EXHIBIT 4.6
CONSENT AND AGREEMENT
This CONSENT AND AGREEMENT, dated as of December 12, 2001
(this "Consent and Agreement"), is among Public Service Electric and Gas
Company, a New Jersey corporation (the "Consenting Party"), Cedar Brakes II,
L.L.C., a Delaware limited liability company (formerly known as Cedar Brakes IV,
L.L.C., the "Issuer"), and Bankers Trust Company, a New York banking
corporation, in its capacity as trustee (together with its successors in such
capacity, the "Trustee") pursuant to the terms of the Indenture, dated as of
December 12, 2001, between the Issuer and the Trustee (the "Indenture").
The parties hereto hereby agree as follows:
1. Definitions. Capitalized terms used but not otherwise
defined herein shall have the meanings ascribed thereto in the Indenture.
2. Consent to Assignment. The Consenting Party hereby
acknowledges notice of and irrevocably consents to the collateral assignment by
the Issuer to the Trustee, for the benefit of the Holders, of all of the
Issuer's right, title and interest in, to and under the Amended and Restated
Power Purchase Agreement, dated May 23, 2001 (as amended, supplemented or
otherwise modified from time to time, the "Assigned Agreement"), between the
Consenting Party and the Issuer. For the purposes of clarification, anything in
the Assigned Agreement to the contrary notwithstanding, it is understood by the
Consenting Party, the Issuer and the Trustee that the definition of the term
"Financier" contained in the Assigned Agreement shall be deemed to include the
Trustee and each Holder.
3. Payments to Trustee. The Consenting Party and the Issuer
hereby agree that all payments to be made by the Consenting Party to the Issuer
under the Assigned Agreement shall be made directly to the Trustee without
offset, abatement, withholding or reduction except as may be authorized by the
Assigned Agreement.
4. Rights Upon Event of Default.
(a) After the occurrence and during the continuation of an
Event of Default under the Indenture, the Trustee shall be entitled, in the
place and stead of the Issuer, to exercise any and all rights of the Issuer
under the Assigned Agreement in accordance with the terms of the Assigned
Agreement. Without limiting the generality of the foregoing, the Trustee shall
have the full right and power to enforce directly against the Consenting Party
all obligations of the Consenting Party under the Assigned Agreement and
otherwise to exercise all remedies thereunder.
(b) The Trustee shall have the right, but not the
obligation, to pay all sums due under the Assigned Agreement and to perform any
other act, duty or obligation required of the Issuer thereunder or to cure any
default of the Issuer thereunder at any time. Unless the Trustee has succeeded
to the Issuer's interests under the Assigned Agreement,
nothing herein shall require the Trustee to cure any default of the Issuer under
the Assigned Agreement or to perform any act, duty or obligation of the Issuer
under the Assigned Agreement, but shall only give the Trustee the option to do
so.
(c) In the event of a foreclosure or other exercise of
remedies under the Security Documents or any sale thereunder by the Trustee,
whether by judicial proceeding or under any power of sale contained therein, or
any conveyance from the Issuer to the Trustee in lieu thereof, the Trustee shall
give notice to the Consenting Party of the transferee or assignee of the
Assigned Agreement. Any such exercise of remedies in accordance with this
subsection (c) shall not constitute a default under the Assigned Agreement.
5. Right to Cure. For so long as the Issuer shall have
outstanding and unpaid obligations under the Financing Documents, the Consenting
Party agrees to promptly furnish to the Trustee a copy of any notice of breach
delivered pursuant to Article XIV of the Assigned Agreement or any demand for
arbitration delivered to the Issuer pursuant to Article XV of the Assigned
Agreement. The Consenting Party agrees that no termination of the Assigned
Agreement shall be effective unless any such written notice of such termination
or breach, as the case may be, and the reasons therefor have been given to and
received by the Trustee thirty (30) days prior to the effective date of
termination. The Consenting Party further agrees that it shall not terminate the
Assigned Agreement if, after notice thereof, and prior to any effective date of
termination, the Trustee has (i) cured the condition precipitating the notice of
breach under Article XIV of the Assigned Agreement or (ii) if the condition
precipitating such notice of breach is not capable of being cured prior to the
date of termination, commenced in a diligent manner to cure the condition
precipitating the notice of breach and for so long as the Trustee diligently
continues such efforts.
6. Further Rights of the Trustee.
(a) In the event that the Trustee, or any designee and
assignee thereof, notifies the Consenting Party that it has succeeded to the
Issuer's interest under the Assigned Agreement, whether by foreclosure or
otherwise, such Person shall assume liability for the Issuer's obligations under
the Assigned Agreement, which liability shall include liability for, and such
Person shall be subject to any defense against or offset from, claims of the
Consenting Party against the Issuer arising from the Issuer's failure to perform
during the period prior to such Person's succession to the Issuer's interest in
and under such Assigned Agreement.
(b) Upon the exercise by the Trustee of any of the remedies
set forth in the Security Documents, the Trustee, upon written notice to the
Consenting Party, may assign its rights and interests hereunder and, on behalf
of the Issuer, the rights and interests of the Issuer under the Assigned
Agreement to any entity which has a credit rating by Moody's Investors Service,
Inc. at least equal to Baa3 and Standard & Poor's at least equal to BBB-. Except
as otherwise provided herein, the Trustee may not, on behalf of the Issuer,
assign its rights and/or transfer its rights and obligations under the Assigned
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Agreement without the prior written consent of the Consenting Party, which
consent shall not be unreasonably withheld or delayed. Following any assignment
and assumption in accordance with the terms herein, the Trustee shall not have
any obligations or liabilities under the Assigned Agreement.
(c) In the event that the Assigned Agreement is terminated
or rejected in connection with the bankruptcy or similar event with respect to
the Issuer, at the request of the Trustee, the Consenting Party will execute and
deliver to the Trustee or its designee or assignee a new agreement for the
balance of the remaining term under the original Assigned Agreement containing
the same conditions, agreements, terms, provisions and limitations as the
original Assigned Agreement; provided, that the Consenting Party's obligation to
execute such a new agreement is conditioned upon (i) the cure by the Trustee or
its designee or assignee in accordance with Section 5 hereof of any defaults by
the Issuer under the Assigned Agreement existing at the time of execution, (ii)
the assumption of liabilities by the Trustee or its designee or assignee in
accordance with Section 6(a) hereof and (iii) the receipt of all Government
Approvals required in connection with such execution and delivery of a new
agreement. References in this Consent and Assignment to an "Assigned Agreement"
shall be deemed also to refer to the new Assigned Agreement. For the purposes of
this Section 6(c), the term "Government Approvals" shall include, without
limitation, any approvals deemed to be needed by the Consenting Party from the
New Jersey Board of Public Utilities, or its successor; provided, that the
Consenting Party shall not be obligated to seek any appeals from any
determination of the New Jersey Board of Public Utilities or its successor, or
any other Governmental Agency.
7. Further Agreements. The Consenting Party agrees to deliver
to the Trustee, concurrently with delivery thereof to the Issuer, a copy of each
notice of default given by the Consenting Party under the Assigned Agreement,
together with the reasons therefor.
8. Specific Agreement.
(a) The Consenting Party and the Issuer each hereby agree
that the Revised Pages (as defined below) shall be substituted for the original
versions of pages 10 and 11 of the Assigned Agreement. Revised versions of pages
10 and 11 of the Assigned Agreement (the "Revised Pages") were filed with the
Board of Public Utilities of the State of New Jersey (the "BPU") pursuant to a
letter dated July 13, 2001 (the "BPU Letter") from Richard Fryling, Jr.,
Associate General Solicitor of PSEG Services Corporation, to Frances L. Smith,
Esq., Secretary of the BPU, and approved by the BPU pursuant to its order dated
July 24, 2001 (Docket No. EM01050327). A copy of the BPU Letter, together with
the Revised Pages, is attached hereto as Exhibit A.
(b) The Consenting Party and the Issuer each hereby agree
that, in the second grammatical paragraph of Section C of Article II of the
Assigned Agreement, the words "the aggregate operation of the Camden Facility
and twenty-two percent (22%) of the Bayonne Facility" shall be substituted for
the words "the operation of the Facility."
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(c) The Issuer hereby agrees to irrevocably and permanently
waive its right in Section C of Article III of the Assigned Agreement to reduce
the amount of the $64 million payment to be made by the Issuer to the Consenting
Party pursuant thereto by $28,266 per day ($859,758 per month) for each day that
the Effective Date (as defined in the Assigned Agreement) occurs after November
1, 2001, such that the Consenting Party shall be entitled to receive a payment
from the Issuer in an amount equal to $64 million within two Business Days (as
defined in the Assigned Agreement) after the Effective Date.
(d) The Consenting Party hereby agrees to irrevocably and
permanently waive its right in the second grammatical paragraph of Article XVII
of the Assigned Agreement to assign and transfer its rights and obligations
under the Assigned Agreement to any entity if such entity has a credit rating by
both Moody's and Standard & Poor's at least equivalent to that of the Consenting
Party, such that the Consenting Party will be permitted to assign and transfer
its rights and obligations under the Assigned Agreement only with the prior
written consent of the Issuer; provided, however, that nothing in this clause
(d) shall prohibit the Consenting Party from assigning and transferring its
rights and obligations under the Assignment Agreement to any entity controlling,
controlled by or under common control with the Consenting Party if such entity
has a credit rating by both Moody's and Standard & Poor's at least equivalent to
that of the Consenting Party.
(e) The Consenting Party hereby acknowledges that, since
the date of the Assigned Agreement, the Issuer has changed its name from "Cedar
Brakes IV, L.L.C." to "Cedar Brakes II, L.L.C."
9. Representations. The Consenting Party hereby represents and
warrants to the Trustee that:
(a) The Consenting Party is a corporation duly organized,
validly existing and in good standing under the laws of New Jersey and is in
good standing in all jurisdictions where necessary in light of its business or
properties and has all requisite power and authority to conduct its business, to
own its properties and to execute and deliver, and perform its obligations
under, this Consent and Agreement and the Assigned Agreement.
(b) The execution, delivery and performance by the
Consenting Party of this Consent and Agreement and the Assigned Agreement have
been duly authorized by all necessary corporate action, and do not and will not
(i) require any consent or approval of its board of directors, shareholders or
any other Person that has not been obtained, (ii) violate any provision of its
articles of incorporation or by-laws, or any law, rule, regulation, order, writ,
judgment, injunction, decree or award having applicability to it, the violation
of which could reasonably be expected to have a material adverse effect on its
ability to perform its obligations under the Assigned Agreement or this Consent
and Agreement, or (iii) result in a breach of or constitute a default under any
agreement relating to the management of its affairs or any indenture or loan or
credit agreement or other agreement, lease or instrument to which it is a party
or by which it or its properties may be
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bound or affected, the breach of which could reasonably be expected to have a
material adverse effect on the Consenting Party's ability to perform its
obligations under the Assigned Agreement or this Consent and Agreement.
(c) The Assigned Agreement and this Consent and Agreement
each has been duly executed and delivered and is in full force and effect and
constitutes the legal, valid and binding contractual obligation of the
Consenting Party. The Consenting Party has not assigned, transferred or pledged
the Assigned Agreement or any interest therein or consented to any assignment,
transfer or pledge of the Issuer's interest in the Assigned Agreement, except as
described herein.
(d) No consent, license, approval or authorization of, or
other action by, or any notice or filing with, any court or administrative or
governmental body or any other Person is necessary in connection with the
execution, delivery and performance by the Consenting Party of the Assigned
Agreement or this Consent and Agreement, other than those which have been duly
obtained and which are currently in full force and effect.
(e) There is no pending or, to the Consenting Party's
knowledge on the date hereof, threatened, action or proceeding affecting the
Consenting Party before any court, governmental agency, regulatory body or
arbitrator, which could affect its ability to perform its obligations under, or
which purports to affect the legality, validity or enforceability of, this
Consent and Agreement or the Assigned Agreement.
(f) To the Consenting Party's knowledge on the date hereof,
there exists no event or condition which constitutes a default, or which would,
with the giving of notice or lapse of time, or both, constitute a default, under
the Assigned Agreement.
(g) The Consenting Party has duly performed, complied with,
and fulfilled all covenants, agreements and conditions contained in the Assigned
Agreement required to be performed or complied with by it on or before the date
hereof, and the Assigned Agreement, as of the date hereof, is in full force and
effect and has not been amended, and none of the Issuer's rights under the
Assigned Agreement have been waived.
10. Amendments to Assigned Agreement. The Consenting Party
acknowledges that there are no prior amendments, supplements or modifications to
the Assigned Agreements. The Consenting Party acknowledges that pursuant to the
terms of the Indenture the Issuer may not, without the prior written consent of
the Trustee, amend, supplement or otherwise modify the Assigned Agreement (as in
effect on the date hereof); provided, that this acknowledgment is not intended
to affect the ability of the parties to the Assigned Agreement to carry out the
day-to-day operations and administration under the Assigned Agreement.
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11. Miscellaneous.
(a) This Consent and Agreement shall be binding upon the
successors and permitted assigns of the Consenting Party, the Issuer and the
Trustee and shall inure to the benefit of the parties hereto and their
respective successors and assigns.
(b) THIS CONSENT AND AGREEMENT WILL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT GIVING
EFFECT TO THE PRINCIPLES THEREOF RELATING TO CONFLICTS OF LAW EXCEPT SECTION
5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.
(c) Any provision of this Consent and Agreement which is
invalid or prohibited in any jurisdiction shall, as to such jurisdiction, be
ineffective and severable from the rest of this Consent and Agreement to the
extent of such invalidity or prohibition, without impairing or affecting in any
way the validity of any other provision of this Consent and Agreement or of such
provision in other jurisdictions. The parties agree to replace any provision
which is ineffective by operation of this Section 11(c) with an effective
provision which as closely as possible corresponds to the spirit and purpose of
such ineffective provision and this Consent and Agreement as a whole.
(d) No amendment or waiver of any provision of this Consent
and Agreement, or consent to any departure by the Consenting Party therefrom,
shall be effective unless it is in writing and signed by the parties hereto. A
waiver or consent granted pursuant to this Section 11(d) shall be effective only
in the specific instance and for the specific purpose for which it is given.
(e) This Consent and Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same instrument.
(f) The Issuer and the Consenting Party hereby acknowledge
and agree that all conditions precedent set forth in Article III(B) of the
Assigned Agreement have been satisfied or waived.
[The rest of this page was left blank intentionally.]
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IN WITNESS WHEREOF, the parties, intending to be legally
bound, have caused this Consent and Agreement to be executed and acknowledged by
their respective officers or representatives hereunto duly authorized, on the
date first above written.
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
By /s/ Frederick D. DeSanti
----------------------------------------------
Name: Frederick D. Desanti
Title: Vice President, External Affairs
CEDAR BRAKES II, L.L.C.
By /s/ John L. Harrison
----------------------------------------------
Name: John L. Harrison
Title: Senior Vice President and Chief Financial
Officer
BANKERS TRUST COMPANY,
as Trustee
By /s/ Daniel G. Ulrich
----------------------------------------------
Name: Daniel G. Ulrich
Title: Vice President
Exhibit A
BPU LETTER
[PSEG SERVICES CORPORATION LETTERHEAD]
July 13, 2001
Frances L. Smith, Esq.
Secretary
Board of Public Utilities
Two Gateway Center
Newark, New Jersey 07102
Re: In the Matter of the Application of Camden Cogen, L.P. (Camden)
and Cogen Technologies NJ Venture (Bayonne) and Public Service
Electric and Gas Company ("PSE&G") for The Approval of an
Amendment and Restatement of the Power Purchase and
Interconnection Agreements and Gas Service Agreements
Currently Existing Between Camden, Bayonne and PSE&G.
BPU Docket No. EM01050327
Dear Secretary Smith:
Enclosed for filing is an original and ten copies of revised pages 10 and 11
from the Amended and Restated Power Purchase and Interconnection Agreement
reflecting the agreement reached between the Ratepayer Advocate and PSE&G which
has been filed previously. Specifically, the attached pages provide for a
November 1, 2001 effective date and prior to which date the Restructuring Credit
may not be reduced by $28,266 per day.
Should you have any questions, please contact the undersigned at (973) 430-6462.
Very truly yours,
/s/ RICHARD FRYLING, JR.
Richard Fryling, Jr.
Associate General Solicitor
Enclosure(s)
Cc: Attached Service List
Section F
Ancillary Services
Seller shall have no obligation to provide ancillary services to PSE&G
under the Amended Agreement.
ARTICLE III
TERM: EFFECTIVENESS
Section A
Term
This Amended Agreement shall become effective (the "Effective Date")
upon the later to occur of (i) the last date upon which all of the conditions
precedent set forth in Article III(B) below are satisfied or waived and (ii)
November 1, 2001. This Amended Agreement shall remain in effect through and
including March 5, 2013, except as otherwise provided herein.
Section B
Conditions Precedent
The following shall be conditions precedent to the effectiveness of
this Amended Agreement: (i)(a) issuance by the NJBPU of an order ("NJBPU Order")
finding that this Amended Agreement is reasonable and prudent, and that PSE&G
will be able to fully and timely recover from its rate payers all costs and
charges to be paid by PSE&G hereunder for Capacity and Energy purchased pursuant
to this Amended Agreement, and such NJBPU Order is issued without conditions or
is otherwise deemed acceptable to the Parties in their reasonable discretion and
(b) the expiration of all relevant notice and appeal periods and the filing of
all other notices and obtaining of all other approvals required under New Jersey
law; (ii) amendment, modification or replacement of the existing Gas Service
Agreement between PSE&G and Camden dated May 15, 1991, as amended by the First
Amendment dated November 1, 1991 on mutually acceptable terms and the receipt of
any required regulatory approvals; (iii)(a) issuance of a FERC order ("FERC
Order"), if required, accepting for filing pursuant to Section 205 of the
Federal Power Act a rate schedule providing for Seller to make sales of energy
and capacity for resale in interstate commerce as contemplated herein and
granting waivers of regulation under the Federal Power Act routinely granted by
FERC to sellers of electricity which market power, and such FERC Order is to be
issued without conditions, or subject to such conditions as are reasonable
acceptable to Seller; and (b) if required, the expiration or all relevant notice
and appeal periods and the filing of all other notices and obtaining of all
other approvals required under federal law; (iv) approval of the transactions
contemplated by this Amended Agreement by the
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Lenders, (v) approval of the Board of Directors of El Paso Corporation
and PSE&G, if required, (vi) receipt by PSE&G from Camden and by Camden from
PSE&G of a mutual waiver and release of any claims arising under the Camden
Original Agreement prior to the effective date of this Amended Agreement,
including but not limited to claims or liability for breach of contract or
contract defaults and a release of the mortgage held by PSE&G on the Camden
Facility, (vii) receipt by PSE&G from Bayonne and by Bayonne from PSE&G of a
mutual waiver and release of any claims arising under the Bayonne Original
Agreement prior to the effective date of this Amended Agreement, including but
not limited to claims or liability for breach of contract or contract defaults,
(viii) following a restructuring of the ownership of Camden and Seller which
causes the interest therein to be held by entities that are disregarded for
federal income tax purposes, the transfer and/or assignment of Camden's rights
and obligations under the Camden Original Agreement to Seller, (ix) following a
restructuring of the ownership of Bayonne and Seller which causes the interest
therein to be held by entities that are disregarded for federal income tax
purposes, the transfer and/or assignment of Bayonne's rights and obligations
under the Bayonne Original Agreement to Seller, and (x) closing of the
transactions contemplated by the Loan Agreements and availability of proceeds to
be obtained thereunder.
Upon satisfaction or waiver of the last such condition precedent to be
satisfied, the Parties shall promptly affirm in writing that all conditions
precedent have been satisfied. In the event the conditions precedent are not
satisfied, or waived (in the case of (vi) above) by the Party responsible for
obtaining them, within 360 days of execution of this Amended Agreement, either
Party at its option may notify the other Party of its election to terminate this
Amended Agreement and upon receipt of such notice, this Amended Agreement shall
be terminated.
Section C
Restructuring Credit
In consideration of the amendment of the Original Camden Agreement and
the Original Bayonne Agreement by PSE&G, Seller shall within two Business Days
after the Effective Date pay to PSE&G the amount of $64 million by check or wire
transfer in next-day funds; provided however that the amount of the foregoing
payment shall be reduced by $28,266 per day for each day ($859,758 per month)
that the Effective Date occurs after November 1, 2001. Until such funds have
been delivered to PSE&G, Seller may not deliver Energy under this Amended
Agreement.
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