to any of the Guarantors and
is outstanding on the Closing Date and Indebtedness of any of the
Guarantors which is owed to Issuer and is outstanding on the
Closing Date, and all intercompany indebtedness from time to time
of Issuer and/or the Guarantors or any of them to the extent not
represented by a note or other written instrument;
(vi) the Permitted Guarantees;
(vii) Indebtedness of Issuer which is owed to Calpine Corporation for
reimbursement of any draw under the letter of credit in a stated
amount of not more than $375,000 issued to PG&E for the account of
Calpine Corporation in support of Issuer's obligations to reimburse
PG&E for certain tax liabilities relating to the Issuer's
contribution of certain interconnection facilities utilized for one
or more of the Wolfskill Project, the Riverview Project and the
Feather River Project; and
(viii) Indebtedness incurred to refinance the Indebtedness permitted to be
incurred pursuant to clauses (i), (ii), (v), and this clause
(viii), provided that such refinanced Indebtedness (a) has a stated
maturity no earlier than and an average life no shorter than the
stated maturity and average life of the Indebtedness being
refinanced, and (b) has an aggregate principal amount that is equal
to or less than the aggregate principal amount then outstanding or
committed under the Indebtedness being refinanced.
"Permitted Investments" means the following investments maturing, in each
case, not less than one Business Day before the Payment Date next following the
date such investment is made; provided, however, that in the case of any
investment pursuant to clause (ii) of this definition which is made with the
Trustee, such investment may mature on such Payment Date:
15
(i) any direct obligations of, or obligations fully and unconditionally
guaranteed by, the United States of America, or any agency or instrumentality of
the United States of America, the obligations of which are fully and
unconditionally backed by the full faith and credit of the United States of
America;
(ii) demand and time deposits in, certificates of deposit of, bankers'
acceptances issued by, or federal funds sold by any depository institution or
trust company incorporated under the laws of the United States of America or any
state thereof and subject to supervision and examination by federal and/or state
authorities, or incorporated under the laws of any other jurisdiction, so long
as at the time of such investment or contractual commitment providing for such
investment the unsecured commercial paper or other unsecured short-term debt
obligations of such depository institution or trust company have credit ratings
of at least P-1 (or its equivalent) or higher from Moody's and A-1 (or its
equivalent) or higher from S&P;
(iii) repurchase obligations with respect to any security described in
clauses (i) or (ii) above, in each case entered into with either (A) a
depository institution or trust company (acting as principal) which in respect
of its short-term unsecured debt has credit ratings of at least P-1 (or its
equivalent) or higher from Moody's and A-1 (or its equivalent) or higher from
S&P or (B) a money market fund maintained by a broker which, in respect of its
short-term unsecured debt, has credit ratings of at least P-1 (or its
equivalent) or higher from Moody's and A-1 (or its equivalent) or higher from
S&P;
(iv) unsecured debt securities bearing interest or sold at a discount
issued by any corporation incorporated under the laws of the United States of
America or any state thereof which have, at the time of such investment, credit
ratings of at least P-1 (or its equivalent) or higher from Moody's and A-1 (or
its equivalent) or higher from S&P;
(v) unsecured commercial paper which has, at the time of such investment,
credit ratings of at least P-1 (or its equivalent) or higher from Moody's and
A-1 (or its equivalent) or higher from S&P; and
(vi) investments in money market funds or money market mutual funds which
have, at the time of such investment, credit ratings of at least P-1 (or its
equivalent) or higher from Moody's and A-1 (or its equivalent) or higher from
S&P (including such funds for which the Trustee or any of its Affiliates is
investment manager or advisor and for which the Trustee or any of its Affiliates
may receive a fee).
"Permitted Lien" means, with respect to any Person:
(i) Liens created by the Financing Documents;
(ii) Liens existing on the Closing Date;
(iii) Liens securing purchase money Indebtedness incurred pursuant to
clause (ii)(D) of the definition of Permitted Indebtedness so long
as such Liens extend only to the items of equipment purchased with
the proceeds of such Indebtedness;
(iv) pledges or deposits by such Person under workers' compensation laws,
unemployment insurance laws, or similar legislation, or deposits as
security for contested taxes or import duties or for the payment of
rent, in each case incurred in the ordinary course of business;
(v) Liens imposed by law, such as carriers', warehousemen's,
materialman's, workman's, and mechanics' Liens, in each case for
sums not yet due or being contested in good faith by appropriate
proceedings and as to which enforcement has been stayed or other
Liens arising
16
out of judgments or awards against such Person with respect to which
such Person shall then be proceeding with an appeal or other
proceedings for review and as to which enforcement has been stayed;
(vi) Liens incident to the ordinary course of business that are not
incurred in connection with the obtaining of any loan, advance or
credit in respect of borrowed money permitted to be incurred
pursuant to the Transaction Documents so long as such Liens (x) do
not individually or in the aggregate materially and adversely affect
the use of the property or assets of the Issuer and the Guarantors
or the value of such property or assets for the purpose of such
business, (y) could not otherwise reasonably be expected to have a
Material Adverse Effect, and (z) do not in the aggregate secure
actual or contingent liabilities in excess of $2,000,000; and
(vii) Liens for taxes, assessments or governmental charges which are not
delinquent and remain payable without penalty or are being contested
in good faith and for which adequate reserves or bonds have been
provided; and
(viii) a subordinated, second priority lien in favor of DWR which provides
that it is at all times subordinate in priority and effect to the
Liens created by the Financing Documents and subject to the
agreement referred to in Section (t)(2) of the cover sheet to the
DWR Contract.
"Person" means any natural person, corporation, partnership, limited
liability company, firm, association, Governmental Authority or any other entity
whether acting in an individual, fiduciary or other capacity.
"PG&E" means Pacific Gas and Electric Company.
"PG&E Reimbursement Amount" means any proceeds received by Issuer, Creed
or Goose Haven from PG&E constituting reimbursement of capital costs pursuant to
the interim crediting mechanism and the true-up provisions contained in the
Electric Interconnection Agreements.
"Pledge and Security Agreements" means the Gilroy Pledge Agreement and the
Guarantor Pledge Agreements.
"Power Marketing Agreement" means that certain Peaker Power Marketing and
Fuel Supply Agreement, executed as of the Closing Date by Calpine Energy
Services, Issuer and the Guarantors.
"Primary Treasury Dealer" means a primary U.S. Government securities
dealer in New York City.
"Prime Rate" means the annual interest rate equal to the annual variable
rate of interest published from time to time by the Federal Reserve in its
statistical release H.15 of Selected Interest Rates under the heading "Bank
prime loan" or any replacement for such release, as in effect from time to time.
"Private Placement Legend" means the legend set forth in Section
2.06(f)(i) to be placed on all Senior Secured Notes issued under this Indenture
except where otherwise permitted by the provisions of this Indenture.
17
"Prohibited Transaction" means any transaction set forth in Section 406 of
ERISA or Section 4975 of the Code which is not exempt under Section 408 of ERISA
or Section 4975(d) of the Code.
"Project" means, as the context requires, each of the Issuer Projects, the
Creed Project and the Goose Haven Project.
"Project Documents" means for each Project, each Site Lease, the Power
Marketing Agreement, the DWR Contract, each Electric Interconnection Agreement,
each Gas Interconnection Agreement, each Shared Facilities Agreement, each
Shared Use Agreement, the O&M Agreement, the Co-Tenancy and O&M Agreement and
any Additional Project Documents with respect to such Project
"Project Revenues" means, with respect to a Project at any time and
without duplication, all income and receipts of Issuer or the applicable
Guarantor derived from the ownership, lease or operation of such Project, and
payments received by Issuer or such Guarantor including under any applicable
Project Document (excluding Loss Proceeds (other than Condemnation Proceeds)
deposited in the Loss Proceeds Account with respect to such Project), proceeds
of any delay in start up or business interruption or other insurance, income
derived from the sale or use of electric capacity or energy transmitted or
distributed or ancillary services or similar products produced by such Project,
payments for remarketing of fuel or transportation rights relating thereto, and
payments under reverse tolling agreements together with any receipts derived
from the sale of any property pertaining to such Project or incidental to the
operation of such Project, all as determined in conformity with cash accounting
principles, the investment income on amounts in the Accounts with respect to
such Project and Condemnation Proceeds and Title Event Proceeds relating to such
Project and proceeds from the Collateral Documents to which Issuer or such
Guarantor is a party.
"Projected Debt Service Coverage Ratio" for any period means the ratio of
the (i) sum of (x) the fixed capacity revenues under the DWR Contract scheduled
to be received in such period less (y) the Fixed O&M Costs scheduled to be paid
in such period to (ii) the aggregate of scheduled principal and interest
payments on the Senior Secured Notes and all other Permitted Indebtedness for
such period.
"PUC" means the California Public Utilities Commission and its successors.
"PUHCA" means the Public Utility Holding Company Act of 1935, as amended.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"Qualified Transferee" means any Person that acquires after the Closing
Date direct or indirect interests in Issuer or the manager of Holding Company so
long as:
(1) such Person is controlled by or is under common control with a
Person that (i) is reasonably experienced in the business of owning or investing
in facilities similar to the Projects, and (ii) either operates facilities
similar to the Projects or retains a Person to operate the Projects who is
reasonably experienced in the operation of such facilities;
(2) such acquisition shall be in compliance with the law and after
giving effect to such acquisition (a) none of Issuer nor the Guarantors will as
a result of such acquisition be in violation of any Legal Requirements
(including, without limitation, all Governmental Approvals) the compliance with
which is necessary to permit Issuer and/or the Guarantors to conduct their
business in accordance with the Project Documents and to maintain their status
as Exempt Wholesale Generators and the Projects' status as Eligible Facilities
(if Issuer, the Guarantors and the Projects were certified as such at the time
of such
18
acquisition) and the Trustee shall have received opinions of counsel to such
Person and counsel to Issuer to such effect, (b) no Default or Event of Default
shall have occurred and be continuing and (c) such acquisition would not
reasonably be expected to result in a Material Adverse Effect; and
(3) to the extent relevant to such acquisition, the Collateral Agent
shall have received a pledge of and lien on any direct limited liability company
interests in Issuer so acquired and Issuer shall have furnished to Trustee and
Collateral Agent such documents, certificates and opinions from counsel to such
Person and Issuer as the Trustee and Collateral Agent shall have reasonably
required.
"Qualifying Letter of Credit" means an irrevocable letter of credit
provided by an Acceptable Letter of Credit Issuer with any Person other than
Issuer, either Guarantor or Holding Company as the account party thereof, naming
the Collateral Agent as beneficiary, and containing customary terms and
provisions, including provisions that (a) such letter of credit shall have an
initial expiration date of at least 364 days beyond the date of its issuance,
(b) such letter of credit shall automatically renew upon the expiration thereof
unless, at least sixty days prior to such expiration, the issuer thereof shall
provide the Collateral Agent with a notice of non-renewal of such letter of
credit, (c) the Collateral Agent may draw on such letter of credit if such a
notice of non-renewal has been received and Issuer fails to replace such letter
of credit with one or a combination of cash, Permitted Investments or another
Qualifying Letter of Credit at least 30 days prior to expiration, or if, at any
time, the issuing financial institution no longer satisfies the criteria for an
Acceptable Letter of Credit Issuer and is not replaced by Issuer with one or a
combination of cash, Permitted Investments, or another Qualifying Letter of
Credit within 30 days, (d) such letter of credit and the reimbursement
obligations with respect to draws thereunder shall not be obligations of Issuer
or either Guarantor nor secured by any of the Collateral, and (e) such letter of
credit shall not obligate the Depositary, the Collateral Agent, the Trustee or
the Holders of the Senior Secured Notes to make any reimbursement or any other
payment to the Issuer or otherwise with respect thereto, or provide the Issuer
or any other Person with any claim against the Depositary, the Collateral Agent,
the Trustee or the Holders of the Senior Secured Notes, whether for costs of
maintenance, reimbursement of amounts drawn thereunder or otherwise.
"Rating" means the rating of the Senior Secured Notes by the Rating
Agencies.
"Rating Agency" means either of Moody's or S&P; provided that if either
Moody's or S&P shall cease to operate as a "rating agency," then such other
nationally recognized rating agency or agencies may be selected by Issuer as a
substitute therefor.
"Ratings Downgrade" means a lowering by a Rating Agency of its then credit
rating of the Senior Secured Notes.
"Redemption Account" means the account of such name created under the
Depositary Agreement.
"Redemption Date" means the date on which Issuer redeems or shall redeem
any Senior Secured Notes in accordance with this Indenture.
"Reference Treasury Dealer" means, for the Senior Secured Notes, each of
(x) Goldman, Sachs & Co., or its successors; provided, however, that if the
foregoing shall not be a Primary Treasury Dealer, the Issuer shall substitute
therefor another Primary Treasury Dealer and (y) a Primary Treasury Dealer
selected by the Issuer.
"Regulation S" means Regulation S under the Securities Act.
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"Regulation S Global Note" means a Regulation S Temporary Global Note or
Regulation S Permanent Global Note, as appropriate.
"Regulation S Permanent Global Note" means a permanent global Senior
Secured Note in the form of Exhibit A1 hereto bearing the Global Note Legend and
the Private Placement Legend and deposited with or on behalf of and registered
in the name of the Depositary or its nominee, issued in a denomination equal to
the outstanding principal amount of the Regulation S Temporary Global Note upon
expiration of the Restricted Period.
"Regulation S Temporary Global Note" means a temporary global Senior
Secured Note in the form of Exhibit A2 hereto bearing the Private Placement
Legend and deposited with or on behalf of and registered in the name of the
Depositary or its nominee, issued in a denomination equal to the outstanding
principal amount of the Senior Secured Notes initially sold in reliance on Rule
903 of Regulation S.
"Related Party" means (a) any direct or indirect controlling stockholder
or 80% (or more) owned subsidiary of Calpine Corporation or (b) any trust,
corporation, partnership or other entity, the beneficiaries, stockholders,
partners, owners or Persons beneficially holding an 80% or more controlling
interest of which consist of Calpine Corporation and/or such other Persons
referred to in the immediately preceding clause (a).
"Required Holders" means, at any time, Persons that at such time hold more
than 50% of the principal amount of Outstanding Senior Secured Notes.
"Responsible Trust Officer" when used with respect to the Trustee, the
Depositary or the Collateral Agent, means any officer within the Corporate Trust
Office of the Trustee, the Depositary or the Collateral Agent (or any successor
group of the Trustee, Depositary or Collateral Agent, as applicable) including
any Managing Director, Principal, Vice President, Assistant Vice President,
Secretary, Assistant Secretary, Treasurer, Assistant Treasurer, Controller,
General Counsel, Associate Corporate Counsel or any other officer of the
Trustee, the Depositary or the Collateral Agent customarily performing functions
similar to those performed by any of the above designated officers and also
means, with respect to a particular corporate trust matter, any other officer to
whom such matter is referred because of such officer's knowledge of and
familiarity with the particular subject.
"Restricted Definitive Note" means a Definitive Note bearing the Private
Placement Legend.
"Restricted Global Note" means a Global Note bearing the Private Placement
Legend.
"Restricted Payment" means, with respect to any Person, (i) the
declaration and payment of distributions, dividends or any other payment made in
cash, property, obligations or other notes, (ii) any payment of the principal of
or interest on any Subordinated Indebtedness, or (iii) the making of any loans
or advances to any Affiliate (other than Permitted Indebtedness); provided,
however, that "Restricted Payment" shall not include (a) payments of the
Subordinated Operating Fee, (b) payments under, pursuant to, or contemplated by
any of the Project Documents, (c) reimbursements for actual O&M Costs paid by an
Affiliate to the extent contemplated by the Operating Budget as administered
pursuant to the Financing Documents, or (d) payments made by Issuer from funds
received that are not required to be deposited in the Revenue Account.
"Restricted Period" means the 40-day distribution compliance period as
defined in Regulation S.
"Revenue Account" means the account of such name created under the
Depositary Agreement.
20
"Riverview" means Riverview Energy Center, LLC, a Delaware limited
liability company.
"Riverview Project" means that certain Unit comprising an approximately 45
MW gas fired, simple cycle power generation plant and associated tangible and
intangible personal property and real property located in the County of Contra
Costa, California.
"Riverview Shared Systems Agreement" means that certain Shared Systems
Agreement, dated as of June 13, 2003, among Issuer and G-P Gypsum Corporation, a
Delaware corporation.
"Riverview Site Lease" means that certain Option to Lease and Peaker Plant
Site Lease dated as of October 18, 2002, by and between Riverview, as lessee,
and G-P Gypsum Corporation (formerly known as Domtar Gypsum, Inc.), as lessor,
as amended by the First Amendment to Option to Lease and Peaker Plant Site
Lease, dated as of October 28, 2002, as further amended by the Second Amendment
to Option to Lease and Peaker Plant Site Lease, dated as of December 19, 2002,
and as further amended by the Third Amendment to Option to Lease and Peaker
Plant Site Lease, dated as of July 16, 2003, by and between Issuer, as
successor-in interest to Riverview, and G-P Gypsum Corporation. The option to
lease granted pursuant to the Riverview Site Lease was exercised by letter,
dated November 26, 2002, by Riverview. Riverview's interest in the Riverview
Site Lease was assigned under that certain Assignment of Interests in Lease and
Easements, dated as of June 23, 2003, by and between Riverview and Issuer.
"Rule 144" means Rule 144 promulgated under the Securities Act.
"Rule 144A" means Rule 144A promulgated under the Securities Act.
"Rule 903" means Rule 903 promulgated under the Securities Act.
"Rule 904" means Rule 904 promulgated under the Securities Act.
"S&P" means Standard & Poor's, a division of The McGraw Hill Companies,
Inc., and its successors and assigns.
"SEC" means the United States Securities and Exchange Commission.
"Secured Parties" means the Trustee, the Collateral Agent, the Depositary,
the Holders of the Senior Secured Notes or any other Person that becomes a
Secured Party under any Financing Document.
"Securities Act" means the Securities Act of 1933, as amended.
"Security Agreements" means (a) that certain Gilroy Security Agreement
dated as of the Closing Date, by and between Issuer and Collateral Agent, (b)
that certain Goose Haven Security Agreement dated as of the Closing Date, by and
between Goose Haven and Collateral Agent, and (c) that certain Creed Security
Agreement dated as of the Closing Date, by and between Creed and Collateral
Agent.
"Senior Secured Notes" has the meaning assigned to it in the preamble to
this Indenture.
"Shared Facilities Agreements" means (a) for the Gilroy Project, the
Gilroy Shared Facilities Agreements, (b) for the Yuba City Project, the Yuba
City Shared Facilities Agreement, and (c) for the Riverview Project, the
Riverview Shared Systems Agreement.
21
"Shared Use Agreements" means (a) for the Gilroy Project, the Gilroy
Shared Use Agreement (b) for the King City Project, the King City Shared Use
Agreement and (c) for the Yuba City Project, the Yuba City Shared Use Agreement.
"Site" has the meaning given in the granting clause of the applicable Deed
of Trust.
"Site Lease" means each of the Yuba City Site Lease, the Lambie Site
Lease, the Creed Site Lease, the Goose Haven Site Lease, the Feather River Site
Lease, the Riverview Site Lease and the Wolfskill Site Lease.
"Special Mandatory Redemption Price" means 101% of the principal amount of
the Senior Secured Notes plus accrued interest on the Senior Secured Notes to
the Redemption Date.
"Subordinated Indebtedness" means Indebtedness (and the note or other
instrument evidencing the same) which has been subordinated, on terms and
conditions set forth in Exhibit F attached hereto and made a part hereof, to the
prior payment of amounts owing under this Indenture and the Senior Secured
Notes, and which shall be payable from amounts in the Distribution Account and
shall constitute Restricted Payments.
"Subordinated Operating Fee" has the meaning given thereto in the O&M
Agreement.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb) as in effect on the date on which this Indenture is qualified
under the TIA, except as provided in Section 8.08 of this Indenture.
"Title Event" means the existence of any defect of title or Lien or
encumbrance on any of the Projects (other than certain Permitted Liens) in
effect on the Closing Date that entitles the Collateral Agent to make a claim
under the policy or policies of title insurance required pursuant to the
Financing Documents.
"Title Event Proceeds" means all amounts and proceeds (including
instruments) in respect of any Title Event received by Issuer or either
Guarantor.
"Title Insurer" means Stewart Title Guaranty Company, a Texas corporation.
"Title Policy" means the policy or policies of title insurance issued by
the Title Insurer with respect to the Projects as required pursuant to the
Financing Documents.
"Transaction Documents" means the Project Documents and the Financing
Documents.
"Trustee" means Wilmington Trust Company until a successor replaces it in
accordance with the applicable provisions of this Indenture and thereafter means
the successor serving hereunder.
"Unit" means the turbine and all related physical assets which comprise a
power generating unit, it being acknowledged and agreed that Creed and Goose
Haven each owns one Unit and Issuer owns nine Units.
"Unrestricted Global Note" means a permanent global Senior Secured Note in
the form of Exhibit A1 attached hereto that bears the Global Note Legend and
that has the "Schedule of Exchanges of Interests in the Global Note" attached
thereto, and that is deposited with or on behalf of and registered in
22
the name of the Depositary, representing a series of Senior Secured Notes that
do not bear the Private Placement Legend.
"Unrestricted Definitive Note" means one or more Definitive Notes that do
not bear and are not required to bear the Private Placement Legend.
"U.S. Person" means a U.S. person as defined in Rule 902(o) under the
Securities Act.
"Wolfskill" means Wolfskill Energy Center, LLC, a Delaware limited
liability company.
"Wolfskill Project" means that certain Unit comprising an approximately
45MW gas fired, simple cycle power generation plant and associated tangible and
intangible personal property and real property located in an unincorporated area
of Solano County, California.
"Wolfskill Site Lease" means that certain Ground Lease, dated as of July
16, 2002, by and between the City of Fairfield, California, as lessor, and
Wolfskill, as lessee (which lessee interest was assigned under that certain
Assignment of Interests in Lease and Easements, dated as of June 23, 2003, by
and between Wolfskill and Issuer), as amended by the First Amendment to Ground
Lease, dated as of the Closing Date, by and between Issuer and the City of
Fairfield, California.
"Yuba City" means Yuba City Energy Center, LLC, a Delaware limited
liability company.
"Yuba City Project" means that certain Unit comprising an approximately 45
MW gas fired, simple cycle power generation plant and associated tangible and
intangible personal property and real property located in the City of Yuba City,
Sutter County, California.
"Yuba City Shared Facilities Agreement" means that certain Amendment and
Restatement of Easement Agreements, Grant of Easements, and Shared Facilities
Agreement, dated July 3, 2003, among Issuer (as successor-in-interest to Yuba
City Energy Center, LLC and Feather River Energy Center, LLC), Sunsweet Growers
Inc., a California corporation, Calpine Greenleaf, Inc., a Delaware corporation,
Calpine Greenleaf Holdings, Inc., a Delaware corporation, and State Street Bank
and Trust Company of California, National Association, a national banking
association organized and existing under the laws of the United States of
America, as owner trustee.
"Yuba City Shared Use Agreement" means that certain Shared Permit
Agreement, dated as of July 3, 2003, by and among Calpine Greenleaf, Inc., a
Delaware corporation, Issuer and Calpine Corporation.
"Yuba City Site Lease" means that certain Ground Lease and Easement, dated
as of February 15, 2002, between Sunsweet Growers Inc., as lessor, and Yuba
City, as lessee, as amended by that certain First Amendment to Ground Lease and
Easement, dated November 4, 2002, by and between Yuba City and Sunsweet Growers
Inc., which lessee interest was assigned under that certain Assignment of
Interests in Lease and Easements, dated as of June 23, 2003, by and between Yuba
City and Issuer.
"ZLD Reserve Account" means the account of such name created under the
Depositary Agreement.
Section 1.02 Other Definitions.
23
Defined in
Term Section
"Authentication Order"................... 2.02
"Change of Control Offer"................ 3.09
"Change of Control Payment".............. 3.09
"Change of Control Payment Date"......... 3.09
"Covenant Defeasance".................... 7.03
"DTC".................................... 2.03
"Legal Defeasance"....................... 7.02
"Paying Agent"........................... 2.03
"Registrar".............................. 2.03
Section 1.03 Trust Indenture Act Provisions.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Senior Secured Notes;
"indenture security holder" means a Holder of a Senior Secured Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee; and
"obligor" on the Senior Secured Notes and the Guarantees means Issuer and
the Guarantors, respectively, and any successor obligor upon the Senior Secured
Notes and the Guarantees, respectively.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the TIA
have the meanings so assigned to them.
Section 1.04 Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural
include the singular;
(5) "will" shall be interpreted to express a command;
(6) provisions apply to successive events and transactions;
24
(7) references to any "person" includes such person's successors and
permitted assigns;
(8) references to "including" shall mean including without limiting
the generality of any description preceding such term;
(9) a definition or reference to any document, schedule, exhibit,
instrument or agreement includes any amendment or supplement to such
document, schedule, exhibit, instrument or agreement entered into in
accordance with the terms of the Financing Documents; and
(10) references to sections of or rules under the Securities Act
shall be deemed to include substitute, replacement or successor sections
or rules adopted by the SEC from time to time.
ARTICLE 2
THE SENIOR SECURED NOTES
Section 2.01 Form and Dating.
(a) General. The Senior Secured Notes and the Trustee's certificate of
authentication shall be substantially in the form of Exhibit A hereto. The
Senior Secured Notes may have notations, legends or endorsements required by
law, stock exchange rule or usage. Each Senior Secured Note shall be dated the
date of its authentication. The Senior Secured Notes shall be issued in minimum
denominations of $100,000 and in integral multiples of $1,000 in excess thereof.
The terms and provisions contained in the Senior Secured Notes shall
constitute, and are hereby expressly made, a part of this Indenture and Issuer,
the Guarantors and the Trustee, by their execution and delivery of this
Indenture, expressly agree to such terms and provisions and to be bound thereby.
However, to the extent any provision of any Senior Secured Note conflicts with
the express provisions of this Indenture, the provisions of this Indenture shall
govern and be controlling.
(b) Global Notes. Senior Secured Notes issued in global form shall be
substantially in the form of Exhibits A1 or A2 attached hereto (including the
Global Note Legend thereon and the "Schedule of Exchanges of Interests in the
Global Note" attached thereto). Senior Secured Notes issued in definitive form
shall be substantially in the form of Exhibit A1 attached hereto (but without
the Global Note Legend thereon and without the "Schedule of Exchanges of
Interests in the Global Note" attached thereto). Each Global Note shall
represent such of the outstanding Senior Secured Notes as shall be specified
therein and each shall provide that it shall represent the aggregate principal
amount of outstanding Senior Secured Notes from time to time endorsed thereon
and that the aggregate principal amount of outstanding Senior Secured Notes
represented thereby may from time to time be reduced or increased, as
appropriate, to reflect exchanges and redemptions. Any endorsement of a Global
Note to reflect the amount of any increase or decrease in the aggregate
principal amount of outstanding Senior Secured Notes represented thereby shall
be made by the Trustee or the Note Custodian, at the direction of the Trustee,
in accordance with instructions given by the Holder thereof as required by
Section 2.06 hereof.
(c) Temporary Global Notes. Senior Secured Notes offered and sold in
reliance on Regulation S shall be issued initially in the form of the Regulation
S Temporary Global Note, which shall be deposited on behalf of the purchasers of
the Senior Secured Notes represented thereby with the Trustee, at the Corporate
Trust Office of the Trustee, as custodian for the Depositary Agent, and
25
registered in the name of the Depositary Agent or the nominee of the Depositary
Agent for the accounts of designated agents holding on behalf of Euroclear or
Clearstream, duly executed by the Issuer and authenticated by the Trustee as
hereinafter provided. The Restricted Period shall be terminated upon the receipt
by the Trustee of (i) a written certificate from the Depositary Agent, together
with copies of certificates from Euroclear and Clearstream certifying that they
have received certification of non-United States beneficial ownership of 100% of
the aggregate principal amount of the Regulation S Temporary Global Note (except
to the extent of any beneficial owners thereof who acquired an interest therein
during the Restricted Period pursuant to another exemption from registration
under the Securities Act and who will take delivery of a beneficial ownership
interest in a 144A Global Note or an IAI Global Note bearing a Private Placement
Legend, all as contemplated by Section 2.06(a)(ii) hereof), and (ii) a
certificate from an Officer of Issuer. Following the termination of the
Restricted Period, beneficial interests in the Regulation S Temporary Global
Note shall be exchanged for beneficial interests in Regulation S Permanent
Global Notes pursuant to the terms set forth in this Indenture and in accordance
with the Applicable Procedures. Simultaneously with the authentication of
Regulation S Permanent Global Notes pursuant to an Authentication Order, the
Trustee shall cancel the Regulation S Temporary Global Note. The aggregate
principal amount of the Regulation S Temporary Global Note and the Regulation S
Permanent Global Notes may from time to time be increased or decreased by
adjustments made on the records of the Trustee and the Depositary Agent or its
nominee, as the case may be, in connection with transfers of interest as
hereinafter provided.
(d) Euroclear and Clearstream Procedures Applicable. The provisions of the
"Operating Procedures of the Euroclear System" and "Terms and Conditions
Governing Use of Euroclear" and the "General Terms and Conditions of Clearstream
Banking" and "Customer Handbook" of Clearstream shall be applicable to transfers
of beneficial interests in the Regulation S Temporary Global Note and the
Regulation S Permanent Global Notes that are held by Participants through
Euroclear or Clearstream.
(e) CUSIP and Private Placement Numbers. Issuer in issuing the Senior
Secured Notes may use "CUSIP" or "private placement" numbers (if then generally
in use), and, if so, the Trustee shall indicate the "CUSIP" or "private
placement" numbers of the Senior Secured Notes in notices of redemption and
related materials as a convenience to Holders; provided that any such notice may
state that no representation is made as to the correctness of such numbers
either as printed on the Senior Secured Notes or as contained in any notice of
redemption and related materials.
Section 2.02 Execution and Authentication.
An Officer shall sign the Senior Secured Notes for Issuer by manual or
facsimile signature.
If the Officer whose signature is on a Senior Secured Note no longer holds
that office at the time a Senior Secured Note is authenticated, the Senior
Secured Note shall nevertheless be valid.
A Senior Secured Note shall not be valid until authenticated by the manual
signature of the Trustee. The signature shall be conclusive evidence that the
Senior Secured Note has been authenticated under this Indenture.
The Trustee shall, upon a written order of Issuer signed by an Officer (an
"Authentication Order"), authenticate Senior Secured Notes for original issue up
to the aggregate principal amount stated in paragraph 4 of the Senior Secured
Notes. The aggregate principal amount of Senior Secured Notes outstanding at any
time may not exceed such amount except as provided in Section 2.07 hereof.
26
The Trustee may appoint an authenticating agent acceptable to Issuer to
authenticate Senior Secured Notes. An authenticating agent may authenticate
Senior Secured Notes whenever the Trustee may do so. Each reference in this
Indenture to authentication by the Trustee includes authentication by such
agent. An authenticating agent has the same rights as an Agent to deal with
Holders or an Affiliate of Issuer.
Section 2.03 Registrar and Paying Agent.
Issuer shall maintain an office or agency where Senior Secured Notes may
be presented for registration of transfer or for exchange ("Registrar") and an
office or agency where Senior Secured Notes may be presented for payment
("Paying Agent"). The Registrar shall keep a register of the Senior Secured
Notes and of their transfer and exchange. Issuer may appoint one or more
co-registrars and one or more additional paying agents. The term "Registrar"
includes any co-registrar and the term "Paying Agent" includes any additional
paying agent. Issuer may change any Paying Agent or Registrar without notice to
any Holder. Issuer shall notify the Trustee in writing of the name and address
of any Agent not a party to this Indenture. If Issuer fails to appoint or
maintain another entity as Registrar or Paying Agent, the Trustee shall act as
such. Issuer or either Guarantor may act as Paying Agent or Registrar.
Issuer initially appoints The Depository Trust Company ("DTC") to act as
Depositary Agent with respect to the Global Notes.
Issuer initially appoints the Trustee to act as the Registrar and Paying
Agent and to act as Note Custodian with respect to the Global Notes.
Section 2.04 Paying Agent to Hold Money in Trust.
Issuer shall require each Paying Agent other than the Trustee to agree in
writing that the Paying Agent will hold in trust for the benefit of Holders or
the Trustee all money held by the Paying Agent for the payment of principal,
interest, or premium, if any, on the Senior Secured Notes, and will notify the
Trustee of any default by Issuer in making any such payment. While any such
default continues, the Trustee may require a Paying Agent to pay all money held
by it to the Trustee. Issuer at any time may require a Paying Agent to pay all
money held by it to the Trustee. Upon payment over to the Trustee, the Paying
Agent (if other than Issuer) shall have no further liability for the money. If
Issuer acts as Paying Agent, it shall segregate and hold in a separate trust
fund for the benefit of the Holders all money held by it as Paying Agent. Upon
any Bankruptcy Event relating to Issuer, the Trustee shall serve as Paying Agent
for the Senior Secured Notes.
Section 2.05 Holder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA ss. 312(a). If the Trustee is
not the Registrar, Issuer shall furnish to the Trustee at least seven Business
Days before each interest payment date and at such other times as the Trustee
may request in writing, a list in such form and as of such date as the Trustee
may reasonably require of the names and addresses of the Holders of Senior
Secured Notes and Issuer shall otherwise comply with TIA ss. 312(a).
Section 2.06 Transfer and Exchange.
(a) Transfer and Exchange of Global Notes. A Global Note may not be
transferred as a whole except by the Depositary Agent to a nominee of the
Depositary Agent, by a nominee of the
27
Depositary Agent to the Depositary Agent or to another nominee of the Depositary
Agent, the Depositary Agent or any such nominee to a successor Depositary Agent
or a nominee of such successor Depositary Agent. All Global Notes will be
exchanged by Issuer for Definitive Notes if (i) Issuer delivers to the Trustee
notice from the Depositary Agent that it is unwilling or unable to continue to
act as Depositary Agent or that it is no longer a clearing agency registered
under the Exchange Act and, in either case, a successor Depositary Agent is not
appointed by Issuer within 120 days after the date of such notice from the
Depositary Agent, (ii) Issuer in its sole discretion determines that the Global
Notes (in whole but not in part) should be exchanged for Definitive Notes and
delivers a written notice to such effect to the Trustee; provided that in no
event shall the Regulation S Temporary Global Note be exchanged by Issuer for
Definitive Notes prior to (x) the expiration of the Restricted Period and (y)
the receipt by the Registrar of any certificates required pursuant to Rule
903(b)(3)(ii)(B) under the Securities Act, or (iii) a Default or Event of
Default has occurred and is continuing. Upon the occurrence of either of the
preceding events in (i), (ii) or (iii) above, Definitive Notes shall be issued
in such names as the Depositary Agent shall instruct the Trustee. Global Notes
also may be exchanged or replaced, in whole or in part, as provided in Sections
2.07 and 2.10 hereof. Every Senior Secured Note authenticated and delivered in
exchange for, or in lieu of, a Global Note or any portion thereof, pursuant to
this Section 2.06 or Section 2.07 or 2.10 hereof, shall be authenticated and
delivered in the form of, and shall be, a Global Note. A Global Note may not be
exchanged for another Senior Secured Note other than as provided in this Section
2.06(a), however, beneficial interests in a Global Note may be transferred and
exchanged as provided in Section 2.06(b) or (c) hereof.
(b) Transfer and Exchange of Beneficial Interests in the Global Notes. The
transfer and exchange of beneficial interests in the Global Notes shall be
effected through the Depositary Agent, in accordance with the provisions of this
Indenture and the Applicable Procedures. Beneficial interests in the Restricted
Global Notes shall be subject to restrictions on transfer comparable to those
set forth herein to the extent required by the Securities Act. Transfers of
beneficial interests in the Global Notes also shall require compliance with
either subparagraph (i) or (ii) below, as applicable, as well as one or more of
the other following subparagraphs, as applicable:
(i) Transfer of Beneficial Interests in the Same Global Note.
Beneficial interests in any Restricted Global Note may be transferred to Persons
who take delivery thereof in the form of a beneficial interest in the same
Restricted Global Note in accordance with the transfer restrictions set forth in
the Private Placement Legend; provided, however, that prior to the expiration of
the Restricted Period, transfers of beneficial interests in the Regulation S
Temporary Global Note may not be made to a U.S. Person or for the account or
benefit of a U.S. Person (other than an Initial Purchaser). Beneficial interests
in any Unrestricted Global Note may be transferred to Persons who take delivery
thereof in the form of a beneficial interest in an Unrestricted Global Note. No
written orders or instructions shall be required to be delivered to the
Registrar to effect the transfers described in this Section 2.06(b)(i).
(ii) All Other Transfers and Exchanges of Beneficial Interests in
Global Notes. In connection with all transfers and exchanges of beneficial
interests that are not subject to Section 2.06(b)(i) above, the transferor of
such beneficial interest must deliver to the Registrar either (A) both (1) a
written order from a Participant or an Indirect Participant given to the
Depositary Agent in accordance with the Applicable Procedures directing the
Depositary Agent to credit or cause to be credited a beneficial interest in
another Global Note in an amount equal to the beneficial interest to be
transferred or exchanged and (2) instructions given in accordance with the
Applicable Procedures containing information regarding the Participant account
to be credited with such increase or (B) both (1) a written order from a
Participant or an Indirect Participant given to the Depositary Agent in
accordance with the Applicable Procedures directing the Depositary Agent to
cause to be issued a
28
Definitive Note in an amount equal to the beneficial interest to be transferred
or exchanged and (2) instructions given by the Depositary Agent to the Registrar
containing information regarding the Person in whose name such Definitive Note
shall be registered to effect the transfer or exchange referred to in (1) above;
provided that in no event shall Definitive Notes be issued upon the transfer or
exchange of beneficial interests in the Regulation S Temporary Global Note prior
to (x) the expiration of the Restricted Period and (y) the receipt by the
Registrar of any certificates required pursuant to Rule 903 under the Securities
Act. Upon satisfaction of all of the requirements for transfer or exchange of
beneficial interests in Global Notes contained in this Indenture and the Senior
Secured Notes or otherwise applicable under the Securities Act, the Trustee
shall adjust the principal amount of the relevant Global Note(s) pursuant to
Section 2.06(g) hereof.
(iii) Transfer of Beneficial Interests to Another Restricted Global
Note. A beneficial interest in any Restricted Global Note may be transferred to
a Person who takes delivery thereof in the form of a beneficial interest in
another Restricted Global Note if the transfer complies with the requirements of
Section 2.06(b)(ii) above and the Registrar receives the following:
(A) if the transferee will take delivery in the form of a
beneficial interest in the 144A Global Note, then the transferor
must deliver a certificate in the form of Exhibit B hereto,
including the certifications in item (1) thereof;
(B) if the transferee will take delivery in the form of a
beneficial interest in the Regulation S Temporary Global Note or the
Regulation S Global Note, then the transferor must deliver a
certificate in the form of Exhibit B hereto, including the
certifications in item (2) thereof; and
(C) if the transferee will take delivery in the form of a
beneficial interest in the IAI Global Note, then the transferor must
deliver a certificate in the form of Exhibit B hereto, including the
certifications and certificates and Opinion of Counsel required by
item (3) thereof, if applicable.
(iv) Transfer and Exchange of Beneficial Interests in a Restricted
Global Note for Beneficial Interests in the Unrestricted Global Note. A
beneficial interest in any Restricted Global Note may be exchanged by any holder
thereof for a beneficial interest in an Unrestricted Global Note or transferred
to a Person who takes delivery thereof in the form of a beneficial interest in
an Unrestricted Global Note if the exchange or transfer complies with the
requirements of Section 2.06(b)(ii) above and the Registrar receives the
following:
(A) if the holder of such beneficial interest in a Restricted
Global Note proposes to exchange such beneficial interest for a
beneficial interest in an Unrestricted Global Note, a certificate
from such holder in the form of Exhibit C hereto, including the
certifications in item (1)(a) thereof; or
(B) if the holder of such beneficial interest in a Restricted
Global Note proposes to transfer such beneficial interest to a
Person who shall take delivery thereof in the form of a beneficial
interest in an Unrestricted Global Note, a certificate from such
holder in the form of Exhibit B hereto, including the certifications
in item (4) thereof;
and, in each such case, if the Registrar so requests or if the Applicable
Procedures so require, an Opinion of Counsel in form reasonably acceptable to
the Registrar to the effect that such exchange or transfer is in compliance with
the Securities Act and that the restrictions on transfer contained herein
29
and in the Private Placement Legend are no longer required in order to
maintain compliance with the Securities Act.
If any such transfer is effected at a time when an
Unrestricted Global Note has not yet been issued, the Issuer shall
issue and, upon receipt of an Authentication Order in accordance
with Section 2.02 hereof, the Trustee shall authenticate one or more
Unrestricted Global Notes in an aggregate principal amount equal to
the aggregate principal amount of beneficial interests transferred.
Beneficial interests in an Unrestricted Global Note cannot be exchanged
for, or transferred to Persons who take delivery thereof in the form of, a
beneficial interest in a Restricted Global Note.
(c) Transfer or Exchange of Beneficial Interests for Definitive Notes.
(i) Beneficial Interests in Restricted Global Notes to Restricted
Definitive Notes. If any holder of a beneficial interest in a Restricted Global
Note proposes to exchange such beneficial interest for a Restricted Definitive
Note or to transfer such beneficial interest to a Person who takes delivery
thereof in the form of a Restricted Definitive Note, then, upon receipt by the
Registrar of the following documentation:
(A) if the holder of such beneficial interest in a Restricted
Global Note proposes to exchange such beneficial interest for a
Restricted Definitive Note, a certificate from such holder in the
form of Exhibit C hereto, including the certifications in item
(2)(a) thereof;
(B) if such beneficial interest is being transferred to a QIB
in accordance with Rule 144A under the Securities Act, a certificate
to the effect set forth in Exhibit B hereto, including the
certifications in item (1) thereof;
(C) if such beneficial interest is being transferred to a
Non-U.S. Person in an offshore transaction in accordance with Rule
903 or Rule 904 under the Securities Act, a certificate to the
effect set forth in Exhibit B hereto, including the certifications
in item (2) thereof;
(D) if such beneficial interest is being transferred pursuant
to an exemption from the registration requirements of the Securities
Act in accordance with Rule 144 under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including
the certifications in item (3)(a) thereof;
(E) if such beneficial interest is being transferred to an
Institutional Accredited Investor in reliance on an exemption from
the registration requirements of the Securities Act other than those
listed in subparagraphs (B) through (D) above, a certificate to the
effect set forth in Exhibit B hereto, including the certifications,
certificates and Opinion of Counsel required by item (3) thereof, if
applicable;
(F) if such beneficial interest is being transferred to
Issuer, a certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (3)(b) thereof; or
30
(G) if such beneficial interest is being transferred pursuant
to an effective registration statement under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including
the certifications in item (3)(c) thereof,
the Trustee shall cause the aggregate principal amount of the applicable
Global Note to be reduced accordingly pursuant to Section 2.06(g) hereof,
and Issuer shall execute and the Trustee shall, upon receipt of an
Authentication Order, authenticate and deliver to the Person designated in
the Authentication Order a Definitive Note in the appropriate principal
amount. Any Definitive Note issued in exchange for a beneficial interest
in a Restricted Global Note pursuant to this Section 2.06(c) shall be
registered in such name or names and in such authorized denomination or
denominations as the holder of such beneficial interest shall instruct the
Registrar through instructions from the Depositary and the Participant or
Indirect Participant. The Trustee shall deliver such Definitive Notes to
the Persons in whose names such Senior Secured Notes are so registered.
Any Definitive Note issued in exchange for a beneficial interest in a
Restricted Global Note pursuant to this Section 2.06(c)(i) shall bear the
Private Placement Legend and shall be subject to all restrictions on
transfer contained therein.
(ii) Beneficial Interests in Regulation S Temporary Global Notes to
Definitive Notes. Notwithstanding Sections 2.06(c)(i)(A) and (C) hereof, a
beneficial interest in the Regulation S Temporary Global Note may not be
exchanged for a Definitive Note or transferred to a Person who takes delivery
thereof in the form of a Definitive Note prior to (x) the expiration of the
Restricted Period and (y) the receipt by the Registrar of any certificates
required pursuant to Rule 903(b)(3)(ii)(B) under the Securities Act, except in
the case of a transfer pursuant to an exemption from the registration
requirements of the Securities Act other than Rule 903 or Rule 904.
(iii) Beneficial Interests in Restricted Global Notes to
Unrestricted Definitive Notes. A holder of a beneficial interest in a Restricted
Global Note may exchange such beneficial interest for an Unrestricted Definitive
Note or may transfer such beneficial interest to a Person who takes delivery
thereof in the form of an Unrestricted Definitive Note only if the Registrar
receives the following:
(A) if the holder of such beneficial interest in a Restricted
Global Note proposes to exchange such beneficial interest for an
Unrestricted Definitive Note, a certificate from such holder in the
form of Exhibit C hereto, including the certifications in item
(1)(b) thereof; or
(B) if the holder of such beneficial interest in a Restricted
Global Note proposes to transfer such beneficial interest to a
Person who shall take delivery thereof in the form of an
Unrestricted Definitive Note, a certificate from such holder in the
form of Exhibit B hereto, including the certifications in item (4)
thereof;
and, in each such case, if the Registrar so requests or if the
Applicable Procedures so require, an Opinion of Counsel in form
reasonably acceptable to the Registrar to the effect that such
exchange or transfer is in compliance with the Securities Act and
that the restrictions on transfer contained herein and in the
Private Placement Legend are no longer required in order to maintain
compliance with the Securities Act.
(iv) Beneficial Interests in Unrestricted Global Notes to
Unrestricted Definitive Notes. If any holder of a beneficial interest in an
Unrestricted Global Note proposes to exchange such beneficial interest for a
Definitive Note or to transfer such beneficial interest to a Person who takes
delivery thereof in the form of a Definitive Note, then, upon satisfaction of
the conditions set forth in Section 2.06(b)(ii) hereof, the Trustee shall cause
the aggregate principal amount of the applicable Global Note to be reduced
accordingly pursuant to
31
Section 2.06(g) hereof, and the Issuer shall execute and the Trustee shall, upon
receipt of an Authentication Order, authenticate and deliver to the Person
designated in the Authentication Order a Definitive Note in the appropriate
principal amount. Any Definitive Note issued in exchange for a beneficial
interest pursuant to this Section 2.06(c)(iv) shall be registered in such name
or names and in such authorized denomination or denominations as the holder of
such beneficial interest shall instruct the Registrar through instructions from
the Depositary Agent and the Participant or Indirect Participant. The Trustee
shall deliver such Definitive Notes to the Persons in whose names such Senior
Secured Notes are so registered. Any Definitive Note issued in exchange for a
beneficial interest pursuant to this Section 2.06(c)(iv) shall not bear the
Private Placement Legend.
(d) Transfer and Exchange of Definitive Notes for Beneficial Interests.
(i) Restricted Definitive Notes to Beneficial Interests in
Restricted Global Notes. If any Holder of a Restricted Definitive Note proposes
to exchange such Restricted Definitive Note for a beneficial interest in a
Restricted Global Note or to transfer such Restricted Definitive Notes to a
Person who takes delivery thereof in the form of a beneficial interest in a
Restricted Global Note, then, upon receipt by the Registrar of the following
documentation:
(A) if the Holder of such Restricted Definitive Note proposes
to exchange such Restricted Definitive Note for a beneficial
interest in a Restricted Global Note, a certificate from such Holder
in the form of Exhibit C hereto, including the certifications in
item (2)(b) thereof;
(B) if such Restricted Definitive Note is being transferred to
a QIB in accordance with Rule 144A under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including
the certifications in item (1) thereof;
(C) if such Restricted Definitive Note is being transferred to
a Non-U.S. Person in an offshore transaction in accordance with Rule
903 or Rule 904 under the Securities Act, a certificate to the
effect set forth in Exhibit B hereto, including the certifications
in item (2) thereof;
(D) if such Restricted Definitive Note is being transferred
pursuant to an exemption from the registration requirements of the
Securities Act in accordance with Rule 144 under the Securities Act,
a certificate to the effect set forth in Exhibit B hereto, including
the certifications in item (3)(a) thereof;
(E) if such Restricted Definitive Note is being transferred to
an Institutional Accredited Investor in reliance on an exemption
from the registration requirements of the Securities Act other than
those listed in subparagraphs (B) through (D) above, a certificate
to the effect set forth in Exhibit B hereto, including the
certifications, certificates and Opinion of Counsel required by item
(3) thereof, if applicable;
(F) if such Restricted Definitive Note is being transferred to
Issuer, a certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (3)(b) thereof; or
32
(G) if such Restricted Definitive Note is being transferred
pursuant to an effective registration statement under the Securities
Act, a certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (3)(c) thereof,
the Trustee shall cancel the Restricted Definitive Note, increase or cause
to be increased the aggregate principal amount of, in the case of clause
(A) above, the appropriate Restricted Global Note, in the case of clause
(B) above, the 144A Global Note, in the case of clause (C) above, the
Regulation S Global Note, and in all other cases, the IAI Global Note.
(ii) Restricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes. A Holder of a Restricted Definitive Note may exchange
such Restricted Definitive Note for a beneficial interest in an Unrestricted
Global Note or transfer such Restricted Definitive Note to a Person who takes
delivery thereof in the form of a beneficial interest in an Unrestricted Global
Note only if the Registrar receives the following:
(A) if the Holder of such Definitive Notes proposes to
exchange such Senior Secured Notes for a beneficial interest in the
Unrestricted Global Note, a certificate from such Holder in the form
of Exhibit C hereto, including the certifications in item (1)(c)
thereof; or
(B) if the Holder of such Definitive Notes proposes to
transfer such Senior Secured Notes to a Person who shall take
delivery thereof in the form of a beneficial interest in the
Unrestricted Global Note, a certificate from such Holder in the form
of Exhibit B hereto, including the certifications in item (4)
thereof;
and, in each such case, if the Registrar so requests or if the Applicable
Procedures so require, an Opinion of Counsel in form reasonably acceptable
to Issuer to the effect that such exchange or transfer is in compliance
with the Securities Act and that the restrictions on transfer contained
herein and in the Private Placement Legend are no longer required in order
to maintain compliance with the Securities Act.
Upon satisfaction of the conditions of any of the subparagraphs in this
Section 2.06(d)(ii), the Trustee shall cancel the Definitive Notes and
increase or cause to be increased the aggregate principal amount of the
Unrestricted Global Note.
(iii) Unrestricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes. A Holder of an Unrestricted Definitive Note may
exchange such Unrestricted Definitive Note for a beneficial interest in an
Unrestricted Global Note or transfer such Definitive Notes to a Person who takes
delivery thereof in the form of a beneficial interest in an Unrestricted Global
Note at any time. Upon receipt of a request for such an exchange or transfer,
the Trustee shall cancel the applicable Unrestricted Definitive Note and
increase or cause to be increased the aggregate principal amount of one of the
Unrestricted Global Notes.
If any such exchange or transfer from a Definitive Note to a beneficial
interest is effected pursuant to subparagraphs (ii) or (iii) above at a time
when an Unrestricted Global Note has not yet been issued, Issuer shall issue
and, upon receipt of an Authentication Order in accordance with Section 2.02
hereof, the Trustee shall authenticate one or more Unrestricted Global Notes in
an aggregate principal amount equal to the principal amount of Definitive Notes
so transferred.
(e) Transfer and Exchange of Definitive Notes for Definitive Notes.
33
Upon request by a Holder of Definitive Notes and such Holder's compliance
with the provisions of this Section 2.06(e), the Registrar shall register the
transfer or exchange of Definitive Notes. Prior to such registration of transfer
or exchange, the requesting Holder shall present or surrender to the Registrar
the Definitive Notes duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Registrar duly executed by such Holder or
by his attorney, duly authorized in writing. In addition, the requesting Holder
shall provide any additional certifications, documents and information, as
applicable, required pursuant to the following provisions of this Section
2.06(e).
(i) Restricted Definitive Notes to Restricted Definitive Notes. Any
Restricted Definitive Note may be transferred to and registered in the name of
Persons who take delivery thereof in the form of a Restricted Definitive Note if
the Registrar receives the following:
(A) if the transfer will be made pursuant to Rule 144A, then
the transferor must deliver a certificate in the form of Exhibit B
hereto, including the certifications in item (1) thereof;
(B) if the transfer will be made pursuant to Rule 903 or Rule
904, then the transferor must deliver a certificate in the form of
Exhibit B hereto, including the certifications in item (2) thereof;
and
(C) if the transfer will be made pursuant to any other
exemption from the registration requirements of the Securities Act,
then the transferor must deliver a certificate in the form of
Exhibit B hereto, including the certifications, certificates and
Opinion of Counsel required by item (3) thereof, if applicable.
(ii) Restricted Definitive Notes to Unrestricted Definitive Notes.
Any Restricted Definitive Note may be exchanged by the Holder thereof for an
Unrestricted Definitive Note or transferred to a Person or Persons who take
delivery thereof in the form of an Unrestricted Definitive Note if the Registrar
receives the following:
(A) if the Holder of such Restricted Definitive Notes proposes
to exchange such Senior Secured Notes for an Unrestricted Definitive
Note, a certificate from such Holder in the form of Exhibit C
hereto, including the certifications in item (1)(d) thereof; or
(B) if the Holder of such Restricted Definitive Notes proposes
to transfer such Restricted Definitive Notes to a Person who shall
take delivery thereof in the form of an Unrestricted Definitive
Note, a certificate from such Holder in the form of Exhibit B
hereto, including the certifications in item (4) thereof;
and, in each such case, if the Registrar so requests, an Opinion of
Counsel in form reasonably acceptable to the Registrar to the effect
that such exchange or transfer is in compliance with the Securities
Act and that the restrictions on transfer contained herein and in
the Private Placement Legend are no longer required in order to
maintain compliance with the Securities Act.
(iii) Unrestricted Definitive Notes to Unrestricted Definitive
Notes. A Holder of Unrestricted Definitive Notes may transfer such Senior
Secured Notes to a Person who takes delivery thereof in the form of an
Unrestricted Definitive Note. Upon receipt of a request to register such a
34
transfer, the Registrar shall register the Unrestricted Definitive Notes
pursuant to the instructions from the Holder thereof.
(f) Legends.
The following legends shall appear on the face of all Global Notes and
Definitive Notes issued under this Indenture unless specifically stated
otherwise in the applicable provisions of this Indenture.
(i) Private Placement Legend.
(A) Except as permitted by subparagraph (B) below, each Global
Note and each Definitive Note (and all Senior Secured Notes issued
in exchange therefor or substitution thereof) shall bear the legend
in substantially the following form:
"THE NOTES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT") AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED
EXCEPT (A)(1) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER
THE SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT
OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (2) IN AN OFFSHORE TRANSACTION COMPLYING
WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT,
(3) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), (4) TO AN
INSTITUTIONAL ACCREDITED INVESTOR THAT IS AN ACCREDITED INVESTOR
WITHIN THE MEANING OF RULE 501 OF REGULATION D UNDER THE SECURITIES
ACT IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT OR (5) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND (B) IN ACCORDANCE WITH ALL
APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES AND
OTHER JURISDICTIONS."
(B) Notwithstanding the foregoing, any Global Note or
Definitive Note issued pursuant to subparagraphs (b)(iv), (c)(iii),
(c)(iv), (d)(ii), (d)(iii), (e)(ii) or (e)(iii) to this Section 2.06
(and all Senior Secured Notes issued in exchange therefor or
substitution thereof) shall not bear the Private Placement Legend.
(ii) Global Note Legend. Each Global Note shall bear a legend in
substantially the following form:
"THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE
BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY
CIRCUMSTANCES EXCEPT THAT (1) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON
AS MAY BE REQUIRED PURSUANT TO SECTION 2.06 OF THE INDENTURE, (2) THIS
GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION
2.06(a) OF THE INDENTURE, (3) THIS GLOBAL NOTE MAY BE DELIVERED TO THE
TRUSTEE FOR
35
CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS
GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR
WRITTEN CONSENT OF ISSUER.
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN
DEFINITIVE FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE
DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY
THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE
OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER
STREET, NEW YORK, NEW YORK) ("DTC"), TO THE COMPANY OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED
IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE
TO CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE
OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN."
(iii) Original Issue Discount Legend.
(A) Except as set forth in subparagraph (B) below, each Global
Note and each Definitive Note (and all Senior Secured Notes issued in exchange
therefor or substitution thereof) shall bear the legend in substantially the
following form:
"THIS SECURITY MAY HAVE BEEN ISSUED WITH ORIGINAL ISSUE DISCOUNT FOR
UNITED STATES FEDERAL INCOME TAX PURPOSES AND MAY BE SUBJECT TO TREASURY
REGULATIONS REGARDING THE REPORTING OF ORIGINAL ISSUE DISCOUNT. FURTHER
INFORMATION MAY BE OBTAINED BY SUBMITTING A REQUEST TO LISA BODENSTEINER,
EXECUTIVE VICE PRESIDENT, GILROY ENERGY CENTER, LLC, 50 WEST SAN FERNANDO
STREET, SUITE 690, SAN JOSE, CA 95113."
(B) Notwithstanding the foregoing, if Senior Secured Notes are
issued with original issue discount for United States federal income tax
purposes, a separate Global Note or Definitive Note shall be issued for such
Senior Secured Notes and such Global Note or Definitive Note, as the case may
be, shall bear the legend in substantially the following form:
"THIS SECURITY WAS ISSUED WITH ORIGINAL ISSUE DISCOUNT FOR UNITED STATES
FEDERAL INCOME TAX PURPOSES AND IS SUBJECT TO TREASURY REGULATIONS
REGARDING THE REPORTING OF ORIGINAL ISSUE DISCOUNT. FURTHER INFORMATION
MAY BE OBTAINED BY SUBMITTING A REQUEST TO LISA BODENSTEINER, EXECUTIVE
VICE PRESIDENT, GILROY ENERGY CENTER, LLC, 50 WEST SAN FERNANDO STREET,
SUITE 690, SAN JOSE, CA 95113."
(g) Cancellation and/or Adjustment of Global Notes. At such time as all
beneficial interests in a particular Global Note have been exchanged for
Definitive Notes or a particular Global Note has
36
been redeemed, repurchased or canceled in whole and not in part, each such
Global Note shall be returned to or retained and canceled by the Trustee in
accordance with Section 2.11 hereof. At any time prior to such cancellation, if
any beneficial interest in a Global Note is exchanged for or transferred to a
Person who will take delivery thereof in the form of a beneficial interest in
another Global Note or for Definitive Notes, the principal amount of Senior
Secured Notes represented by such Global Note shall be reduced accordingly and
an endorsement shall be made on such Global Note by the Trustee or by the
Depositary Agent at the direction of the Trustee to reflect such reduction; and
if the beneficial interest is being exchanged for or transferred to a Person who
will take delivery thereof in the form of a beneficial interest in another
Global Note, such other Global Note shall be increased accordingly and an
endorsement shall be made on such Global Note by the Trustee or by the
Depositary Agent at the direction of the Trustee to reflect such increase.
(h) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, Issuer shall
execute and the Trustee shall authenticate Global Notes and Definitive Notes
upon receipt of an Authentication Order. The Definitive Notes shall be
transferable only upon surrender of a Definitive Note to the Registrar for
registration of transfer or exchange.
(ii) No service charge shall be made to a holder of a beneficial
interest in a Global Note or to a Holder of a Definitive Note for any
registration of transfer or exchange, but the Issuer may require payment of a
sum sufficient to cover any transfer tax or similar governmental charge payable
in connection therewith (other than any such transfer taxes or similar
governmental charge payable upon exchange or transfer pursuant to Sections 2.10,
3.06, 3.09 and 8.05 hereof).
(iii) The Registrar shall not be required to register the transfer
of or exchange any Senior Secured Note selected for redemption in whole or in
part, except the unredeemed portion of any Senior Secured Note being redeemed in
part.
(iv) All Global Notes and Definitive Notes issued upon any
registration of transfer or exchange of Global Notes or Definitive Notes shall
be the valid obligations of Issuer, evidencing the same debt, and entitled to
the same benefits under this Indenture, as the Global Notes or Definitive Notes
surrendered upon such registration of transfer or exchange.
(v) Neither the Registrar nor the Issuer shall be required (A) to
issue, to register the transfer of or to exchange any Senior Secured Notes
during a period beginning at the opening of business 15 days before the day of
any selection of Senior Secured Notes for redemption under Section 3.02 hereof
and ending at the close of business on the day of selection, (B) to register the
transfer of or to exchange any Senior Secured Note so selected for redemption in
whole or in part, except the unredeemed portion of any Senior Secured Note being
redeemed in part or (C) to register the transfer of or to exchange a Senior
Secured Note between a record date and the next succeeding Payment Date.
(vi) Prior to due presentment for the registration of a transfer of
any Senior Secured Note, the Trustee, any Agent and the Issuer may deem and
treat the Person in whose name any Senior Secured Note is registered as the
absolute owner of such Senior Secured Note for the purpose of receiving payment
of principal of and interest on such Senior Secured Notes and for all other
purposes, and none of the Trustee, any Agent or Issuer shall be affected by
notice to the contrary.
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(vii) The Trustee shall authenticate Global Notes and Definitive
Notes in accordance with the provisions of Section 2.02 hereof.
(viii) All certifications, certificates and Opinions of Counsel
required to be submitted to the Registrar pursuant to this Section 2.06 to
effect a registration of transfer or exchange may be submitted by facsimile.
Section 2.07 Replacement Senior Secured Notes.
If any mutilated Senior Secured Note is surrendered to the Trustee or
Issuer and the Trustee receives evidence to its satisfaction of the destruction,
loss or theft of any Senior Secured Note, Issuer shall issue and the Trustee,
upon receipt of an Authentication Order, shall authenticate a replacement Senior
Secured Note if the Trustee's requirements hereunder are met. If required by the
Trustee, Registrar or Issuer, an indemnity bond must be supplied by the Holder
that is sufficient in the judgment of the Trustee, Registrar and Issuer to
protect Issuer, the Trustee, any Agent and any authenticating agent from any
loss that any of them may suffer if a Senior Secured Note is replaced. Issuer
and the Trustee may charge the applicable Holder for their respective expenses
in replacing a Senior Secured Note.
Every replacement Senior Secured Note is an additional obligation of
Issuer and shall be entitled to all of the benefits of this Indenture equally
and proportionately with all other Senior Secured Notes duly issued hereunder.
Section 2.08 Outstanding Senior Secured Notes.
The Senior Secured Notes outstanding at any time are all the Senior
Secured Notes authenticated by the Trustee except for those canceled by it,
those delivered to it for cancellation, those reductions in the interest in a
Global Note effected by the Trustee in accordance with the provisions hereof,
and those described in this Section as not outstanding. Except as set forth in
Section 2.09 hereof, a Senior Secured Note does not cease to be outstanding
because Issuer or an Affiliate of Issuer holds the Senior Secured Note.
If a Senior Secured Note is replaced pursuant to Section 2.07 hereof, it
ceases to be outstanding unless the Trustee receives proof satisfactory to it
that the replaced Senior Secured Note is held by a bona fide purchaser.
If the principal amount of any Senior Secured Note is considered paid
under Section 4.01 hereof, it ceases to be outstanding and interest on it ceases
to accrue.
If the Paying Agent (other than Issuer, a subsidiary or an Affiliate of
any thereof) holds, on a redemption date or maturity date, money sufficient to
pay Senior Secured Notes payable on that date, then on and after that date such
Senior Secured Notes shall be deemed to be no longer outstanding and shall cease
to accrue interest.
In the event the Senior Secured Notes are issued in book-entry form with
the Depositary Agent: (i) the Trustee may deal with the Depositary Agent as the
authorized representative of the Holders; (ii) the rights of the Holders shall
be exercised only through the Depositary Agent and shall be limited to those
established by law and agreement between the Holders and the Depositary Agent
and/or direct participants of the Depositary Agent; (iii) the Depositary Agent
will make book-entry transfers among the direct participants of the Depositary
Agent and will receive and transmit distributions of principal and interest on
the Senior Secured Notes to such direct participants; and (iv) the direct
participants of the
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Depositary Agent shall have no rights under this Indenture under or with respect
to any of the Senior Secured Notes held on their behalf by the Depositary Agent,
and the Depositary Agent may be treated by the Trustee and its agents,
employees, officers and directors as the absolute owner of the Senior Secured
Notes for all purposes whatsoever.
Section 2.09 Treasury Notes.
In determining whether the Holders of the required principal amount of
Senior Secured Notes have concurred in any direction, waiver or consent, Senior
Secured Notes owned by Issuer, or by any Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
Issuer, shall be considered as though not outstanding, except that for the
purposes of determining whether the Trustee shall be protected in relying on any
such direction, waiver or consent, only Senior Secured Notes that a Responsible
Trust Officer of the Trustee actually knows are so owned shall be so
disregarded.
Section 2.10 Temporary Senior Secured Notes.
Until certificates representing Senior Secured Notes are ready for
delivery, Issuer may prepare and the Trustee, upon receipt of an Authentication
Order, shall authenticate temporary Senior Secured Notes. Temporary Senior
Secured Notes shall be substantially in the form of certificated Senior Secured
Notes but may have variations that Issuer considers appropriate for temporary
Senior Secured Notes and as shall be reasonably acceptable to the Trustee.
Without unreasonable delay, Issuer shall prepare and the Trustee shall
authenticate Definitive Notes in exchange for temporary Senior Secured Notes.
Holders of temporary Senior Secured Notes shall be entitled to all of the
benefits of this Indenture.
Section 2.11 Cancellation.
Issuer at any time may deliver Senior Secured Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Senior Secured Notes surrendered to them for registration of transfer, exchange
or payment. The Trustee and no one else shall cancel all Senior Secured Notes
surrendered for registration of transfer, exchange, payment, replacement or
cancellation and shall destroy canceled Senior Secured Notes in accordance with
its customary procedures (subject to the record retention requirement of the
Exchange Act). Certification of the destruction of all canceled Senior Secured
Notes shall be delivered to Issuer. Issuer may not issue new Senior Secured
Notes to replace Senior Secured Notes that it has paid or that have been
delivered to the Trustee for cancellation.
Section 2.12 Defaulted Interest.
If Issuer defaults in a payment of interest on the Senior Secured Notes,
it shall pay the defaulted interest in any lawful manner plus, to the extent
lawful, interest payable on the defaulted interest, to the Persons who are
Holders on a subsequent special record date, in each case at the rate provided
in the Senior Secured Notes and in Section 4.01 hereof. Issuer shall notify the
Trustee in writing of the amount of defaulted interest proposed to be paid on
each Senior Secured Note and the date of the proposed payment. Issuer shall fix
or cause to be fixed each such special record date and payment date, provided
that no such special record date shall be less than 10 days prior to the related
payment date for such defaulted interest. At least 15 days before the special
record date, Issuer (or, upon the written request of Issuer, the Trustee in the
name and at the expense of Issuer) shall mail or cause to be mailed to Holders a
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notice that states the special record date, the related payment date and the
amount of such interest to be paid.
ARTICLE 3
REDEMPTION AND PREPAYMENT
Section 3.01 Notices to Trustee.
If Issuer elects to redeem Senior Secured Notes pursuant to the optional
redemption provisions of Section 3.07 hereof, it shall furnish to the Trustee,
at least 45 days but not more than 60 days before a redemption date, a
certificate of an Officer setting forth (i) the clause of this Indenture
pursuant to which the redemption shall occur, (ii) the redemption date, (iii)
the principal amount of Senior Secured Notes to be redeemed and (iv) the
redemption price.
Section 3.02 Selection of Senior Secured Notes to Be Redeemed
If less than all of the Senior Secured Notes are to be redeemed or
purchased in an offer to purchase at any time, the Trustee shall select the
Senior Secured Notes to be redeemed or purchased among the Holders of the Senior
Secured Notes on a pro rata basis or in accordance with any other method the
Trustee deems fair and appropriate. In the event of partial redemption by lot,
the particular Senior Secured Notes to be redeemed shall be selected, unless
otherwise provided herein, not less than 30 nor more than 60 days' prior to the
redemption date by the Trustee from the outstanding Senior Secured Notes not
previously called for redemption.
The Trustee shall promptly notify Issuer in writing of the Senior Secured
Notes selected for redemption and, in the case of any Senior Secured Note
selected for partial redemption, the principal amount thereof to be redeemed.
Senior Secured Notes and portions of Senior Secured Notes selected shall be in
minimum denominations of $100,000 and integral multiples of $1,000 in excess
thereof; except that if all of the Senior Secured Notes of a Holder are to be
redeemed, the entire outstanding amount of Senior Secured Notes held by such
Holder, even if not a minimum denomination of $100,000 or a multiple of $1,000,
shall be redeemed. Except as provided in the preceding sentence, provisions of
this Indenture that apply to Senior Secured Notes called for redemption also
apply to portions of Senior Secured Notes called for redemption.
Section 3.03 Notice of Redemption
Upon not less than 30 nor more than 60 days' notice to each Holder before
a redemption date, Issuer shall mail or cause to be mailed, by first class mail,
a notice of redemption to each Holder whose Senior Secured Notes are to be
redeemed at its registered address.
The notice shall identify the Senior Secured Notes to be redeemed and
shall state:
(a) the redemption date;
(b) the redemption price;
(c) if any Senior Secured Note is being redeemed in part, the portion of
the principal amount of such Senior Secured Note to be redeemed and that, after
the redemption date upon surrender of such Senior Secured Note, new Senior
Secured Notes in principal amount equal to the unredeemed portion shall be
issued upon cancellation of the original Senior Secured Note;
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(d) the name and address of the Paying Agent;
(e) that Senior Secured Notes called for redemption must be surrendered to
the Paying Agent to collect the redemption price;
(f) that, unless Issuer defaults in making such redemption payment,
interest on Senior Secured Notes called for redemption ceases to accrue on and
after the Redemption Date;
(g) the paragraph of the Senior Secured Notes and/or Section of this
Indenture pursuant to which the Senior Secured Notes called for redemption are
being redeemed; and
(h) that no representation is made as to the correctness or accuracy of
the CUSIP number, if any, listed in such notice or printed on the Senior Secured
Notes.
At Issuer's request, the Trustee shall give the notice of redemption in
Issuer's name and at its expense; provided, however, that Issuer shall have
delivered to the Trustee, at least 45 days prior to the redemption date, a
certificate of an Officer requesting that the Trustee give such notice and
setting forth the information to be stated in such notice as provided in the
preceding paragraph.
Section 3.04 Effect of Notice of Redemption
Once notice of redemption is mailed in accordance with Section 3.03
hereof, Senior Secured Notes called for redemption become irrevocably due and
payable on the Redemption Date at the redemption price. A notice of redemption
may not be conditional.
Section 3.05 Deposit of Redemption Price
Not less than one Business Day prior to the Redemption Date, Issuer shall
deposit with the Trustee or with the Paying Agent money sufficient to pay the
redemption price of and accrued interest on all Senior Secured Notes to be
redeemed on that date. The Trustee or the Paying Agent shall promptly return to
Issuer any money deposited with the Trustee or the Paying Agent by Issuer in
excess of the amounts necessary to pay the redemption price of, and accrued
interest on all Senior Secured Notes to be redeemed.
If Issuer complies with the provisions of the preceding paragraph, on and
after the Redemption Date, interest shall cease to accrue on the Senior Secured
Notes or the portions of Senior Secured Notes called for redemption. If a Senior
Secured Note is redeemed on or after an interest record date but on or prior to
the related Payment Date, then any accrued and unpaid interest shall be paid to
the Person in whose name such Senior Secured Note was registered at the close of
business on such record date. If any Senior Secured Note called for redemption
shall not be so paid upon surrender for redemption because of the failure of
Issuer to comply with the preceding paragraph, interest shall be paid on the
unpaid principal, from the Redemption Date until such principal is paid, and to
the extent lawful on any interest not paid on such unpaid principal, in each
case at the rate provided in the Senior Secured Notes and in Section 4.01
hereof.
Section 3.06 Senior Secured Notes Redeemed In Part.
Upon surrender of a Senior Secured Note that is redeemed in part, Issuer
shall issue and, upon receipt of an Authentication Order, the Trustee shall
authenticate for the Holder at the expense of Issuer a
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new Senior Secured Note equal in principal amount to the unredeemed portion of
the Senior Secured Note surrendered.
Section 3.07 Optional Redemption.
(a) The Senior Secured Notes will be redeemable at the option of Issuer at
any time and from time to time, in whole or in part, upon not less than 30 nor
more than 60 days' notice to each Holder of Senior Secured Notes, at a
redemption price equal to the outstanding principal amount thereof plus accrued
interest, plus the Make Whole Premium computed by an Independent Investment
Banker. Unless Issuer defaults in payment of the redemption price, on and after
the Redemption Date interest will cease to accrue on the Senior Secured Notes or
portions thereof called for redemption.
(b) Any redemption pursuant to this Section 3.07 shall be made pursuant to
the provisions of Section 3.01 through 3.06 hereof.
Section 3.08 Mandatory Redemption.
(a) The Senior Secured Notes shall be redeemed, in whole or in part, as
applicable, at a redemption price equal to the principal amount thereof plus
accrued and unpaid interest to the Redemption Date upon the receipt of Loss
Proceeds by Issuer or either Guarantor as described herein. If the Issuer or
either Guarantor determines that (a) more than two Units cannot be rebuilt,
repaired or restored to permit operations on a commercially reasonable basis at
any given time, or the Issuer or either Guarantor determines not to rebuild,
repair or restore more than two Units (whether held by the Issuer, the
Guarantors or a combination of the foregoing), then the Senior Secured Notes
shall be redeemed in whole; or (b) a Unit cannot be rebuilt, repaired or
restored to permit operations on a commercially reasonable basis, or the Issuer
or either Guarantor determines that a Unit cannot be rebuilt, repaired or
restored to permit operations on a commercially reasonable basis, then the
amount of Loss Proceeds received in respect of such Unit shall be used for
redemption; or (c) only a portion of a Unit is capable of being rebuilt,
repaired or restored, and Loss Proceeds of greater than $2 million remain after
payment of all costs and expenses for such rebuild, repair or restoration, then
the amount of such Loss Proceeds shall be used for redemption. If less than $2
million of Loan Proceeds remain, the amount of such Loss Proceeds shall be
transferred to the Revenue Account.
(b) Upon the receipt of proceeds in connection with a Title Event, the
amount of such Title Event Proceeds shall be made available for redemption,
subject to reduction by the costs expended in connection with collecting any
Title Event Proceeds, and any additional reasonable costs or expenses that
Issuer and Guarantors will be subject to as a result of the Title Event.
(c) In addition, Issuer shall apply all funds, if any, which remain in the
Distribution Account to redeem Senior Secured Notes, in whole or in part
(depending on the amount of funds in the Distribution Account), at a price equal
to the outstanding principal amount thereof plus accrued interest through the
Redemption Date (a) on any date within 61 days after a Payment Date on which
Issuer certifies to the Depositary that the Debt Service Coverage Ratio or the
Projected Debt Service Coverage Ratio, in each case as determined in accordance
with, and for the periods described in, Section 3.6(b)(iii) of the Depositary
Agreement, does not equal or exceed the applicable minimum ratio that would
permit Restricted Payments set forth in such Section 3.6(b)(iii), and (b) on the
61st day after a Payment Date if Issuer has not, during the period between such
Payment Date and such 61st day, provided a certificate to the Depositary as to
its calculations of the Debt Service Coverage Ratio and the Projected Debt
Service Coverage Ratio, in each case as determined in accordance with, for the
periods described in, and meeting the requirements for Restricted Payments
specified in, Section 3.6(b)(iii) of the Depositary Agreement.
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Notwithstanding any provisions contained herein to the contrary, any redemption
made pursuant to this subsection (c) shall be made upon not less than 5 nor more
than 10 days' notice to each Holder.
(d) Other than as specifically provided in this Section 3.08, any purchase
pursuant to this Section 3.08 shall be made pursuant to the provisions of
Sections 3.01 through 3.06 hereof.
Section 3.09 Repurchase at the Option of Holders Upon a Change of Control.
(a) Upon the occurrence of a Change of Control, each Holder of Senior
Secured Notes will have the right to require Issuer to repurchase all or any
part of such Holder's Senior Secured Notes pursuant to the offer described below
(the "Change of Control Offer") at an offer price in cash equal to 101% of the
aggregate principal amount thereof plus accrued and unpaid interest thereon, if
any, to the date of purchase (the "Change of Control Payment"). Within ten days
following the occurrence of any Change of Control, Issuer will mail a notice to
each Holder describing the transaction or transactions that constitute the
Change of Control and offering to repurchase Senior Secured Notes on the date
specified in such notice, which date shall be no earlier than 30 days and no
later than 60 days from the date such notice is mailed (the "Change of Control
Payment Date"), pursuant to the procedures required by this Indenture and
described in such notice. Issuer will comply with the requirements of Rule 14e-1
under the Exchange Act and any other securities laws and regulations thereunder
to the extent such laws and regulations are applicable in connection with the
repurchase of the Senior Secured Notes as a result of a Change of Control.
(b) On the Change of Control Payment Date, Issuer will, to the extent
lawful: (1) accept for payment all Senior Secured Notes or portions thereof
properly tendered pursuant to the Change of Control Offer; (2) deposit into the
Redemption Account an amount equal to the Change of Control Payment in respect
of all Senior Secured Notes or portions thereof so tendered; and (3) deliver or
cause to be delivered to the Trustee the Senior Secured Notes so accepted
together with a certificate of an Officer stating the aggregate principal amount
of Senior Secured Notes or portions thereof being purchased by Issuer.
(c) The Trustee will promptly mail to each Holder of Senior Secured Notes
so tendered the Change of Control Payment for such Senior Secured Notes, and the
Trustee will, upon receipt of an Authentication Order, promptly authenticate and
mail (or cause to be transferred by book entry) to each Holder a new Senior
Secured Note equal in principal amount to any unpurchased portion of the Senior
Secured Notes surrendered, if any; provided that each such new Senior Secured
Note will be in a minimum principal amount of $100,000 or in integral multiples
of $1,000 in excess thereof.
(d) The Change of Control provisions described in clauses (a) through (c)
above will be applicable whether or not any other provisions of this Indenture
are applicable. Except as described above with respect to a Change of Control,
this Indenture does not contain provisions that permit the Holders of the Senior
Secured Notes to require that Issuer repurchase or redeem the Senior Secured
Notes in the event of a takeover, recapitalization or similar transaction.
(e) Issuer will not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set forth
in this Indenture applicable to a Change of Control Offer made by Issuer and
purchases all Senior Secured Notes validly tendered and not withdrawn under such
Change of Control Offer.
Section 3.10 Special Mandatory Redemption
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If an Escrow Agreement is executed, then, if Issuer has not satisfied the
conditions to the release of funds to the Issuer set forth in the Escrow
Agreement within 90 days after the Closing Date, all Outstanding Senior Secured
Notes shall be redeemed at the Special Mandatory Redemption Price. If an Escrow
Agreement is executed, then, Issuer shall hereby certify that, as of the Closing
Date, the funds on deposit in the Escrow Account are at least equal to the
Special Mandatory Redemption Price. Such special mandatory redemption shall be
made upon five days' prior written notice to the Holders, which notice shall be
delivered by Issuer on, or prior to, December 30, 2003, in accordance with the
terms of the Escrow Agreement. If such notice is not delivered by the Issuer on,
or prior to, December 30, 2003, then the Trustee shall deliver such notice of
special mandatory redemption in accordance with the terms of the Escrow
Agreement. The funds on deposit in the Escrow Account shall be available for the
special mandatory redemption. Notwithstanding any provisions contained herein to
the contrary, any redemption made pursuant to this Section 3.10 shall be made
upon at least 5 days' written notice as set forth in the Escrow Agreement.
Other than as specifically provided in this Section 3.10, any purchase
pursuant to this Section 3.10 shall be made pursuant to the provisions of
Sections 3.01 through 3.06 hereof.
If no Escrow Agreement is executed as of the Closing Date, the
provisions of this Section 3.10 shall be inapplicable and there shall be no
special mandatory redemption.
ARTICLE 4
COVENANTS
Section 4.01 Payment of Senior Secured Notes.
Issuer shall pay or cause to be paid the principal, interest, and premium,
if any, on the Senior Secured Notes on the dates and in the manner provided in
the Senior Secured Notes. Principal, interest, and premium, if any, shall be
considered paid on the date due if the Paying Agent, if other than the Issuer,
holds as of 11:00 a.m. Eastern Time on the due date money deposited by Issuer in
immediately available funds and designated for and sufficient to pay all
principal, premium, if any, and interest then due.
Issuer shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal at the rate equal to
1% per annum in excess of the then applicable interest rate on the Senior
Secured Notes to the extent lawful; it shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
installments of interest, (without regard to any applicable grace period) at the
same rate as set forth above to the extent lawful.
Section 4.02 Maintenance of Office or Agency.
Issuer shall maintain and shall cause each Guarantor to maintain in the
Borough of Manhattan, the City of New York, an office or agency (which may be an
office of the Trustee or an affiliate of the Trustee, Registrar or co-registrar)
where Senior Secured Notes may be surrendered for registration of transfer or
for exchange and where notices and demands to or upon Issuer or the Guarantors
in respect of the Senior Secured Notes and this Indenture may be served. Issuer
shall give prompt written notice to the Trustee of the location, and any change
in the location, of such office or agency. If at any time Issuer shall fail to
maintain or cause each Guarantor to maintain any such required office or agency
or shall fail to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Trustee.
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Issuer may also from time to time designate one or more other offices or
agencies where the Senior Secured Notes may be presented or surrendered for any
or all such purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner
relieve Issuer of its obligation to maintain, and cause each Guarantor to
maintain, an office or agency in the Borough of Manhattan, the City of New York
for such purposes. Issuer shall give prompt written notice to the Trustee of any
such designation or rescission and of any change in the location of any such
other office or agency.
Issuer hereby designates the Corporate Trust Office of the Trustee as one
such office or agency of Issuer in accordance with Section 2.03.
Section 4.03 Reports.
(a) Issuer will provide to the Collateral Agent, the Trustee and each
Rating Agency: (a) (i) unaudited financial statements for the first three
quarters of each fiscal year (commencing with the quarter ending September 30,
2003, on a consolidated basis for Issuer and the Guarantors) and (ii) annual
audited financial statements for each fiscal year (commencing with the fiscal
year ended December 31, 2003) on a consolidated basis for Issuer and the
Guarantors, (b) all other information with respect to Issuer and the Guarantors
reasonably requested by either Rating Agency, (c) written notice of any Default
or Event of Default or any notice of any material litigation, claim or
proceeding pending or to the best knowledge of Issuer, threatened, involving or
affecting Issuer, the Guarantors or the Projects, (d) quarterly Officer's
certificates from Issuer and the Guarantors certifying that, as of such date, no
Default or Event of Default has occurred and is continuing, or, if a Default or
Event of Default has occurred and is continuing, a statement as to the nature
thereof and (e) any opinion from Issuer's independent public accountants (who
shall be a firm of established national reputation) delivered in connection with
the year-end financial statements delivered pursuant to Section 4.03(a), which
opinion shall comply with the generally accepted auditing standards then in
effect.
(b) As long as the Issuer is not subject to the periodic reporting
requirements of the Exchange Act, the Issuer will furnish to all Holders of the
Senior Secured Notes and prospective purchasers of Senior Secured Notes
designated by the Holders, promptly upon their written request, the information
required to be delivered under Rule 144A(d)(4) of the Securities Act. In
addition, the Issuer will file with the Trustee, within 15 days after it would
have been required to file the same with the SEC if the Issuer had been subject
to the periodic reporting requirements of the Exchange Act and excluding any
time periods applicable to "accelerated filers" under the Exchange Act,
quarterly and annual financial statements, including any notes thereto (and with
respect to annual financial statements only, an auditors' report by a firm of
established national reputation), and a "Management Discussion and Analysis of
Financial Condition and Results of Operations," both comparable to that which
the Issuer would have been required to include in a quarterly report on Form
10-Q or an annual report on Form 10-K if the Issuer had been subject to those
periodic reporting requirements.
(c) In addition, for so long as any Senior Secured Notes are outstanding,
whether or not required by the SEC, Issuer will make available to securities
analysts and prospective investors upon request all of the information and
reports referred to in clause (b) above. Issuer will at all times comply with
TIA ss. 314(a).
Section 4.04 Compliance Certificate.
(a) Issuer and the Guarantors (to the extent that the Guarantors are so
required under the TIA) shall deliver to the Trustee, within 90 days after the
end of each calendar year, a certificate of an
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Officer prescribed by the TIA stating that a review of the activities of Issuer
during the preceding calendar year has been made under the supervision of the
signing Officer with a view to determining whether Issuer has kept, observed,
performed and fulfilled its obligations under this Indenture, and further
stating, as to such Officer signing such certificate, that to the best of his or
her knowledge Issuer has kept, observed, performed and fulfilled each and every
covenant contained in this Indenture and is not in default in the performance or
observance of any of the terms, provisions and conditions of this Indenture (or,
if a Default or Event of Default shall have occurred, describing all such
Defaults or Events of Default of which he or she may have knowledge and what
action Issuer is taking or proposes to take with respect thereto) and that to
the best of his or her knowledge no event has occurred and remains in existence
by reason of which payments on account of the principal of or interest, if any,
on the Senior Secured Notes is prohibited or if such event has occurred, a
description of the event and what action Issuer is taking or proposes to take
with respect thereto.
(b) Issuer shall, so long as any of the Senior Secured Notes are
outstanding, deliver to the Trustee, promptly upon any Officer becoming aware of
any Default or Event of Default, a certificate of an Officer specifying such
Default or Event of Default and what action Issuer is taking or proposes to take
with respect thereto.
Section 4.05 Stay, Extension and Usury Laws.
Issuer (to the extent that it may lawfully do so) shall not, and shall not
permit either Guarantor to (to the extent such Guarantor may lawfully do so), at
any time insist upon, plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay, extension or usury law wherever enacted, now
or at any time hereafter in force, that may affect the covenants or the
performance of this Indenture; and Issuer and each Guarantor (to the extent that
they may lawfully do so) hereby expressly waives all benefit or advantage of any
such law, and covenants that it shall not, by resort to any such law, hinder,
delay or impede the execution of any power herein granted to the Trustee, but
shall suffer and permit the execution of every such power as though no such law
has been enacted.
Section 4.06 Restricted Payments.
Issuer shall not make any Restricted Payments, or acquiesce in or direct
any Restricted Payments to be made on behalf of the Guarantors, except for
Restricted Payments permitted under the Depositary Agreement.
Section 4.07 Incurrence Of Indebtedness/Liens.
Issuer shall not, and shall not permit either Guarantor to, create or
incur or suffer to exist any Indebtedness except Permitted Indebtedness. Issuer
shall not, and shall not permit either Guarantor to, grant, create, incur or
suffer to exist any Liens upon any of its respective properties, except for
Permitted Liens.
Section 4.08 Limitations On Guarantees.
Issuer shall not, and shall not permit either Guarantor to, contingently
or otherwise be or become liable in connection with any guarantee, except for
Permitted Guarantees, endorsements, indemnities and similar obligations in the
ordinary course of business.
Section 4.09 Prohibitions On Assignments.
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Issuer shall not, and shall not permit either Guarantor to, assign any of
its rights or obligations under any Financing Document.
Section 4.10 Books And Records.
Issuer shall, and shall cause each Guarantor to, maintain its books and
records and give the Trustee, the Collateral Agent and the Independent Engineer
reasonable inspection rights at reasonable times and upon reasonable prior
notice.
Section 4.11 Prohibitions On Fundamental Changes.
Issuer shall not, and shall not permit either Guarantor to, enter into any
merger or consolidation, change its form of organization or its business,
liquidate, wind-up or dissolve itself or discontinue its business, except as may
be contemplated by the Financing Documents. Issuer shall not, and shall not
permit either Guarantor to, purchase or otherwise acquire all or substantially
all of the assets of any other Person, except in the case of the acquisition of
assets related to Issuer's or such Guarantor's business and where the purchase
price for such assets (i) does not exceed in the aggregate $10 million and (ii)
is funded by Permitted Indebtedness or amounts available to Issuer from
Restricted Payments for such acquisition. Issuer shall not, and shall not permit
either Guarantor to, form any new subsidiaries. Issuer shall not, and shall not
permit either Guarantor to, engage in any business other than in connection with
the issuance of the Senior Secured Notes, the incurrence of Permitted
Indebtedness, the performance of its obligations under the Transaction Documents
and the ownership, operation and maintenance of its power generating Units.
Issuer shall not, and shall not permit either Guarantor to, lease (as lessor) or
sell, transfer, assign, hypothecate, pledge or otherwise dispose of any of its
property or assets, except as may be contemplated by the Financing Documents.
Section 4.12 Corporate Existence.
Issuer shall, and shall cause each Guarantor to, do or cause to be done
all things necessary to preserve and keep in full force and effect (i) its
separate corporate existence and form as a bankruptcy-remote, special purpose
entity separate from any other entity, and all registrations necessary therefor
and (ii) the rights (charter and statutory), licenses and franchises of Issuer;
provided, however, that Issuer shall not be required to preserve any such right,
license or franchise, if the management committee of Issuer shall determine that
the preservation thereof is no longer desirable in the conduct of the business
of Issuer, and that the loss thereof is not adverse in any material respect to
the Holders of the Senior Secured Notes.
Section 4.13 Compliance With Laws.
Issuer shall, and shall cause each Guarantor to, comply with all Legal
Requirements and Governmental Approvals, except where non-compliance could not
reasonably be expected to have a Material Adverse Effect.
Section 4.14 Sale of Assets.
Except as contemplated by the Transaction Documents, Issuer shall not, and
shall not permit either Guarantor to, sell, lease (as lessor) or transfer (as
transferor) any property or assets except: (i) in the ordinary course of
business (it being agreed that, without limitation, sales of energy and related
products and surplus fuel shall be deemed to be in the ordinary course of
business); or (ii) property which is worn out, obsolete or no longer useful or
necessary in connection with the operation of the Projects as
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certified by Issuer, if the aggregate fair market value of the property subject
to such sales, leases or transfers in any fiscal year does not exceed $5
million.
Section 4.15 Insurance.
Issuer will maintain or cause to be maintained for each Project in
accordance with the terms of this Indenture, all risk property and boiler and
machinery insurance, subject to reasonable and customary deductibles and
sublimits, business interruption, providing coverage of not less than 12 months
of scheduled principal and interest on the Senior Secured Notes and continuing
expenses and profits, commercial general liability, workers' compensation and
employer's liability, automobile liability, earthquake coverage, flood coverage,
watercraft liability, aircraft liability and umbrella liability, with a minimum
of $50 million per occurrence and aggregate. All policies of insurance except
workers' compensation will name the Trustee as loss payee or additional insured.
If the policies contain aggregate limits applying to other facilities than the
Projects and such limits are diminished below $25 million by any incident,
occurrence, claim, settlement or judgment against such insurance which has
caused the carrier to establish a reserve, Issuer shall promptly and in any
event, within 10 business days, take or cause steps be taken to restore such
aggregate limits or shall provide other equivalent insurance protection for such
aggregate limits. If at any time any of the required insurance will no longer be
available and commercially feasible in the commercial insurance market as
certified by an independent insurance adviser, Issuer will be required to
maintain or cause to be maintained such insurance as such independent insurance
adviser determines to be available and commercially feasible in the commercial
insurance market at such time, subject to the approval (not to be unreasonably
withheld or delayed) of the Insurance Consultant.
Section 4.16 Maintenance of EWG Status.
Issuer shall be, and shall cause each Guarantor to be, an EWG and shall
operate and maintain, and shall cause each Guarantor to operate and maintain,
each of their respective Projects as an Eligible Facility unless the failure to
be an EWG or to so operate and maintain each of the Projects as an Eligible
Facility would not cause Issuer, the Guarantors or any of the Projects to be
subject to (i) financial, organizational or rate regulation as an "electric
utility company," "public utility company," or "holding company" under PUHCA or
(ii) financial, organizational or rate regulation as a public utility under any
state or local law respecting the rates or the financial or organization
regulation of electric utilities applicable to Issuer, the Guarantors or any of
the Projects.
Section 4.17 Governmental Approvals; Title.
Issuer will at all times (i) obtain and maintain, and cause each Guarantor
to obtain and maintain, in full force and effect all material Governmental
Approvals and other consents and approvals required at any time in connection
with its respective business and (ii) preserve and maintain, and cause each
Guarantor to preserve and maintain, good and valid title to its respective
properties and assets (subject to no Liens other than Permitted Liens), except
in each case specified in clauses (i) and (ii) above, where the failure to do so
could not reasonably be expected to have a Material Adverse Effect.
Section 4.18 Revenue Account.
Issuer will take all actions as may be necessary to cause all revenues
actually received by it or either Guarantor pursuant to the DWR Contract or any
other Project Document or from any of the Projects to be deposited in the
Revenue Account to the extent required by the Depositary Agreement.
Section 4.19 Transactions with Affiliates.
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Issuer will not, and will not permit either Guarantor to, enter into any
transaction or agreement with any Affiliate of Issuer other than (a) the
Transaction Documents in effect on the Closing Date and transactions
contemplated thereunder, and (b) transactions on terms no less favorable to
Issuer or such Guarantor, as applicable, than Issuer or such Guarantor, as
applicable, would obtain in an arm's-length transaction with a Person that is
not an Affiliate of Issuer.
Section 4.20 Exercise of Rights.
Issuer will not exercise, fail to enforce, nor permit either Guarantor to
exercise or fail to enforce, its respective rights under the Project Documents
in a manner which could reasonably be expected to result in a Material Adverse
Effect. Issuer will diligently pursue, and cause each Guarantor to diligently
pursue, all of their respective rights to Loss Proceeds upon the occurrence of a
Casualty Event, Condemnation Event or Title Event.
Section 4.21 Amendments to Contracts.
Issuer will not terminate, amend, replace or modify (other than immaterial
amendments or modifications as certified by Issuer), nor permit any Guarantor to
terminate, amend, replace or modify (other than immaterial amendments or
modifications as certified by Issuer) any of the Project Documents (other than
the DWR Contract except as specified below) or any subordination agreement with
DWR to which it is a party, unless Issuer certifies to the Trustee that such
termination, amendment, replacement or modification could not reasonably be
expected to have a Material Adverse Effect. Issuer will not amend, modify or
terminate the DWR Contract (other than ministerial and administrative amendments
or modifications that could not be reasonably be expected to adversely effect
Issuer, the Guarantors or the Projects as certified by Issuer) unless (a) Issuer
obtains the prior written consent of Holders of more than 66 2/3% in aggregate
principal amount of the Outstanding Senior Secured Notes to such amendment,
modification or termination or (b) (x) Issuer provides to the Trustee a letter
from each of the Ratings Agencies confirming that no Ratings Downgrade will
result from the effectiveness of such amendment, modification or termination and
(y) if any amendment or modification of the DWR Contract amends or modifies the
term of, or payment provisions of, the DWR Contract, Issuer certifies to the
Trustee and the Independent Engineer confirms to the Trustee that the minimum
and average Projected Debt Service Coverage Ratios calculated immediately prior
to such amendment or modification through the scheduled maturity date of the
Senior Secured Notes would not be reduced after giving effect to such amendment
or modification.
Section 4.22 Project Documents.
(a) Issuer will perform and observe, and shall cause each Guarantor to
perform and observe, its covenants and obligations under all of the Project
Documents, except where the failure to do so could not reasonably be expected to
result in a Material Adverse Effect.
(b) Issuer will not enter into, nor permit either Guarantor to enter into,
any Additional Project Documents unless an Officer has certified to the Trustee
that entering into such document is not reasonably expected to result in a
Material Adverse Effect.
(c) Issuer will use its commercially reasonable efforts to obtain consents
to the collateral assignment to the Trustee of each Additional Project Document
from each future or successor counterparty to any Additional Project Document.
Section 4.23 Taxes.
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Issuer shall pay and discharge, or cause each Guarantor to pay and
discharge, all taxes, assessments and governmental charges upon it, its income
and its properties prior to the date on which penalties are attached thereto,
unless and to the extent only that (a) such taxes, assessments and governmental
charges shall be contested in good faith and by appropriate proceedings, and (b)
adequate reserves, bonds or other security are established with respect thereto.
Section 4.24 Additional Documents; Filings and Recordings.
Issuer shall execute and deliver, and shall cause each Guarantor to
execute and deliver, as requested by Trustee, such other documents as shall
reasonably be necessary or advisable in order to effect or protect the rights
and remedies of Trustee granted or provided for by the Financing Documents to
which Issuer or either Guarantor is a party and to consummate the transactions
contemplated therein. Issuer shall, at its own expense, take, and shall cause
each Guarantor to take, at its respective expense, all reasonable actions (a)
that are reasonably requested by Trustee, or (b) that an Officer of Issuer or
the Guarantor, as applicable, has actual knowledge are necessary as a legal
matter, to establish, maintain and perfect the first priority security interests
of Trustee and the Collateral Agent in the Collateral, subject to Permitted
Liens. Without limiting the generality of the foregoing, Issuer shall execute or
cause to be executed and shall file or cause to be filed such financing
statements, continuation statements, and fixture filings and such mortgages, or
deeds of trust in all places necessary or advisable to establish, maintain and
perfect such security interests, subject to Permitted Liens.
Section 4.25 Zero Liquid Discharge Facility.
Issuer shall diligently pursue the construction of a zero liquid discharge
facility for the Gilroy Project.
Section 4.26 Budget and Expenditures.
Issuer shall, and shall cause each Guarantor to, comply with the Operating
Budget, as modified from time to time, and shall pay, and shall cause each
Guarantor to pay, O&M Costs, in each case in accordance with Section 3.1(d)(i)
of the Depositary Agreement.
Section 4.27 Payments for Consent.
Issuer will not, and will not permit either Guarantor to, directly or
indirectly, pay or cause to be paid any consideration to or for the benefit of
any Holder of Senior Secured Notes for or as an inducement to any consent,
waiver or amendment of any of the terms or provisions of this Indenture or the
Senior Secured Notes unless such consideration is offered to be paid and is paid
to all Holders of the Senior Secured Notes that consent, waive or agree to amend
in the time frame set forth in the solicitation documents relating to such
consent, waiver or agreement.
Section 4.28 CDWR Contract Payment Invoices.
Issuer shall timely deliver, or cause to be timely delivered, payment
invoices under the CDWR Contract.
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ARTICLE 5
DEFAULTS AND REMEDIES
Section 5.01 Events of Default.
The occurrence and continuance of the following events shall constitute an
"Event of Default":
(a) failure to pay any principal, interest, or premium, if any, with
respect to any Senior Secured Note when the same becomes due and payable,
whether by scheduled maturity or required prepayment or redemption or by
acceleration or otherwise, and such failure continues for (i) more than five
days following the due date for payment in the case of principal, (ii) more than
15 days following the due date for payment in the case of interest, or premium,
if any, and (iii) more than 30 days after receipt of notice that other amounts
have become due and payable, in the case of any other amounts owed under the
Financing Documents;
(b) any representation or warranty made by Issuer or either Guarantor in
this Indenture or in any other Financing Document or any representation,
warranty or statement in any certificate, financial statement or other document
furnished to the Trustee or any other Person by or on behalf of Issuer or either
Guarantor proves to have been untrue or misleading in any material respect as of
the time made, confirmed or furnished and such fact, event or circumstance that
gave rise to such inaccuracy has resulted, or could reasonably be expected to
result, in a Material Adverse Effect and such fact, event or circumstance
continues uncured for 30 or more days from the date Issuer or either Guarantor
obtains actual knowledge thereof; provided that, if Issuer or Guarantor, as
applicable, commences and diligently pursues efforts to cure such fact, event or
circumstance within such 30-day period and delivers written notice to the
Trustee thereof, Issuer or Guarantor, as applicable, may continue to effect such
cure, and such misrepresentation shall not be deemed an "Event of Default" for
an additional 60 days so long as Issuer or Guarantor, as applicable, is
diligently pursuing such cure;
(c) Issuer or either Guarantor fails to perform or observe any covenant or
agreement contained in Sections 4.06, 4.07, 4.08, 4.11, 4.12, 4.14, 4.15, 4.21,
or 4.22(b) of this Indenture, and such failure continues uncured for 30 or more
days from the date Issuer or Guarantor obtains actual knowledge thereof;
(d) Issuer or either Guarantor fails to perform or observe any of its
covenants or agreements contained in this Indenture (other than those contained
in (c) above) or any other Financing Document and such failure continues uncured
for 30 or more days from the date Issuer obtains actual knowledge thereof;
provided, however, if Issuer or the Guarantor, as applicable, commences and
diligently pursues efforts to cure such default within such 30-day period and
delivers written notice thereof to the Trustee, Issuer or the Guarantor, as
applicable, may continue to effect such cure of the default and such default
will not be deemed an "Event of Default" for an additional 60 days so long as
Issuer or the Guarantor, as applicable, is diligently pursuing such cure;
(e) a Bankruptcy Event occurs with respect to Issuer or either Guarantor;
(f) any Governmental Approval required by Issuer or either Guarantor, as
applicable, is revoked, terminated, withdrawn or ceases to be in full force and
effect if such revocation, termination, withdrawal or cessation could reasonably
be expected to have a Material Adverse Effect and such revocation, termination,
withdrawal or cessation is not cured within 30 days following the occurrence
thereof, provided that if such revocation, termination, withdrawal, or cessation
cannot be cured within such initial 30 day period but is curable within 90 days
and Issuer or the Guarantor, as applicable, is
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proceeding with diligence and in good faith to so cure, then such 30 day period
shall be extended for an additional 60 days;
(g) any Project Document ceases to be valid and binding and in full force
and effect prior to its stated maturity date other than as a result of an
amendment, modification, termination, or replacement thereof permitted under
this Indenture, any third party thereto denies that it has any liability or
obligation under any Project Document and such third party ceases performance
thereunder or any third party thereto fails to perform its material obligations
thereunder, is in default under such Project Document (after expiration of all
applicable grace periods) or any Affiliate makes any material misrepresentation
under any Project Document, and in each case such cessation, denial, default or,
in the case of an Affiliate, such misrepresentation, has resulted or could
reasonably be expected to result in a Material Adverse Effect; provided that no
such event with respect to any Project Document will be an Event of Default if
within 90 days from the occurrence of any such event, Issuer or a Guarantor, as
applicable, (i) causes the third party to confirm its obligations under such
Project Document, cure such breach, default or, in the case of an Affiliate,
such misrepresentation, or resume performance thereunder (as the case may be) or
(ii) enters into an alternate agreement which (A) contains substantially similar
terms and conditions or, with respect to any Project Document other than the DWR
Contract and any Project Document with an Affiliate, if such terms and
conditions are no longer available on a commercially reasonable basis, the terms
and conditions then available on a commercially reasonable basis and (B) after
giving effect to the agreement, each Rating Agency confirms that none of such
actions will result in a Rating Downgrade; provided further that with respect to
any Project Document other than the DWR Contract, if such cessation, denial,
default or, with respect to an Affiliate, such misrepresentation, can not be
cured within such initial 90 day period but is curable within 180 days, and
Issuer is proceeding with diligence and in good faith to so cure, then such 90
day period shall be extended for an additional 90 days;
(h) any of the Collateral Documents cease to be in full force and effect
or any Lien purported to be granted therein ceases to be a valid and perfected
Lien in favor of the Secured Parties, as applicable, on the Collateral described
therein with the priority purported to be created thereby and such Collateral
Document or Lien is not reinstated within 10 business days from the earlier of
(a) the date on which Issuer or either Guarantor obtains actual knowledge
thereof and (b) the date on which Issuer or either Guarantor receives notice
thereof;
(i) Issuer or either Guarantor fails to make any payment when due or to
comply with any covenant (after expiration of all applicable grace periods) in
respect of any Indebtedness other than Indebtedness under the Financing
Documents) in an amount exceeding $2 million if the effect of such failure is to
permit acceleration of the maturity of such Indebtedness;
(j) the entry of one or more final and non-appealable judgments for the
payment of money in excess of $2 million against Issuer or either Guarantor
(exclusive of judgment amounts covered by insurance or indemnity), which remain
unpaid or unstayed for more than 60 consecutive days;
(k) except as permitted by this Indenture, (i) any Guarantee shall cease
for any reason to be in full force and effect and such unenforceability or
cessation shall continue for 10 days after the Guarantor obtains actual
knowledge thereof, (ii) either Guarantor, or any Person acting on behalf of such
Guarantor, shall deny or disaffirm its obligations under its Guarantee, or (iii)
any Guarantee shall be held in any judicial proceeding to be unenforceable or
invalid;
(l) any Acceptable Letter of Credit Issuer fails to perform or breaches
any of its payment obligations under any Debt Service Reserve Letter of Credit,
and such failure or breach continues uncured or unremedied by any such
Acceptable Letter of Credit Issuer, or Issuer for 10 Business Days or more;
(m) (i) any ownership interest in Issuer shall be held by an entity other
than Holding Company, (ii) Holding Company shall have more than four members,
(iii) after consummation of the
52
member equity investment, Holding Company shall cease to have at least one
member that is not an Affiliate of Calpine or (iv) any beneficial owner of
Holding Company shall not, at the time of any transfer of an ownership interest
in Holding Company to such member following the Closing Date, be a Permitted
Holder;
(n) Issuer fails to comply in any material respect with the requirements
specified under Section 3.09;
(o) Issuer fails to comply with or breaches any material provision of the
Escrow Agreement, if any, and such non-compliance or breach continues uncured
for 10 days after the date Issuer obtains actual knowledge thereof; provided
that the invalidity of the Escrow Agent's, if any, security interest in the
assets contained in the Escrow Account, if any, will automatically constitute an
Event of Default; or
(p) after the grant of any junior lien on the Collateral to DWR pursuant
to the terms of the DWR Contract, (i) DWR commences the exercise of remedies
with respect to such junior lien or (ii) DWR breaches any material provision of
the subordination agreement entered into by DWR with respect to such junior
lien; provided that, no such breach will be an Event of Default if within 90
days from the occurrence of such breach, DWR cures such breach.
Section 5.02 Enforcement of Remedies
(a) Subject to Section 5.03 hereof, if one or more Events of Default have
occurred and are continuing, then:
(i) in the case of an Event of Default described in Section 5.01(e)
above, the entire principal amount of the Outstanding Senior Secured Notes, all
interest accrued and unpaid thereon, and all premium, if any, and other amounts
payable under the Senior Secured Notes and this Indenture, if any, will
automatically become due and payable without presentment, demand, protest or
notice of any kind; or
(ii) subject to Section 5.03, in the case of an Event of Default
described in:
(A) Section 5.01(a) above, upon the written direction of the
Holders of more than 33 1/3% in aggregate principal amount of the
Outstanding Senior Secured Notes, the Trustee will, by notice to
Issuer, declare the entire principal amount of the Outstanding
Senior Secured Notes, all interest accrued and unpaid thereon, and
all premium, if any, and other amounts payable under the Senior
Secured Notes and this Indenture, if any, to be due and payable, or
(B) Section 5.01(b), Section 5.01(c), Section 5.01(d), Section
5.01(f), Section 5.01(g), Section 5.01(h), Section 5.01(i), Section
5.01(j), Section 5.01(k), Section 5.01(l), Section 5.01(m), Section
5.01(n), Section 5.01(o) or Section 5.01(p) above, upon the written
direction of the Required Holders, the Trustee will, by notice to
Issuer, declare the entire principal amount of the Outstanding
Senior Secured Notes, all interest accrued and unpaid thereon, and
all premium, if any, and other amounts payable under the Senior
Secured Notes and this Indenture, if any, to be due and payable.
If an Event of Default occurs and is continuing and is actually
known to a Responsible Trust Officer, the Trustee will mail to each Holder
notice of the Event of Default within 90 days after the occurrence
thereof. Except in the case of an Event of Default in payment of principal
of
53
or interest on any Senior Secured Note, the Trustee may withhold the
notice to the Holders if the Trustee in good faith determines that
withholding the notice is in the interest of the Holders.
If an Event of Default relating to failure to pay amounts owed on
the Senior Secured Notes has occurred and is continuing, the Trustee may
declare the principal amount of the Outstanding Senior Secured Notes, all
interest accrued and unpaid thereon, and all premium, if any, and other
amounts payable under the Senior Secured Notes and this Indenture, if any,
to be due and payable notwithstanding the absence of direction from
Holders of at least 33 1/3% in aggregate principal amount of the
Outstanding Senior Secured Notes directing the Trustee in writing to
accelerate the maturity of the Senior Secured Notes unless Holders of more
than 66 2/3% in aggregate principal amount of the Outstanding Senior
Secured Notes direct the Trustee not to accelerate the maturity of such
Senior Secured Notes, if in the good faith exercise of its discretion the
Trustee reasonably determines that such action is necessary to protect the
interests of the Holders.
In addition, if one or more of the Events of Default referred to in
Section 5.02(a)(ii)(B) above has occurred and is continuing, the Trustee
may declare the entire principal amount of the Senior Secured Notes
Outstanding, all interest accrued and unpaid thereon, and all premium, if
any, and other amounts payable under the Senior Secured Notes and this
Indenture, if any, to be due and payable notwithstanding the absence of
direction from the Required Holders directing the Trustee to accelerate
the maturity of the Senior Secured Notes unless, the Required Holders
direct the Trustee not to accelerate the maturity of the Senior Secured
Notes, if in the good faith exercise of its discretion the Trustee
reasonably determines that such action is necessary to protect the
interests of the Holders.
(b) Subject to Section 5.03, at any time after the principal of the Senior
Secured Notes has become due and payable upon a declared acceleration, and
before any judgment or decree for the payment of the money so due, or any
portion thereof, has been entered, the Required Holders, by written notice to
Issuer and the Trustee, shall rescind and annul such declaration and its
consequences if:
(i) there has been paid to or deposited with the Trustee a sum
sufficient to pay
(A) all overdue interest on the Senior Secured Notes,
(B) the principal of and premium, if any, on any Senior
Secured Notes that have become due (including overdue principal)
other than by such declaration of acceleration and interest thereon
at the respective rates provided in the Senior Secured Notes for
overdue principal,
(C) to the extent that payment of such interest is lawful,
interest upon overdue interest at the respective rates provided in
the Senior Secured Notes for overdue interest, and
(D) all sums paid or advanced by the Trustee and the
Collateral Agent, if any, and the reasonable compensation, expenses,
disbursements, and advances of the Trustee and the Collateral Agent,
their respective agents and counsel, and
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(ii) all Events of Default, other than the nonpayment of the
principal of the Senior Secured Notes that has become due solely by such
acceleration, have been cured or waived in accordance with this Indenture.
(c) Subject to Section 5.03, if an Event of Default relating to failure to
pay amounts owed on the Senior Secured Notes has occurred and is continuing and
an acceleration has occurred, the Trustee shall (if the Holders of at least 33
1/3% in aggregate principal amount of the Outstanding Senior Secured Notes
request in writing) direct the Collateral Agent to take possession of all
Collateral pledged to secure the Indenture.
(d) Subject to Section 5.03, if an Event of Default other than those
referred to in Section 5.02(c) and Section 5.02(d) above has occurred and is
continuing and an acceleration has occurred, the Trustee may (if the Required
Holders request in writing) direct the Collateral Agent to take possession of
all Collateral.
Section 5.03 Enforcement of Remedies by Ambac Assurance
(a) Any reorganization or liquidation plan with respect to Issuer or
either Guarantor must be acceptable to Ambac Assurance. In the event of any
reorganization or liquidation of Issuer or any Guarantor, Ambac Assurance shall
have the right to vote on behalf of all Holders absent an Insurer Default under
the Financial Guaranty Insurance.
(b) Notwithstanding anything herein to the contrary, so long as no Insurer
Default has occurred and is continuing and upon the occurrence and continuance
of an Event of Default, Ambac Assurance shall be entitled to control and direct
the enforcement of all rights and remedies granted to the Holders or the Trustee
for the benefit of the Holders under this Indenture, including, without
limitation:
(i) the right to accelerate the principal of the Senior Secured
Notes as described in herein; and
(ii) the right to annul any declaration of acceleration;
and Ambac Assurance shall also be entitled to approve all waivers of Events of
Default.
(c) Upon the occurrence of an Event of Default, so long as no Insurer
Default has occurred and is continuing, the Trustee shall, at the written
direction of Ambac Assurance or pursuant to the requirements set forth under
Section 5.02 hereof and with the written consent of Ambac Assurance, by written
notice to Issuer and Ambac Assurance, declare the principal of the Senior
Secured Notes to be immediately due and payable, whereupon that portion of the
principal of the Senior Secured Notes thereby coming due and the interest
thereon accrued to the date of payment shall, without further action, become and
be immediately due and payable, anything herein or in the Senior Secured Notes
to the contrary notwithstanding.
Section 5.04 Other Remedies.
If an Event of Default occurs and is continuing, the Trustee may, subject
to the provisions of Section 5.03 and Section 6.02, pursue any available remedy
to collect the payment of principal, interest, and premium, if any, on the
Senior Secured Notes or to enforce the performance of any provision of the
Senior Secured Notes or this Indenture.
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The Trustee may maintain a proceeding even if it does not possess any of
the Senior Secured Notes or does not produce any of them in the proceeding. A
delay or omission by the Trustee or any Holder of a Senior Secured Note in
exercising any right or remedy accruing upon an Event of Default shall not
impair the right or remedy or constitute a waiver of or acquiescence in the
Event of Default. All remedies are cumulative to the extent permitted by law.
Section 5.05 Waiver of Past Defaults.
Subject to Section 5.03, Required Holders by notice to the Trustee may on
behalf of the Holders of all of the Senior Secured Notes waive an existing
Default or Event of Default and its consequences hereunder, except a continuing
Default or Event of Default in the payment of the principal, interest, or
premium, if any, on the Senior Secured Notes; provided, however, that the
Required Holders may rescind an acceleration and its consequences, including any
related payment default that resulted from such acceleration. Upon any such
waiver, such Default shall cease to exist, and any Event of Default arising
therefrom shall be deemed to have been cured for every purpose of this
Indenture; but no such waiver shall extend to any subsequent or other Default or
impair any right consequent thereon.
Section 5.06 Control by Majority.
The Required Holders have the right to direct the time, place and method
of conducting any proceeding for any right or remedy available to the Trustee or
exercising any trust or power conferred on the Trustee in this Indenture, except
as otherwise specifically provided herein, including Section 5.03 hereof.
Subject to the above paragraph and Section 5.03 hereof, if an Event of
Default has occurred and is continuing and as a result thereof or in connection
therewith or pursuant to an acceleration of the Senior Secured Notes arising
therefrom, payments on the Senior Secured Notes are not made when due, the
Trustee is required to enforce the Guarantees and the rights of the Holders
thereunder.
Section 5.07 Limitation on Suits.
Subject to Section 5.03, a Holder of a Senior Secured Note may pursue a
remedy with respect to this Indenture or the Senior Secured Notes only if:
(a) the Holder of a Senior Secured Note gives to the Trustee written
notice of a continuing Event of Default;
(b) the Holders of at least 33 1/3% in principal amount of the then
outstanding Senior Secured Notes make a written request to the Trustee to pursue
the remedy;
(c) such Holder of a Senior Secured Note or Holders of Senior Secured
Notes offer and, if requested, provide to the Trustee indemnity satisfactory to
the Trustee against any loss, liability or expense;
(d) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer and, if requested, the provision of
indemnity; and
(e) during such 60-day period the Holders of a majority in principal
amount of the then outstanding Senior Secured Notes do not give the Trustee a
direction inconsistent with the request.
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A Holder of a Senior Secured Note may not use this Indenture to prejudice
the rights of another Holder of a Senior Secured Note or to obtain a preference
or priority over another Holder of a Senior Secured Note.
Section 5.08 Rights of Holders of Senior Secured Notes to Receive Payment.
Notwithstanding any other provision of this Indenture but subject to
Section 5.03, the right of any Holder of a Senior Secured Note to receive
payment of principal, interest, and premium, if any, on the Senior Secured
Notes, on or after the respective due dates expressed in the Senior Secured
Notes (including in connection with an offer to purchase), or to bring suit for
the enforcement of any such payment on or after such respective dates, shall not
be impaired or affected without the consent of such Holder; provided that the
Holder shall not have the right to institute any such suit for the enforcement
of payment if and to the extent that the institution or prosecution thereof or
the entry of judgment therein would, under applicable law, result in the
surrender, impairment, waiver or loss of the Lien of this Indenture or any
Collateral Document upon any property subject to such Lien.
Section 5.09 Collection Suit by Trustee.
Subject to Section 5.03, if an Event of Default specified in Section
5.01(a) occurs and is continuing, the Trustee is authorized to the extent set
forth in Section 5.02(a), Section 5.02(c) and Section 5.02(d) above to recover
judgment in its own name and as trustee of an express trust against the Issuer
for the whole amount of principal, interest, and premium, if any, remaining
unpaid on the Senior Secured Notes and interest on overdue principal and, to the
extent lawful, interest and such further amount as shall be sufficient to cover
the costs and expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel.
Section 5.10 Trustee May File Proofs of Claim.
The Trustee is authorized to file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Senior Secured Notes allowed in any judicial proceedings relative
to Issuer (or any other obligor upon the Senior Secured Notes), its creditors or
its property and shall be entitled and empowered to collect, receive and
distribute any money or other property payable or deliverable on any such claims
and any custodian in any such judicial proceeding is hereby authorized by each
Holder to make such payments to the Trustee, and in the event that the Trustee
shall consent to the making of such payments directly to the Holders, to pay to
the Trustee any amount due to it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 6.07 hereof. To the extent that the
payment of any such compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 6.07 hereof out of the estate in any such proceeding, shall be denied
for any reason, payment of the same shall be secured by a Lien on, and shall be
paid out of, any and all distributions, dividends, money, securities and other
properties that the Holders may be entitled to receive in such proceeding
whether in liquidation or under any plan of reorganization or arrangement or
otherwise. Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Senior
Secured Notes or the rights of any Holder, or to authorize the Trustee to vote
in respect of the claim of any Holder in any such proceeding.
Section 5.11 Priorities.
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If the Trustee collects any money pursuant to this Article, it shall be
applied to amounts owed with respect to all Senior Secured Notes on a pro rata
basis and, in respect of Senior Secured Notes of a series, will be applied
ratably to the Holders of Senior Secured Notes in the following order from time
to time, on the date or dates fixed by the Trustee: (i) to the payment of all
amounts due to the Trustee (including fees and expenses of any agents and its
counsel) or any predecessor Trustee under this Indenture; (ii) (A) in case the
unpaid principal amount of the Outstanding Senior Secured Notes has not become
due, to the payment of any overdue interest, (B) in case the unpaid principal
amount of a portion of the Outstanding Senior Secured Notes has become due,
first to the payment of accrued interest on all Outstanding Senior Secured Notes
for overdue principal, interest, and premium, if any, and next to the payment of
the overdue principal on all Senior Secured Notes; or (C) in case the unpaid
principal amount of all the Outstanding Senior Secured Notes has become due,
first to the payment of the entire amount then due and unpaid upon the
Outstanding Senior Secured Notes for principal, interest, and premium, if any,
together with interest for overdue principal, interest, and premium, if any; and
(iii) in case the unpaid principal amount of all the Outstanding Senior Secured
Notes has become due, and all of the outstanding principal, interest, and
premium, if any, and other amounts owed in connection with the Senior Secured
Notes have been fully paid, any surplus then remaining will be paid to Issuer,
or to whomsoever may be lawfully entitled to receive the same, or as a court of
competent jurisdiction may direct.
The Trustee may fix a record date and payment date for any payment to
Holders of Senior Secured Notes pursuant to this Section 5.11.
Section 5.12 Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section does not apply to a suit by the Trustee, a suit by a Holder of a
Senior Secured Note pursuant to Section 5.08 hereof, or a suit by Holders of
more than 10% in principal amount of the then outstanding Senior Secured Notes.
ARTICLE 6
TRUSTEE
Section 6.01 Duties of Trustee.
(a) If an Event of Default actually known to a Responsible Trust Officer
has occurred and is continuing, the Trustee shall exercise such of the rights
and powers vested in it by this Indenture, and use the same degree of care and
skill in its exercise, as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by the
express provisions of this Indenture and the Trustee need perform only those
duties that are specifically set forth in this Indenture and no others, and no
implied covenants or obligations shall be read into this Indenture against the
Trustee; and
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(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture. However, the
Trustee shall examine the certificates and opinions to determine whether or not
they conform to the requirements of this Indenture (but need not confirm or
investigate the accuracy of mathematical calculations or other facts stated
therein).
(c) The Trustee may not be relieved from liabilities for its own negligent
action, its own negligent failure to act, or its own willful misconduct, except
that:
(i) this paragraph does not limit the effect of paragraph (b) of
this Section;
(ii) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Trust Officer, unless it is conclusively
determined by a court of competent jurisdiction that the Trustee was negligent
in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction received by
it pursuant to Section 6.05 hereof.
(d) Whether or not therein expressly so provided, every provision of this
Indenture that in any way relates to the Trustee is subject to paragraphs (a),
(b), and (c) of this Section.
(e) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or incur any liability. The Trustee shall be under no
obligation to exercise any of its rights and powers under this Indenture at the
request of any Holders, unless such Holder shall have offered to the Trustee
security and indemnity satisfactory to it against any loss, liability or
expense.
(f) The Trustee shall not be liable for interest on any money received by
it except as the Trustee may agree in writing with Issuer. Money held in trust
by the Trustee need not be segregated from other funds except to the extent
required by law.
(g) Notwithstanding any other provision of this Indenture, in determining
whether the rights of the Holders will be adversely affected by any action taken
pursuant to the terms and provisions of this Indenture, the Trustee shall
consider the effect on the Holders as if there were no Financial Guaranty
Insurance.
Section 6.02 Rights of Trustee.
(a) The Trustee may conclusively rely upon any document believed by it to
be genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require and
shall be entitled to a certificate of an Officer or an Opinion of Counsel or
both. The Trustee shall not be liable for any action it takes or omits to take
in good faith in reliance on such certificate of an Officer or Opinion of
Counsel. The Trustee may consult with counsel and the advice, promptly confirmed
in writing thereafter, of such counsel or any Opinion of Counsel shall be full
and complete authorization and protection from liability in respect of any
action taken, suffered or omitted by it hereunder in good faith and in reliance
thereon.
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(c) The Trustee may act through its attorneys, custodians, nominees and
agents and shall not be responsible for the misconduct or negligence of any
agent, attorney, custodian or nominee appointed with due care.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any demand,
request, direction or notice from Issuer shall be sufficient if signed by an
Officer of Issuer.
(f) The Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Indenture at the request or direction of any of
the Holders unless such Holders shall have offered to the Trustee security or
indemnity satisfactory to the Trustee against the costs, expenses and
liabilities that might be incurred by it in compliance with such request or
direction.
(g) In no event shall the Trustee be deemed to have notice of any default
or breach hereof or any Event of Default hereunder, except for Events of Default
specified in Section 5.01(a) hereof, unless and until the Trustee shall have
received from a Holder or from Issuer express written notice of the
circumstances constituting the breach, default or Event of Default and stating
that said circumstances constitute an Event of Default hereunder.
(h) If the Trustee is acting as Paying Agent or Transfer Agent and
Registrar hereunder, the rights and protections afforded to the Trustee pursuant
to this Article 6 will also be afforded to such Paying Agent or Transfer Agent
and Registrar.
(i) In no event shall the Trustee be deemed to have notice of an Insurer
Default, unless and until the Trustee shall have received from a Holder, Issuer
or Ambac Assurance express written notice of the Insurer Default.
Section 6.03 Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the owner
or pledgee of Senior Secured Notes and may otherwise deal with Issuer or any
Affiliate of Issuer with the same rights it would have if it were not Trustee.
However, in the event that the Trustee acquires any conflicting interest it must
eliminate such conflict within 90 days after ascertaining it has such
conflicting interest, apply to the SEC for permission to continue as trustee or
resign to the extent and in the manner provided by, and subject to the
provisions of, the TIA and this Indenture. Any Agent may do the same with like
rights and duties. The Trustee is also subject to Sections 6.10 and 6.11 hereof.
Section 6.04 Trustee's Disclaimer.
The Trustee shall not be responsible for and makes no representation as to
the validity or adequacy of this Indenture or the Senior Secured Notes, it shall
not be accountable for Issuer's use of the proceeds from the Senior Secured
Notes or any money paid to Issuer or upon Issuer's direction under any provision
of this Indenture, it shall not be responsible for the use or application of any
money received by any Paying Agent other than the Trustee, and it shall not be
responsible for any statement or recital herein or any statement in the Senior
Secured Notes or any other document in connection with the sale of the Senior
Secured Notes or pursuant to this Indenture other than its certificate of
authentication.
Section 6.05 Notice of Defaults.
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If a Default or Event of Default occurs and is continuing and if it is
actually known to a Responsible Trust Officer, or if appropriate notice is
provided in writing in accordance with Section 6.02(g), as applicable, the
Trustee shall mail to Holders of Senior Secured Notes a notice of the Default or
Event of Default within 90 days after it occurs. Except in the case of a Default
or Event of Default in payment of principal, interest, and premium, if any, on
any Senior Secured Note, the Trustee may withhold the notice if and so long as a
committee of its Responsible Trust Officers in good faith determines that
withholding the notice is in the interests of the Holders of the Senior Secured
Notes.
Section 6.06 Reports by Trustee to Holders of the Senior Secured Notes.
Within 60 days after each May 15 beginning with the May 15 following the
date hereof, and for so long as Senior Secured Notes remain outstanding, the
Trustee shall mail to the Holders of the Senior Secured Notes a brief report
dated as of such reporting date that complies with TIA ss. 313(a) (but if no
event described in TIA ss. 313(a) has occurred within the twelve months
preceding the reporting date, no report need be transmitted). The Trustee also
shall comply with TIA ss. 313(b)(2) to the extent applicable. The Trustee shall
also transmit by mail all reports as required by TIA ss. 313(c).
A copy of each report at the time of its mailing to the Holders of Senior
Secured Notes shall be mailed to Issuer and filed with the SEC and each stock
exchange, if any, on which the Senior Secured Notes are listed in accordance
with TIA ss. 313(d). The Issuer shall promptly notify the Trustee in writing
when the Senior Secured Notes are listed on any stock exchange.
Section 6.07 Compensation and Indemnity.
Issuer shall pay to the Trustee from time to time reasonable compensation
for its acceptance of this Indenture and services hereunder as is now or
hereafter agreed to in writing by Issuer and the Trustee. The Trustee's
compensation shall not be limited by any law on compensation of a trustee of an
express trust. Issuer shall reimburse the Trustee promptly upon request for all
reasonable and properly documented disbursements, advances and expenses incurred
or made by it in addition to the compensation for its services. Such expenses
shall include the reasonable and properly documented fees, disbursements and
expenses of the Trustee's agents and counsel.
Issuer and the Guarantors shall, jointly and severally, indemnify and hold
harmless the Trustee against any and all losses, liabilities, damages or
expenses incurred by it arising out of or in connection with the acceptance or
administration of its duties under this Indenture and the other Financing
Documents to which it is a party, including the costs and expenses of enforcing
this Indenture against Issuer (including this Section 6.07) and defending itself
against any claim (whether asserted by Issuer or any Holder or any other person)
or liability in connection with the exercise or performance of any of its powers
or duties hereunder, except to the extent any such loss, liability or expense
may be attributable to its negligence or bad faith. The Trustee shall notify
Issuer promptly of any claim for which it may seek indemnity. Failure by the
Trustee to so notify Issuer shall not relieve Issuer of its obligations
hereunder. Issuer shall defend the claim and the Trustee shall cooperate in the
defense. The Trustee may have separate counsel (reasonably acceptable to Issuer)
and Issuer shall pay the reasonable fees and expenses of such counsel. Issuer
need not pay for any settlement made without its consent, which consent shall
not be unreasonably withheld.
The obligations of Issuer under this Section 6.07 shall survive the
satisfaction and discharge of this Indenture.
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To secure Issuer's payment obligations in this Section, the Trustee shall
have a Lien prior to the Senior Secured Notes on all money or property held or
collected by the Trustee, except that held in trust to pay principal and
interest on particular Senior Secured Notes.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 5.01(f) hereof occurs, the expenses and the
compensation for the services (including the fees and expenses of its agents and
counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.
Section 6.08 Replacement of Trustee.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section.
The Trustee may resign in writing at any time by giving no less than 30
days advance written notice thereof to Issuer and be discharged from the trust
hereby created. Ambac Assurance may remove the Trustee at any time for failure
to perform any of its material obligations under the Financing Documents by so
notifying the Trustee and Issuer in writing. The Required Holders may remove the
Trustee at any time by so notifying the Trustee and Issuer in writing. Issuer
may remove the Trustee if:
(a) the Trustee fails to comply with Section 6.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) no Default or Event of Default on the part of Issuer or either of the
Guarantors has occurred and is continuing and the Trustee has failed to observe
or perform any of its material obligations under the Financing Documents;
(d) a custodian or public officer takes charge of the Trustee or its
property; or
(e) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the office
of Trustee for any reason, Issuer shall promptly appoint a successor Trustee.
Within one year after the successor Trustee takes office, the Holders of a
majority in principal amount of the then outstanding Senior Secured Notes may
appoint a successor Trustee to replace the successor Trustee appointed by the
Issuer.
Ambac Assurance shall receive prior written notice of any Trustee
resignation. Issuer shall give notice of each resignation and removal of the
Trustee and each appointment of a successor Trustee to all Holders.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, Issuer, or the
Holders of Senior Secured Notes of at least 10% in principal amount of the then
outstanding Senior Secured Notes may petition any court of competent
jurisdiction for the appointment of a successor Trustee. Notwithstanding any
other provision of this Indenture, no removal, resignation or termination of the
Trustee shall take effect until a successor, acceptable to Ambac Assurance,
shall be appointed.
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If the Trustee, after written request by any Holder of a Senior Secured
Note who has been a Holder of a Senior Secured Note for at least six months,
fails to comply with Section 6.10, such Holder of a Senior Secured Note may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to Issuer. Thereupon, the resignation or removal of
the retiring Trustee shall become effective, and the successor Trustee shall
have all the rights, powers and duties of the Trustee under this Indenture. The
successor Trustee shall mail a notice of its succession to Holders of the Senior
Secured Notes. The retiring Trustee shall promptly transfer all property held by
it as Trustee to the successor Trustee, provided all sums owing to the Trustee
hereunder have been paid and subject to the Lien provided for in Section 6.07
hereof. Notwithstanding replacement of the Trustee pursuant to this Section
6.08, Issuer's obligations under Section 6.07 hereof shall continue for the
benefit of the retiring Trustee.
Section 6.09 Successor Trustee by Merger, etc.
If the Trustee consolidates, merges or converts into, or transfers all or
substantially all of its corporate trust business to, another corporation, the
successor corporation without any further act shall be the successor Trustee.
Section 6.10 Eligibility; Disqualification.
There shall at all times be a Trustee under this Indenture, which shall be
a corporation having either (a) a combined capital and surplus of at least $75
million, or (b) having a combined capital and surplus of at least $10 million
and being a wholly owned subsidiary of a corporation having a combined capital
and surplus of at least $75 million in each case acceptable to Ambac Assurance
and subject to supervision or examination by a Federal or State or District of
Columbia authority and having a corporate trust office in New York, New York, to
the extent there is such an institution eligible and willing to serve.
This Indenture shall always have a Trustee who satisfies the requirements
of TIA ss. 310(a)(1), (2) and (5). The Trustee is subject to TIA ss. 310(b).
Section 6.11 Preferential Collection of Claims Against Issuer.
The Trustee is subject to TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). A Trustee who has resigned or been
removed shall be subject to TIA ss. 311(a) to the extent indicated therein.
Section 6.12 Default Rate of Interest
All sums of money owed to the Trustee shall bear interest from the date on
which the same are due and payable until the date of payment at a rate equal to
the Prime Rate, as such rate is announced from time to time.
Section 6.13 Receipt of Documents
In no event shall receipt by the Trustee of financial and other reports
from Issuer as provided in this Indenture, review of which could lead to the
conclusion that an Event of Default exists hereunder, result, without further
action, in the occurrence of an Event of Default, or impose upon the Trustee the
obligation to review and examine the same, it being understood that all such
information shall be received
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by the Trustee as repository for said information and documents with no
obligation on the part of the Trustee to review the same.
ARTICLE 7
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 7.01 Option to Effect Legal Defeasance or Covenant Defeasance.
Issuer may, at its option, elect to have either Section 7.02 or 7.03
hereof be applied to all Outstanding Senior Secured Notes upon compliance with
the conditions set forth below in this Article 7.
Section 7.02 Legal Defeasance and Discharge.
Upon Issuer's exercise under Section 7.01 hereof of the option applicable
to this Section 7.02, Issuer shall, subject to the satisfaction of the
conditions set forth in Section 7.04 hereof, be deemed to have been discharged
from its obligations with respect to all outstanding Senior Secured Notes on the
date the conditions set forth below are satisfied (hereinafter, "Legal
Defeasance"). For this purpose, Legal Defeasance means that Issuer shall be
deemed to have paid and discharged the entire Indebtedness represented by the
Outstanding Senior Secured Notes, which shall thereafter be deemed to be
"Outstanding" only for the purposes of Section 7.05 hereof and the other
Sections of this Indenture referred to in (a) and (b) below, and to have
satisfied all its other obligations under such Senior Secured Notes and this
Indenture insofar as those Senior Secured Notes are concerned, (and the Trustee,
on demand of and at the expense of the Issuer, shall execute proper instruments
acknowledging the same), except for the following provisions which shall survive
until otherwise terminated or discharged hereunder: (a) the rights of Holders of
the outstanding Senior Secured Notes to receive solely from the Accounts,
payments in respect of the principal, interest, and premium, if any, on such
Senior Secured Notes when such payments are due; (b) ministerial obligations
with respect to registration, payment and transfer of the Senior Secured Notes
and similar matters; (c) the rights, powers, trusts, duties and immunities of
the Trustee under the Indenture; and (d) the defeasance provisions of the
Indenture. Subject to compliance with this Article 7, Issuer may exercise its
option under this Section 7.02 notwithstanding the prior exercise of its option
under Section 7.03 hereof.
Section 7.03 Covenant Defeasance.
Upon Issuer's exercise under Section 7.01 hereof of the option applicable
to this Section 7.03, Issuer shall, subject to the satisfaction of the
conditions set forth in Section 7.04 hereof, be released from its obligations
under the covenants in Article 4 except those contained in Sections 4.01, 4.02,
4.12 and 4.14 hereof with respect to the Outstanding Senior Secured Notes on and
after the date the conditions set forth in Section 7.04 are satisfied
(hereinafter, "Covenant Defeasance"), and the Senior Secured Notes shall
thereafter be deemed not "outstanding" for the purposes of any direction,
waiver, consent or declaration or act of Holders (and the consequences of any
thereof) in connection with such covenants, but shall continue to be deemed
"outstanding" for all other purposes hereunder (it being understood that such
Senior Secured Notes shall not be deemed Outstanding for accounting purposes).
For this purpose, Covenant Defeasance means that, with respect to the
Outstanding Senior Secured Notes, Issuer may omit to comply with and shall have
no liability in respect of any term, condition or limitation set forth in any
such covenant, whether directly or indirectly, by reason of any reference
elsewhere herein to any such covenant or by reason of any reference in any such
covenant to any other provision herein or in any other document and such
omission to comply shall not constitute an Event of Default under Section 5.01
hereof, but, except as specified above, the remainder of this Indenture and such
Senior Secured Notes shall be unaffected thereby. In addition, upon Issuer's
exercise under Section 7.01 hereof of the option
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applicable to this Section 7.03 hereof, subject to the satisfaction of the
conditions set forth in Section 7.04 hereof, failure to comply with such
covenants shall not constitute an Event of Default.
Section 7.04 Conditions to Legal or Covenant Defeasance.
The following shall be the conditions to the application of either Section
7.02 or 7.03 hereof to the outstanding Senior Secured Notes:
(a) Issuer must irrevocably deposit or cause to be deposited with the
Trustee, specifically pledged as security for, and dedicated solely to, the
benefit of the Holders, an amount sufficient to pay and discharge the
outstanding principal of and unpaid installments of interest on the Outstanding
Senior Secured Notes on the stated date for payment thereof or on the applicable
Redemption Date, as the case may be, and Issuer must specify whether the Senior
Secured Notes are being defeased to maturity or to a particular redemption date;
(b) in the case of an election under Section 7.02 hereof, the Issuer shall
have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that (A) the Issuer has received
from, or there has been published by, the Internal Revenue Service a ruling or
(B) since the date hereof, there has been a change in the applicable federal
income tax law, in either case to the effect that, and based thereon such
Opinion of Counsel shall confirm that, the Holders of the outstanding Senior
Secured Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such Legal Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such Legal Defeasance had not occurred;
(c) in the case of an election under Section 7.03 hereof, Issuer shall
have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that the Holders of the
Outstanding Senior Secured Notes will not recognize income, gain or loss for
federal income tax purposes as a result of such Covenant Defeasance and will be
subject to federal income tax on the same amounts and in the same manner and at
the same times as would have been the case if such Covenant Defeasance had not
occurred;
(d) no Default or Event of Default with respect to the Outstanding Senior
Secured Notes shall have occurred and be continuing on the date of such deposit
or, insofar as Section 5.01(e) hereof is concerned, at any time during the
period ending on the 121st day after the date of deposit;
(e) such Legal Defeasance or Covenant Defeasance shall not cause the
Trustee to have a conflicting interest with respect to any of Issuer's
securities;
(f) such Legal Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under, this Indenture, the
Transaction Documents, or any other material agreement or instrument to which
Issuer is a party or by which it is bound;
(g) such Legal Defeasance or Covenant Defeasance shall not result in the
trust arising from the deposit constituting an investment company as defined in
the Investment Company Act of 1940, as amended, or the trust will be qualified
under that act or exempt from regulation thereunder;
(h) Issuer shall have delivered to the Trustee a certificate of an Officer
stating that the deposit was not made by Issuer with the intent of preferring
the Holders over any other creditors of Issuer or with the intent of defeating,
hindering, delaying or defrauding any other creditors of Issuer; and
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(i) the Issuer shall have delivered to the Trustee a certificate of an
Officer and an Opinion of Counsel, each stating that all conditions precedent
provided for or relating to the Legal Defeasance or the Covenant Defeasance have
been complied with.
Section 7.05 Deposited Money to be Held in Trust; Other Miscellaneous
Provisions.
Subject to Section 7.06 hereof, all money (including the proceeds thereof)
deposited with the Trustee (or other qualifying trustee, collectively for
purposes of this Section 7.05, the "Trustee") pursuant to Section 7.04 hereof in
respect of the Outstanding Senior Secured Notes shall be held in trust and
applied by the Trustee, in accordance with the provisions of such Senior Secured
Notes and this Indenture, to the payment, either directly or through any Paying
Agent (including Issuer acting as Paying Agent) as the Trustee may determine, to
the Holders of such Senior Secured Notes of all sums due and to become due
thereon in respect of principal, interest, and premium, if any, but such money
need not be segregated from other funds except to the extent required by law.
Issuer shall pay and indemnify the Trustee against any tax, fee or other
charge imposed on or assessed against the cash deposited pursuant to Section
7.04 hereof or the principal and interest received in respect thereof other than
any such tax, fee or other charge which by law is for the account of the Holders
of the Outstanding Senior Secured Notes.
Anything in this Article 7 to the contrary notwithstanding, the Trustee
shall deliver or pay to Issuer from time to time upon the request of Issuer any
money held by it as provided in Section 7.04 hereof which are in excess of the
amount thereof that would then be required to be deposited to effect an
equivalent Legal Defeasance or Covenant Defeasance.
Section 7.06 Repayment to Issuer.
Any money deposited with the Trustee or any Paying Agent, or then held by
Issuer, in trust for the payment of the principal, interest, and premium, if
any, on any Senior Secured Note and remaining unclaimed for two years after such
principal, interest, or premium, if any, has become due and payable shall be
paid to Issuer on its request or (if then held by Issuer) shall be discharged
from such trust; and the Holder of such Senior Secured Note shall thereafter, as
a secured creditor, look only to Issuer for payment thereof, and all liability
of the Trustee or such Paying Agent with respect to such trust money, and all
liability of Issuer as trustee thereof, shall thereupon cease; provided,
however, that the Trustee or such Paying Agent, before being required to make
any such repayment, may at the expense of Issuer cause to be published once, in
the New York Times and The Wall Street Journal (national edition), notice that
such money remains unclaimed and that, after a date specified therein, which
shall not be less than 30 days from the date of such notification or
publication, any unclaimed balance of such money then remaining shall be repaid
to Issuer.
Section 7.07 Reinstatement.
If the Trustee or Paying Agent is unable to apply any cash in accordance
with Section 7.02 or 7.03 hereof, as the case may be, by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, then Issuer's obligations under this
Indenture and the Senior Secured Notes shall be revived and reinstated as though
no deposit had occurred pursuant to Section 7.02 or 7.03 hereof until such time
as the Trustee or Paying Agent is permitted to apply all such money in
accordance with Section 7.02 or 7.03 hereof, as the case may be; provided,
however, that, if Issuer makes any payment of principal, interest, or premium,
if any, on any Senior Secured Note following the reinstatement of its
obligations, Issuer shall be subrogated to the rights
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of the Holders of such Senior Secured Notes to receive such payment from the
money held by the Trustee or Paying Agent.
Section 7.08 Payments pursuant to Financial Guaranty Insurance
Notwithstanding anything in this Indenture to the contrary, in the event
that the principal and/or interest due on the Senior Secured Notes shall be paid
pursuant to the Financial Guaranty Insurance, the Senior Secured Notes shall
remain Outstanding for all purposes and shall not be defeased or otherwise
satisfied and not be considered paid by the Issuer notwithstanding such payment
pursuant to the Financial Guaranty Insurance, and all covenants, agreements and
other obligations of the Issuer to the Holders shall continue to exist and shall
run to the benefit of Ambac Assurance, and Ambac Assurance shall be subrogated
to the rights of such Holders, in each case to the extent of such payment.
ARTICLE 8
AMENDMENT, SUPPLEMENT AND WAIVER
Section 8.01 Consent of Ambac Assurance
(a) Any provision of this Indenture expressly recognizing or granting
rights in or to Ambac Assurance may not be amended in any manner which affects
the rights of Ambac Assurance thereunder without the prior written consent of
Ambac Assurance.
(b) Unless otherwise provided in Section 5.03, so long as no Insurer
Default has occurred and is continuing, Ambac Assurance's consent shall be
required in addition to Holder consent, when and to the extent required, for the
following purposes:
(i) execution and delivery of any supplemental indenture or any
amendment, supplement or change to or modification of this Indenture other than
those amendments or supplements to this Indenture that would not require consent
of any Holders as set forth in Section 8.02 hereof;
(ii) removal of the Trustee and selection and appointment of any
successor trustee; and
(iii) initiation or approval of any action not described in (i) or
(ii) above which requires Holder consent.
Section 8.02 Without Consent of Holders of Senior Secured Notes.
Notwithstanding Section 8.03 of this Indenture, Issuer, each Guarantor and
the Trustee may amend or supplement this Indenture, the Guarantees, the Senior
Secured Notes and any and all of the other Financing Documents without the
consent of any Holder of a Senior Secured Note:
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(a) for any purpose not inconsistent with the terms of this Indenture or
to cure any ambiguity, defect or inconsistency;
(b) to add additional covenants of Issuer, to surrender rights conferred
upon Issuer, or to confer additional benefits upon the Holders;
(c) to increase the assets securing Issuer's obligations under this
Indenture;
(d) to appoint a successor Trustee;
(e) to comply with requirements of the SEC in order to effect or maintain
the qualification of this Indenture under the TIA;
(f) to provide for the issuance of Permitted Indebtedness in accordance
with the limitations set forth in this Indenture; or
(g) to reflect any amendments required by a Rating Agency in circumstances
where confirmation of the Ratings is required or permitted under this Indenture.
Upon the request of Issuer, and upon receipt by the Trustee of the
documents described in Section 6.02 hereof, the Trustee shall join with Issuer
and the Guarantors in the execution of any amended or supplemental indenture and
any amendment to any of the other Financing Documents authorized or permitted by
the terms of this Indenture and to make any further appropriate agreements and
stipulations that may be therein contained, but the Trustee shall not be
obligated to enter into such amended or supplemental indenture or amendments to
the Financing Documents that affects its own rights, duties, immunities, or
indemnities under this Indenture or otherwise.
Section 8.03 With Consent of Holders of Senior Secured Notes.
Subject to Section 8.01 and except as provided below in this Section 8.03,
Issuer, the Guarantors and the Trustee may amend or supplement this Indenture
(including Section 4.14 hereof), the Guarantees, the other Financing Documents
and the Senior Secured Notes with the consent of the Required Holders voting as
a single class (including consents obtained in connection with a tender offer or
exchange offer for, or purchase of, the Senior Secured Notes), and, subject to
Sections 5.05 and 5.08 hereof, any existing Default or Event of Default (other
than a Default or Event of Default in the payment of the principal, interest, or
premium, if any, on the Senior Secured Notes, except a payment default resulting
from an acceleration that has been rescinded) or compliance with any provision
of this Indenture, the Guarantees, the other Financing Documents or the Senior
Secured Notes may be waived with the consent of the Required Holders voting as a
single class (including consents obtained in connection with a tender offer or
exchange offer for, or purchase of, the Senior Secured Notes).
Subject to Section 8.01, upon the request of Issuer, and upon the filing
with the Trustee of evidence satisfactory to the Trustee of the consent of the
Required Holders of Senior Secured Notes as aforesaid, and upon receipt by the
Trustee of the documents described in Section 6.02 hereof, the Trustee shall
join with Issuer in the execution of such amended or supplemental indenture and
amendments to the other Financing Documents unless such amended or supplemental
indenture or amendments to the Financing Documents directly affects the
Trustee's own rights, duties, immunities or indemnities under this Indenture or
otherwise, in which case the Trustee may in its discretion, but shall not be
obligated to, enter into such amended or supplemental indenture or such
amendments.
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It shall not be necessary for the consent of the Holders of Senior Secured
Notes under this Section 8.03 to approve the particular form of any proposed
amendment or waiver, but it shall be sufficient if such consent approves the
substance thereof.
Subject to Section 8.01, after an amendment, supplement or waiver under
this Section becomes effective, Issuer shall mail to the Holders of Senior
Secured Notes affected thereby a notice briefly describing the amendment,
supplement or waiver. Any failure of Issuer to mail such notice, or any defect
therein, shall not, however, in any way impair or affect the validity of any
such amended or supplemental indenture or waiver or amendments to the Financing
Documents. Subject to Sections 5.05 and 5.08 hereof, the Required Holders of the
Senior Secured Notes then outstanding voting as a single class may waive
compliance in a particular instance by Issuer with any provision of this
Indenture or the Senior Secured Notes. However, without the consent of each
affected Holder of Outstanding Senior Secured Notes, no amendment, supplement or
waiver under this Section 8.03 may modify:
(a) the principal, interest, and premium, if any, payable upon the Senior
Secured Notes;
(b) the dates on which interest or principal on any Senior Secured Notes
is paid;
(c) the dates of maturity of any Senior Secured Notes; and
(d) the procedures for amendment by a supplemental indenture.
Section 8.04 Revocation and Effect of Consents.
Until an amendment, supplement or waiver becomes effective, a consent to
it by a Holder of a Senior Secured Note is a continuing consent by the Holder of
a Senior Secured Note and every subsequent Holder of a Senior Secured Note or
portion of a Senior Secured Note that evidences the same debt as the consenting
Holder's Senior Secured Note, even if notation of the consent is not made on any
Senior Secured Note. However, any such Holder of a Senior Secured Note or
subsequent Holder of a Senior Secured Note may revoke the consent as to its
Senior Secured Note if the Trustee receives written notice of revocation before
the date the waiver, supplement or amendment becomes effective. An amendment,
supplement or waiver becomes effective in accordance with its terms and
thereafter binds every Holder.
Section 8.05 Notation on or Exchange of Senior Secured Notes.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Senior Secured Note thereafter authenticated. Issuer
in exchange for all Senior Secured Notes may issue and the Trustee shall, upon
receipt of an Authentication Order, authenticate new Senior Secured Notes that
reflect the amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new Senior Secured
Note shall not affect the validity and effect of such amendment, supplement or
waiver.
Section 8.06 Trustee to Sign Amendments, etc.
The Trustee shall sign any amended or supplemental indenture and
amendments to the other Financing Documents authorized pursuant to this Article
8 if the amendment or supplement does not adversely affect the rights, duties,
liabilities, immunities or indemnities of the Trustee. In executing any amended
or supplemental indenture or in executing any amendment or modification
contemplated by
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Section 8.08 hereof, or amendments to the other Financing Documents, the Trustee
and the Collateral Agent shall be entitled to receive and (subject to Section
6.01 hereof) shall be fully protected in relying upon, in addition to the
documents required by Section 11.04 hereof, a certificate of an Officer and an
Opinion of Counsel stating that the execution of such amended or supplemental
indenture or amendment to the other Financing Documents is authorized or
permitted by this Indenture.
Section 8.07 Authorization and Direction to Trustee to Release Certain Liens and
Consent to Certain Modifications of the Project Documents.
The Trustee shall not withhold, and it is hereby authorized and directed
to grant, its consent to any modification of any of the Project Documents to the
extent that such modification is otherwise permitted pursuant to the provisions
of this Indenture and of the Financing Documents.
Section 8.08 Conformity with Trust Indenture Act.
Every amended or supplemental indenture executed pursuant to this Article
Eight shall conform to the requirements of the Trust Indenture Act as then in
effect.
ARTICLE 9
GUARANTEE
Section 9.01 Guarantee.
Subject to this Article 9, the Guarantors hereby unconditionally guarantee
to each Holder of a Senior Secured Note authenticated and delivered by the
Trustee and to the other Secured Parties and their respective successors and
assigns, irrespective of the validity and enforceability of this Indenture, the
Senior Secured Notes or the obligations of the Issuer hereunder or thereunder,
that: (a) the principal of, interest, and premium, if any, on the Senior Secured
Notes shall be promptly paid in full when due, whether at maturity, by
acceleration, redemption or otherwise, and interest on the overdue principal and
premium, if any, and, to the extent permitted by law, interest and all other
obligations of the Issuer to the Holders or the other Secured Parties hereunder
or under the other Financing Documents to which they may be a party shall be
promptly paid in full or performed, all in accordance with the terms hereof and
thereof; and (b) in case of any extension of time of payment or renewal of any
Senior Secured Notes or any of such other obligations, that same shall be
promptly paid in full when due or performed in accordance with the terms of the
extension or renewal, whether at stated maturity, by acceleration or otherwise.
Failing payment when due of any amount so guaranteed or any performance so
guaranteed for whatever reason, the Guarantors shall be obligated to pay the
same immediately. Guarantors agree that this is a guarantee of payment and not a
guarantee of collection.
The Guarantors hereby agree that their obligations hereunder shall be
unconditional, irrespective of the validity, regularity or enforceability of the
Senior Secured Notes, this Indenture or the other Financing Documents, the
absence of any action to enforce the same, any waiver or consent by any Holder
of the Senior Secured Notes with respect to any provisions hereof or thereof,
the recovery of any judgment against the Issuer, any action to enforce the same
or any other circumstance which might otherwise constitute a legal or equitable
discharge or defense of the Guarantors. The Guarantors hereby waive diligence,
presentment, demand of payment, filing of claims with a court in the event of
insolvency or bankruptcy of the Issuer, any right to require a proceeding first
against the Issuer, protest, notice and all demands whatsoever and covenants
that this Guarantee shall not be discharged except by complete performance of
the obligations contained in the Senior Secured Notes, this Indenture and the
other Financing Documents.
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If any Holder or any of the other Secured Parties is required by any court
or otherwise to return to the Issuer, the Guarantors or any custodian, trustee,
liquidator or other similar official acting in relation to either the Issuer or
the Guarantors, any amount paid by either to such Holder or any other Secured
Party, this Guarantee, to the extent theretofore discharged, shall be reinstated
in full force and effect.
The Guarantors agree that they shall not be entitled to any right of
subrogation in relation to the Holders in respect of any obligations guaranteed
hereby until payment in full of all obligations guaranteed hereby. The
Guarantors further agree that, as between the Guarantors on the one hand, and
the Holders and the other Secured Parties, on the other hand, (x) the maturity
of the obligations guaranteed hereby may be accelerated as provided in Article 5
hereof for the purposes of this Guarantee, notwithstanding any stay, injunction
or other prohibition preventing such acceleration in respect of the obligations
guaranteed hereby, and (y) in the event of any declaration of acceleration of
such obligations as provided in Article 5 hereof, such obligations (whether or
not due and payable) shall promptly become due and payable by the Guarantors for
the purpose of this Guarantee.
Section 9.02 Limitation on Guarantor Liability.
The Guarantors, and by its acceptance of Senior Secured Notes, each
Holder, hereby confirms that it is the intention of all such parties that the
Guarantee of the Guarantors not constitute a fraudulent transfer or conveyance
for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the
Uniform Fraudulent Transfer Act or any similar federal or state law to the
extent applicable to the Guarantee. To effectuate the foregoing intention, the
Secured Parties and the Guarantors hereby irrevocably agree that the obligations
of the Guarantors under their respective Guarantee and this Article 9 shall be
limited to the maximum amount as will, after giving effect to such maximum
amount and all other contingent and fixed liabilities of the Guarantors that are
relevant under such laws, result in the obligations of the Guarantors not
constituting a fraudulent transfer or conveyance.
Section 9.03 Execution and Delivery of Guarantee.
To evidence the Guarantee set forth in Section 9.01 hereof, the Guarantors
hereby agree that a notation of each such Guarantee substantially in the form
included in Exhibit E shall be endorsed by an Officer of each of the Guarantors
on each Senior Secured Note authenticated and delivered by the Trustee and that
this Indenture shall be executed on behalf of the Guarantors by each of their
managing members.
The Guarantors hereby agree that their respective Guarantee set forth in
Section 9.01 hereof shall remain in full force and effect notwithstanding any
failure to endorse on each Senior Secured Notes a notation of such Guarantee.
If the Officer whose signature is on this Indenture or on the Guarantee no
longer holds that office at the time the Trustee authenticates the Senior
Secured Note on which the Guarantee is endorsed, the Guarantee shall be valid
nevertheless.
The delivery of any Senior Secured Note by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of the Guarantee
set forth in this Indenture on behalf of the Guarantor.
Section 9.04 Guarantors May Not Merge, Consolidate, etc.
None of the Guarantors will enter into any merger or consolidation, change
its form of organization or its business, liquidate or dissolve itself (or
suffer any liquidation or dissolution). None of
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the Guarantors will purchase or otherwise acquire all or substantially all of
the assets of any other Person, except in the case of the acquisition of assets
related to such Guarantor's business and where the purchase price for such
assets (i) does not exceed in the aggregate $10 million and (ii) is funded by
Permitted Indebtedness or amounts provided to Guarantors by Issuer from
Restricted Payments for such acquisition. None of the Guarantors will engage or
enter into any business other than in connection with the performance of its
obligations under the Transaction Documents and the ownership, operation and
maintenance of their respective power generating facilities.
ARTICLE 10
SATISFACTION AND DISCHARGE
Section 10.01 Satisfaction and Discharge.
This Indenture will be discharged and will cease to be of further effect
(except as to any surviving rights of registration or transfer or exchange of
notes expressly provided for, and except as otherwise specifically provided, in
this Indenture) as to all Senior Secured Notes issued hereunder, when:
(i) either:
(A) all Senior Secured Notes previously authenticated and
delivered (other than (1) Senior Secured Notes which have been
destroyed, lost or stolen and which have been replaced or paid and
(2) Senior Secured Notes for which payment money has previously been
deposited with the Trustee) have been delivered to the Trustee for
cancellation; or
(B) all Senior Secured Notes not previously delivered to the
Trustee for cancellation:
(1) have become due and payable, or will become due and
payable at their stated maturity within one year; or
(2) if redeemable at Issuer's option, are to be called
for redemption within one year under arrangements
satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in Issuer's name and at
Issuer's expense;
and Issuer or either Guarantor has irrevocably deposited or caused
to be deposited with the Trustee an amount sufficient to pay and
discharge the entire Indebtedness on those Senior Secured Notes not
previously delivered to the Trustee for cancellation for principal,
and premium, if any, and interest to the stated maturity or
redemption date, as the case may be;
(ii) no Default or Event of Default has occurred and is continuing
on the date of such deposit or will occur as a result of such deposit and such
deposit will not result in a breach or violation of, or constitute a default
under, any other instrument to which Issuer or either Guarantor is a party or by
which Issuer or either Guarantor is bound;
(iii) Issuer has delivered irrevocable instructions to the Trustee
under this Indenture to apply the deposited money toward the payment of the
Senior Secured Notes at maturity or the redemption date, as the case may be;
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(iv) Issuer or either Guarantor has paid or caused to be paid all
other sums then payable by it under this Indenture; and
(v) Issuer has delivered to the Trustee a certificate of an Officer
and an Opinion of Counsel, each stating that all conditions precedent relating
to the satisfaction and discharge of this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, if money
has been deposited with the Trustee pursuant to subclause (B) of clause (i) of
this Section, the provisions of Section 9.02 and Section 7.06 will survive. In
addition, nothing in this Section 10.01 will be deemed to discharge those
provisions of Section 6.07 hereof, that, by their terms, survive the
satisfaction and discharge of this Indenture.
This Indenture will be automatically satisfied and discharged upon the
Issuer's or either Guarantor's payment in full on the Final Maturity Date of all
principal, premium, if any, and accrued interest on the Senior Secured Notes.
Section 10.02 Application of Trust Money.
Subject to the provisions of Section 7.06, all money deposited with the
Trustee pursuant to Section 10.01 shall be held in trust and applied by it, in
accordance with the provisions of the Senior Secured Notes and this Indenture,
to the payment, either directly or through any Paying Agent (including Issuer
acting as its own Paying Agent) as the Trustee may determine, to the Persons
entitled thereto, of the principal, interest, and premium, if any, for whose
payment such money has been deposited with the Trustee; but such money need not
be segregated from other funds except to the extent required by law.
If the Trustee or Paying Agent is unable to apply any money or Government
Securities in accordance with Section 10.01 by reason of any legal proceeding or
by reason of any order or judgment of any court or governmental authority
enjoining, restraining or otherwise prohibiting such application, Issuer's and
Guarantors' obligations under this Indenture and the Senior Secured Notes shall
be revived and reinstated as though no deposit had occurred pursuant to Section
10.01; provided that if Issuer has made any payment of principal, interest, and
premium, if any, on any Senior Secured Notes because of the reinstatement of its
obligations, Issuer shall be subrogated to the rights of the Holders of such
Senior Secured Notes to receive such payment from the money or Government
Securities held by the Trustee or Paying Agent.
ARTICLE 11
MISCELLANEOUS
Section 11.01 Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or conflicts with the
duties imposed by TIA ss. 318(c), the imposed duties or provisions of the TIA
shall control.
Section 11.02 Notices.
Any notice or communication by Issuer, the Guarantors or the Trustee to
the others is duly given if in writing and delivered in Person or mailed by
first class mail (registered or certified, return receipt requested), telex,
telecopier or overnight air courier guaranteeing next day delivery, to the
others' address:
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If to Issuer:
Gilroy Energy Center, LLC
50 West San Fernando Street, Suite 690
San Jose, CA 95113
Telephone number: (408) 794-2417
Fax number: (408) 794-2407
Attention: Vice President-Finance
With a copy to:
Calpine Corporation
50 West San Fernando Street
San Jose, California 95113
Attn: General Counsel
Telecopier No.: (408) 995-0505
Telephone No.: (408) 995-5115
and a copy to:
Gilroy Energy Center, LLC
4160 Dublin Blvd., Suite 150
Dublin, CA 94568-3139
Telephone: (925) 479-6730
Fax: (925) 479-7303
Attn: Area Executive
If to Goose Haven:
Goose Haven Energy Center, LLC
50 West San Fernando Street, Suite 630
San Jose, CA 95113
Telephone number: (408) 794-2419
Fax number: (408) 794-2408
With a copy to:
Calpine Corporation
50 West San Fernando Street
San Jose, California 95113
Attn: General Counsel
Telecopier No.: (408) 995-0505
Telephone No.: (408) 995-5115
and a copy to:
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Goose Haven Energy Center, LLC
4160 Dublin Blvd., Suite 150
Dublin, CA 94568-3139
Telephone: (925) 479-6730
Fax: (925) 479-7303
Attn: Area Executive
If to Creed:
Creed Energy Center, LLC
50 West San Fernando Street, Suite 640
San Jose, CA 95113
Telephone number: (408) 794-2420
Fax number: (408) 794-2413
With a copy to:
Calpine Corporation
50 West San Fernando Street
San Jose, California 95113
Attn: General Counsel
Telecopier No.: (408) 995-0505
Telephone No.: (408) 995-5115
and a copy to:
Creed Energy Center, LLC
4160 Dublin Blvd., Suite 150
Dublin, CA 94568-3139
Telephone: (925) 479-6730
Fax: (925) 479-7303
Attn: Area Executive
If to the Trustee and Collateral Agent:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington Delaware 19890
Telecopier No: (302) 636-4145
Attention: Corporate Capital Markets
If to Ambac Assurance:
Ambac Assurance Corporation
One State Street Plaza
New York, NY 10004
Telecopier No: (212) 509-9190
Attention: General Counsel
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If to Moody's:
Moody's Investors Service, Inc.
99 Church Street
New York, New York 10007
Telecopier No.: (212) 553-0468
Telephone No.: (212) 553-7822
Attention: Corporate Utilities Department
If to S&P:
Standard & Poor's Rating Group
25 Broadway
New York, New York 10004
Telecopier No.: (212) 208-8946
Telephone No.: (212) 208-1651
Attention: Corporate Finance Department Electric Utilities Group
Issuer, the Guarantors or the Trustee, by notice to the others may
designate additional or different addresses for subsequent notices or
communications.
All notices and communications (other than those sent to Holders) shall be
deemed to have been duly given: at the time delivered by hand, if personally
delivered; five Business Days after being deposited in the mail, postage
prepaid, if mailed; when answered back, if telexed; when receipt acknowledged,
if telecopied; and the next Business Day after timely delivery to the courier,
if sent by overnight air courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first class
mail, certified or registered, return receipt requested, or by overnight air
courier guaranteeing next day delivery to its address shown on the register kept
by the Registrar. Any notice or communication shall also be so mailed to any
Person described in TIA ss. 313(c), to the extent required by the TIA. Failure
to mail a notice or communication to a Holder or any defect in it shall not
affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above within
the time prescribed, it is duly given, whether or not the addressee receives it.
If Issuer mails a notice or communication to Holders, it shall mail a copy
to the Trustee and each Agent at the same time.
Section 11.03 Communication by Holders of Senior Secured Notes with Other
Holders of Senior Secured Notes.
Holders may communicate pursuant to TIA ss. 312(b) with other Holders with
respect to their rights under this Indenture or the Senior Secured Notes.
Issuer, the Trustee, the Registrar and anyone else shall have the protection of
TIA ss. 312(c).
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Section 11.04 Certificate and Opinion as to Conditions Precedent.
Upon any request or application by Issuer to the Trustee to take any
action under this Indenture, Issuer shall furnish to the Trustee upon the
Trustee's reasonable request:
(a) a certificate of an Officer in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 11.05 hereof) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably satisfactory to
the Trustee (which shall include the statements set forth in Section 11.05
hereof) stating that, in the opinion of such counsel, all such conditions
precedent and covenants have been satisfied.
Section 11.05 Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture (other than a certificate provided
pursuant to TIA ss. 314(a)(4)) shall comply with the provisions of TIA ss.
314(e) and shall include:
(a) a statement that the Person making such certificate or opinion has
read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he or she has made
such examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
satisfied; and
(d) a statement as to whether or not, in the opinion of such Person, such
condition or covenant has been satisfied.
Section 11.06 Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
Section 11.07 No Personal Liability of Directors, Officers, Employees and
Stockholders.
No past, present or future director, officer, employee, incorporator,
stockholder, partner or agent of Issuer or the Guarantors or any Affiliate of
any such party (other than Holding Company under the Gilroy Pledge Agreement,
Issuer and the Guarantors), as such, shall have any liability for any
obligations of Issuer or the Guarantors under the Senior Secured Notes, this
Indenture, the Guarantees, any Financing Document or for any claim based on, in
respect of, or by reason of, such obligations or their creation. Each Holder by
accepting a Senior Secured Note waives and releases all such liability. The
waiver and release are part of the consideration for issuance of the Senior
Secured Notes.
Section 11.08 Governing Law.
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THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THIS INDENTURE, THE SENIOR SECURED NOTES AND THE GUARANTEES WITHOUT
GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT
THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
Section 11.09 No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret any other indenture, loan or
Indebtedness agreement of Issuer or of any other Person. Any such indenture,
loan or Indebtedness agreement may not be used to interpret this Indenture.
Section 11.10 Successors.
All agreements of Issuer in this Indenture and the Senior Secured Notes
shall bind its successors. All agreements of the Trustee in this Indenture shall
bind its successors.
Section 11.11 Severability.
In case any provision in this Indenture or in the Senior Secured Notes
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
Section 11.12 Counterpart Originals.
The parties may sign any number of copies of this Indenture. Each signed
copy shall be an original, but all of them together represent the same
agreement.
Section 11.13 Table of Contents, Headings, etc.
The Table of Contents, Cross-Reference Table and Headings of the Articles
and Sections of this Indenture have been inserted for convenience of reference
only, are not to be considered a part of this Indenture and shall in no way
modify or restrict any of the terms or provisions hereof.
ARTICLE 12
FINANCIAL GUARANTY INSURANCE
Section 12.01 Payments Pursuant to Financial Guaranty Insurance
So long as the Financial Guaranty Insurance shall be in full force and
effect, the Issuer and the Trustee agree to comply with the following
provisions:
(a) At least one (1) business day prior to each Payment Date, the Trustee
will determine whether there will be sufficient funds in the Depositary Accounts
to pay the principal of or interest on the Senior Secured Notes on such Payment
Date. If the Trustee determines that there will be insufficient funds in such
Depositary Accounts, the Trustee shall so notify Ambac Assurance in writing.
Such written notice shall specify the amount of the anticipated deficiency, and
whether such Senior Secured Notes will be deficient as to principal or interest,
or both. Upon receipt of such written notice at least one (1) business day prior
to a Payment Date, Ambac Assurance will make payments of principal or interest
due on the Senior Secured Notes on such Payment Date. If the Trustee has not so
notified Ambac Assurance at least one (1) business
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day prior to a Payment Date, Ambac Assurance will make payments of principal or
interest due on the Senior Secured Notes on or before the first (1st) business
day next following the date on which Ambac Assurance shall have received notice
of Nonpayment from the Trustee.
(b) The Trustee shall, after giving written notice to Ambac Assurance as
provided in (a) above, make available to Ambac Assurance and, at Ambac
Assurance's written direction, to the Insurance Trustee, the list of Holders
and/or any registration books maintained by the Trustee and all records relating
to the Depositary Accounts maintained pursuant to the Depositary Agreement.
(c) The Trustee shall provide Ambac Assurance and the Insurance Trustee
with a list of registered owners of Senior Secured Notes, and shall make
arrangements with the Insurance Trustee (i) regarding payments by Ambac
Assurance to the registered owners of Senior Secured Notes entitled to receive
full or partial interest payments from Ambac Assurance and (ii) regarding
payments by Ambac Assurance of principal upon Senior Secured Notes surrendered
to the Insurance Trustee by the registered owners of Senior Secured Notes
entitled to receive full or partial principal payments from Ambac Assurance. The
Insurance Trustee or Ambac Assurance shall notify the Trustee at the time of
such payment if any payment is made to Holder under the Financial Guaranty
Insurance.
(d) The Trustee shall, at the time it provides written notice to Ambac
Assurance pursuant to Section 12.01(a) above, notify registered owners of Senior
Secured Notes entitled to receive the payment of principal or interest thereon
from Ambac Assurance (i) as to the fact of such entitlement, (ii) that Ambac
Assurance will remit to them all or a part of the interest payments next coming
due upon proof of Holder entitlement to interest payments and delivery to the
Insurance Trustee, in form satisfactory to the Insurance Trustee, of an
appropriate assignment of the registered owner's right to such interest payment,
(iii) that should they be entitled to receive full payment of principal from
Ambac Assurance, they must surrender their Senior Secured Notes and/or provide
to Insurance Trustee an appropriate instrument of assignment in form
satisfactory to the Insurance Trustee to permit ownership of such Senior Secured
Notes to be registered in the name of Ambac Assurance for payment to the
Insurance Trustee, and not the Trustee or Paying Agent, if any, and (iv) that
should they be entitled to receive partial payment of principal from Ambac
Assurance, they must surrender their Senior Secured Notes for payment thereon
first to the Trustee who shall note on such Senior Secured Notes the portion of
the principal paid and/or provide to Insurance Trustee an appropriate instrument
of assignment in form satisfactory to the Insurance Trustee, to the Insurance
Trustee, which will then pay the unpaid portion of principal to the Holders, and
Ambac Assurance shall then be the registered owner of such Senior Secured Notes
thereafter.
(e) In the event that the Trustee has notice that any payment of principal
of or interest on a Senior Secured Note which has become Due for Payment and
which is made to a Holder by or on behalf of the Issuer has been deemed a
preferential transfer and theretofore recovered from such Holder pursuant to the
United States Bankruptcy Code by a trustee in bankruptcy in accordance with the
final, nonappealable order of a court having competent jurisdiction, the Trustee
shall, at the time Ambac Assurance is notified pursuant to (a) above, notify all
Holders that in the event that any Holder's payment is so recovered, such Holder
will be entitled to payment from Ambac Assurance to the extent of such recovery
if sufficient funds are not otherwise available, and the Trustee shall furnish
to Ambac Assurance its records evidencing the payments of principal of and
interest on the Senior Secured Notes which have been made by the Trustee and
subsequently recovered from Holders and the dates on which such payments were
made.
(f) In addition to those rights granted Ambac Assurance under this
Indenture, Ambac Assurance shall, to the extent it makes payment of principal of
or interest on Senior Secured Notes, become subrogated to the rights of the
recipients of such payments in accordance with the terms of the
79
Financial Guaranty Insurance, and to evidence such subrogation (i) in the case
of subrogation as to claims for past due interest, the Trustee shall note Ambac
Assurance's rights as subrogee on any records maintained by the Trustee upon
receipt from Ambac Assurance of proof of the payment of interest thereon to the
registered owners of the Senior Secured Notes, and (ii) in the case of
subrogation as to claims for past due principal, the Trustee shall note Ambac
Assurance's rights as subrogee on any records maintained by the Trustee upon
surrender of the Senior Secured Notes by the registered owners thereof together
with proof of the payment of principal thereof.
Section 12.02 Notices to be sent to Surveillance Department of Ambac Assurance
(a) While the Financial Guaranty Insurance is in effect, the Issuer or the
Trustee, as appropriate, shall furnish to Ambac Assurance, upon request, the
following :
(i) a copy of any financial statement, audit and/or annual report of
the Issuer;
(ii) such additional information as Ambac Assurance may reasonably
request; and
(iii) a copy of any notice to be given to the Holders, including,
without limitation, notice of any redemption or defeasance of Senior Secured
Notes, and any certificate rendered pursuant to this Indenture relating to the
security for the Senior Secured Notes.
Upon request, such information shall be delivered at the Issuer's expense to the
attention of the Surveillance Department of Ambac Assurance, unless otherwise
indicated.
(b) To the extent that the Issuer has entered into a continuing disclosure
agreement with respect to the Senior Secured Notes, Ambac Assurance shall be
included as party to be notified.
Section 12.03 Notices to be sent to General Counsel of Ambac Assurance
(a) The Trustee or Issuer, as appropriate, shall notify Ambac Assurance of
any failure of the Issuer to provide the information required to be provided to
Ambac Assurance pursuant to Section 12.02(a) which failure the Trustee or Issuer
has actual knowledge of.
(b) Notwithstanding any other provision of this Indenture, the Trustee or
Issuer, as appropriate, shall promptly notify Ambac Assurance if at any time it
becomes aware that there are insufficient moneys to make any payments of
principal and/or interest as required and as soon as practicable upon becoming
aware of the occurrence of an Event of Default hereunder.
Section 12.04 Miscellaneous
(a) The Issuer will permit Ambac Assurance to discuss the affairs,
finances and accounts of the Issuer or any information Ambac Assurance may
reasonably request regarding the security for the Senior Secured Notes with
appropriate officers of the Issuer during such officers' normal business hours
and at other times as Ambac Assurance may reasonably request. The Trustee or
Issuer, as appropriate, will permit Ambac Assurance, at the Issuer's expense, to
have access to and to make copies of all books and records relating to the
Senior Secured Notes at any reasonable time and upon prior written notice and
the Issuer will permit Ambac Assurance to have access to the Projects at any
reasonable time and upon prior written notice.
80
(b) Upon the occurrence and during the continuance of an Event of Default,
Ambac Assurance shall have the right to direct an accounting at the Issuer's
expense, and the Issuer's failure to comply with such direction within ninety
(90) days after receipt of written notice of the direction from Ambac Assurance
shall be deemed an Event of Default hereunder; provided, however, that if
compliance cannot occur within such period, then such period will be extended so
long as compliance is begun within such period and diligently pursued, but only
if such extension would not materially adversely affect the interests of any
Holder.
(c) To the extent that this Indenture confers upon or gives or grants to
Ambac Assurance any right, remedy or claim under or by reason of this Indenture,
Ambac Assurance is hereby explicitly recognized as being a third-party
beneficiary hereunder and may enforce any such right remedy or claim conferred,
given or granted hereunder; provided that, to the extent that Ambac Assurance is
or becomes an owner of Senior Secured Notes, Ambac Assurance shall, in such
capacity, be subject to all of the terms and conditions of this Indenture and
the Senior Secured Notes applicable to, and to the same extent as, other
Holders.
(d) Nothing in this Indenture expressed or implied is intended or shall be
construed to confer upon, or to give or grant to, any Person, other than the
Issuer, the Guarantors, the Trustee, Ambac Assurance, and the Holders, any
right, remedy or claim under or by reason of this Indenture or any covenant,
condition or stipulation hereof, and all covenants, stipulations, promises and
agreements in this Indenture contained by and on behalf of the Issuer shall be
for the sole and exclusive benefit of the Issuer, the Guarantors, the Trustee,
Ambac Assurance, and the Holders.
[SIGNATURE PAGE FOLLOWS]
SIGNATURES:
GILROY ENERGY CENTER, LLC
By: /s/ RICHARD L. THOMAS
--------------------------------
Name:
Title:
CREED ENERGY CENTER, LLC
By: /s/ RICHARD L. THOMAS
--------------------------------
Name:
Title:
GOOSE HAVEN ENERGY CENTER, LLC
By: /s/ RICHARD L. THOMAS
--------------------------------
Name:
Title:
WILMINGTON TRUST COMPANY,
as Trustee and Collateral Agent
By: /s/ JAMES J. MCGINLEY
--------------------------------
Name: James J. McGinley
Title: Authorized Signer
EXHIBIT A1
(Face of Note)
================================================================================
CUSIP/CINS ___________________
4.00% Senior Secured Notes due August 15, 2011
No. __ $____________
GILROY ENERGY CENTER, LLC
promises to pay to [_______], or registered assigns, the principal sum of
______________ Dollars on August 15, 2011 in installments on the dates and in
the percentage amounts of the principal hereof set forth on Schedule I attached
hereto and made part hereof.
Interest Payment Dates: February 15 and August 15
Record Dates: February 1 and August 1
GILROY ENERGY CENTER, LLC
By:
--------------------------------
Name:
Title:
Dated:
This is one of the Notes referred to in the within-mentioned Indenture:
Wilmington Trust Company,
as Trustee
By:
--------------------------
Authorized Signatory
================================================================================
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(Back of Note)
4.00% Senior Secured Notes due August 15, 2011
[Insert the Global Note legend, if applicable, pursuant to the provisions of the
Indenture]
[Insert the Private Placement legend, if applicable, pursuant to the provisions
of the Indenture]
[Insert the applicable original issue discount legend pursuant to the provisions
of the Indenture]
Financial Guaranty Insurance Policy No. 21604BE (the "Policy") with
respect to payments due for principal of and interest on this Senior Secured
Note has been issued by Ambac Assurance Corporation ("Ambac Assurance"). The
Policy has been delivered to The Bank of New York, New York, New York, as the
Insurance Trustee under said Policy and will be held by such Insurance Trustee
or any successor insurance trustee. The Policy is on file and available for
inspection at the principal office of the Insurance Trustee and a copy thereof
may be secured from Ambac Assurance or the Insurance Trustee. All payments
required to be made under the Policy shall be made in accordance with the
provisions thereof. The owner of this Senior Secured Note acknowledges and
consents to the subrogation rights of Ambac Assurance as more fully set forth in
the Policy.
Capitalized terms used herein shall have the meanings assigned to them in
the Indenture referred to below unless otherwise indicated.
1. INTEREST. Gilroy Energy Center, LLC, a Delaware limited liability
company (the "Issuer"), promises to pay interest on the principal amount of this
Senior Secured Note at 4.00% per annum from the date of issuance until maturity.
The Issuer shall pay interest pro rata semiannually in arrears on February 15
and August 15 of each year (the "Payment Date"), or if any such day is not a
Business Day, on the next succeeding Business Day. Interest on the Senior
Secured Notes will accrue from the most recent Payment Date to which interest
has been paid or, if no interest has been paid, from the date of issuance;
provided that if there is no existing Default in the payment of interest, and if
this Senior Secured Note is authenticated between a record date referred to on
the face hereof and the next succeeding Payment Date, interest shall accrue from
such next succeeding Payment Date; provided, further, that the first Payment
Date shall be February 15, 2004. The Issuer shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
principal, and premium, if any, from time to time on demand at a rate that is 1%
per annum in excess of the rate then in effect; it shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
installments of interest (without regard to any applicable grace periods) from
time to time on demand at the same rate to the extent lawful. Interest will be
computed on the basis of a 360-day year of twelve 30-day months.
2. METHOD OF PAYMENT. The Issuer will pay interest on the Senior Secured
Notes (except defaulted interest) to the Persons who are registered Holders of
Senior Secured Notes at the close of business on the February 1 or August 1
immediately preceding the Payment Date, even if such Senior Secured Notes are
cancelled after such record date and on or before such Payment Date, except as
provided in Section 2.12 of the Indenture with respect to defaulted interest.
The Senior Secured Notes will be payable as to principal, interest, and premium,
if any, at the office or agency of the Issuer maintained for such purpose within
the City and State of New York, or, at the option of the Issuer, payment of
interest may be made by check mailed to the Holders at their respective
addresses set forth in the register of Holders, and provided that payment by
wire transfer of immediately available funds will be required with respect to
principal, interest, and premium, if any, on all Senior Secured Notes the
Holders
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of which shall have provided wire transfer instructions to the Issuer or the
Paying Agent. Such payment shall be in such coin or currency of the United
States of America as at the time of payment is legal tender for payment of
public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, Wilmington Trust Company, the
Trustee under the Indenture, will act as Paying Agent and Registrar. The Issuer
may change any Paying Agent or Registrar without notice to any Holder. The
Issuer or any of its subsidiaries may act in any such capacity.
4. INDENTURE. The Issuer issued the Senior Secured Notes under an
Indenture dated as of September 30, 2003 ("Indenture") among the Issuer, the
Guarantors on the signature pages thereto (the "Guarantors") and Wilmington
Trust Company as trustee (the "Trustee") and as collateral agent (the
"Collateral Agent"). The terms of the Senior Secured Notes include those stated
in the Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended (15 U.S. Code ss.ss. 77aaa-77bbbb). The Senior
Secured Notes are subject to all such terms, and Holders are referred to the
Indenture and such Act for a statement of such terms. To the extent any
provision of this Senior Secured Note conflicts with the express provisions of
the Indenture, the provisions of the Indenture shall govern and be controlling.
5. OPTIONAL REDEMPTION.
The Senior Secured Notes will be redeemable at the option of the Issuer at
any time and from time to time, in whole or in part, upon not less than 30 nor
more than 60 days' notice to each Holder of Senior Secured Notes, at a
redemption price equal to the outstanding principal amount thereof plus accrued
interest plus the Make Whole Premium computed by an Independent Investment
Banker. Unless the Issuer defaults in payment of the redemption price, on and
after the Redemption Date, interest will cease to accrue on the Senior Secured
Notes or portions thereof called for redemption.
Any redemption pursuant to this subparagraph 5 shall be made pursuant to
the provisions of Sections 3.01 through 3.06 of the Indenture.
6. MANDATORY REDEMPTION.
(a) The Senior Secured Notes shall be redeemed, in whole or in part, as
applicable, at a redemption price equal to the principal amount thereof plus
accrued and unpaid interest to the Redemption Date upon the receipt of Loss
Proceeds by Issuer or either Guarantor. If the Issuer, Creed, or Goose Haven
determines that (a) more than two Units cannot be rebuilt, repaired or restored
to permit operations on a commercially reasonable basis at any given time, or
the Issuer, Creed or Goose Haven determines not to rebuild, repair or restore
more than two Units (whether held by the Issuer, Creed, Goose Haven or a
combination of the foregoing), then the Senior Secured Notes shall be redeemed
in whole; or (b) a Unit cannot be rebuilt, repaired or restored to permit
operations on a commercially reasonable basis, or the Issuer, Creed, or Goose
Haven determines that a Unit cannot be rebuilt, repaired or restored to permit
operations on a commercially reasonable basis, then the amount of Loss Proceeds
received in respect of such Unit shall be used for redemption; or (c) only a
portion of a Unit is capable of being rebuilt, repaired or restored, and Loss
Proceeds of greater than $2 million remain after payment of all costs and
expenses for such rebuild, repair or restoration, then the amount of such Loss
Proceeds shall be used for redemption. If less than $2 million of Loss Proceeds
remain, then the amount of such Loss Proceeds shall be transferred to the
Revenue Account.
(b) Upon the receipt of proceeds in connection with a Title Event, the
amount of such Title Event Proceeds shall be made available for redemption,
subject to reduction by the costs expended in
A1-3
connection with collecting any Title Event Proceeds, and any additional
reasonable costs or expenses that Issuer and Guarantors will be subject to as a
result of the Title Event.
(c) In addition, Issuer shall apply all funds, if any, which remain in the
Distribution Account to redeem Senior Secured Notes, in whole or in part
(depending on the amount of funds in the Distribution Account), at a price equal
to the outstanding principal amount thereof plus accrued interest through the
Redemption Date (a) on any date within 61 days after a Payment Date on which
Issuer certifies to the Depositary that the Debt Service Coverage Ratio or the
Projected Debt Service Coverage Ratio, in each case as determined in accordance
with, and for the periods described in, Section 3.6(b)(iii) of the Depositary
Agreement does not equal or exceed the applicable minimum ratio that would
permit Restricted Payments set forth in such Section 3.6(b)(iii), and (b) on the
61st day after a Payment Date if Issuer has not, during the period between such
Payment Date and such 61st day, provided a certificate to the Depositary as to
its calculations of the Debt Service Coverage Ratio and the Projected Debt
Service Coverage Ratio, in each case as determined in accordance with, for the
periods described in, and meeting the requirements for Restricted Payments
specified in, Section 3.6(b)(iii) of the Depositary Agreement. Notwithstanding
any provisions contained herein to the contrary, any redemption made pursuant to
this subsection (c) shall be made upon not less than 5 nor more than 10 days'
notice to each Holder.
(d) Other than as specifically provided in this subparagraph 6, any
purchase pursuant to this subparagraph 6 shall be made pursuant to the
provisions of Sections 3.01 through 3.06 of the Indenture.
7. SPECIAL MANDATORY REDEMPTION. If Issuer has not satisfied the
conditions to the release of funds to the Issuer set forth in the Escrow
Agreement, if any, within 90 days after the Closing Date, all Outstanding Senior
Secured Notes shall be redeemed at the Special Mandatory Redemption Price. Such
special mandatory redemption shall be made upon five days' prior written notice
to the Holders, which notice shall be delivered by Issuer on, or prior to,
December 30, 2003, in accordance with the terms of the Escrow Agreement, if any.
If such notice is not delivered by the Company on, or prior to, December 30,
2003, then the Trustee shall deliver such notice of special mandatory redemption
in accordance with the terms of the Escrow Agreement, if any. The funds on
deposit in the Escrow Account shall be available for the special mandatory
redemption. Notwithstanding any provisions contained herein to the contrary, any
redemption made pursuant to this subparagraph 7 shall be made upon at least 5
days' notice as set forth in the Escrow Agreement, if any.
Other than as specifically provided in this subparagraph 7, any purchase
pursuant to this subparagraph 7 shall be made pursuant to the provisions of
Sections 3.01 through 3.06 of the Indenture.
If no Escrow Agreement is executed then this subparagraph 7 shall be
inapplicable and there shall be no special mandatory redemption.
8. REPURCHASE AT THE OPTION OF HOLDERS UPON A CHANGE OF CONTROL.
(a) Upon the occurrence of a Change of Control, each Holder of Senior
Secured Notes will have the right to require Issuer to repurchase all or any
part of such Holder's Senior Secured Notes pursuant to the offer described below
(the "Change of Control Offer") at an offer price in cash equal to 101% of the
aggregate principal amount thereof plus accrued and unpaid interest thereon, if
any, to the date of purchase (the "Change of Control Payment"). Within ten days
following the occurrence of any Change of Control, Issuer will mail a notice to
each Holder describing the transaction or transactions that constitute the
Change of Control and offering to repurchase Senior Secured Notes on the date
specified in such notice, which date shall be no earlier than 30 days and no
later than 60 days from the date such notice is mailed (the "Change of Control
Payment Date"), pursuant to the procedures required by the Indenture and
described in such notice. Issuer will comply with the requirements of Rule 14e-1
under the
A1-4
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of the Senior Secured Notes as a result of a Change of Control.
(b) On the Change of Control Payment Date, Issuer will, to the extent
lawful: (1) accept for payment all Senior Secured Notes or portions thereof
properly tendered pursuant to the Change of Control Offer; (2) deposit into the
Redemption Account an amount equal to the Change of Control Payment in respect
of all Senior Secured Notes or portions thereof so tendered; and (3) deliver or
cause to be delivered to the Trustee the Senior Secured Notes so accepted
together with a certificate of an Officer stating the aggregate principal amount
of Senior Secured Notes or portions thereof being purchased by Issuer.
(c) The Trustee will promptly mail to each Holder of Senior Secured Notes
so tendered the Change of Control Payment for such Senior Secured Notes, and the
Trustee will, upon receipt of an Authentication Order, promptly authenticate and
mail (or cause to be transferred by book entry) to each Holder a new Senior
Secured Note equal in principal amount to any unpurchased portion of the Senior
Secured Notes surrendered, if any; provided that each such new Senior Secured
Note will be in a minimum principal amount of $100,000 or in integral multiples
of $1,000 in excess thereof.
(d) The Change of Control provisions described in clauses (a) through (c)
above will be applicable whether or not any other provisions of the Indenture
are applicable. Except as described above with respect to a Change of Control,
the Indenture does not contain provisions that permit the Holders of the Senior
Secured Notes to require that Issuer repurchase or redeem the Senior Secured
Notes in the event of a takeover, recapitalization or similar transaction.
(e) Issuer will not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set forth
in the Indenture applicable to a Change of Control Offer made by Issuer and
purchases all Senior Secured Notes validly tendered and not withdrawn under such
Change of Control Offer.
9. NOTICE OF REDEMPTION. Notice of redemption will be mailed at least 30
days but not more than 60 days before the redemption date to each Holder whose
Senior Secured Notes are to be redeemed at its registered address. The Trustee
shall promptly notify Issuer in writing of the Senior Secured Notes selected for
redemption and, in the case of any Senior Secured Note selected for partial
redemption, the principal amount thereof to be redeemed. Senior Secured Notes
and portions of Senior Secured Notes selected shall be in denominations of
$1,000 and integral multiples thereof; except that if all of the Senior Secured
Notes of a Holder are to be redeemed, the entire outstanding amount of Senior
Secured Notes held by such Holder, even if not a multiple of $1,000, shall be
redeemed. Except as provided in the preceding sentence, provisions of the
Indenture that apply to Senior Secured Notes called for redemption also apply to
portions of Senior Secured Notes called for redemption.
10. DENOMINATIONS, TRANSFER, EXCHANGE. The Senior Secured Notes are in
registered form without coupons in minimum denominations of $100,000 and
integral multiples thereof. The transfer of Senior Secured Notes may be
registered and Senior Secured Notes may be exchanged as provided in the
Indenture. The Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and the
Issuer may require a Holder to pay any taxes and fees required by law or
permitted by the Indenture. The Issuer need not exchange or register the
transfer of any Senior Secured Note or portion of a Senior Secured Note selected
for redemption, except for the unredeemed portion of any Senior Secured Note
being redeemed in part. Also, the Issuer need not
A1-5
exchange or register the transfer of any Senior Secured Notes for a period of 15
days before a selection of Senior Secured Notes to be redeemed or during the
period between a record date and the corresponding Interest Payment Date.
11. PERSONS DEEMED OWNERS. The registered Holder of a Senior Secured Note
may be treated as its owner for all purposes.
12. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions, the
Indenture, the Guarantees or the Senior Secured Notes may be amended or
supplemented with the consent of the Required Holders of the then Outstanding
Senior Secured Notes and any existing default or non-compliance with any
provision of the Indenture, the Guarantees or the Senior Secured Notes may be
waived with the consent of the Required Holders of the then Outstanding Senior
Secured Notes. Without the consent of any Holder of a Senior Secured Note, the
Indenture, the Guarantees or the Senior Secured Notes may be amended or
supplemented for any purpose not inconsistent with the terms of the Indenture or
to cure any ambiguity, defect or inconsistency; to increase the assets securing
Issuer's obligations under the Indenture; to add additional covenants of Issuer,
to surrender rights conferred upon Issuer, or to confer additional benefits upon
the Holders; to comply with the requirements of the SEC in order to effect or
maintain the qualification of the Indenture under the Trust Indenture Act; to
provide for the issuance of Permitted Indebtedness in accordance with the
limitations set forth in the Indenture; or to reflect any amendments required by
a Rating Agency in circumstances where confirmation of the Ratings is required
or permitted under the Indenture.
Any provision of the Indenture expressly recognizing or granting rights in
or to Ambac Assurance may not be amended in any manner which affects the rights
of Ambac Assurance thereunder without the prior written consent of Ambac
Assurance. Unless otherwise provided in Section 5.03 of the Indenture, so long
as no Insurer Default has occurred and is continuing, Ambac Assurance's consent
shall be required in addition to Holder consent, when and to the extent
required, for the following purposes: (i) execution and delivery of any
supplemental indenture or any amendment, supplement or change to or modification
of the Indenture other than those amendments or supplements to the Indenture
that would not require consent of any Holders as set forth in Section 8.02 of
the Indenture; (ii) removal of the Trustee and selection and appointment of any
successor trustee; and (iii) initiation or approval of any action not described
in (i) or (ii) above which requires Holder consent.
13. DEFAULTS AND REMEDIES. Events of Default include: (i) failure by the
Issuer or either Guarantor to pay any principal, interest, or premium, if any,
with respect to any Senior Secured Note when the same becomes due and payable,
whether by scheduled maturity or required prepayment or redemption or by
acceleration or otherwise, and such failure continues for (a) more than five
days following the due date for payment in the case of principal, (b) more than
15 days following the due date for payment in the case of interest, or premium,
if any, and (c) more than 30 days after receipt of notice that other amounts
have become due and payable, in the case of any other amounts owed under the
Financing Documents; (ii) any representation or warranty made by Issuer or
either Guarantor in the Indenture or in any other Financing Document or any
representation, warranty or statement in any certificate, financial statement or
other document furnished to the Trustee or any other Person by or on behalf of
Issuer or either Guarantor proves to have been untrue or misleading in any
material respect as of the time made, confirmed or furnished and such fact,
event or circumstance that gave rise to such inaccuracy has resulted, or could
reasonably be expected to result, in a Material Adverse Effect and such fact,
event or circumstance continues uncured for 30 or more days from the date Issuer
or either Guarantor obtains actual knowledge thereof; provided that, if Issuer
or Guarantor, as applicable, commences and diligently pursues efforts to cure
such fact, event or circumstance within such 30-day period and delivers written
notice to the Trustee thereof, Issuer or Guarantor, as applicable, may continue
A1-6
to effect such cure, and such misrepresentation shall not be deemed an "Event of
Default" for an additional 60 days so long as Issuer or Guarantor, as
applicable, is diligently pursuing such cure; (iii) Issuer or either Guarantor
fails to perform or observe any covenant or agreement contained in Sections
4.06, 4.07, 4.08, 4.11, 4.12, 4.14, 4.15, 4.21, or 4.22(b) of the Indenture, and
such failure continues uncured for 30 or more days from the date Issuer or
Guarantor obtains actual knowledge thereof; (iv) the Issuer or either Guarantor
fails to perform or observe any of its covenants or agreements contained in the
Indenture (other than those contained in (iii) above) or any other Financing
Document and such failure continues uncured for 30 or more days from the date
Issuer obtains actual knowledge thereof; provided, however, if Issuer or the
Guarantor, as applicable, commences and diligently pursues efforts to cure such
default within such 30-day period and delivers written notice thereof to the
Trustee, Issuer or the Guarantor, as applicable may continue to effect such cure
of the default and such default will not be deemed an "Event of Default" for an
additional 60 days so long as Issuer or the Guarantor, as applicable, is
diligently pursuing such cure; (v) a Bankruptcy Event occurs with respect to
Issuer or either Guarantor; (vi) any Governmental Approval required by Issuer or
either Guarantor, as applicable, is revoked, terminated, withdrawn or ceases to
be in full force and effect if such revocation, termination, withdrawal or
cessation could reasonably be expected to have a Material Adverse Effect and
such revocation, termination, withdrawal or cessation is not cured within 30
days following the occurrence thereof, provided that if such revocation,
termination, withdrawal, or cessation cannot be cured within such initial 30 day
period but is curable within 90 days and Issuer or the Guarantor, as applicable,
is proceeding with diligence and in good faith to so cure, then such 30 day
period shall be extended for an additional 60 days; (vii) any Project Document
ceases to be valid and binding and in full force and effect prior to its stated
maturity date other than as a result of an amendment, modification, termination,
or replacement thereof permitted under the Indenture, any third party thereto
denies that it has any liability or obligation under any Project Document and
such third party ceases performance thereunder or any third party thereto fails
to perform its material obligations thereunder, is in default under such Project
Document (after expiration of all applicable grace periods) or any Affiliate
makes any material misrepresentation under any Project Document, and in each
case such cessation, denial, default or, in the case of an Affiliate, such
misrepresentation, has resulted or could reasonably be expected to result in a
Material Adverse Effect; provided that no such event with respect to any Project
Document will be an Event of Default if within 90 days from the occurrence of
any such event, Issuer or a Guarantor, as applicable, (1) causes the third party
to confirm its obligations under such Project Document, cure such breach,
default or, in the case of an Affiliate, such misrepresentation, or resume
performance thereunder (as the case may be) or (2) enters into an alternate
agreement which (A) contains substantially similar terms and conditions or, with
respect to any Project Document other than the DWR Contract and any Project
Document with an Affiliate, if such terms and conditions are no longer available
on a commercially reasonable basis, the terms and conditions then available on a
commercially reasonable basis and (B) after giving effect to the agreement, each
Rating Agency confirms that none of such actions will result in a Rating
Downgrade; provided further that with respect to any Project Document other than
the DWR Contract, if such cessation, denial, default or, with respect to an
Affiliate, such misrepresentation, can not be cured within such initial 90 day
period but is curable within 180 days, and Issuer is proceeding with diligence
and in good faith to so cure, then such 90 day period shall be extended for an
additional 90 days; (viii) any of the Collateral Documents cease to be in full
force and effect or any Lien purported to be granted therein ceases to be a
valid and perfected Lien in favor of the Secured Parties, as applicable, on the
Collateral described therein with the priority purported to be created thereby
and such Collateral Document or Lien is not reinstated within 10 business days
from the earlier of (A) the date on which Issuer or either Guarantor obtains
actual knowledge thereof and (B) the date on which Issuer or either Guarantor
receives notice thereof; (ix) Issuer or either Guarantor fails to make any
payment when due or to comply with any covenant (after expiration of all
applicable grace periods) in respect of any Indebtedness other than Indebtedness
under the Financing Documents) in an amount exceeding $2 million if the effect
of such failure is to permit acceleration of the maturity of such Indebtedness;
(x) the entry of one or more final
A1-7
and non-appealable judgments for the payment of money in excess of $2 million
against Issuer or either Guarantor (exclusive of judgment amounts covered by
insurance or indemnity), which remain unpaid or unstayed for more than 60
consecutive days; (xi) except as permitted by the Indenture, (A) any Guarantee
shall cease for any reason to be in full force and effect and such
unenforceability or cessation shall continue for ten (10) days after the
Guarantor obtains actual knowledge thereof, (B) either Guarantor, or any Person
acting on behalf of such Guarantor, shall deny or disaffirm its obligations
under its Guarantee, or (C) any Guarantee shall be held in any judicial
proceeding to be unenforceable or invalid; (xii) any Acceptable Letter of Credit
Issuer fails to perform or breaches any of its payment obligations under any
Debt Service Reserve Letter of Credit, and such failure or breach continues
uncured or unremedied by any such Acceptable Letter of Credit Issuer, or Issuer
for 10 Business Days or more; (xiii) (A) any ownership interest in Issuer shall
be held by an entity other than Holding Company, (B) Holding Company shall have
more than four members, (C) after consummation of the member equity investment,
Holding Company shall cease to have at least one member that is not an Affiliate
of Calpine or (D) any beneficial owner of Holding Company shall not, at the time
of any transfer of an ownership interest in Holding Company to such member
following the Closing Date, be a Permitted Holder; (xiv) Issuer fails to comply
in any material respect with the requirements specified under Section 3.09 of
the Indenture; (xv) Issuer fails to comply with or breaches any material
provision of the Escrow Agreement, if any, and such non-compliance or breach
continues uncured for 10 days after the date Issuer obtains actual knowledge
thereof; provided that the invalidity of the Escrow Agent's, if any, security
interest in the assets contained in the Escrow Account, if any, will
automatically constitute an Event of Default; or (xvi) after the grant of any
junior lien on the Collateral to DWR pursuant to the terms of the DWR Contract,
(i) DWR commences the exercise of remedies with respect to such junior lien or
(ii) DWR breaches any material provision of the subordination agreement entered
into by DWR with respect to such junior lien; provided that, no such breach will
be an Event of Default if within 90 days from the occurrence of such breach, DWR
cures such breach.
If an Event of Default relating to failure to pay amounts owed on the
Senior Secured Notes has occurred and is continuing, the Trustee may declare the
principal amount of the Outstanding Senior Secured Notes, all interest accrued
and unpaid thereon, and all premium, if any, and other amounts payable under the
Senior Secured Notes and the Indenture, if any, to be due and payable
notwithstanding the absence of direction from Holders of at least 33 1/3% in
aggregate principal amount of the Outstanding Senior Secured Notes directing the
Trustee in writing to accelerate the maturity of the Senior Secured Notes unless
Holders of more than 66 2/3% in aggregate principal amount of the Outstanding
Senior Secured Notes direct the Trustee not to accelerate the maturity of such
Senior Secured Notes, if in the good faith exercise of its discretion the
Trustee determines that such action is necessary to protect the interests of the
Holders. Notwithstanding the foregoing, in the case of an Event of Default
arising from certain Bankruptcy Events, all Outstanding Senior Secured Notes
will become due and payable immediately. The Issuer is required to deliver to
the Trustee annually a statement regarding compliance with the Indenture, and
the Issuer is required upon any Officer becoming aware of any Default or Event
of Default to deliver to the Trustee a statement specifying such Default or
Event of Default.
So long as no Insurer Default has occurred and is continuing, upon the
occurrence and continuance of an Event of Default, Ambac Assurance shall be
entitled to control and direct the enforcement of all rights and remedies
granted to the Holders or the Trustee for the benefit of the Holders under the
Indenture, including, without limitation: the right to accelerate the principal
of the Senior Secured Notes as described in herein and the right to annul any
declaration of acceleration, and Ambac Assurance shall also be entitled to
approve all waivers of Events of Default.
Upon the occurrence of an Event of Default, so long as no Insurer Default
has occurred and is continuing, the Trustee shall, at the written direction of
Ambac Assurance or pursuant to the requirements
A1-8
set forth under Section 5.02 of the Indenture and with the consent of Ambac
Assurance, by written notice to Issuer and Ambac Assurance, declare the
principal of the Senior Secured Notes to be immediately due and payable,
whereupon that portion of the principal of the Senior Secured Notes thereby
coming due and the interest thereon accrued to the date of payment shall,
without further action, become and be immediately due and payable, anything
herein or in the Senior Secured Notes to the contrary notwithstanding.
14. TRUSTEE DEALINGS WITH ISSUER. The Trustee, in its individual or any
other capacity, may make loans to, accept deposits from, and perform services
for the Issuer or its Affiliates, and may otherwise deal with the Issuer or its
Affiliates, as if it were not the Trustee.
15. NO RECOURSE AGAINST OTHERS. No past, present or future director,
officer, employee, incorporator, stockholder, partner or agent of the Issuer or
the Guarantors or any Affiliate of any such party (other than Holding Company
under the Gilroy Pledge Agreement, Issuer and the Guarantors), as such, shall
have any liability for any obligations of the Issuer under the Senior Secured
Notes, the Indenture, the Guarantees, any Financing Document or for any claim
based on, in respect of, or by reason of, such obligations or their creation.
Each Holder by accepting a Senior Secured Note waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Senior Secured Notes.
16. AUTHENTICATION. This Senior Secured Note shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating agent.
17. ABBREVIATIONS. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
17. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Issuer has caused
CUSIP numbers to be printed on the Senior Secured Notes and the Trustee may use
CUSIP numbers in notices of redemption as a convenience to Holders. No
representation is made as to the accuracy of such numbers either as printed on
the Senior Secured Notes or as contained in any notice of redemption and
reliance may be placed only on the other identification numbers placed thereon.
The Issuer will furnish to any Holder upon written request and without
charge a copy of the Indenture. Requests may be made to:
Gilroy Energy Center, LLC
50 West San Fernando Street
San Jose, California 95113
Attn: Vice President-Finance
Telecopier No.: (408) 995-0505
Telephone No.: (408) 995-5115
A1-9
ASSIGNMENT FORM
To assign this Senior Secured Note, fill in the form below: (I) or (we) assign
and transfer this Senior Secured Note to
(Insert assignee's soc. sec. or tax I.D. no.)
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint ________________________________________________________
to transfer this Senior Secured Note on the books of the Issuer. The agent may
substitute another to act for him.
Date: Your Signature:_____________________________________
(Sign exactly as your name appears on
the Senior Secured Note)
Tax Identification No:______________________________
Signature Guarantee.
Medallion No.:
Notice: Signature must be guaranteed by a member firm of the STAMP, SEMP or MSP
signature guaranty medallion program
A1-10
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE(1)
The following exchanges of a part of this Global Note for an interest in
another Global Note or for a Definitive Note, or exchanges of a part of another
Global Note or Definitive Note for an interest in this Global Note, have been
made:
Amount of decrease in Amount of increase in Principal Amount Signature of
Principal Amount Principal Amount of this Global authorized officer
of this of this Note following such of Trustee or Note
Date of Exchange Global Note Global Note decrease (or increase) Custodian
---------------- ----------- ----------- ---------------------- ---------
- ----------
(1) This should be included only if the Note is issued in global form.
A1-11
SCHEDULE I
Schedule of Payments
February 15, 2004 6.2370%
August 15, 2004 6.2370%
February 15, 2005 6.4450%
August 15, 2005 6.4450%
February 15, 2006 6.6384%
August 15, 2006 6.6384%
February 15, 2007 5.7421%
August 15, 2007 5.7421%
February 15, 2008 6.1267%
August 15, 2008 6.1267%
February 15, 2009 6.2551%
August 15, 2009 6.2551%
February 15, 2010 6.3000%
August 15, 2010 6.3000%
February 15, 2011 6.2557%
August 15, 2011 6.2557%
A1-12
EXHIBIT A2
(Face of Regulation S Temporary Global Note)
================================================================================
CUSIP/CINS_______________
4.00% Senior Secured Notes due August 15, 2011
No.__ $_______________
GILROY ENERGY CENTER, LLC
promises to pay to Cede & Co., or registered assigns, the principal sum of
________________ Dollars on August 15, 2011 in installments on the dates and in
the amounts set forth on Schedule I attached hereto and made part hereof.
Interest Payment Dates: February 15 and August 15
Record Dates: February 1 and August 1
GILROY ENERGY CENTER, LLC
BY:______________________________
Name:
Title:
Dated:
This is one of the Global Notes referred to in the within-mentioned Indenture:
Wilmington Trust Company,
as Trustee
s
By: ______________________________
Authorized Signatory
================================================================================
A2-1
(Back of Regulation S Temporary Global Note)
4.00 % Senior Secured Notes due August 15, 2011
THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE
CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED SENIOR SECURED
NOTES, ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER
NOR THE BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL BE
ENTITLED TO RECEIVE PAYMENT OF INTEREST HEREON.
THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL
OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES
EXCEPT THAT (1) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED
PURSUANT TO SECTION 2.06 OF THE INDENTURE, (2) THIS GLOBAL NOTE MAY BE EXCHANGED
IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (3) THIS
GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION
2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A
SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE ISSUER.
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE
FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A
NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR
ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A
SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY (55 WATER STREET, NEW YORK, NEW YORK) ("DTC"), TO THE COMPANY OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THE NOTES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") AND MAY NOT BE
OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A)(1) TO A PERSON WHO
THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE
MEANING OF RULE 144A UNDER THE SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR
FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (2) IN AN OFFSHORE TRANSACTION COMPLYING WITH RULE
903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (3) PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144
THEREUNDER (IF AVAILABLE), (4) TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT IS
AN ACCREDITED INVESTOR WITHIN THE MEANING OF RULE 501 OF REGULATION D UNDER THE
SECURITIES ACT IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES
A2-2
ACT OR (5) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF
THE UNITED STATES AND OTHER JURISDICTIONS."
[Insert the applicable original issue discount legend pursuant to the provisions
of the Indenture]
Financial Guaranty Insurance Policy No. 21604BE (the "Policy") with
respect to payments due for principal of and interest on this Senior Secured
Note has been issued by Ambac Assurance Corporation ("Ambac Assurance"). The
Policy has been delivered to The Bank of New York, New York, New York, as the
Insurance Trustee under said Policy and will be held by such Insurance Trustee
or any successor insurance trustee. The Policy is on file and available for
inspection at the principal office of the Insurance Trustee and a copy thereof
may be secured from Ambac Assurance or the Insurance Trustee. All payments
required to be made under the Policy shall be made in accordance with the
provisions thereof. The owner of this Senior Secured Note acknowledges and
consents to the subrogation rights of Ambac Assurance as more fully set forth in
the Policy.
Capitalized terms used herein shall have the meanings assigned to them in
the Indenture referred to below unless otherwise indicated.
1. INTEREST. Gilroy Energy Center, LLC, a Delaware limited liability
company (the "Issuer"), promises to pay interest on the principal amount of this
Senior Secured Note at 4.00% per annum from the date of issuance until maturity.
The Issuer shall pay interest pro rata semiannually in arrears on February 15
and August 15 of each year (the "Payment Date"), or if any such day is not a
Business Day, on the next succeeding Business Day. Interest on the Senior
Secured Notes will accrue from the most recent Payment Date to which interest
has been paid or, if no interest has been paid, from the date of issuance;
provided that if there is no existing Default in the payment of interest, and if
this Senior Secured Note is authenticated between a record date referred to on
the face hereof and the next succeeding Payment Date, interest shall accrue from
such next succeeding Payment Date; provided, further, that the first Payment
Date shall be February 15, 2004. The Issuer shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
principal, and premium, if any, from time to time on demand at a rate that is 1%
per annum in excess of the rate then in effect; it shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
installments of interest (without regard to any applicable grace periods) from
time to time on demand at the same rate to the extent lawful. Interest will be
computed on the basis of a 360-day year of twelve 30-day months.
2. METHOD OF PAYMENT. The Issuer will pay interest on the Senior Secured
Notes (except defaulted interest) to the Persons who are registered Holders of
Senior Secured Notes at the close of business on the February 1 or August 1
immediately preceding the Payment Date, even if such Senior Secured Notes are
cancelled after such record date and on or before such Payment Date, except as
provided in Section 2.12 of the Indenture with respect to defaulted interest.
The Senior Secured Notes will be payable as to principal, interest, and premium,
if any, at the office or agency of the Issuer maintained for such purpose within
the City and State of New York, or, at the option of the Issuer, payment of
interest may be made by check mailed to the Holders at their respective
addresses set forth in the register of Holders, and provided that payment by
wire transfer of immediately available funds will be required with respect to
principal, interest, and premium, if any, on all Senior Secured Notes the
Holders of which shall have provided wire transfer instructions to the Issuer or
the Paying Agent. Such payment shall be in such coin or currency of the United
States of America as at the time of payment is legal tender for payment of
public and private debts.
A2-3
3. PAYING AGENT AND REGISTRAR. Initially, Wilmington Trust Company, the
Trustee under the Indenture, will act as Paying Agent and Registrar. The Issuer
may change any Paying Agent or Registrar without notice to any Holder. The
Issuer or any of its subsidiaries may act in any such capacity.
4. INDENTURE. The Issuer issued the Senior Secured Notes under an
Indenture dated as of September 30, 2003 ("Indenture") among the Issuer, the
Guarantors on the signature pages thereto (the "Guarantors") and Wilmington
Trust Company as trustee (the "Trustee") and as collateral agent (the
"Collateral Agent"). The terms of the Senior Secured Notes include those stated
in the Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended (15 U.S. Code ss.ss. 77aaa-77bbbb). The Senior
Secured Notes are subject to all such terms, and Holders are referred to the
Indenture and such Act for a statement of such terms. To the extent any
provision of this Senior Secured Note conflicts with the express provisions of
the Indenture, the provisions of the Indenture shall govern and be controlling.
5. OPTIONAL REDEMPTION.
The Senior Secured Notes will be redeemable at the option of the Issuer at
any time and from time to time, in whole or in part, upon not less than 30 nor
more than 60 days' notice to each Holder of Senior Secured Notes, at a
redemption price equal to the outstanding principal amount thereof plus accrued
interest plus the Make Whole Premium computed by an Independent Investment
Banker. Unless the Issuer defaults in payment of the redemption price, on and
after the Redemption Date, interest will cease to accrue on the Senior Secured
Notes or portions thereof called for redemption.
Any redemption pursuant to this subparagraph 5 shall be made pursuant to
the provisions of Sections 3.01 through 3.06 of the Indenture.
6. MANDATORY REDEMPTION.
(a) The Senior Secured Notes shall be redeemed, in whole or in part, as
applicable, at a redemption price equal to the principal amount thereof plus
accrued and unpaid interest to the Redemption Date upon the receipt of Loss
Proceeds by Issuer or either Guarantor. If the Issuer, Creed, or Goose Haven
determines that (a) more than two Units cannot be rebuilt, repaired or restored
to permit operations on a commercially reasonable basis at any given time, or
the Issuer, Creed or Goose Haven determines not to rebuild, repair or restore
more than two Units (whether held by the Issuer, Creed, Goose Haven or a
combination of the foregoing), then the Senior Secured Notes shall be redeemed
in whole; or (b) a Unit cannot be rebuilt, repaired or restored to permit
operations on a commercially reasonable basis, or the Issuer, Creed, or Goose
Haven determines that a Unit cannot be rebuilt, repaired or restored to permit
operations on a commercially reasonable basis, then the amount of Loss Proceeds
received in respect of such Unit shall be used for redemption; or (c) only a
portion of a Unit is capable of being rebuilt, repaired or restored, and Loss
Proceeds of greater than $2 million remain after payment of all costs and
expenses for such rebuild, repair or restoration, then the amount of such Loss
Proceeds shall be used for redemption. If less than $2 million of Loss Proceeds
remain, then the amount of such Loss Proceeds shall be transferred to the
Revenue Account.
(b) Upon the receipt of proceeds in connection with a Title Event, the
amount of such Title Event Proceeds shall be made available for redemption,
subject to reduction by the costs expended in connection with collecting any
Title Event Proceeds, and any additional reasonable costs or expenses that
Issuer and Guarantors will be subject to as a result of the Title Event.
(c) In addition, Issuer shall apply all funds, if any, which remain in the
Distribution Account to redeem Senior Secured Notes, in whole or in part
(depending on the amount of funds in the
A2-4
Distribution Account), at a price equal to the outstanding principal amount
thereof plus accrued interest through the Redemption Date (a) on any date within
61 days after a Payment Date on which Issuer certifies to the Depositary that
the Debt Service Coverage Ratio or the Projected Debt Service Coverage Ratio, in
each case as determined in accordance with, and for the periods described in,
Section 3.6(b)(iii) of the Depositary Agreement does not equal or exceed the
applicable minimum ratio that would permit Restricted Payments set forth in such
Section 3.6(b)(iii), and (b) on the 61st day after a Payment Date if Issuer has
not, during the period between such Payment Date and such 61st day, provided a
certificate to the Depositary as to its calculations of the Debt Service
Coverage Ratio and the Projected Debt Service Coverage Ratio, in each case as
determined in accordance with, for the periods described in, and meeting the
requirements for Restricted Payments specified in, Section 3.6(b)(iii) of the
Depositary Agreement. Notwithstanding any provisions contained herein to the
contrary, any redemption made pursuant to this subsection (c) shall be made upon
not less than 5 nor more than 10 days' notice to each Holder.
(d) Other than as specifically provided in this subparagraph 6, any
purchase pursuant to this subparagraph 6 shall be made pursuant to the
provisions of Sections 3.01 through 3.06 of the Indenture.
7. SPECIAL MANDATORY REDEMPTION. If Issuer has not satisfied the
conditions to the release of funds to the Issuer set forth in the Escrow
Agreement, if any, within 90 days after the Closing Date, all Outstanding Senior
Secured Notes shall be redeemed at the Special Mandatory Redemption Price. Such
special mandatory redemption shall be made upon five days' prior written notice
to the Holders, which notice shall be delivered by Issuer on, or prior to,
December 30, 2003, in accordance with the terms of the Escrow Agreement, if any.
If such notice is not delivered by the Company on, or prior to, December 30,
2003, then the Trustee shall deliver such notice of special mandatory redemption
in accordance with the terms of the Escrow Agreement, if any. The funds on
deposit in the Escrow Account shall be available for the special mandatory
redemption. Notwithstanding any provisions contained herein to the contrary, any
redemption made pursuant to this subparagraph 7 shall be made upon at least 5
days' notice as set forth in the Escrow Agreement, if any.
Other than as specifically provided in this subparagraph 7, any purchase
pursuant to this subparagraph 7 shall be made pursuant to the provisions of
Sections 3.01 through 3.06 of the Indenture.
If no Escrow Agreement is executed then this subparagraph 7 shall be
inapplicable and there shall be no special mandatory redemption.
8. REPURCHASE AT THE OPTION OF HOLDERS UPON A CHANGE OF CONTROL.
(a) Upon the occurrence of a Change of Control, each Holder of Senior
Secured Notes will have the right to require Issuer to repurchase all or any
part of such Holder's Senior Secured Notes pursuant to the offer described below
(the "Change of Control Offer") at an offer price in cash equal to 101% of the
aggregate principal amount thereof plus accrued and unpaid interest thereon, if
any, to the date of purchase (the "Change of Control Payment"). Within ten days
following the occurrence of any Change of Control, Issuer will mail a notice to
each Holder describing the transaction or transactions that constitute the
Change of Control and offering to repurchase Senior Secured Notes on the date
specified in such notice, which date shall be no earlier than 30 days and no
later than 60 days from the date such notice is mailed (the "Change of Control
Payment Date"), pursuant to the procedures required by the Indenture and
described in such notice. Issuer will comply with the requirements of Rule 14e-1
under the Exchange Act and any other securities laws and regulations thereunder
to the extent such laws and regulations are applicable in connection with the
repurchase of the Senior Secured Notes as a result of a Change of Control.
A2-5
(b) On the Change of Control Payment Date, Issuer will, to the extent
lawful: (1) accept for payment all Senior Secured Notes or portions thereof
properly tendered pursuant to the Change of Control Offer; (2) deposit into the
Redemption Account an amount equal to the Change of Control Payment in respect
of all Senior Secured Notes or portions thereof so tendered; and (3) deliver or
cause to be delivered to the Trustee the Senior Secured Notes so accepted
together with a certificate of an Officer stating the aggregate principal amount
of Senior Secured Notes or portions thereof being purchased by Issuer.
(c) The Trustee will promptly mail to each Holder of Senior Secured Notes
so tendered the Change of Control Payment for such Senior Secured Notes, and the
Trustee will, upon receipt of an Authentication Order, promptly authenticate and
mail (or cause to be transferred by book entry) to each Holder a new Senior
Secured Note equal in principal amount to any unpurchased portion of the Senior
Secured Notes surrendered, if any; provided that each such new Senior Secured
Note will be in a minimum principal amount of $100,000 or in integral multiples
of $1,000 in excess thereof.
(d) The Change of Control provisions described in clauses (a) through (c)
above will be applicable whether or not any other provisions of the Indenture
are applicable. Except as described above with respect to a Change of Control,
the Indenture does not contain provisions that permit the Holders of the Senior
Secured Notes to require that Issuer repurchase or redeem the Senior Secured
Notes in the event of a takeover, recapitalization or similar transaction.
(e) Issuer will not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set forth
in the Indenture applicable to a Change of Control Offer made by Issuer and
purchases all Senior Secured Notes validly tendered and not withdrawn under such
Change of Control Offer.
9. NOTICE OF REDEMPTION. Notice of redemption will be mailed at least 30
days but not more than 60 days before the redemption date to each Holder whose
Senior Secured Notes are to be redeemed at its registered address. The Trustee
shall promptly notify Issuer in writing of the Senior Secured Notes selected for
redemption and, in the case of any Senior Secured Note selected for partial
redemption, the principal amount thereof to be redeemed. Senior Secured Notes
and portions of Senior Secured Notes selected shall be in denominations of
$1,000 and integral multiples thereof; except that if all of the Senior Secured
Notes of a Holder are to be redeemed, the entire outstanding amount of Senior
Secured Notes held by such Holder, even if not a multiple of $1,000, shall be
redeemed. Except as provided in the preceding sentence, provisions of the
Indenture that apply to Senior Secured Notes called for redemption also apply to
portions of Senior Secured Notes called for redemption.
10. DENOMINATIONS, TRANSFER, EXCHANGE. The Senior Secured Notes are in
registered form without coupons in minimum denominations of $100,000 and
integral multiples thereof. The transfer of Senior Secured Notes may be
registered and Senior Secured Notes may be exchanged as provided in the
Indenture. The Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and the
Issuer may require a Holder to pay any taxes and fees required by law or
permitted by the Indenture. The Issuer need not exchange or register the
transfer of any Senior Secured Note or portion of a Senior Secured Note selected
for redemption, except for the unredeemed portion of any Senior Secured Note
being redeemed in part. Also, the Issuer need not exchange or register the
transfer of any Senior Secured Notes for a period of 15 days before a selection
of Senior Secured Notes to be redeemed or during the period between a record
date and the corresponding Interest Payment Date.
A2-6
11. PERSONS DEEMED OWNERS. The registered Holder of a Senior Secured Note
may be treated as its owner for all purposes.
12. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions, the
Indenture, the Guarantees or the Senior Secured Notes may be amended or
supplemented with the consent of the Required Holders of the then Outstanding
Senior Secured Notes and any existing default or non-compliance with any
provision of the Indenture, the Guarantees or the Senior Secured Notes may be
waived with the consent of the Required Holders of the then Outstanding Senior
Secured Notes. Without the consent of any Holder of a Senior Secured Note, the
Indenture, the Guarantees or the Senior Secured Notes may be amended or
supplemented for any purpose not inconsistent with the terms of the Indenture or
to cure any ambiguity, defect or inconsistency; to increase the assets securing
Issuer's obligations under the Indenture; to add additional covenants of Issuer,
to surrender rights conferred upon Issuer, or to confer additional benefits upon
the Holders; to comply with the requirements of the SEC in order to effect or
maintain the qualification of the Indenture under the Trust Indenture Act; to
provide for the issuance of Permitted Indebtedness in accordance with the
limitations set forth in the Indenture; or to reflect any amendments required by
a Rating Agency in circumstances where confirmation of the Ratings is required
or permitted under the Indenture.
Any provision of the Indenture expressly recognizing or granting rights in
or to Ambac Assurance may not be amended in any manner which affects the rights
of Ambac Assurance thereunder without the prior written consent of Ambac
Assurance. Unless otherwise provided in Section 5.03 of the Indenture, so long
as no Insurer Default has occurred and is continuing, Ambac Assurance's consent
shall be required in addition to Holder consent, when and to the extent
required, for the following purposes: (i) execution and delivery of any
supplemental indenture or any amendment, supplement or change to or modification
of the Indenture other than those amendments or supplements to the Indenture
that would not require consent of any Holders as set forth in Section 8.02 of
the Indenture; (ii) removal of the Trustee and selection and appointment of any
successor trustee; and (iii) initiation or approval of any action not described
in (i) or (ii) above which requires Holder consent.
13. DEFAULTS AND REMEDIES. Events of Default include: (i) failure by the
Issuer or either Guarantor to pay any principal, interest, or premium, if any,
with respect to any Senior Secured Note when the same becomes due and payable,
whether by scheduled maturity or required prepayment or redemption or by
acceleration or otherwise, and such failure continues for (a) more than five
days following the due date for payment in the case of principal, (b) more than
15 days following the due date for payment in the case of interest, or premium,
if any, and (c) more than 30 days after receipt of notice that other amounts
have become due and payable, in the case of any other amounts owed under the
Financing Documents; (ii) any representation or warranty made by Issuer or
either Guarantor in the Indenture or in any other Financing Document or any
representation, warranty or statement in any certificate, financial statement or
other document furnished to the Trustee or any other Person by or on behalf of
Issuer or either Guarantor proves to have been untrue or misleading in any
material respect as of the time made, confirmed or furnished and such fact,
event or circumstance that gave rise to such inaccuracy has resulted, or could
reasonably be expected to result, in a Material Adverse Effect and such fact,
event or circumstance continues uncured for 30 or more days from the date Issuer
or either Guarantor obtains actual knowledge thereof; provided that, if Issuer
or Guarantor, as applicable, commences and diligently pursues efforts to cure
such fact, event or circumstance within such 30-day period and delivers written
notice to the Trustee thereof, Issuer or Guarantor, as applicable, may continue
to effect such cure, and such misrepresentation shall not be deemed an "Event of
Default" for an additional 60 days so long as Issuer or Guarantor, as
applicable, is diligently pursuing such cure; (iii) Issuer or either Guarantor
fails to perform or observe any covenant or agreement contained in Sections
4.06, 4.07, 4.08, 4.11, 4.12, 4.14, 4.15, 4.21, or 4.22(b) of the Indenture, and
such failure continues
A2-7
uncured for 30 or more days from the date Issuer or Guarantor obtains actual
knowledge thereof; (iv) the Issuer or either Guarantor fails to perform or
observe any of its covenants or agreements contained in the Indenture (other
than those contained in (iii) above) or any other Financing Document and such
failure continues uncured for 30 or more days from the date Issuer obtains
actual knowledge thereof; provided, however, if Issuer or the Guarantor, as
applicable, commences and diligently pursues efforts to cure such default within
such 30-day period and delivers written notice thereof to the Trustee, Issuer or
the Guarantor, as applicable may continue to effect such cure of the default and
such default will not be deemed an "Event of Default" for an additional 60 days
so long as Issuer or the Guarantor, as applicable, is diligently pursuing such
cure; (v) a Bankruptcy Event occurs with respect to Issuer or either Guarantor;
(vi) any Governmental Approval required by Issuer or either Guarantor, as
applicable, is revoked, terminated, withdrawn or ceases to be in full force and
effect if such revocation, termination, withdrawal or cessation could reasonably
be expected to have a Material Adverse Effect and such revocation, termination,
withdrawal or cessation is not cured within 30 days following the occurrence
thereof, provided that if such revocation, termination, withdrawal, or cessation
cannot be cured within such initial 30 day period but is curable within 90 days
and Issuer or the Guarantor, as applicable, is proceeding with diligence and in
good faith to so cure, then such 30 day period shall be extended for an
additional 60 days; (vii) any Project Document ceases to be valid and binding
and in full force and effect prior to its stated maturity date other than as a
result of an amendment, modification, termination, or replacement thereof
permitted under the Indenture, any third party thereto denies that it has any
liability or obligation under any Project Document and such third party ceases
performance thereunder or any third party thereto fails to perform its material
obligations thereunder, is in default under such Project Document (after
expiration of all applicable grace periods) or any Affiliate makes any material
misrepresentation under any Project Document, and in each case such cessation,
denial, default or, in the case of an Affiliate, such misrepresentation, has
resulted or could reasonably be expected to result in a Material Adverse Effect;
provided that no such event with respect to any Project Document will be an
Event of Default if within 90 days from the occurrence of any such event, Issuer
or a Guarantor, as applicable, (1) causes the third party to confirm its
obligations under such Project Document, cure such breach, default or, in the
case of an Affiliate, such misrepresentation, or resume performance thereunder
(as the case may be) or (2) enters into an alternate agreement which (A)
contains substantially similar terms and conditions or, with respect to any
Project Document other than the DWR Contract and any Project Document with an
Affiliate, if such terms and conditions are no longer available on a
commercially reasonable basis, the terms and conditions then available on a
commercially reasonable basis and (B) after giving effect to the agreement, each
Rating Agency confirms that none of such actions will result in a Rating
Downgrade; provided further that with respect to any Project Document other than
the DWR Contract, if such cessation, denial, default or, with respect to an
Affiliate, such misrepresentation, can not be cured within such initial 90 day
period but is curable within 180 days, and Issuer is proceeding with diligence
and in good faith to so cure, then such 90 day period shall be extended for an
additional 90 days; (viii) any of the Collateral Documents cease to be in full
force and effect or any Lien purported to be granted therein ceases to be a
valid and perfected Lien in favor of the Secured Parties, as applicable, on the
Collateral described therein with the priority purported to be created thereby
and such Collateral Document or Lien is not reinstated within 10 business days
from the earlier of (A) the date on which Issuer or either Guarantor obtains
actual knowledge thereof and (B) the date on which Issuer or either Guarantor
receives notice thereof; (ix) Issuer or either Guarantor fails to make any
payment when due or to comply with any covenant (after expiration of all
applicable grace periods) in respect of any Indebtedness other than Indebtedness
under the Financing Documents) in an amount exceeding $2 million if the effect
of such failure is to permit acceleration of the maturity of such Indebtedness;
(x) the entry of one or more final and non-appealable judgments for the payment
of money in excess of $2 million against Issuer or either Guarantor (exclusive
of judgment amounts covered by insurance or indemnity), which remain unpaid or
unstayed for more than 60 consecutive days; (xi) except as permitted by the
Indenture, (A) any Guarantee shall cease for any reason to be in full force and
effect and such unenforceability or cessation shall
A2-8
continue for ten (10) days after the Guarantor obtains actual knowledge thereof,
(B) either Guarantor, or any Person acting on behalf of such Guarantor, shall
deny or disaffirm its obligations under its Guarantee, or (C) any Guarantee
shall be held in any judicial proceeding to be unenforceable or invalid; (xii)
any Acceptable Letter of Credit Issuer fails to perform or breaches any of its
payment obligations under any Debt Service Reserve Letter of Credit, and such
failure or breach continues uncured or unremedied by any such Acceptable Letter
of Credit Issuer, or Issuer for 10 Business Days or more; (xiii) (A) any
ownership interest in Issuer shall be held by an entity other than Holding
Company, (B) Holding Company shall have more than four members, (C) after
consummation of the member equity investment, Holding Company shall cease to
have at least one member that is not an Affiliate of Calpine or (D) any
beneficial owner of Holding Company shall not, at the time of any transfer of an
ownership interest in Holding Company to such member following the Closing Date,
be a Permitted Holder; (xiv) Issuer fails to comply in any material respect with
the requirements specified under Section 3.09 of the Indenture; (xv) Issuer
fails to comply with or breaches any material provision of the Escrow Agreement,
if any, and such non-compliance or breach continues uncured for 10 days after
the date Issuer obtains actual knowledge thereof; provided that the invalidity
of the Escrow Agent's, if any, security interest in the assets contained in the
Escrow Account, if any, will automatically constitute an Event of Default; or
(xvi) after the grant of any junior lien on the Collateral to DWR pursuant to
the terms of the DWR Contract, (i) DWR commences the exercise of remedies with
respect to such junior lien or (ii) DWR breaches any material provision of the
subordination agreement entered into by DWR with respect to such junior lien;
provided that, no such breach will be an Event of Default if within 90 days from
the occurrence of such breach, DWR cures such breach.
If an Event of Default relating to failure to pay amounts owed on the
Senior Secured Notes has occurred and is continuing, the Trustee may declare the
principal amount of the Outstanding Senior Secured Notes, all interest accrued
and unpaid thereon, and all premium, if any, and other amounts payable under the
Senior Secured Notes and the Indenture, if any, to be due and payable
notwithstanding the absence of direction from Holders of at least 33 1/3% in
aggregate principal amount of the Outstanding Senior Secured Notes directing the
Trustee in writing to accelerate the maturity of the Senior Secured Notes unless
Holders of more than 66 2/3% in aggregate principal amount of the Outstanding
Senior Secured Notes direct the Trustee not to accelerate the maturity of such
Senior Secured Notes, if in the good faith exercise of its discretion the
Trustee determines that such action is necessary to protect the interests of the
Holders. Notwithstanding the foregoing, in the case of an Event of Default
arising from certain Bankruptcy Events, all Outstanding Senior Secured Notes
will become due and payable immediately. The Issuer is required to deliver to
the Trustee annually a statement regarding compliance with the Indenture, and
the Issuer is required upon any Officer becoming aware of any Default or Event
of Default to deliver to the Trustee a statement specifying such Default or
Event of Default.
So long as no Insurer Default has occurred and is continuing, upon the
occurrence and continuance of an Event of Default, Ambac Assurance shall be
entitled to control and direct the enforcement of all rights and remedies
granted to the Holders or the Trustee for the benefit of the Holders under the
Indenture, including, without limitation: the right to accelerate the principal
of the Senior Secured Notes as described in herein and the right to annul any
declaration of acceleration, and Ambac Assurance shall also be entitled to
approve all waivers of Events of Default.
Upon the occurrence of an Event of Default, so long as no Insurer Default
has occurred and is continuing, the Trustee shall, at the written direction of
Ambac Assurance or pursuant to the requirements set forth under Section 5.02 of
the Indenture and with the consent of Ambac Assurance, by written notice to
Issuer and Ambac Assurance, declare the principal of the Senior Secured Notes to
be immediately due and payable, whereupon that portion of the principal of the
Senior Secured Notes thereby coming due and the interest thereon accrued to the
date of payment shall, without further action, become and be
A2-9
immediately due and payable, anything herein or in the Senior Secured Notes to
the contrary notwithstanding.
14. TRUSTEE DEALINGS WITH ISSUER. The Trustee, in its individual or any
other capacity, may make loans to, accept deposits from, and perform services
for the Issuer or its Affiliates, and may otherwise deal with the Issuer or its
Affiliates, as if it were not the Trustee.
15. NO RECOURSE AGAINST OTHERS. No past, present or future director,
officer, employee, incorporator, stockholder, partner or agent of the Issuer or
the Guarantors or any Affiliate of any such party (other than Holding Company
under the Gilroy Pledge Agreement, Issuer and the Guarantors), as such, shall
have any liability for any obligations of the Issuer under the Senior Secured
Notes, the Indenture, the Guarantees, any Financing Document or for any claim
based on, in respect of, or by reason of, such obligations or their creation.
Each Holder by accepting a Senior Secured Note waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Senior Secured Notes.
16. AUTHENTICATION. This Senior Secured Note shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating agent.
17. ABBREVIATIONS. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
18. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Issuer has caused
CUSIP numbers to be printed on the Senior Secured Notes and the Trustee may use
CUSIP numbers in notices of redemption as a convenience to Holders. No
representation is made as to the accuracy of such numbers either as printed on
the Senior Secured Notes or as contained in any notice of redemption and
reliance may be placed only on the other identification numbers placed thereon.
The Issuer will furnish to any Holder upon written request and without
charge a copy of the Indenture. Requests may be made to:
Gilroy Energy Center, LLC
50 West San Fernando Street
San Jose, California 95113
Attn: Vice President-Finance
Telecopier No.: (408) 995-0505
Telephone No.: (408) 995-5115
A2-10
Assignment Form
To assign this Senior Secured Note, fill in the form below: (I) or (we) assign
and transfer this Senior Secured Note to
(Insert assignee's soc. sec. or tax I.D. no.)
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint_________________________________________________________
to transfer this Senior Secured Note on the books of the Issuer. The agent may
substitute another to act for him.
Date: Your Signature:_________________________________________
(Sign exactly as your name appears on the
Senior Secured Note)
Tax Identification No:___________________________________
Signature Guarantee.
Medallion No.:
Notice: Signature must be guaranteed by a member firm of the STAMP, SEMP or MSP
signature guaranty medallion program.
A2-11
SCHEDULE OF EXCHANGES OF REGULATION S TEMPORARY GLOBAL NOTE
The following exchanges of a part of this Regulation S Temporary Global
Note for an interest in another Global Note, or exchanges of a part of another
Restricted Global Note for an interest in this Regulation S Temporary Global
Note, have been made:
Amount of decrease in Amount of increase in Principal Amount Signature of
Principal Amount Principal Amount of this Global authorized officer
of this of this Note following such of Trustee or Note
Date of Exchange Global Note Global Note decrease (or increase) Custodian
---------------- ----------- ----------- ---------------------- ---------
A2-12
SCHEDULE I
Schedule of Payments
$0
A2-13
EXHIBIT B
FORM OF CERTIFICATE OF TRANSFER
Gilroy Energy Center, LLC
50 West San Fernando Street, Suite 690
San Jose, CA 95113
Fax number: 408-794-2407
Attention: Vice President - Finance
Wilmington Trust Company
Attention: Corporate Capital Markets
Re: 4.00 % Senior Secured Notes Due August 15, 2011
Reference is hereby made to the Indenture, dated as of September 30, 2003
(the "Indenture"), among Gilroy Energy Center, LLC (the "Issuer"), as issuer,
Creed Energy Center, LLC, as a guarantor ("Creed"), Goose Haven Energy Center,
LLC, as a guarantor ("Goose Haven" and, together with Creed, the "Guarantors")
and Wilmington Trust Company, as trustee and collateral agent. Capitalized terms
used but not defined herein shall have the meanings given to them in the
Indenture.
______________, (the "Transferor") owns and proposes to transfer the
Senior Secured Note[s] or interest in such Senior Secured Note[s] specified in
Annex A hereto, in the principal amount of $___________ in such Senior Secured
Note[s] or interests (the "Transfer"), to __________ (the "Transferee"), as
further specified in Annex A hereto. In connection with the Transfer, the
Transferor hereby certifies that:
[CHECK ALL THAT APPLY]
1. |_| Check if Transferee will take delivery of a beneficial interest in the
144A Global Note or a Restricted Definitive Note pursuant to Rule 144A. The
Transfer is being effected pursuant to and in accordance with Rule 144A under
the United States Securities Act of 1933, as amended (the "Securities Act"),
and, accordingly, the Transferor hereby further certifies that the beneficial
interest or Definitive Note is being transferred to a Person that the Transferor
reasonably believes is purchasing the beneficial interest or Definitive Note for
its own account, or for one or more accounts with respect to which such Person
exercises sole investment discretion, and such Person and each such account is a
"qualified institutional buyer" within the meaning of Rule 144A in a transaction
meeting the requirements of Rule 144A, and such Transfer is in compliance with
any applicable blue sky securities laws of any state of the United States. Upon
consummation of the proposed Transfer in accordance with the terms of the
Indenture, the transferred beneficial interest or Definitive Note will be
subject to the restrictions on transfer enumerated in the Private Placement
Legend printed on the 144A Global Note and/or the Restricted Definitive Note and
in the Indenture and the Securities Act.
B-1
2. |_| Check if Transferee will take delivery of a beneficial interest in the
Regulation S Temporary Global Note, the Regulation S Permanent Global Note or a
Restricted Definitive Note pursuant to Regulation S. The Transfer is being
effected pursuant to and in accordance with Rule 903 or Rule 904 under the
Securities Act and, accordingly, the Transferor hereby further certifies that
(i) the Transfer is not being made to a person in the United States and (x) at
the time the buy order was originated, the Transferee was outside the United
States or such Transferor and any Person acting on its behalf reasonably
believed and believes that the Transferee was outside the United States or (y)
the transaction was executed in, on or through the facilities of a designated
offshore securities market and neither such Transferor nor any Person acting on
its behalf knows that the transaction was prearranged with a buyer in the United
States, (ii) no directed selling efforts have been made in contravention of the
requirements of Rule 903(b) or Rule 904(b) of Regulation S under the Securities
Act and (iii) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act and (iv) if the proposed
transfer is being made prior to the expiration of the Restricted Period, the
transfer is not being made to a U.S. Person or for the account or benefit of a
U.S. Person (other than an Initial Purchaser). Upon consummation of the proposed
transfer in accordance with the terms of the Indenture, the transferred
beneficial interest or Definitive Note will be subject to the restrictions on
Transfer enumerated in the Private Placement Legend printed on the Regulation S
Permanent Global Note , the Regulation S Temporary Global Note and/or the
Restricted Definitive Note and in the Indenture and the Securities Act.
3. |_| Check and complete if Transferee will take delivery of a beneficial
interest in the IAI Global Note or a Restricted Definitive Note pursuant to any
provision of the Securities Act other than Rule 144A or Regulation S. The
Transfer is being effected in compliance with the transfer restrictions
applicable to beneficial interests in Restricted Global Notes and Restricted
Definitive Notes and pursuant to and in accordance with the Securities Act and
any applicable blue sky securities laws of any state of the United States, and
accordingly the Transferor hereby further certifies that (check one):
(a) |_| such Transfer is being effected pursuant to and in accordance
with Rule 144 under the Securities Act;
or
(b) |_| such Transfer is being effected to the Issuer or a subsidiary
thereof;
or
(c) |_| such Transfer is being effected pursuant to an effective
registration statement under the Securities Act and in compliance
with the prospectus delivery requirements of the Securities Act;
or
(d) |_| such Transfer is being effected to an Institutional Accredited
Investor and pursuant to an exemption from the registration
requirements of the Securities Act other than Rule 144A, Rule 144,
Rule 903 or Rule 904, and the Transferor hereby further certifies
that it has not engaged in any general solicitation within the
meaning of Regulation D under the Securities Act and the Transfer
complies with the transfer restrictions applicable to beneficial
interests in a Restricted Global Note or Restricted Definitive Notes
and the requirements of the exemption claimed, which certification
is supported by (1) a certificate executed by the Transferee in the
form of Exhibit D to the Indenture and (2) if such Transfer is in
respect of a principal amount of Senior Secured Notes at the time of
transfer of less than $250,000, an Opinion of Counsel provided by
the Transferor or the Transferee (a copy of which the Transferor has
attached to this certification), to the effect that such Transfer is
in compliance with the Securities Act. Upon consummation of the
proposed transfer in accordance with the terms of the Indenture, the
transferred beneficial interest or Definitive Note will be subject
to the restrictions on transfer enumerated in the Private Placement
Legend printed on the IAI Global Note and/or the Restricted
Definitive Notes and in the Indenture and the Securities Act.
B-2
4. |_| Check if Transferee will take delivery of a beneficial interest in an
Unrestricted Global Note or of an Unrestricted Definitive Note.
(a) |_| Check if Transfer is pursuant to Rule 144. (i) The Transfer is
being effected pursuant to and in accordance with Rule 144 under the Securities
Act and in compliance with the transfer restrictions contained in the Indenture
and any applicable blue sky securities laws of any state of the United States
and (ii) the restrictions on transfer contained in the Indenture and the Private
Placement Legend are not required in order to maintain compliance with the
Securities Act. Upon consummation of the proposed Transfer in accordance with
the terms of the Indenture, the transferred beneficial interest or Definitive
Note will no longer be subject to the restrictions on transfer enumerated in the
Private Placement Legend printed on the Restricted Global Notes, on Restricted
Definitive Notes and in the Indenture.
(b) |_| Check if Transfer is Pursuant to Regulation S. (i) The Transfer is
being effected pursuant to and in accordance with Rule 903 or Rule 904 under the
Securities Act and in compliance with the transfer restrictions contained in the
Indenture and any applicable blue sky securities laws of any state of the United
States and (ii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act. Upon consummation of the proposed Transfer in accordance
with the terms of the Indenture, the transferred beneficial interest or
Definitive Note will no longer be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted Global
Notes, on Restricted Definitive Notes and in the Indenture.
(c) |_| Check if Transfer is Pursuant to Other Exemption. (i) The Transfer
is being effected pursuant to and in compliance with an exemption from the
registration requirements of the Securities Act other than Rule 144, Rule 903 or
Rule 904 and in compliance with the transfer restrictions contained in the
Indenture and any applicable blue sky securities laws of any State of the United
States and (ii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act. Upon consummation of the proposed Transfer in accordance
with the terms of the Indenture, the transferred beneficial interest or
Definitive Note will not be subject to the restrictions on transfer enumerated
in the Private Placement Legend printed on the Restricted Global Notes or
Restricted Definitive Notes and in the Indenture.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Issuer.
__________________________________________
[Insert Name of Transferor]
BY:______________________________________
Name:
Title:
Dated: __________, ____
B-3
ANNEX A TO CERTIFICATE OF TRANSFER
1. The Transferor owns and proposes to transfer the following:
[CHECK ONE OF (a) OR (b)]
(a) |_| a beneficial interest in the:
(i) |_| 144A Global Note (CUSIP ), or
(ii) |_| Regulation S Global Note (CUSIP ), or
(iii) |_| IAI Global Note (CUSIP ); or
(b)|_| a Restricted Definitive Note.
2. After the Transfer the Transferee will hold:
[CHECK ONE]
(a) |_| a beneficial interest in the:
(i) |_| 144A Global Note (CUSIP ), or
(ii) |_| Regulation S Global Note (CUSIP ), or
(iii) |_| IAI Global Note (CUSIP ), or
(iv) |_| Unrestricted Global Note (CUSIP ); or
(b) |_| a Restricted Definitive Note; or
(c) |_| an Unrestricted Definitive Note, in accordance with the terms of
the Indenture.
B-4
EXHIBIT C
FORM OF CERTIFICATE OF EXCHANGE
Gilroy Energy Center, LLC
50 West San Fernando Street, Suite 690
San Jose, CA 95113
Fax number: 408-794-2407
Attention: Vice President - Finance
Wilmington Trust Company
Attention: Corporate Capital Markets
Re: 4.00 % Senior Secured Notes Due August 15, 2011
Reference is hereby made to the Indenture, dated as of September 30, 2003
(the "Indenture"), among Gilroy Energy Center, LLC (the "Issuer"), as issuer,
Creed Energy Center, LLC, as a guarantor ("Creed"), Goose Haven Energy Center,
LLC, as a guarantor ("Goose Haven" and, together with Creed, the "Guarantors")
and Wilmington Trust Company, as trustee and collateral agent. Capitalized terms
used but not defined herein shall have the meanings given to them in the
Indenture.
____________, (the "Owner") owns and proposes to exchange the Senior
Secured Note[s] or interest in such Senior Secured Note[s] specified herein, in
the principal amount of $____________ in such Senior Secured Note[s] or
interests (the "Exchange"). In connection with the Exchange, the Owner hereby
certifies that:
1. Exchange of Restricted Definitive Notes or Beneficial Interests in a
Restricted Global Note for Unrestricted Definitive Notes or Beneficial Interests
in an Unrestricted Global Note
(a) |_| Check if Exchange is from beneficial interest in a Restricted
Global Note to beneficial interest in an Unrestricted Global Note. In connection
with the Exchange of the Owner's beneficial interest in a Restricted Global Note
for a beneficial interest in an Unrestricted Global Note in an equal principal
amount, the Owner hereby certifies (i) the beneficial interest is being acquired
for the Owner's own account without transfer, (ii) such Exchange has been
effected in compliance with the transfer restrictions applicable to the Global
Notes and pursuant to and in accordance with the United States Securities Act of
1933, as amended (the "Securities Act"), (iii) the restrictions on transfer
contained in the Indenture and the Private Placement Legend are not required in
order to maintain compliance with the Securities Act and (iv) the beneficial
interest in an Unrestricted Global Note is being acquired in compliance with any
applicable blue sky securities laws of any state of the United States.
C-1
(b) |_| Check if Exchange is from beneficial interest in a Restricted
Global Note to Unrestricted Definitive Note. In connection with the Exchange of
the Owner's beneficial interest in a Restricted Global Note for an Unrestricted
Definitive Note, the Owner hereby certifies (i) the Definitive Note is being
acquired for the Owner's own account without transfer, (ii) such Exchange has
been effected in compliance with the transfer restrictions applicable to the
Restricted Global Notes and pursuant to and in accordance with the Securities
Act, (iii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act and (iv) the Definitive Note is being acquired in compliance
with any applicable blue sky securities laws of any state of the United States.
(c) |_| Check if Exchange is from Restricted Definitive Note to beneficial
interest in an Unrestricted Global Note. In connection with the Owner's Exchange
of a Restricted Definitive Note for a beneficial interest in an Unrestricted
Global Note, the Owner hereby certifies (i) the beneficial interest is being
acquired for the Owner's own account without transfer, (ii) such Exchange has
been effected in compliance with the transfer restrictions applicable to
Restricted Definitive Notes and pursuant to and in accordance with the
Securities Act, (iii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the beneficial interest is being
acquired in compliance with any applicable blue sky securities laws of any state
of the United States.
(d) |_| Check if Exchange is from Restricted Definitive Note to
Unrestricted Definitive Note. In connection with the Owner's Exchange of a
Restricted Definitive Note for an Unrestricted Definitive Note, the Owner hereby
certifies (i) the Unrestricted Definitive Note is being acquired for the Owner's
own account without transfer, (ii) such Exchange has been effected in compliance
with the transfer restrictions applicable to Restricted Definitive Notes and
pursuant to and in accordance with the Securities Act, (iii) the restrictions on
transfer contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act and (iv) the
Unrestricted Definitive Note is being acquired in compliance with any applicable
blue sky securities laws of any state of the United States.
2. Exchange of Restricted Definitive Notes or Beneficial Interests in Restricted
Global Notes for Restricted Definitive Notes or Beneficial Interests in
Restricted Global Notes.
(a) |_| Check if Exchange is from beneficial interest in a Restricted
Global Note to Restricted Definitive Note. In connection with the Exchange of
the Owner's beneficial interest in a Restricted Global Note for a Restricted
Definitive Note with an equal principal amount, the Owner hereby certifies that
the Restricted Definitive Note is being acquired for the Owner's own account
without transfer. Upon consummation of the proposed Exchange in accordance with
the terms of the Indenture, the Restricted Definitive Note issued will continue
to be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the Restricted Definitive Note and in the Indenture
and the Securities Act.
(b) |_| Check if Exchange is from Restricted Definitive Note to beneficial
interest in a Restricted Global Note. In connection with the Exchange of the
Owner's Restricted Definitive Note for a beneficial interest in the [CHECK ONE]
"144A Global Note", "Regulation S Global Note", "IAI Global Note" with an equal
principal amount, the Owner hereby certifies (i) the beneficial interest is
being acquired for the Owner's own account without transfer and (ii) such
Exchange has been effected in compliance with the transfer restrictions
applicable to the Restricted Global Notes and pursuant to and in accordance with
the Securities Act, and in compliance with any applicable blue sky securities
laws of any
D-2
state of the United States. Upon consummation of the proposed Exchange in
accordance with the terms of the Indenture, the beneficial interest issued will
be subject to the restrictions on transfer enumerated in the Private Placement
Legend printed on the relevant Restricted Global Note and in the Indenture and
the Securities Act.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Issuer.
_________________________________
[Insert Name of Owner]
BY:__________________________________
Name:
Title:
Dated: __________, ____
D-3
EXHIBIT D
FORM OF CERTIFICATE FROM
ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
Gilroy Energy Center, LLC
50 West San Fernando Street, Suite 690
San Jose, CA 95113
Fax number: 408-794-2407
Attention: Vice President - Finance
Wilmington Trust Company
Attention: Corporate Capital Markets
Re: 4.00% Senior Secured Notes Due August 15, 2011
Reference is hereby made to the Indenture, dated as of September 30, 2003
(the "Indenture"), among Gilroy Energy Center, LLC (the "Issuer"), as issuer,
Creed Energy Center, LLC, as a guarantor ("Creed"), Goose Haven Energy Center,
LLC, as a guarantor ("Goose Haven" and, together with Creed, the "Guarantors")
and Wilmington Trust Company, as trustee and collateral agent. Capitalized terms
used but not defined herein shall have the meanings given to them in the
Indenture.
In connection with our proposed purchase of $____________ aggregate
principal amount of:
(a) |_| a beneficial interest in a Global Note, or
(b) |_| a Definitive Note,
we confirm that:
1. We understand that any subsequent transfer of the Senior Secured
Notes or any interest therein is subject to certain restrictions and
conditions set forth in the Indenture and the undersigned agrees to
be bound by, and not to resell, pledge or otherwise transfer the
Senior Secured Notes or any interest therein except in compliance
with, such restrictions and conditions and the United States
Securities Act of 1933, as amended (the "Securities Act").
2. We understand that the offer and sale of the Senior Secured Notes
have not been registered under the Securities Act, and that the
Senior Secured Notes and any interest therein may not be offered or
sold except as permitted in the following sentence. We agree, on our
own behalf and on behalf of any accounts for which we are acting as
hereinafter stated, that if we should sell the Senior Secured Notes
or any interest therein, we will do so only (A) to the Issuer or any
subsidiary thereof, (B) in accordance with Rule 144A under the
Securities Act to a "qualified institutional buyer" (as defined
therein), (c) to an institutional "accredited investor" (as defined
below) that, prior to such transfer, furnishes (or has furnished on
its behalf by a U.S. broker-dealer) to you and to the Issuer a
signed letter substantially in the form of this letter and, if such
transfer is in respect of a principal amount of Senior Secured
Notes, at the time of transfer of less than $250,000, an Opinion of
Counsel in form reasonably acceptable to the Issuer to the effect
that such transfer is in compliance with the Securities Act, (D)
outside the United States in accordance with Rule 904 of Regulation
S under the Securities Act, (E) pursuant to the provisions of Rule
144(k) under the Securities Act or (F) pursuant to an effective
registration statement under the Securities Act, and
D-1
we further agree to provide to any person purchasing the Definitive
Note or beneficial interest in a Global Note from us in a
transaction meeting the requirements of clauses (A) through (E) of
this paragraph a notice advising such purchaser that resales thereof
are restricted as stated herein.
3. We understand that, on any proposed resale of the Senior Secured
Notes or beneficial interest therein, we will be required to furnish
to you and the Issuer such certifications, legal opinions and other
information as you and the Issuer may reasonably require to confirm
that the proposed sale complies with the foregoing restrictions. We
further understand that the Senior Secured Notes purchased by us
will bear a legend to the foregoing effect. We further understand
that any subsequent transfer by us of the Senior Secured Notes or
beneficial interest therein acquired by us must be effected through
one of the Placement Agents.
4. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act)
and have such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of our
investment in the Senior Secured Notes, and we and any accounts for
which we are acting are each able to bear the economic risk of our
or its investment.
5. We are acquiring the Senior Secured Notes or beneficial interest
therein purchased by us for our own account or for one or more
accounts (each of which is an institutional "accredited investor")
as to each of which we exercise sole investment discretion.
You and the Issuer are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to
any interested party in any administrative or legal proceedings or
official inquiry with respect to the matters covered hereby.
____________________________________
[Insert Name of Accredited Investor]
By: ________________________________
Name:
Title:
Dated: __________________, ____
D-2
EXHIBIT E
FORM OF NOTATION OF GUARANTEE
For value received, Guarantor (which term includes any successor Person
under the Indenture) has, unconditionally guaranteed, to the extent set forth in
the Indenture and subject to the provisions in the Indenture dated as of
September 30, 2003 (the "Indenture") among Gilroy Energy Center, LLC, as issuer
(the "Issuer"), Creed Energy Center, LLC, as a guarantor ( "Creed"), Goose Haven
Energy Center, LLC, as a guarantor ("Goose Haven" and, together with Creed, each
individually, a "Guarantor" and, collectively, the "Guarantors") and Wilmington
Trust Company (the "Trustee"), as trustee and collateral agent, (a) the due and
punctual (i) payment of the principal of, premium, if any, and interest on the
Senior Secured Notes, whether at maturity, by acceleration, redemption or
otherwise, (ii) payment of interest on overdue principal and premium, if any,
and, to the extent permitted by law, interest, and (iii) performance of all
other obligations of the Issuer to the Holders or the other Secured Parties all
in accordance with the terms of the Indenture and (b) in case of any extension
of time of payment or renewal of any Senior Secured Notes or any of such other
obligations, that the same will be promptly paid in full when due or performed
in accordance with the terms of the extension or renewal, whether at stated
maturity, by acceleration or otherwise. The obligations of the Guarantor to the
Holders of Senior Secured Notes and to the other Secured Parties pursuant to the
Guarantee and the Indenture are expressly set forth in Article 9 of the
Indenture and reference is hereby made to the Indenture for the precise terms of
the Guarantee. Each Holder of a Senior Secured Note, by accepting the same, (a)
agrees to and shall be bound by such provisions, (b) authorizes and directs the
Trustee, on behalf of such Holder, to take such action as may be necessary or
appropriate to effectuate the subordination as provided in the Indenture and (c)
appoints the Trustee attorney-in-fact of such Holder for such purpose.
Capitalized terms used but not defined herein have the meanings given to them in
the Indenture.
[Name of Guarantor]
By: ________________________________
Name:
Title:
E-1
EXHIBIT F
FORM OF SUBORDINATION AGREEMENT
This SUBORDINATION AGREEMENT ("Agreement"), dated as of __________, 20__,
by and between ____________________, a __________ ("Subordinator Creditor"), and
Wilmington Trust Company, as Trustee for the Holders of Senior Secured Notes
(the "Holders") under the Indenture described below (in such capacity,
"Trustee").
A. Trustee, Gilroy Energy Center, LLC ("Issuer"), Creed Energy Center,
LLC, ("Creed"), and Goose Haven Energy Center, LLC, ("Goose Haven" and, together
with Creed, the "Guarantors" and each individually a "Guarantor") have entered
into the Indenture, dated as of September __, 2003 ("Indenture")
B. Trustee, Issuer and the Guarantors have agreed for the benefit of each
other and for the benefit of the Secured Parties (as defined in the Indenture)
that Issuer and the Guarantors may incur Subordinated Indebtedness (as defined
in the Indenture) only if the Subordinated Creditor enters into this Agreement
and subordinates the Subordinated Debt (as defined below) to the Senior Debt (as
defined below), to the extent and in the manner hereinafter set forth.
NOW THEREFORE, in consideration of the premises and as an inducement to
the Secured Parties to grant financial accommodations to Issuer and the
Guarantors, and in consideration of the granting thereof, the parties hereby
agree as follows:
1. Capitalized terms used and not otherwise defined herein shall have the
meanings assigned to them in the Indenture. As used in this Agreement, the
following terms have the following respective meanings:
"Senior Debt" means all obligations of Issuer and the Guarantors to the
Secured Parties arising under the Indenture, as amended, modified or
supplemented from time to time, whether now existing or hereafter arising,
whether for principal, interest, fees, expenses or otherwise, together with all
renewals, extensions, increases or rearrangements thereof.
"Subordinated Debt" means all obligations of [Issuer/Creed/Goose Haven] to
the Subordinated Creditor, direct or indirect, absolute or contingent, due or to
become due, now existing or hereafter arising, including without limitation all
obligations of [Issuer/Creed/Goose Haven] pursuant to the Subordinated Debt
Documents.
"Subordinated Debt Documents" means the [describe subordinated loan
agreement] and the __________.
2. Until all Senior Debt shall have been paid in full:
(a) The Subordinated Creditor acknowledges and agrees that,
notwithstanding anything to the contrary in any instrument governing the
Subordinated Debt, the Subordinated Debt is subordinated, to the extent and in
the manner set forth herein, to the Senior Debt.
(b) The Subordinated Creditor shall not receive (and if involuntarily
received, shall not retain) any payment from [Issuer/Creed/Goose Haven] on
account of the Subordinated Debt (directly or indirectly, by way of setoff or
otherwise), or any collateral in respect thereof, except that so long as the
F-1
conditions to Restricted Payments set forth in Section 3.6(b) of the Depositary
Agreement have been satisfied, the Subordinated Creditor may receive (i)
payments of regularly scheduled principal and interest on account of the
Subordinated Debt in accordance with the terms of the Subordinated Debt
Documents if, and to the extent that, amounts are available from the
Distribution Account in accordance with Section 3.6(a) of the Depositary
Agreement and (ii) prepayment of the Subordinated Debt if, and to the extent
that, amounts are available from such Distribution Account in accordance with
Section 3.6(a) of the Depositary Agreement.
3. Each instrument evidencing Subordinated Debt shall bear a legend
providing that payment of principal and interest thereon has been subordinated
to prior payment of the Senior Debt in the manner and to the extent set forth in
this Agreement and a copy of this Agreement shall be attached to each such
instrument.
4. The Subordinated Creditor shall not commence or join with any other
creditor or creditors of [Issuer/Creed/Goose Haven] in commencing any
bankruptcy, reorganization or insolvency proceedings against [Issuer/Creed/Goose
Haven] provided that the Subordinated Creditor shall not be prohibited from
filing a proof of claim in any such proceeding not commenced by it.
5. In the event of any insolvency or bankruptcy proceedings, and any
receivership, liquidation, reorganization or other similar proceedings in
connection therewith, relative to [the Issuer/Creed/Goose Haven] or to its
creditors, in their capacity as creditors of [the Issuer/Creed/Goose Haven], or
to substantially all of [the Issuer's/Creed's/Goose Haven's] property, and in
the event of any proceedings for voluntary liquidation, dissolution or other
winding up of [the Issuer/Creed/Goose Haven], whether or not involving
insolvency or bankruptcy, then
(i) the Senior Debt shall first be entitled to receive payment in
full in dollars of the principal thereof, interest thereon, and all other
amounts payable thereon or thereunder (including, without limitation,
fees, expenses and indemnities), accruing before and after the
commencement of the proceedings, before the Subordinated Creditor is
entitled to receive any payment on account of the Subordinated Debt; and
(ii) any payment or distribution of assets of [the
Issuer/Creed/Goose Haven] of any kind or character, whether in cash,
property or securities to which the Subordinated Creditor would be
entitled, but for the provisions of this Agreement, shall be paid or
distributed 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 other trustee or agent, directly to the Trustee
in respect of the Senior Debt, to the extent necessary to make payment in
full of all principal, interest (accruing before or after commencement of
proceedings) and all other amounts payable on the Senior Debt, and all
fees, expenses and indemnities relating thereto, remaining unpaid, after
giving effect to any prior or concurrent payment or distribution in
respect of the Senior Debt.
6. Should any payment on account of, or any collateral for any part of,
the Subordinated Debt be received by the Subordinated Creditor in violation of
this Agreement, such payment or collateral shall be delivered forthwith to
Trustee by the recipient for application to Senior Debt, in the form received.
Trustee is irrevocably authorized to supply any required endorsement or
assignment which may have been omitted. Until so delivered, any such payment or
collateral shall be held by the recipient in trust for the Secured Parties and
shall not be commingled with other funds or property of the recipient.
F-2
7. The Subordinated Creditor represents and warrants that it is the lawful
owner of the Subordinated Debt and no part thereof has been assigned to or
subordinated or subjected to any other security interest in favor of anyone
other than the Holders. The Subordinated Creditor may not assign all or any
portion of the Subordinated Debt except upon the execution and delivery to
Trustee of (i) an agreement by any such assignee to be bound by the terms of
this Agreement (including provisions relating to assignment), and (ii) an
Opinion of Counsel that this Agreement is enforceable against such assignee.
8. Trustee is hereby authorized to demand specific performance of this
Agreement at any time when the Subordinated Creditor shall have failed to comply
with any provision hereof. The Subordinated Creditor hereby irrevocably waives
any defense based on the adequacy of a remedy at law which might be asserted as
a bar to the remedy of specific performance hereof in any action brought
therefor by the Secured Parties. The Subordinated Creditor further waives
presentment, notice and protest in connection with all negotiable instruments
evidencing Senior Debt, notice of the acceptance of this Agreement by the
Secured Parties, notice of any loan made, extension granted or other action
taken in reliance hereon, and all demands and notices of every kind in
connection with the Senior Debt or time of payment of Senior Debt, hereby
assents to any renewal, extension or postponement of the time of payment of
Senior Debt or any other indulgence with respect thereto, to any increase in the
amount of the Senior Debt, to any substitution, exchange or release of
collateral therefor and to the addition or release of any person primarily or
secondarily liable thereon, and assents to the provisions of any instrument,
security or other writing evidencing Senior Debt, and any amendment or
modification to the documentation evidencing or executed and delivered in
connection with the Senior Debt.
8. The Subordinated Creditor shall execute and deliver to Trustee such
further instruments and shall take such further action as Trustee may at any
time or times reasonably request and consistent with the terms of this Agreement
in order to carry out the provisions and intent of this Agreement.
9. The rights granted to the Secured Parties hereunder are solely for
their protection and nothing herein contained shall impose on the Secured
Parties any duties with respect to any property of [the Issuer/Creed/Goose
Haven] or the Subordinated Creditor received hereunder. The Secured Parties
shall have no duty to preserve rights against prior parties in any property of
any kind received hereunder.
10. Nothing contained in this Agreement is intended to or shall impair, as
between [Issuer/Creed/Goose Haven], its creditors other than the Secured
Parties, and the Subordinated Creditor, the obligation of [Issuer/Creed/Goose
Haven] to pay to the Subordinated Creditor the principal of and premium, if any,
and the interest on the Subordinated Debt as and when the same shall become due
and payable in accordance with its terms, or to affect the relative rights of
the Subordinated Creditor and creditors of [Issuer/Creed/Goose Haven] other than
the Secured Parties. It is intended that there be no third party beneficiaries
of this Agreement (other than the Secured Parties), including without limitation
Issuer and the Guarantors.
11. No failure or delay by Trustee in exercising any right, power or
privilege hereunder or under any Financing Document (as defined in the
Indenture) shall operate as a waiver of any provision hereof, nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
12. Any provision of this Agreement may be amended or waived only by
written instrument signed by the Trustee and the Subordinated Creditor.
F-3
13. This Agreement may be executed in any number of counterparts, but all
such counterparts shall together constitute but one agreement. In making proof
of this Agreement, it shall not be necessary to produce or account for more than
one counterpart signed by each of the parties hereto.
14. This Agreement shall be binding upon Trustee, the Subordinated
Creditor, and their respective successors and assigns, and shall inure to the
benefit of Trustee, the Secured Parties, the Subordinated Creditor, and their
respective successors and assigns. This Agreement shall be governed by the laws
of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this Subordination
Agreement to be duly executed as of the date first above written.
[SUBORDINATED CREDITOR]
By:_________________________________
Name:
Title:
WILMINGTON TRUST COMPANY
By:_________________________________
Name:
Title:
F-4