EXHIBIT 10.3
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DEPOSIT ACCOUNT AGREEMENT
Dated as of October 28, 2002
between
ORION POWER CAPITAL, LLC
and
BANK OF AMERICA, N.A., as Collateral Agent
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TABLE OF CONTENTS
Article I DEFINITIONS........................................................2
Article II APPOINTMENT OF COLLATERAL AGENT; CREATION OF ACCOUNTS...........12
Section 2.1 Appointment of Collateral Agent...............................12
Section 2.2 Creation of Accounts..........................................12
Section 2.3 Accounts as Collateral........................................13
Section 2.4 Accounts and the Collateral Agent.............................14
Article III NOTICE REQUIREMENTS............................................14
Section 3.1 Monthly Notice of Deposits and Withdrawals;
Confirmation of Transfers.....................................15
Section 3.2 Notice of Subsidiary Account Shortfalls.......................15
Section 3.3 Periodic Notice...............................................16
Section 3.4 Notice of Allowance Purchase..................................17
Section 3.5 Notice of Closing Expenses....................................17
Article IV DEPOSITS INTO ACCOUNTS..........................................17
Section 4.1 Deposit of Subsidiary Advances................................17
Section 4.2 Deposit of Initial Indenture Debt Service Deposit Amount......17
Section 4.3 Indenture Debt Service Reserve Amounts........................18
Section 4.4 Deposit of Voluntary Prepayment Advances......................18
Section 4.5 Deposit of Allowance Purchase Reserve Amount..................18
Section 4.6 Deposit of Distribution Amounts...............................18
Section 4.7 Deposit of Restructuring Closing..............................18
Section 4.8 Information to Accompany Amounts Delivered to the
Collateral Agent; Deposits Irrevocable........................18
Section 4.9 Books of Account; Statements..................................19
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Article V ALLOCATIONS FROM ACCOUNTS........................................19
Section 5.1 Allocations from the Collection Account.......................19
Section 5.2 Allocations from the Initial Indenture Debt Service
Reserve Account...............................................21
Section 5.3 Allocations from the Indenture Debt Service Reserve Account...21
Section 5.4 Allocations from Voluntary Prepayment Account.................22
Section 5.5 Allocations from the Allowance Purchase Reserve Account.......22
Section 5.6 Allocations from the Restructuring Cost Reserve Account.......22
Section 5.7 Allocations from the Distribution Account.....................23
Article VI INVESTMENTS AND VALUATION.......................................24
Section 6.1 Investments...................................................24
Section 6.2 Income or Gain................................................25
Section 6.3 Value.........................................................25
Section 6.4 Taxes.........................................................25
Article VII REPRESENTATIONS AND WARRANTIES.................................25
Section 7.1 Representations and Warranties................................25
Article VIII COVENANTS.....................................................26
Section 8.1 Covenants.....................................................26
Article IX COLLATERAL AGENT................................................27
Section 9.1 Appointment of Collateral Agent, Powers and Immunities........27
Section 9.2 Ambiguity or Inconsistency in Intercreditor Agreement
with Proposed Actions.........................................28
Section 9.3 Right and Duties..............................................28
Article X EXERCISE OF RIGHTS UNDER Intercreditor Agreement.................29
Section 10.1 Actions Upon an Event of Default.............................29
Section 10.2 Administration of Collateral.................................29
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Section 10.3 Application of Proceeds After Acceleration...................29
Article XI INDEMNIFICATION.................................................29
Section 11.1 Payment of Expenses and Indemnification......................29
Article XII MISCELLANEOUS..................................................31
Section 12.1 Agreement for Benefit of Parties Hereto......................31
Section 12.2 No Warranties................................................31
Section 12.3 Reimbursement of Expenses....................................31
Section 12.4 Severability.................................................31
Section 12.5 Notices......................................................31
Section 12.6 Successors and Assigns.......................................31
Section 12.7 Counterparts.................................................32
Section 12.8 GOVERNING LAW................................................32
Section 12.9 No Impairments of Other Rights...............................32
Section 12.10 Amendment; Waiver...........................................32
Section 12.11 Separate Liability..........................................32
Section 12.12 Incumbency Certificates; Authorized Persons.................32
Section 12.13 Headings....................................................33
Section 12.14 Termination; Release........................................33
Section 12.15 Entire Agreement............................................33
Section 12.16 Survival of Indemnities.....................................33
Exhibit A Form of Monthly Notice of Deposits and Withdrawals
Exhibit B Form of Periodic Notice
Schedule 7.1 Filings and Other Actions
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This DEPOSIT ACCOUNT AGREEMENT (this "Agreement"), dated as of October 28,
2002, between ORION POWER CAPITAL, LLC, a Delaware corporation ("Holdco"), and
BANK OF AMERICA, N.A., as collateral agent under the Intercreditor Agreement (as
defined below) (in such capacity, together with its successors, the "Collateral
Agent").
WHEREAS, each of OPNY, Erie Boulevard, Carr Street Generating, Astoria
Generating, OPMW and Twelvepole are wholly-owned, indirect subsidiaries of
Holdco and Holdco is a direct, wholly-owned subsidiary of Orion Power Holdings,
Inc., a Delaware corporation ("OPH");
WHEREAS, OPNY, Erie Boulevard, Carr Street Generating, Astoria Generating
and the OPNY Administrative Agent have entered into that certain Second Amended
and Restated Deposit Account Agreement, dated as of even date herewith (the
"OPNY Deposit Account Agreement") and OPNY, the OPNY Administrative Agent, Banc
of America Securities LLC and BNP Paribas, as lead arrangers (the "OPNY Lead
Arrangers"), Bank of America, N.A., as the issuer of the letters of credit
referred to therein, BNP Paribas, as Syndication Agent, Union Bank of
California, N.A., CoBank, ACB and Deutsche Bank AG New York and/or Cayman Island
Branch, as Documentation Agents, and the Lenders named on the signature pages
thereto and from time to time parties thereto (the "OPNY Lenders") have entered
into that certain Amended and Restated Credit Agreement, dated as of even date
herewith (the "OPNY Credit Agreement");
WHEREAS, OPMW, Twelvepole and the OPMW Administrative Agent have entered
into that certain Second Amended and Restated Deposit Account Agreement, dated
as of even date herewith (the "OPMW Deposit Account Agreement," and, together
with the OPNY Deposit Account Agreement, the "Subsidiary Deposit Account
Agreements"), and OPMW, the OPMW Administrative Agent, Banc of America
Securities LLC and BNP Paribas, as lead arrangers (the "OPMW Lead Arrangers"),
Bank of America, N.A., as the issuer of the letters of credit referred to
therein, BNP Paribas, as Syndication Agent, The Bank of Nova Scotia, Mizuho
Corporate Bank, Ltd, and Bayerische Hypo-Und Vereinsbank AG, New York Branch, as
Documentation Agents, and the Lenders named on the signature pages thereto and
from time to time parties thereto (the "OPMW Lenders") have entered into that
certain Second Amended and Restated Credit Agreement, dated as of even date
herewith (the "OPMW Credit Agreement," and, together with the OPNY Credit
Agreement, the "Subsidiary Credit Agreements"); and
WHEREAS, OPNY is the 99% limited partner in each of Erie Boulevard, Carr
Street Generating and Astoria Generating, and each of them is the owner and
operator of a portion of the Portfolio Assets (as defined in the OPNY Credit
Agreement);
WHEREAS, OPMW owns 100% of the membership interests in Twelvepole and each
of OPMW and Twelvepole is the owner and operator of a portion of the Portfolio
Assets (as defined in the OPMW Credit Agreement);
WHEREAS, it is a condition of the Subsidiary Credit Agreements that Holdco
enter into this Agreement;
NOW THEREFORE, in consideration of foregoing and of the mutual agreements
herein contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement the following terms have the following meanings
(with terms defined in the singular to have the same meaning as when used in the
plural and vice versa). All capitalized terms not otherwise defined herein shall
have the meanings attributed to them in the Subsidiary Credit Agreements or the
Subsidiary Deposit Account Agreements, and, except as otherwise expressly
provided herein, the provisions of Sections 1.02, 1.03 and 1.04 of the
Subsidiary Credit Agreements shall apply hereto.
"Account Collateral" shall have the meaning ascribed to it in Section 2.3.
"Accounts" shall have the meaning ascribed to it in Section 2.2.
"Administrative Agent" shall mean the collective reference to the OPNY
Administrative Agent and the OPMW Administrative Agent.
"Agreement" shall mean this Deposit Account Agreement, as it may be
amended, modified or supplemented from time to time hereafter.
"Allowance Purchase" shall mean any purchase of an Allowance as permitted
by and in accordance with the terms of the Credit Agreements.
"Allowance Purchase Amount" shall have the meaning ascribed to it in
Section 3.4.
"Allowance Purchase Reserve Account" shall have the meaning ascribed to it
in Section 2.2(a).
"Allowance Purchase Reserve Amount" shall mean an amount equal to
$48,500,000.
"Borrower Operating Accounts" shall mean the collective reference to (i)
the "Operating Account" as defined in the OPMW Deposit Account Agreement and
(ii) the "Operating Account" as defined in the OPNY Deposit Account Agreement,
or either of them.
"Borrower Subsidiaries" shall mean the collective reference to OPNY and
OPMW only (each, a "Borrower Subsidiary").
"Collateral Agent" shall have the meaning ascribed to such term in the
first paragraph of this Agreement.
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"Collateral Agent Fee Side Letter" shall mean that certain fee letter
dated as of the Restructuring Effective Date by and between the Collateral Agent
and Holdco.
"Collection Account" shall have the meaning ascribed to it in Section
2.2(a).
"Combined Debt Service Coverage Ratio" shall mean, for any period of
determination, the ratio of (i) the sum of the OPNY Net Cash Flow and the OPMW
Net Cash Flow to (ii) the sum of the OPNY Debt Service and the OPMW Debt
Service, calculated on a trailing 12 month basis; provided, that, if the date of
determination occurs prior to June 30, 2003, such ratio shall be calculated
based on actual results over the period from and including July 1, 2002, to but
excluding such date of determination; and provided, further that, any prepayment
for coal made pursuant to any New Coal Contract (as defined in the OPMW Credit
Agreement) as permitted by Section 6.07(b) of the OPMW Credit Agreement, shall
be excluded from OPMW Net Cash Flow until such time as the coal attributable to
such prepayments is delivered to OPMW at which time, to the extent of the coal
so delivered, the Operating Costs properly attributable thereto shall be
included in the calculation of OMPW Net Cash Flow for the period in which such
delivery occurs, the calculation of the Combined Debt Service Coverage Ratio
made as of December 31, 2002.
"Convertible Notes Indenture" shall mean the Indenture dated May 31, 2001,
pursuant to which OPH issued 4.5% Senior Convertible Notes due on June 1, 2008.
"Debt Service Coverage Compliance Prepayment Amount" shall have the
meaning ascribed to it in Section 3.3.
"Debt Service Coverage Ratio" shall mean (i) as to OPNY, the "Debt Service
Coverage Ratio" as defined in the OPNY Credit Agreement, (ii) as to OPMW, the
"Debt Service Coverage Ratio as defined in the OPMW Credit Agreement and (iii)
as to Holdco, the Combined Debt Service Coverage Ratio.
"Debt Service Non-Compliance Notice" shall have the meaning ascribed to it
in Section 3.3.
"Default" shall mean the occurrence of a "Default" under either Subsidiary
Credit Agreement.
"Designated Office" shall mean the office of the Collateral Agent located
at the address set forth below its signature hereto, or at such other address as
may be designated by the Collateral Agent in a notice to the Borrower.
"Determination Date" shall mean the first (1st) Business Day of each
month.
"Distribution Account" shall have the meaning ascribed to it in Section
2.2(a).
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"Distribution Blocking Event" shall mean the occurrence and continuation
of any of the following:
(a) The violation by OPNY of Sections 5.11, 6.08 or 6.12 of the OPNY
Credit Agreement;
(b) The violation by OPMW of Sections 5.11, 6.08 or 6.12 of the OPMW
Credit Agreement;
(c) The violation by any Subsidiary of OPNY of Section 8.08 or 8.12
of the relevant Subsidiary Guarantee;
(d) The violation by Twelvepole of Section 7.11, 8.08 or 8.12 of the
Twelvepole Guarantee;
(e) The occurrence of a Regulatory Change that is under review by
the OPNY Lead Arrangers, in consultation with the Independent Experts, to
determine if such Regulatory Change is a Material Regulatory Change; provided
that such determination shall be made promptly and, in any event, in no more
than sixty (60) days after the Lead Arrangers have been notified in writing by
Holdco of the occurrence of such Regulatory Change; and, provided, further, that
if the Lead Arrangers have not made such determination within such period, the
Lead Arrangers and parties hereto shall negotiate in good faith to make such
determination no later than thirty days after the expiration of the sixty day
period described in the foregoing clause and, if such determination is not made
by the expiration of such additional thirty day period, the "Distribution
Blocking Event" under this clause (c) shall terminate;
(f) The occurrence of a Material Regulatory Change under and as
defined in the OPNY Credit Agreement;
(g) Any failure by any of OPMW, the OPMW Subsidiaries, OPNY, or the
OPNY Subsidiaries to operate or maintain their respective Portfolio Assets in
material compliance with any then current Operational Plan; or
(h) A Default or an Event of Default.
"Distribution Cut-Off Date" shall mean the date that occurs on the second
anniversary of the Restructuring Effective Date.
"Event of Default" shall mean the occurrence of any "Event of Default"
under either Subsidiary Credit Agreement.
"Excess Cash Flow" shall mean, as of any date, any amounts on deposit in
the Distribution Account.
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"High Yield Indenture" shall mean the Indenture dated April 27, 2000
pursuant to which OPH issued 12% Senior Notes due 2010.
"Holdco" shall mean Orion Power Capital, LLC, a Delaware limited liability
company and a direct, wholly-owned subsidiary of OPH.
"Holdco Collateral" shall mean the collective reference to all or any part
of the "Collateral" as defined in each of the Holdco Pledge Agreements.
"Holdco Documents" shall mean the collective reference to this Agreement,
the Holdco Guarantees and the Holdco Pledge Agreements, or any of them.
"Holdco Guarantees" shall mean the collective reference to the OPNY Holdco
Guarantee and the OPMW Holdco Guarantee, or either of them.
"Holdco Pledge Agreements" shall mean the collective reference to the (i)
pledge agreement, dated as of the date hereof, made by Holdco in favor of the
OPMW Administrative Agent, and (ii) the pledge agreement, dated as of the date
hereof, made by Holdco in favor the OPNY Administrative Agent, or either of
them.
"IDSRA Deposit Amount" shall mean, as of any date of determination, the
amount of cash that will be on deposit in the Indenture Debt Service Reserve
Account after the making of all withdrawals required under Sections 5.1 and
5.3(a) of this Agreement, if any, as of such date.
"IDSRA Distribution Amount" shall mean, as of any date of determination,
an amount equal to the IDSRA Deposit Amount, less the sum of (i) the Indenture
Payment Offset Amount as of such date, if any, and (ii) the Regulatory Change
Cash Flow Reduction amount as of such date, if any.
"Indemnified Person" shall have the meaning set forth in Section
11.1(a)(iii).
"Indentures" shall mean the collective reference to the High Yield
Indenture and the Convertible Notes Indenture, or either of them, in each case,
as in effect on the Restructuring Effective Date, and, with respect to the
principal amount of the Indebtedness issued pursuant thereto, as outstanding on
the Restructuring Effective Date.
"Indenture Debt Service Reserve Account" shall have the meaning set forth
in Section 2.2(a).
"Indenture Payment Date" shall mean (i) with regard to the High Yield
Indenture, each May 1 and November 1, and (ii) with regard to the Convertible
Notes Indenture, each June 1 and December 1, or, if any such date shall not be a
Business Day, the next Business Day.
"Indenture Payment Offset Amount" shall mean, as of any date of
determination, an amount equal to (i) the sum of all OPH Net Cash Flow amounts
that have accrued as of such date
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as certified by Holdco in the relevant Periodic Notice and accepted (or not
objected to) by the Collateral Agent pursuant to procedures set forth in Section
5.8(b) of this Agreement, less (ii) the aggregate amount of all OPH Net Cash
Flows actually deducted from the IDSRA Deposit Amount prior to such date.
"Indenture Payment Reserve Shortfall" shall mean, as of any date of
determination, the difference between the IDSRA Distribution Amount as of such
date and the Scheduled Indenture Debt Service Payment Amount as of such date.
"Indenture Payment Reserve Shortfall Deposit" shall have the meaning set
forth in Section 3.3.
"Indenture Trustee" shall mean (i) with regard to the High Yield
Indenture, Wilmington Trust Company, in its capacity as "Trustee" thereunder,
and (ii) with regard to the Convertible Notes Indenture, Wilmington Trust
Company, in its capacity as "Trustee" thereunder, the successors and assigns of
each "Trustee".
"Initial Indenture Debt Service Deposit Amount" shall mean up to
$$25,000,000.00.
"Initial Indenture Debt Service Reserve Account" shall have the meaning
set forth in Section 2.2(a).
"Intercreditor Agreement" shall mean that certain Intercreditor Agreement,
dated as of the date hereof, by and among the OPNY Administrative Agent, the
OPNY Lenders, the OPMW Administrative Agent, the OPMW Lenders and the Collateral
Agent.
"Measurement Period" shall mean, for any date of determination, the twelve
month period immediately preceding such date; provided, that, if the date of
determination occurs on or prior to June 30, 2003, the Measurement Period shall
mean the period from and including July 1, 2002, to but excluding such date of
determination.
"Minimum Debt Service Coverage Ratio" shall mean (i) with regard to OPNY,
a Debt Service Coverage Ratio of at least 1.00 to 1.00 and (ii) with regard to
OPMW, a Debt Service Coverage Ratio of at least 1.00 to 1.00.
"Net Voluntary Prepayment Amount" shall mean, as of any date of
determination, an amount equal to (i) the sum of all Voluntary Prepayment
Advances deposited in the Voluntary Prepayment Account on or prior to such date
and used to prepay then outstanding Obligations less (ii) the aggregate amount
of all Voluntary Prepayment Distributions made prior to such date.
"Notice of Allowance Purchase" shall mean a notice from Holdco to the
Collateral Agent requesting that funds be withdrawn from the Allowance Purchase
Reserve Account to fund the payment of an Allowance Purchase.
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"Notice of Closing Expenses" shall mean a notice substantially in the form
of Exhibit B hereto from Holdco to the Collateral Agent setting forth the
Closing Expenses due and payable as of the date set forth in such notice and the
Persons to whom such payments shall be made pursuant to Section 5.6 of this
Agreement.
"Notice of Monthly Deposits and Withdrawals" shall have the meaning
ascribed to it in Section 3.1.
"Obligations" shall mean the collective reference to (i) the "Obligations"
of OPMW under the OPMW Credit Agreement, (ii) the "Obligations" of OPNY under
the OPNY Agreement and (iii) the "Guarantor Obligations" of Holdco under each of
the Holdco Guarantees, or any of them.
"OPH" shall have the meaning ascribed to it in the preamble hereto.
"OPH Net Cash Flows" shall mean, for any period of determination, the sum
of (i) the amount of cash then available for distribution to OPH from any of its
subsidiaries (excluding Holdco and its subsidiaries), after income taxes
properly attributable to such subsidiaries for such period of determination,
(ii) the net amount of cash generated by operations of OPH (exclusive of the
operations of all of its subsidiaries) during such period, after income taxes
properly attributable to such operations, and (iii) the gross sales proceeds of
any asset sale received by OPH or any of its subsidiaries (other than Holdco and
its subsidiaries) during such period, less taxes properly attributable to such
asset sale and reasonable and customary transaction expenses (excluding,
however, transaction expenses and similar costs and fees paid or payable with
respect to Affiliates of OPH). For purposes of this definition, "income taxes"
shall mean that amount of federal or state income taxes reasonably estimated by
OPH on a consolidated, unitary or combined basis to be payable on the applicable
amount of cash available for distribution or cash generated by operations for
the applicable period of determination in the case of clauses (i) and (ii)
preceding and "taxes" shall mean that amount of federal or state income, sales,
transaction or other taxes reasonably estimated to be attributable to the gross
sales proceeds received during such period, in the case of clause (iii)
preceding.
"OPMW" shall mean Orion Power MidWest L.P., a Delaware limited
partnership.
"OPMW Account" shall mean any account established and maintained pursuant
to the OPMW Deposit Account Agreement.
"OPMW Administrative Agent" shall mean Bank of America, N.A., in its
capacity as Administrative Agent under the OPMW Credit Agreement.
"OPMW Credit Agreement" shall have the meaning ascribed to it in the
preamble hereto.
"OPMW Debt Service" shall have the meaning ascribed to the term "Debt
Service" in the OPMW Credit Agreement.
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"OPMW Deposit Agreement" shall have the meaning ascribed to it in the
preamble hereto.
"OPMW Holdco Guarantee" shall mean the Guarantee Agreement, dated of even
date herewith, executed by Holdco in favor of the OPMW Administrative Agent (for
the benefit of the OPMW Secured Parties) guaranteeing the payment and
performance of the Obligations of OPMW under the OPMW Credit Agreement.
"OPMW Lenders" shall have the meaning ascribed to it in the preamble
hereto.
"OPMW Loans" shall have the meaning ascribed to the term "Loans" in the
OPMW Credit Agreement.
"OPMW Net Cash Flow" shall have the meaning ascribed to the term "Net Cash
Flow" in the OPMW Credit Agreement.
"OPMW Prepayment Account" shall mean the "Prepayment Account" as defined
in and established under the OPMW Deposit Agreement.
"OPMW Revenue Account" shall mean the "Revenue Account" as defined in and
established under the OPMW Deposit Agreement.
"OPMW Secured Parties" shall mean the "Secured Parties" as defined under
the OPMW Credit Agreement.
"OPMW Subsidiary" shall mean Twelvepole.
"OPNY" shall mean Orion Power New York L.P., a Delaware limited
partnership.
"OPNY Account" shall mean any account established and maintained pursuant
to the OPNY Deposit Account Agreement.
"OPNY Administrative Agent" shall mean Bank of America, N.A., in its
capacity as Administrative Agent under the OPNY Credit Agreement.
"OPNY Credit Agreement" shall have the meaning ascribed to it in the
preamble hereto.
"OPNY Debt Service" shall have the meaning ascribed to the term "Debt
Service" in the OPNY Credit Agreement.
"OPNY Deposit Agreement" shall have the meaning ascribed to it in the
preamble hereto.
"OPNY Holdco Guarantee" shall mean the Guarantee Agreement, dated of even
date herewith, executed by Holdco in favor of the OPNY Administrative Agent (for
the benefit of the OPNY Secured Parties) guaranteeing the payment and
performance of the Obligations of OPNY under the OPNY Credit Agreement.
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"OPNY Lead Arrangers" shall have the meaning ascribed to the term "Lead
Arrangers" in the OPNY Credit Agreement.
"OPNY Lenders" shall have the meaning ascribed to it in the preamble
hereto.
"OPNY Loans" shall have the meaning ascribed to the term "Loans" in the
OPNY Credit Agreement.
"OPNY Net Cash Flow" shall have the meaning ascribed to the term "Net Cash
Flow" in the OPNY Credit Agreement.
"OPNY Prepayment Account" shall mean the "Prepayment Account" as defined
in and established under the OPNY Deposit Agreement.
"OPNY Revenue Account" shall mean the "Revenue Account" as defined in and
established under the OPNY Deposit Agreement.
"OPNY Secured Parties" shall mean the "Secured Parties" as defined under
the OPNY Credit Agreement.
"OPNY Subsidiaries" shall mean the collective reference to Erie Boulevard,
Astoria Generating and Carr Street Generating.
"Periodic Date" shall mean each February 1, May 1, June 1, August 1,
November 1 and December 1 of each calendar year or, in each case, if such date
is not a Business Day, the next succeeding Business Day.
"Periodic Notice" shall have the meaning ascribed to it in Section 3.3.
"Permitted Distribution" shall mean any distribution to OPH or its
designee or to any Indenture Trustee permitted pursuant to Section 5.2, 5.3(b),
5.7(a) or 5.7(b).
"Pro Rata Share" shall mean as of any date of determination and with
respect to any Borrower Subsidiary, a fraction, the numerator of which is the
aggregate amount of principal and interest outstanding and unpaid under such
Borrower Subsidiary's Subsidiary Credit Agreement as of such date, and the
denominator of which is the aggregate amount of the principal and interest
outstanding and unpaid under both Subsidiary Credit Agreements as of such date.
"Quarterly Payment Date" shall mean each March 31, June 30, September 30
and December 31.
"Regulatory Change Cash Flow Reduction Amount" shall mean, as of any date
of determination with regard to any Regulatory Change that is reasonably
determined by the OPNY Lead Arrangers, in consultation with the Independent
Experts, not to be a Material Regulatory Change (an "Immaterial Regulatory
Change"), the amount equal to the reasonably expected
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reduction in Excess Cash Flow (as defined in the OPNY Deposit Agreement)
attributable to such Immaterial Regulatory Change (as reasonably determined by
the OPNY Lead Arrangers).
"Restructuring Cost Account Deposit Amount" shall mean, as of the
Restructuring Effective Date, the amount of cash distributed from the OPNY
Revenue Account to the Collateral Agent for deposit in the Restructuring Cost
Reserve Account to pay for Closing Expenses.
"Restructuring Cost Reserve Account" shall have the meaning ascribed to it
in Section 2.2(a).
"Scheduled Indenture Debt Service Deposit Amount" shall mean, for any
given calendar quarter, an amount equal to the aggregate amount of interest
accrued under the Indentures during such calendar quarter.
"Scheduled Indenture Debt Service Payment Amount" shall mean, for any
Indenture Payment Date, the amount of scheduled interest then due and payable
pursuant to an Indenture as of such date.
"Scheduled Prepayment" shall mean, as of any date, the sum of (i) all
transfers made on or prior to such date from the Collection Account or the
Distribution Account into the Subsidiary Prepayment Accounts that were used to
prepay then outstanding Obligations and (ii) the amount of all scheduled
amortization payments made on or prior to such date pursuant to the Subsidiary
Credit Agreements to repay outstanding Obligations.
"Secured Parties" shall mean the collective reference to the OPMW Secured
Parties and the OPNY Secured Parties, or any of them.
"Semi-Annual Period" shall mean, during any year, each period (i) from and
including January 1, to and including June 30, and (ii) from and including July
1, to and including December 31.
"Shortfall Certificate" shall have the meaning ascribed to it in Section
3.2.
"Shortfall Notice" shall have the meaning ascribed to it in Section 3.2.
"Subsidiary Account" and "Subsidiary Accounts" shall mean any OPNY Account
or OPMW Account or all of them.
"Subsidiary Account Shortfall" shall mean, as of any date of
determination, the difference between (x) the amount required, permitted or
requested in compliance with the terms of a Subsidiary Deposit Account Agreement
to be transferred into or paid out of any Subsidiary Account thereunder
(including under Section 5.1(f) of the OPMW Deposit Account Agreement or Section
5.2(j) of the OPNY Deposit Account Agreement) and (y) the amount then on deposit
in the Subsidiary Account from which such deposit is to be made or such transfer
or payment
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described in clause (x) above is to be made or paid under the relevant
Subsidiary Deposit Account Agreement.
"Subsidiary Advance" shall mean any transfer of funds to the Collection
Account from a Subsidiary Account.
"Subsidiary Commitments" shall mean the collective reference to the
"Commitments" under the OPNY Credit Agreement and the OPMW Credit Agreement.
"Subsidiary Credit Agreements" shall have the meaning set forth in the
preamble hereto.
"Subsidiary Deposit Account Agreements" shall have the meaning set forth
in the preamble hereto.
"Subsidiary Financing Documents" shall mean the collective reference to
the "Financing Documents" as defined in the OPMW Credit Agreement and the OPNY
Credit Agreement, or any of them.
"Subsidiary Prepayment Account" shall mean either the OPNY Prepayment
Account or the OPMW Prepayment Account, or both.
"Subsidiary Revenue Account" shall mean either the OPNY Revenue Account or
the OPMW Revenue Account, or both.
"Target Prepayment Amount" shall mean $239,392,220.
"Target Principal Amount" shall mean, as of any date of determination, an
amount equal to the aggregate outstanding principal amount of the Obligations as
of the Restructuring Effective Date (after giving effect to any prepayment made
on such date), less the aggregate amount of all Scheduled Prepayments made
through and including such date.
"Transfer Date" shall mean the twenty-fifth day of each month (and in the
case of February, the twenty-third day of such month), or, if the twenty-fifth
(or twenty-third, as applicable) day of any month is not a Business Day, the
first Business Day immediately preceding the twenty-fifth (or the twenty-third,
as applicable) day of each month.
"Unsatisfied Condition" shall have the meaning set forth in Section
5.8(b).
"Voluntary Prepayment Account" shall have the meaning ascribed to it in
Section 2.2(a).
"Voluntary Prepayment Advance" shall mean any funds (including the
proceeds of debt or equity raised by OPH or an Affiliate of OPH (other than
Holdco or any of its subsidiaries)) deposited in the Voluntary Prepayment
Account by, or on behalf of, OPH as proceeds of an equity contribution or
subordinated loan to Holdco as permitted under either Holdco Guarantee.
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"Voluntary Prepayment Distribution" shall have the meaning ascribed to it
in Section 5.7(a).
ARTICLE II
APPOINTMENT OF COLLATERAL AGENT;
CREATION OF ACCOUNTS
Section 2.1 Appointment of Collateral Agent. (a) Bank of America, N.A. has
been appointed to act as Collateral Agent hereunder pursuant to the
Intercreditor Agreement and hereby agrees to receive, accept and deposit all
proceeds of the Subsidiary Advances, Voluntary Prepayment Advances and all
monies, Permitted Investments and other securities and instruments required to
be deposited into the Accounts in accordance with this Agreement.
(b) The Collateral Agent shall not have any duties or responsibilities,
except those expressly set forth in this Agreement and the Intercreditor
Agreement, and no implied covenants, functions or responsibilities shall be read
into this Agreement or otherwise exist against the Collateral Agent.
Section 2.2 Creation of Accounts.
(a) Each of the following accounts are hereby established and created with
the Collateral Agent at its Designated Office (each an "Account" and,
collectively, the "Accounts"):
(i) a special, segregated and irrevocable account identified as
"Bank of America, N.A., as Collateral Agent for Orion Power Capital, LLC
Collection Account" (the "Collection Account");
(ii) a special, segregated and irrevocable account identified as
"Bank of America, N.A., as Collateral Agent for Orion Power Capital, LLC
Allowance Purchase Reserve Account" (the "Allowance Purchase Reserve
Account");
(iii) a special, segregated and irrevocable account identified as
"Bank of America, N.A., as Collateral Agent for Orion Power Capital, LLC
Initial Indenture Debt Service Reserve Account" (the "Initial Indenture
Debt Service Reserve Account");
(iv) a special, segregated and irrevocable account identified as
"Bank of America, N.A., as Collateral Agent for Orion Power Capital, LLC
Indenture Debt Service Reserve Account" (the "Indenture Debt Service
Reserve Account");
(v) a special, segregated and irrevocable account identified as
"Bank of America, N.A., as Collateral Agent for Orion Power Capital, LLC
Voluntary Prepayment Account" (the "Voluntary Prepayment Account");
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(vi) a special, segregated and irrevocable account identified as
"Bank of America, N.A., as Collateral Agent for Orion Power Capital, LLC
Distribution Account" (the "Distribution Account"); and
(vii) a special, segregated and irrevocable account identified as
"Bank of America, N.A., as Collateral Agent for Orion Power Capital, LLC
Restructuring Cost Reserve Account" (the "Restructuring Cost Reserve
Account").
(b) Except as specifically set forth herein, each Account shall remain in
the exclusive possession of, and under the sole dominion and control of, the
Collateral Agent and shall be maintained at all times in accordance with the
terms of this Agreement and the Subsidiary Financing Documents until the date on
which the Subsidiary Commitments have been terminated and all Obligations have
been irrevocably and indefeasibly paid in full. Except as specifically set forth
herein, each Account shall be subject to debit or withdrawal solely by the
Collateral Agent as provided in this Agreement and no Person shall have any
control over or right of withdrawal from the Accounts. No payments shall be made
out of the Accounts except for the purposes and on the terms provided in this
Agreement and in the Subsidiary Financing Documents. Holdco hereby irrevocably
authorizes and empowers the Collateral Agent to endorse any check or any other
instrument or security deposited or held in such Accounts to effect a deposit
into such Accounts and to transfer such funds to the Subsidiary Accounts in
accordance with this Agreement.
Section 2.3 Accounts as Collateral.
(a) To secure the payment by OPNY and OPMW of their respective Obligations
when due pursuant to the Subsidiary Financing Documents, as applicable, and
Holdco's obligations under each Holdco Guarantee, Holdco hereby grants,
transfers, pledges and assigns to the Collateral Agent, for the ratable benefit
of the Secured Parties, a security interest in all of the right, title and
interest of Holdco which it now possesses or may hereafter obtain, in and to,
among other things, all Subsidiary Advances and Voluntary Prepayment Advances,
each of the Accounts, including all monies and Permitted Investments and other
securities and instruments held in such Accounts and all other funds held by the
Collateral Agent under this Agreement and all of the proceeds of all the
foregoing (collectively, the "Account Collateral"). Holdco agrees that the
Account Collateral, and all rights Holdco may have with respect to such Account
Collateral, shall be subject to the terms and conditions of this Agreement and
the other Subsidiary Financing Documents.
(b) Holdco agrees that it will not take any actions or fail to perform any
of its duties or obligations under this Agreement so that after giving effect to
such action or inaction the Collateral Agent will not then, or with the passage
of time, cease to have a perfected first priority security interest in any of
the Account Collateral.
(c) Holdco agrees that from time to time, at its expense, it will promptly
execute and deliver all further instruments and documents, and take all further
action, that may be necessary, or that the Collateral Agent may reasonably
request, in order to perfect and protect any pledge or
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security interest granted or purported to be granted hereby or to enable the
Collateral Agent to exercise and enforce its rights and remedies hereunder with
respect to any Account Collateral. Without limiting the generality of the
foregoing, Holdco will execute and file, with a copy thereof to the Collateral
Agent, such financing or continuation statements, or amendments thereto, and
such other instruments or notices, as may be necessary, or as the Collateral
Agent may reasonably request, in order to perfect and preserve the pledge,
assignment and security interest granted or purported to be granted hereby.
(d) Holdco hereby authorizes the Collateral Agent (but the Collateral
Agent shall have no obligation) to file one or more financing or continuation
statements, and amendments thereto, relating to all or any part of the Account
Collateral without Holdco's signature where permitted by law. A photocopy or
other reproduction of this Agreement or any security agreement or financing
statement covering the Account Collateral or any part thereof shall be
sufficient as a financing statement where permitted by law.
(e) Holdco will furnish to the Collateral Agent from time to time
statements and schedules further identifying and describing the Account
Collateral and such other reports in connection with the Account Collateral as
the Collateral Agent may reasonably request, all in reasonable detail.
Section 2.4 Accounts and the Collateral Agent. For purposes of this
Agreement, the parties confirm and agree as follows:
(a) The Collateral Agent confirms and agrees that it is a "securities
intermediary" as defined in Section 8-102(14) of the UCC and a "Securities
Intermediary" as defined in 31 C.F.R. Part 357.2 of the United States.
(b) The Collateral Agent hereby agrees, upon the delivery or transfer of
any Account Collateral to the Collateral Agent for deposit in an Account, to
indicate by book entry that such Account Collateral has been credited to and is
carried in the applicable Account and accept such Account Collateral for credit
to the applicable Account.
(c) Holdco confirms and agrees that it has not and will not (i) permit any
of its creditors to obtain control over any Account or Holdco's or any Borrower
Subsidiary's interest in any financial asset credited thereto or carried
therein, or (ii) except for the Holdco Documents, enter into any agreement,
arrangement or understanding with any other Person relating to any of the
Accounts and the financial assets credited or to be credited thereto or carried
or to be carried therein pursuant to which it has agreed to comply with
entitlement orders of such Person.
(d) Each of the Accounts is and shall continue to be governed by the
Securities Account Control Agreement.
ARTICLE III
NOTICE REQUIREMENTS
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Section 3.1 Monthly Notice of Deposits and Withdrawals; Confirmation of
Transfers. Following the date on which funds are first deposited in any Account,
the Collateral Agent shall, upon the request of either Administrative Agent or
Holdco and in any event on or before the tenth (10th) day of each calendar
month, notify Holdco and each Administrative Agent in the form of Exhibit A
hereto (each, a "Notice of Monthly Deposits and Withdrawals") of the amounts
deposited and withdrawn, if any, from the Accounts (including any earnings
thereon) during the preceding calendar month.
Section 3.2. Notice of Subsidiary Account Shortfalls. On each Transfer
Date, Holdco shall deliver, and no more than two additional times (once with
respect to the OPNY Deposit Account Agreement and once with respect to the OPMW
Deposit Account Agreement) during each calendar week Holdco may deliver, to the
Collateral Agent written notice with regard to each Subsidiary Deposit Account
Agreement setting forth any Subsidiary Account Shortfall under such Subsidiary
Deposit Account Agreement pursuant to the terms of such Subsidiary Deposit
Account Agreement (each, substantially in the form of Exhibit B hereto, a
"Shortfall Certificate"). Promptly, and, in any event, within two (2) Business
Days, following receipt of such Shortfall Certificate notifying the Collateral
Agent that a Subsidiary Account Shortfall has occurred (each, a "Shortfall
Notice"), the Collateral Agent shall review such Shortfall Certificate and
determine, in its reasonable discretion, whether such Shortfall Certificate
conforms to the requirements of this Agreement and the Subsidiary Deposit
Account Agreements and contains accurate calculations. If the Collateral Agent
determines that the Shortfall Certificate conforms to the requirements of this
Agreement and the Subsidiary Deposit Account Agreements and contains accurate
calculations, the Collateral Agent shall, within two (2) Business Days following
receipt of such Shortfall Notice, notify Holdco of such determination and, to
the extent funds are available in the Collection Account, shall make a
withdrawal from the Collection Account and deposit funds into the relevant
Subsidiary Revenue Account as contemplated in Section 5.1 or 5.3 hereof, as the
case may be. If the Collateral Agent determines in good faith that such
Shortfall Certificate does not conform to the requirements of this Agreement or
the Subsidiary Deposit Account Agreements or contains inaccurate calculations,
the Collateral Agent shall, within two (2) Business Days following receipt of
such Shortfall Certificate, notify Holdco of such determination (providing
reasonable detail of such non-conformity and/or inaccuracy). Holdco shall have
the right to resubmit such Shortfall Certificate within two (2) Business Days
following its receipt of notice of non-conformity or inaccuracy from the
Collateral Agent. If the Collateral Agent determines in good faith and in its
reasonable discretion that such resubmitted Shortfall Certificate conforms to
the requirements of this Agreement and the Subsidiary Deposit Account Agreements
and contains accurate calculations, the Collateral Agent, to the extent funds
are available in the Collection Account, shall make a withdrawal from the
Collection Account and deposit funds in the relevant Subsidiary Revenue Account
as contemplated in Section 5.1 or 5.3 hereof, as the case may be. If the
Collateral Agent determines in good faith and in its reasonable discretion that
such resubmitted Shortfall Certificate does not conform to the requirements of
this Agreement or the Subsidiary Deposit Account Agreements or contains
inaccurate calculations, the Collateral Agent's determination regarding such
defect shall be determinative, absent manifest error. It is understood and
agreed that no right to resubmit a Shortfall Certificate as set forth above or
dispute relative thereto may be used to delay any
15
deposits or prepayments otherwise required by this Agreement, and Holdco and the
Collateral Agent agree to work in good faith on shorter deadlines to the extent
Holdco and the Collateral Agent reasonably determine that such shorter deadlines
are commercially feasible, to effect other provisions of this Agreement affected
by such resubmission.
Section 3.3 Periodic Notice. As soon as possible, but in any event not
later than the Transfer Date immediately prior to each Periodic Date (beginning
after the Periodic Dates that occur on November 1, 2002, and December 2, 2002,
and provided, that unless elected by Holdco, no Periodic Notice shall be
required to be delivered with regard to any June 1 or December 1 Periodic Date),
Holdco shall deliver to the Collateral Agent a Periodic Notice in the form of
Exhibit C hereto, certified and signed by a Responsible Officer of Holdco (each
a "Periodic Notice") and (together with the calculations used to determine the
following, as applicable):
(a) setting forth (i) the Scheduled Indenture Debt Service Deposit Amount
for the calendar quarter most recently ended and (ii) the Debt Service Coverage
Ratio for Holdco and each Borrower Subsidiary, in each case, for the applicable
Measurement Period ending as of the last day of the month most recently ended;
(b) either (i) certifying that each of the Borrower Subsidiaries is in
compliance with such Minimum Debt Service Coverage Ratio for the applicable
Measurement Period ending as of the last day of the month most recently ended or
(ii) if any Borrower Subsidiary is not in compliance with its Minimum Debt
Service Coverage Ratio, notifying the Collateral Agent of such non-compliance
(each, a "Debt Service Non-Compliance Notice") and setting forth the amount of
cash necessary to be deposited in the relevant Subsidiary Prepayment Account
which, if used to prepay applicable Obligations during the applicable
Measurement Period, would have caused such Minimum Debt Service Coverage Ratio
to be satisfied (the "Debt Service Coverage Compliance Prepayment Amount");
(c) setting forth (i) the Target Principal Amount as of the Quarterly
Payment Date immediately preceding such notice, and (ii) if the Target Principal
Amount is greater than or equal to $1,000,000,000.00, the Net Voluntary
Prepayment Amount as of the date of such Periodic Notice;
(d) setting forth the OPH Net Cash Flows and Indenture Payment Offset
Amount for the two calendar quarters most recently ended;
(e) setting forth the Scheduled Indenture Debt Service Payment Amount, the
IDSRA Deposit Amount and the IDSRA Distribution Amount as of the Periodic Date
immediately following the date of such Periodic Notice;
(f) certifying that (i) the IDSRA Distribution Amount is sufficient to pay
in full the Scheduled Indenture Debt Service Payment Amount then due and
payable, or (ii) there exists an Indenture Payment Reserve Shortfall and that
OPH shall deposit, or shall cause to be deposited, on or before such Indenture
Payment Date, an amount equal to the applicable Indenture Payment
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Reserve Shortfall (each, an "Indenture Payment Reserve Shortfall Deposit") into
the Indenture Debt Service Reserve Account; and
(g) certifying that no Distribution Blocking Event has occurred and is
continuing.
Notwithstanding anything to the contrary in this Section 3.3, (x) if a
Distribution Blocking Event shall have occurred and be continuing as of such
Transfer Date, or if Holdco otherwise elects not to request that any
distribution be made to OPH as may be contemplated in this Agreement, the
Periodic Notice shall be required to include only the items set forth in clauses
(a)(ii) and (b) of this Section 3.3 and (y) Holdco shall deliver on October 31,
2002, for the Measurement Period ending September 30, 2002, a Periodic Notice
including only the items set forth in clauses (a) and (b) of this Section 3.3.
Section 3.4 Notice of Allowance Purchase. For so long as there is any
amount on deposit in the Allowance Purchase Reserve Account, on any Business
Day, Holdco shall have the right to deliver to the Collateral Agent a Notice of
Allowance Purchase in the form of Exhibit D hereto certifying that the Allowance
Purchase is in compliance with the terms of the applicable Credit Agreement and
setting forth the Borrower Entity desiring to make an Allowance Purchase, the
amount of such Allowance Purchase, or, if the amount of such Allowance Purchase
is in excess of the amount then on deposit in the Allowance Purchase Reserve
Account, an amount up to but not in excess of such amount then on deposit (the
"Allowance Purchase Amount"), and the date on which the Collateral Agent shall
distribute the Allowance Purchase Amount to the relevant Borrower Operating
Account in accordance with Section 5.5 hereof, which date shall be a Business
Day occurring no earlier than the first Business Day following the date of such
notice.
Section 3.5 Notice of Closing Expenses. For so long as there is any amount
on deposit in the Restructuring Cost Reserve Account, on any Business Day before
December 31, 2002, Holdco shall have the right to deliver to the Collateral
Agent a Notice of Closing Expenses in the form of Exhibit B hereto.
ARTICLE IV
DEPOSITS INTO ACCOUNTS
Section 4.1 Deposit of Subsidiary Advances. Promptly upon receipt thereof
by the Collateral Agent, the Collateral Agent shall deposit all Subsidiary
Advances received pursuant to Section 5.2 of the OPNY Deposit Agreement and/or
Section 5.1 of the OPMW Deposit Agreement in the Collection Account.
Section 4.2 Deposit of Initial Indenture Debt Service Deposit Amount.
Promptly upon receipt thereof by the Collateral Agent pursuant to Section 5.2 of
the OPNY Deposit Agreement, the Collateral Agent shall deposit the Initial
Indenture Debt Service Deposit Amount into the Initial Indenture Debt Service
Reserve Account.
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Section 4.3 Indenture Debt Service Reserve Amounts. Promptly upon receipt
thereof by the Collateral Agent, the Collateral Agent shall deposit all amounts
designated for deposit in the Indenture Debt Service Reserve Account pursuant to
Section 5.1 hereof into such account.
Section 4.4 Deposit of Voluntary Prepayment Advances. Promptly upon
receipt thereof, the Collateral Agent shall deposit all Voluntary Prepayment
Advances into the Voluntary Prepayment Account.
Section 4.5 Deposit of Allowance Purchase Reserve Amount. Promptly upon
receipt thereof by the Collateral Agent pursuant to Section 5.2 of the OPNY
Deposit Agreement and Section 5.1 of the OPMW Deposit Agreement, the Collateral
Agent shall deposit the Allowance Purchase Reserve Amount into the Allowance
Purchase Reserve Account.
Section 4.6 Deposit of Distribution Amounts. Promptly upon receipt thereof
on the Restructuring Effective Date or thereafter, by the Collateral Agent, the
Collateral Agent shall deposit all amounts designated pursuant to the terms
hereof for deposit in the Distribution Account into such account.
Section 4.7 Deposit of Restructuring Closing. Promptly on receipt thereof
pursuant to Section 5.2 of the OPNY Deposit Agreement, the Collateral Agent
shall deposit all Closing Expenses in the Restructuring Cost Reserve Account.
Section 4.8 Information to Accompany Amounts Delivered to the Collateral
Agent; Deposits Irrevocable. (a) All amounts transferred by Holdco, OPH, any
Borrower Subsidiary, the OPMW Administrative Agent, the OPNY Administrative
Agent or any Secured Party to the Collateral Agent shall be accompanied by a
written direction of such Person specifying in reasonable detail the source of
such amounts and the Account or Accounts (including the number of such Account
or Accounts) into which such amounts are to be deposited.
(b) All amounts transferred to the Collateral Agent hereunder shall be
made by federal wire transfer in immediately available funds to Bank of America,
N.A. (ABA No. (1110-0001-2)) indicating the appropriate account.
(c) Any deposit made into any Account shall, absent manifest error, be
irrevocable and the amount of such deposit plus any investment earnings thereon
shall be held by the Collateral Agent and applied, invested and transferred
solely as provided herein.
(d) The Collateral Agent shall have no obligation to verify the accuracy
or the adequacy of the sources or amounts transferred to it pursuant to
subsection (a) of this Section 4.8 and shall be entitled to rely on the written
directions accompanying such transfers.
(e) With respect to any amount received by the Collateral Agent without
the information required in subsection (a) above, the Collateral Agent shall
cause such amount to be deposited into the Collection Account and held by the
Collateral Agent and applied, invested and
18
transferred solely as provided herein. The Collateral Agent agrees to notify
Holdco within five (5) days of a receipt of funds for which the Collateral Agent
does not have the information required in subsection (a) above.
Section 4.9 Books of Account; Statements. The Collateral Agent shall
maintain books of account on a cash basis and record therein all deposits into
and transfers to, from and between the Accounts and all investment transactions
effected by the Collateral Agent, pursuant to Article V hereof. The Collateral
Agent shall make such books of account available during normal business hours
for inspection and audit by Holdco and the Secured Parties and their respective
representatives upon reasonable prior notice.
ARTICLE V
ALLOCATIONS FROM ACCOUNTS
Section 5.1 Allocations from the Collection Account. (a) (i) On the
Restructuring Effective Date and each anniversary thereof, the Collateral Agent
shall transfer an amount on deposit in the Collection Account, equal to the fee
specified in the Collateral Agent Fee Side Letter with respect to the next year
to the account specified in the Collateral Agent Fee Side Letter. (ii) On each
Determination Date for which, and on each other date that a weekly shortfall
notice is given as permitted by Section 3.2 and that is no more than three (3)
Business Days after which, the Collateral Agent shall have received a Shortfall
Notice or weekly shortfall notice with regard to either Borrower Subsidiary, the
Collateral Agent shall, to the extent funds are available in the Collection
Account, transfer an amount sufficient to cover such Subsidiary Account
Shortfall to the relevant Subsidiary Revenue Account or, if the amount on
deposit in the Collection Account is not sufficient to cover 100% of the amount
of such Subsidiary Account Shortfall, the Collateral Agent shall transfer 100%
of the amount on deposit in the Collection Account to the relevant Subsidiary
Revenue Account.
(b) On each Determination Date for which, and on each other date that a
weekly shortfall notice is given as permitted by Section 3.2 and that is no more
than three (3) Business Days after which, the Collateral Agent shall have
received a Shortfall Notice or weekly shortfall notice with regard to both
Borrower Subsidiaries, the Collateral Agent shall transfer an amount sufficient
to cover each Subsidiary Account Shortfall to each Borrower Subsidiary's
Subsidiary Revenue Account or, if the amount on deposit in the Collection
Account is not sufficient to cover 100% of the aggregate amount of the
Subsidiary Account Shortfalls, the Collateral Agent shall transfer each Borrower
Subsidiary's Pro Rata Share of the amount on deposit in the Collection Account
into its Subsidiary Revenue Account.
(c) On each date that is the second Determination Date immediately
following each Quarterly Payment Date with respect to which Holdco shall have
delivered a Debt Service Non-Compliance Notice, the Collateral Agent (after
making any pending withdrawals required under the foregoing subsections 5.1(a)
and (b)) shall:
19
first, transfer the Debt Service Coverage Compliance Prepayment Amount(s)
to the relevant Subsidiary Prepayment Account, or, if the amount on
deposit in the Collection Account is less than the Debt Service Coverage
Compliance Prepayment Amount and (x) Holdco has delivered a Debt Service
Non-Compliance Notice for only one of the Borrower Subsidiaries, transfer
100% of the amount on deposit in the Collection Account into the relevant
Subsidiary Prepayment Account or (y) Holdco has delivered a Debt Service
Non-Compliance Notice for both Borrower Subsidiaries, transfer each
Borrower Subsidiary's Pro Rata Share of the amount on deposit in the
Collection Account to its Subsidiary Prepayment Account; and
second, if Holdco elects in its sole discretion to proceed with this
clause second and there is any amount then remaining in the Collection
Account and no Distribution Blocking Event shall have occurred and be
continuing, withdraw an amount on deposit in the Collection Account of up
to but not in excess of (i) the Scheduled Indenture Debt Service Deposit
Amount applicable to the immediately preceding quarter if such quarter is
the first quarter of a Semi-Annual Period or (ii) if such quarter is the
second quarter of a Semi-Annual Period, the sum of the Scheduled Indenture
Debt Service Deposit Amount for both quarters during such Semi-Annual
Period, less the amount of any distribution from the Collection Account to
the Indenture Debt Service Reserve Account pursuant to subsection 5.1(c)
or (d) during the first quarter of such Semi-Annual Period, and transfer
such amount into the Indenture Debt Service Reserve Account; and
third, if there is any amount then remaining in the Collection Account,
transfer such amount into the Distribution Account.
(d) On each date that is the second Determination Date immediately
following each Quarterly Payment Date on which no distributions are made
pursuant to subsection 5.1(c), the Collateral Agent (after making any pending
withdrawals required under subsections 5.1(a) and (b)) shall:
first, if Holdco elects in its sole discretion to proceed with this clause
first, withdraw an amount on deposit in the Collection Account of up to,
but not in excess of, (i) the Scheduled Indenture Debt Service Deposit
Amount applicable to the immediately preceding quarter if such quarter is
the first quarter of a Semi-Annual Period or (ii) if such quarter is the
second quarter of a Semi-Annual Period, the sum of the Scheduled Indenture
Debt Service Deposit Amount for both quarters during such Semi-Annual
Period, less the amount of any distribution from the Collection Account to
the Indenture Debt Service Reserve Account pursuant to subsection 5.1(c)
or (d) during the prior quarter, and deposit such amount into the
Indenture Debt Service Reserve Account; and
second, if there is any amount then remaining in the Collection Account,
withdraw 100% of such amount and deposit it into the Distribution Account.
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Section 5.2 Allocations from the Initial Indenture Debt Service Reserve
Account. (a) On November 1, 2002 and December 1, 2002, so long as no Default or
Event of Default shall have occurred and be continuing, the Collateral Agent
shall:
first, withdraw an amount on deposit in the Initial Indenture Debt Service
Reserve Account equal to the Scheduled Indenture Debt Service Payment
Amount due and payable on such date and transfer such net amount into the
account designated by the relevant Indenture Trustee; and
second, on December 2, 2002, if there is any amount then remaining in the
Initial Indenture Debt Service Reserve Account after giving effect to the
preceding clause first, transfer such 100% of such amount into the
Distribution Account.
(b) On December 2, 2002, after giving effect to the provisions of Section
5.2(a), if for any reason any amount remains on deposit in the Initial Indenture
Debt Service Reserve Account, the Collateral Agent shall withdraw 100% of such
amount then on deposit in the Initial Indenture Debt Service Reserve Account and
deposit such amount into the Distribution Account.
Section 5.3 Allocations from the Indenture Debt Service Reserve Account.
(a) On each date on which the Collateral Agent is required to make a transfer
from the Collection Account to a Subsidiary Revenue Account and/or a Subsidiary
Prepayment Account, if the amount on deposit in the Collection Account is
insufficient to cover the entire amount of such transfers (a "Collection Account
Shortfall" and the amount of such shortfall, the "Collection Account Shortfall
Amount"), the Collateral Agent shall transfer an amount equal to the Collection
Account Shortfall Amount from the Indenture Debt Service Reserve Account to the
Collection Account for distribution under the relevant provisions of Section 5.1
or, if the amount on deposit in the Indenture Debt Service Reserve Account is
insufficient to cover the entire Collection Account Shortfall Amount, the
Collateral Agent shall transfer 100% of the amount on deposit in the Indenture
Debt Service Reserve Account into the Collection Account for distribution under
the relevant provisions of Section 5.1.
(b) Subject to the terms of Section 5.8(a), on each Indenture Payment Date
(i) that occurs after December 2, 2002 and before the Distribution Cut-Off Date,
(ii) on which the sum of the IDSRA Distribution Amount and the Indenture Payment
Reserve Shortfall Deposit, if any, is equal to or greater than the Scheduled
Indenture Debt Service Payment Amount due and payable as of such date, (iii) on
which each of the Borrower Subsidiaries has a Debt Service Coverage Ratio of at
least 1.00 to 1.00, (iv) on which Holdco has a Combined Debt Service Coverage
Ratio of at least 2.50 to 1.00, and (v) on which no Distribution Blocking Event
shall have occurred and be continuing, the Collateral Agent (after making any
pending withdrawals required under Section 5.1 and subsection 5.3(a)) shall:
first, withdraw an amount on deposit in the Indenture Debt Service Reserve
Account equal to but not more than the Scheduled Indenture Debt Service
Payment Amount then due and payable, and transfer such amount into the
account designated by the relevant Indenture Trustee; and
21
second, if such date is an Indenture Payment Date with respect to the
Convertible Notes Indenture and there is any amount then remaining in the
Indenture Debt Service Reserve Account, transfer 100% of such amount into
the Distribution Account.
It is understood and agreed that, notwithstanding any provision of any
Financing Document, none of the Collateral Agent, the OPMW Administrative Agent,
the OPMW Secured Parties, the OPNY Administrative Agent or the OPNY Secured
Parties shall have any rights (including set-off or offset rights) with respect
to any Indenture Payment Reserve Shortfall Deposit, that such amount shall not
constitute collateral (including Account Collateral) hereunder or under the OPMW
Credit Agreement, the OPNY Credit Agreement or any other Transaction Documents,
and that such Indenture Payment Reserve Shortfall Deposit shall be used solely
to pay the Scheduled Indenture Debt Service Payment Amount due on such date in
accordance with Section 5.3. With respect to any Indenture Payment Date, in the
event that any Scheduled Indenture Debt Service Payment Amount is not
distributed to the applicable Indenture Trustee for whatever reason on the date
required hereunder, and an Indenture Payment Reserve Shortfall Deposit was made
with respect to such date, then the Collateral Agent shall return 100% of the
amount of the Indenture Payment Reserve Shortfall Deposit to OPH within one (1)
Business Day of its deposit.
(c) On each Indenture Payment Date occurring after the Distribution
Cut-Off Date or that is an Indenture Payment Date with respect to the
Convertible Notes Indenture and on which no distribution has been made in
accordance with the preceding subsection 5.3(b), the Collateral Agent (after
making any pending withdrawals required under Section 5.1 and subsection 5.3(a))
shall transfer 100% of the amount on deposit in the Indenture Debt Service
Reserve Account into the Distribution Account.
Section 5.4 Allocations from Voluntary Prepayment Account. On any Business
Day on which there is any amount on deposit in the Voluntary Prepayment Account,
the Collateral Agent shall transfer each Borrower Subsidiary's Pro Rata Share of
such amount into such Borrower Subsidiary's Subsidiary Prepayment Account.
Section 5.5 Allocations from the Allowance Purchase Reserve Account. On
the Business Day specified in any Notice of Allowance Purchase, the Collateral
Agent shall withdraw the Allowance Purchase Amount specified in such Notice of
Allowance Purchase and transfer such amount to the relevant Borrower Operating
Account.
Section 5.6 Allocations from the Restructuring Cost Reserve Account. (a)
On any Business Day occurring before December 31, 2002 specified in any Notice
of Closing Expenses (which date shall be at least three (3) Business Days after
the date of such notice and, in any event, before December 31, 2002), the
Collateral Agent shall withdraw the amount specified in such Notice of
Restructuring Closing Costs and transfer such amount to the Person or Persons
designated in such notice.
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(b) On December 31, 2002, if there is any amount then on deposit in the
Restructuring Cost Reserve Account, the Collateral Agent shall transfer 100% of
such amount into the Distribution Account and shall close the Restructuring Cost
Reserve Account.
Section 5.7 Allocations from the Distribution Account. (a) Subject to
Section 5.8(a), on each date that is the second Determination Date immediately
following each Quarterly Payment Date and that occurs on or before the
Distribution Cut-Off Date on which (i) any amount is on deposit in the
Distribution Account, (ii) the Target Principal Amount is greater than or equal
to $1,000,000,000.00, (iii) each of the Borrower Subsidiaries has a Debt Service
Coverage Ratio of at least 1.00 to 1.00, (iv) Holdco has a Combined Debt Service
Coverage Ratio of at least 2.50 to 1.00, (v) no Distribution Blocking Event
shall have occurred and be continuing and (vi) the Net Voluntary Prepayment
Amount is greater than zero, the Collateral Agent (after making any pending
withdrawals required under Sections 5.1) (x) shall distribute from the
Distribution Account: (x) the lesser of (1) 50% of the amount on deposit in the
Distribution Account as of such date and (2) the Net Voluntary Prepayment Amount
as of such date (each such distribution, a "Voluntary Prepayment Distribution")
into an account designated by OPH, in either case, less the Regulatory Change
Cash Flow Reduction Amount as of such date, if any, that otherwise has not been
deducted from any distributions to an Indenture Trustee or OPH pursuant to this
Agreement, and (y) each Borrower Subsidiary's Pro Rata Share of the remaining
amount into such Borrower Subsidiary's Subsidiary Prepayment Account.
(b) Subject to Section 5.8(a), on each date that is the second
Determination Date immediately following each Quarterly Payment Date and that
occurs on or before the Distribution Cut-off Date on which (i) any amount is on
deposit in the Distribution Account, (ii) the Target Principal Amount is less
than $1,000,000,000.00, (iii) each of the Borrower Subsidiaries has a Debt
Service Coverage Ratio of at least 1.00 to 1.00, (iv) Holdco has a Combined Debt
Service Coverage Ratio of at least 2.50 to 1.00, and (v) no Distribution
Blocking Event shall have occurred and be continuing, the Collateral Agent
(after making any pending withdrawals required under Sections 5.1 and 5.3) shall
transfer from the Distribution Account: (x) an amount equal to 50% of the
difference, if positive, between the amount then on deposit in the Distribution
Account as of such date, less the IDSRA Distribution Amount for the Quarterly
Date just ended and less the Regulatory Change Cash Flow Reduction Amount as of
such date, if any, that otherwise has not been deducted from any distributions
to an Indenture Trustee or OPH pursuant to this Agreement, to an account
designated by OPH and (y) each Borrower Subsidiary's Pro Rata Share of the
remaining amount of such difference in (x) into such Borrower Subsidiary's
Subsidiary Prepayment Account.
(c) On any date on which no distributions are made pursuant to the
preceding subsections 5.7(a) or 5.7(b), or on any applicable date that occurs
after the Distribution Cut-Off Date, the Collateral Agent shall transfer each
Borrower Subsidiary's Pro Rata Share of the amount on deposit in the
Distribution Account as of such date into such Borrower Subsidiary's Subsidiary
Prepayment Account.
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Section 5.8 Limitation on Distributions to OPH; Defaults. (a)
Notwithstanding any other provisions contained in this Agreement (other than
Sections 5.1 and 5.2 above), the Collateral Agent shall not make any
distributions from any Account to any Indenture Trustee, OPH or their respective
designees pursuant to Sections 5.3(b), 5.7(a) or 5.7(b) or otherwise (other than
the distribution contemplated by Sections 5.1 and 5.2 above) unless the
principal amount of the Obligations outstanding as of the Restructuring
Effective Date has been prepaid with Scheduled Prepayments which in total are
equal to or greater than the Target Prepayment Amount.
(b) In the event that the Collateral Agent in good faith asserts that any
condition to any of the distributions required to be made on any applicable date
(other than with respect to any Shortfall Certificate) provided herein under the
foregoing provisions of this Article V have not been fully satisfied (each, an
"Unsatisfied Condition"), the Collateral Agent shall so notify Holdco in writing
no later than three (3) Business Days after timely receipt of the calculations
required to be delivered by Holdco pursuant to Section 3.3. If each such
Unsatisfied Condition is capable of being cured and Holdco disputes such
assertion, the parties shall work in good faith to resolve any deficiencies
noted by the Collateral Agent in such notice and Holdco shall be permitted to
resubmit any required notices or other documents on or prior to the second (2nd)
Business Day following Holdco's receipt of such notice. If such resubmissions
are acceptable to the Collateral Agent acting in good faith and its reasonable
discretion and all of the foregoing Unsatisfied Conditions are then satisfied,
the Collateral Agent shall make the distributions required thereby. If such
notice or resubmission from Holdco is not timely delivered, or if the parties
cannot reach agreement regarding any Unsatisfied Conditions, the Collateral
Agent's resolution regarding such certificate, resubmission or Unsatisfied
Condition shall be determinative, absent manifest error.
(c) Notwithstanding any other provision contained in this Agreement but
subject to the provisions of the last paragraph of Section 5.3(b), upon receipt
by the Collateral Agent of written notice from Holdco, the OPNY Administrative
Agent, the OPMW Administrative Agent or any Secured Party to the effect that a
Default or an Event of Default shall have occurred and be continuing, the
Collateral Agent may distribute the funds in the Accounts in accordance with the
terms of this Agreement.
ARTICLE VI
INVESTMENTS AND VALUATION
Section 6.1 Investments. Except upon the occurrence and during the
continuance of any Default or Event of Default, any amounts held by the
Collateral Agent in any of the Accounts shall be invested by the Collateral
Agent from time to time, at the risk and expense of Holdco, solely in such
Permitted Investments as Holdco shall direct (or, so long as any Default or
Event of Default shall have occurred and be continuing, as the Collateral Agent
may in its discretion select). Holdco shall select Permitted Investments having
such maturities as shall cause each Account to have a cash balance as of any day
sufficient to cover the transfers to be made from
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such Account on such day in accordance with this Agreement. In the event that
the cash balance in any Account is as of any day insufficient to cover the
transfers to be made from such Account on such day, the Collateral Agent may
(but shall not be obligated to) sell or liquidate the Permitted Investments held
in such Account (without regard to maturity date) in such manner as the
Collateral Agent may reasonably deem necessary in order to obtain cash at least
sufficient to make such transfers and to pay any expenses and charges incurred
in connection with effecting any such sale or liquidation, which expenses and
charges the Collateral Agent shall be authorized to pay with cash on deposit in
such Account. The Collateral Agent shall not be liable to any Person for any
loss suffered because of any such sale or liquidation other than by reason of
its willful misconduct or gross negligence.
Section 6.2 Income or Gain. Any interest, investment income or gain
realized as a result of any Permitted Investments held in the Accounts (net of
the expenses incurred in connection with making such Permitted Investments)
shall be deposited into the Collection Account on each Transfer Date and applied
or reinvested as provided herein. The Collateral Agent shall have no liability
for any loss resulting from any such Permitted Investment other than by reason
of its willful misconduct or gross negligence.
Section 6.3 Value. Cash and securities on deposit from time to time in the
Accounts shall be valued by the Collateral Agent as follows:
(a) cash shall be valued at the face amount thereof, and
(b) securities shall be valued at the market value thereof.
Section 6.4 Taxes. It is acknowledged by the parties hereto that all
interest and other investment income earned on amounts on deposit in the
Accounts for federal, state and local income tax purposes shall be attributed to
Holdco. Holdco shall be responsible for determining any requirements for paying
taxes or reporting or withholding any payments for tax purposes hereunder.
Holdco shall prepare and file all tax information required with respect to the
Accounts and Holdco agrees to indemnify and hold the Collateral Agent harmless
against all liability for tax withholding and/or reporting for any payments.
Such indemnities shall survive the termination or discharge of this Agreement or
resignation of the Collateral Agent. The Collateral Agent shall not have any
obligation with respect to the making of or the reporting of any payments for
tax purposes other than to the extent it is provided with monies and/or the
reports in respect thereof.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
Section 7.1 Representations and Warranties. Holdco represents and warrants
as follows:
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(a) Holdco is the beneficial owner of the Account Collateral free and
clear of all Liens (other than Liens created pursuant to this Agreement and the
other Financing Documents). No effective financing statement or other document
similar in effect covering all or any part of the Account Collateral made by,
consented to by or known by Holdco is on file in any recording office, except
such as may have been filed in favor of the Collateral Agent.
(b) Holdco conducts no business under any name or tradenames other than
its full name as specified in the preamble to this Agreement.
(c) The security interests purported to be created in the Account
Collateral by this Agreement in favor of the Collateral Agent (for the benefit
of the Secured Parties), upon making the filings and taking the other actions
set forth on Schedule 7.1 hereto, will constitute valid, first priority
perfected Liens on and security interests in all the Account Collateral.
(d) No Governmental Approvals or other approvals, registrations,
notarizations, recordings or filings are required which have not been obtained
or made in connection with (i) the creation in favor of the Collateral Agent
(for the benefit of the Secured Parties) of the Liens purported to be created
pursuant hereto, (ii) the validity and enforceability of this Agreement and such
Liens, (iii) creation and maintenance of the first priority and perfection of
such Liens or (iv) the exercise by the Secured Parties, in accordance with the
Intercreditor Agreement, of their rights and remedies under this Agreement.
ARTICLE VIII
COVENANTS
Section 8.1 Covenants. Holdco agrees that:
(a) Defense of Account Collateral. It shall defend its Account Collateral
against all claims and demands of all Persons (other than the Collateral Agent
and the other Secured Parties) claiming an interest in any of the Account
Collateral.
(b) Location of Office; Jurisdiction of Formation. It shall keep its place
of business and chief executive office and the office where it keeps its records
concerning the Account Collateral, at the address for Holdco specified on the
signature page hereto; or, upon thirty (30) days prior written notice to the
Collateral Agent, at such other location in a jurisdiction where all action
required by Section 2.3 shall have been taken with respect to the Account
Collateral. Holdco shall provide the Collateral Agent thirty (30) days prior
written notice of any change in its jurisdiction of formation.
26
(c) Disposition of Account Collateral. It shall not sell, assign (by
operation of law or otherwise) or otherwise dispose of any of the Account
Collateral, or create or suffer to exist any Lien upon or with respect to any of
the Account Collateral, except for the security interest created by this
Agreement and the other Financing Documents.
ARTICLE IX
COLLATERAL AGENT
Section 9.1 Appointment of Collateral Agent, Powers and Immunities. (a)
Pursuant to the Intercreditor Agreement, the Secured Parties have appointed Bank
of America, N.A. to act as Collateral Agent hereunder and under the other Holdco
Documents with such powers as are expressly delegated to the Collateral Agent by
the terms of the Intercreditor Agreement and this Agreement, together with such
other powers as are reasonably incidental thereto. The Collateral Agent shall
not have any duties or responsibilities except those expressly set forth in the
Intercreditor Agreement, this Agreement or in any other Holdco Document, or be a
trustee for, or have any fiduciary relationship with, any Secured Party.
Notwithstanding anything to the contrary contained herein, the Collateral Agent
shall not be required to take any action which is contrary to the Intercreditor
Agreement, this Agreement or any other Holdco Document or applicable law.
Neither the Collateral Agent nor any Secured Party nor any of their respective
affiliates shall be responsible to any other Secured Party for any recitals,
statements, representations or warranties made by Holdco or either Borrower
contained in the Holdco Documents or the Subsidiary Financing Documents or in
any certificate or other document referred to or provided for in, or received by
any Secured Party under, this Agreement or the other Holdco Documents for the
value, validity, effectiveness, genuineness, enforceability or sufficiency of
this Agreement or the other Holdco Documents or any other document referred to
or provided for herein or therein or for any failure by Holdco to perform its
obligations hereunder or thereunder. The Collateral Agent may employ Collateral
Agents and attorneys-in-fact and shall not be responsible for the negligence or
misconduct of any such Collateral Agents or attorneys-in-fact selected by it
with reasonable care. Neither the Collateral Agent nor any of its directors,
officers, employees or agents shall be responsible for any action taken or
omitted to be taken by it or them hereunder or under any Holdco Document or
Project Document or in connection herewith or therewith, except for its or their
own gross negligence or willful misconduct.
(b) Reliance by Collateral Agent. The Collateral Agent shall be entitled
to rely upon any certificate, notice or other document (including any cable,
telegram, telecopy or telex) believed by it to be genuine and correct and to
have been signed or sent by or on behalf of the proper Person or Persons, and
upon advice and statements of legal counsel, independent accountants and other
experts selected by the Collateral Agent. As to any matters related to this
Agreement or the transactions contemplated hereby, the Collateral Agent shall
not be required to take any action or exercise any discretion, but the
Collateral Agent shall be required to act or to refrain from acting upon
instructions of the Required Lenders and shall in all cases be fully protected
in acting, or in refraining from acting, hereunder or under any Holdco Document
in
27
accordance with the instructions of the Required Lenders, and such instructions
of the Required Lenders and any action taken or failure to act pursuant thereto
shall be binding on all of the Secured Parties.
(c) Defaults. The Collateral Agent shall not be deemed to have actual
knowledge or notice of the occurrence of a Default or an Event of Default unless
the Collateral Agent has received notice from a Secured Party, Holdco or either
Borrower Subsidiary referring to this Agreement, describing the Default or Event
of Default, which Subsidiary Financing Document or Holdco Document such Default
or Event of Default occurred under and stating that such notice is a "Notice of
Default." In the event that the Collateral Agent receives such a notice of the
occurrence of a Default or an Event of Default, the Collateral Agent shall give
notice thereof to the Secured Parties.
Section 9.2 Ambiguity or Inconsistency in Intercreditor Agreement with
Proposed Actions. If, with respect to a proposed action to be taken by it, the
Collateral Agent shall determine in good faith that the provisions of this
Agreement or the Intercreditor Agreement relating to the functions or
responsibilities or discretionary powers of the Collateral Agent are or may be
ambiguous or inconsistent, the Collateral Agent shall notify the Secured
Parties, identifying the proposed action and the provisions that it considers
are or may be ambiguous or inconsistent, and may decline either to perform such
function or responsibility or to exercise such discretionary power unless it has
received written confirmation that the Required Lenders concur in the
circumstances that the action proposed to be taken by the Collateral Agent is
consistent with the terms of this Agreement or is otherwise appropriate. The
Collateral Agent shall be fully protected in acting or refraining from acting
upon the confirmation of the Required Lenders in this respect, and such
confirmation shall be binding upon the Collateral Agent and the other Secured
Parties.
Section 9.3 Right and Duties. The Collateral Agent shall be protected in
acting and may rely exclusively upon any written notice, certificate,
instruction, request or other paper or document, as to the due execution thereof
and the validity and effectiveness of the provisions thereof and as to the truth
of any information therein contained. The Collateral Agent shall not be liable
for any error of judgment or for any act done or step taken or omitted except in
the case of its gross negligence or willful misconduct.
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ARTICLE X
EXERCISE OF RIGHTS UNDER INTERCREDITOR AGREEMENT
Section 10.1 Actions Upon an Event of Default. Upon the occurrence and
during the continuance of an Event of Default and upon receipt of written
instructions in accordance with the Intercreditor Agreement, the Collateral
Agent shall be permitted and is hereby authorized to take any and all actions
and to exercise any and all rights, remedies and options which it may have
hereunder, in each case, to the maximum extent permitted under applicable
Requirements of Law.
Section 10.2 Administration of Collateral. The Collateral Agent shall
administer the Account Collateral in the manner contemplated by this Agreement
to the maximum extent permitted under applicable Requirements of Law. No Secured
Party and no class or classes of Secured Parties shall have any right (a) to
direct the Collateral Agent to take any action in respect of the Account
Collateral other than as provided in this Agreement and the Intercreditor
Agreement or (b) to take any action with respect to the Account Collateral
independently of the Collateral Agent or other than to direct the Collateral
Agent to take action in accordance with this Agreement and the Intercreditor
Agreement, to the maximum extent permitted under applicable Requirements of Law.
Section 10.3 Application of Proceeds After Acceleration. If any Event of
Default shall have occurred and be continuing, and if any Obligations shall have
been declared due and payable under the relevant Subsidiary Credit Agreement to
be due and payable thereunder, then, at the direction of the Required Lenders,
all Account Collateral held by the Collateral Agent shall be distributed in
whole or in part by the Collateral Agent in accordance with the terms and
conditions of, and instructions given pursuant to, the Intercreditor Agreement.
ARTICLE XI
INDEMNIFICATION
Section 11.1 Payment of Expenses and Indemnification. (a) Holdco shall:
(i) promptly reimburse the Collateral Agent for all of its
reasonable costs and expenses, including, without limitation, (A) the
reasonable fees and disbursements of legal counsel, (B) reasonable
out-of-pocket expenses of its personnel, (C) other reasonable legal,
appraisal, environmental, audit, consulting, filing fees and expenses and
(D) all reasonable fees, taxes, assessments and duties (to the extent such
taxes, assessments and duties are to be paid pursuant to Article II of the
applicable Credit Agreement) incurred by it in connection with the due
diligence, negotiation, preparation, review, execution, delivery,
interpretation or administration of this Agreement, the other Holdco
Documents, the Intercreditor Agreement and the transactions contemplated
hereby and thereby;
29
(ii) promptly pay all out-of-pocket costs and other reasonable
expenses of the Secured Parties (both before and after the execution
hereof) in connection with protecting or perfecting the security interest
in the Holdco Collateral or in connection with any matters contemplated by
or arising out of this Agreement or any of the Holdco Documents, whether
(a) to prepare, negotiate or execute any amendment to, modification of or
extension of this Agreement, the Intercreditor Agreement or any other
Holdco Document, (b) to commence, defend, or intervene in any litigation
or to file a petition, complaint, answer, motion or other pleadings
necessary to protect the rights of the Secured Parties under this
Agreement, the Intercreditor Agreement or any of the other Holdco
Documents, (c) to take any other action in or with respect to any suit or
proceeding (bankruptcy or otherwise) necessary to protect the rights of
the Secured Parties under this Agreement, the Intercreditor Agreement or
any of the other Holdco Documents, (d) to protect, collect, lease, sell,
take possession of, release or liquidate any of the Holdco Collateral or
(e) to attempt to enforce any security interest in any of the Holdco
Collateral, or to enforce any rights of the Collateral Agent to collect
any of the Holdco Obligations, including all reasonable fees and expenses
of attorneys and paralegals (including reasonable charges for inside
counsel), and, in the case of enforcement, pay such costs and expenses for
any of the Secured Parties;
(iii) indemnify each of the Collateral Agent and each Secured Party,
its officers, directors, employees, representatives, agents, affiliates
and advisors (each an "Indemnified Person") from, and hold each of them
harmless against, any and all costs, losses, liabilities, claims, damages
or expenses incurred by any Indemnified Person of any kind or nature
whatsoever (including, without limitation, any such costs, losses,
liabilities, claims, damages or expenses of such Indemnified Person
(whether or not a party) arising out of or by reason of any investigation,
litigation or other proceeding) relating to the Collateral Agent or any
Secured Party entering into and performing of this Agreement, the
Intercreditor Agreement or any of the other Holdco Documents, together
with the reasonable fees and disbursements of attorneys and paralegals
(including reasonable charges for inside counsel) incurred in connection
with any of the foregoing; provided that Holdco shall have no obligation
to an Indemnified Person hereunder with respect to any of the foregoing to
the extent resulting from the gross negligence or willful misconduct of
such Indemnified Person; and
(iv) indemnify each Indemnified Person from, and hold each
Indemnified Person harmless against, any and all costs, losses,
liabilities, claims, damages or expenses incurred by any of them resulting
from (x) any past, present or future storage, holding, existence, release,
emission discharge, generation, abatement, disposition, handling or
transportation by, Holdco or its agents, employees and representatives of
any Hazardous Materials or (y) any past, present or future violation of,
failure to comply fully with or requirement to comply with any
Environmental Law by Holdco, or its agents, employees and representatives,
in each case together with the reasonable fees and disbursements of
attorneys and paralegals (including reasonable charges for inside counsel)
incurred in connection with any of the foregoing; provided, that Holdco
shall have no obligation to
30
an Indemnified Person hereunder with respect to any of the foregoing to
the extent resulting from the gross negligence or willful misconduct of
such Indemnified Person.
(b) If and to the extent that the obligations of Holdco under this Section
11 are unenforceable for any reason, Holdco hereby agrees to make the maximum
contribution to the payment and satisfaction of such obligations which is
permissible under applicable Requirements of Law. Holdco's obligations under
this Section 11 shall survive any termination of this Agreement and the payment
of the Obligations.
ARTICLE XII
MISCELLANEOUS
Section 12.1 Agreement for Benefit of Parties Hereto. Nothing in this
Agreement, express or implied, is intended or shall be construed to confer upon,
or to give to, any Person other than the parties hereto and their respective
successors and assigns, any right, remedy or claim under or by reason of this
Agreement or any covenant, condition or stipulation hereof; and the covenants,
stipulations and agreements contained in this Agreement are and shall be for the
sole and exclusive benefit of the parties hereto and their respective successors
and assigns.
Section 12.2 No Warranties. Except as otherwise expressly provided herein,
the Secured Parties have not made to each other nor do they hereby or otherwise
make to each other any warranties, express or implied, nor do they assume any
liability to each other with respect to the enforceability, validity, value or
collectibility of the Account Collateral (or any portion thereof). No Secured
Party shall be liable to any other Secured Party for any action or failure to
act or any error of judgment, negligence, or mistake, or oversight whatsoever on
the part of any Secured Party or any Secured Party's agents, officers, employees
or attorneys with respect to any transaction relating to any of the notes or
agreements evidencing or entered into with respect to any of the Obligations or
any security therefor.
Section 12.3 Reimbursement of Expenses. Holdco will pay upon demand to the
Collateral Agent the amount of Fees and expenses as agreed between the parties
pursuant to the Collateral Agent Fee Side Letter.
Section 12.4 Severability. In case any one or more of the provisions
contained in this Agreement shall be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein shall not in any way be affected and/or impaired thereby.
Section 12.5 Notices. All notices or other communications hereunder shall
be given in the manner set forth in the Subsidiary Credit Agreements and at such
addresses as are set forth on the signature page hereto.
Section 12.6 Successors and Assigns. Whenever in this Agreement any of the
parties hereto is named or referred to, the successors and assigns of such party
shall be deemed to be
31
included and all covenants, promises and agreements in this Agreement by or on
behalf of the respective parties hereto shall bind and inure to the benefit of
the respective successors and assigns of such parties, whether so expressed or
not.
Section 12.7 Counterparts. This Agreement may be executed in any number of
counterparts, each executed counterpart constituting an original but all
counterparts together constituting only one instrument.
Section 12.8 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK OTHER THAN ANY
SUCH REQUIREMENT OF LAWS THAT WOULD APPLY THE LAWS OF ANOTHER JURISDICTION,
EXCEPT TO THE EXTENT THAT THE LAWS OF ANOTHER JURISDICTION ARE MANDATORILY
APPLICABLE. ANY DISPUTE ARISING OUT OF, CONNECTED WITH, RELATED TO, OR
INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN HOLDCO AND THE COLLATERAL
AGENT (FOR THE BENEFIT OF THE SECURED PARTIES) IN CONNECTION WITH THIS AGREEMENT
AND THE INTERCREDITOR AGREEMENT, AND WHETHER ARISING IN CONTRACT, TORT, EQUITY
OR OTHERWISE, SHALL BE RESOLVED IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED
TO THE CONFLICTS OF LAWS PROVISIONS) AND DECISIONS OF THE STATE OF NEW YORK.
Section 12.9 No Impairments of Other Rights. Nothing in this Agreement is
intended or shall be construed to impair, diminish or otherwise adversely affect
any other rights the Secured Parties may have or may obtain against Holdco or
the Subsidiary Borrowers.
Section 12.10 Amendment; Waiver. No amendment or waiver of any provision
of this Agreement shall be effective unless the same shall be executed by all
the parties hereto. No delay on the part of any Secured Party in the exercise of
any right, power or remedy shall operate as a waiver thereof, nor shall any
single or partial waiver by such Secured Party of any right, power or remedy
preclude any further exercise thereof, or the exercise of any other right, power
or remedy.
Section 12.11 Separate Liability. The obligations of each Secured Party
under this Agreement shall be several and not joint, and no Secured Party shall
be liable or responsible for the acts of any other Secured Party. No Secured
Party shall have any fiduciary responsibilities to Holdco or either Borrower
Subsidiary. No Secured Party undertakes any responsibility to Holdco or either
Borrower Subsidiary to review or inform Holdco or such Borrower Subsidiary, as
the case may be, of any matter in connection with any phase of Holdco or such
Borrower Subsidiary's business or operations.
Section 12.12 Incumbency Certificates; Authorized Persons. Holdco shall
furnish to the Collateral Agent on or prior to the Closing Date and from time to
time thereafter as may be necessary duly executed incumbency certificates
showing the names, titles and specimen signatures of the persons authorized on
behalf of such party to take the actions and give the
32
officer's certificates, notifications, approvals and payment instructions
required by this Agreement.
Section 12.13 Headings. Headings herein are for convenience only and shall
not be relied upon in interpreting or enforcing this Agreement.
Section 12.14 Termination; Release. This Agreement shall terminate when
all Obligations have been indefeasibly paid in full, and the Collateral Agent,
at the written request and expense of Holdco, will promptly execute and deliver
to Holdco the proper instruments (which may include Uniform Commercial Code
termination statements on form UCC-3) acknowledging the termination of this
Agreement, and will promptly duly assign, transfer and deliver to Holdco
(without recourse and without any representation or warranty) free from any
interest of the Collateral Agent or Lien granted hereunder such of the Account
Collateral as may be in possession of the Collateral Agent and has not
theretofore been sold or otherwise applied or released pursuant to this
Agreement together with such notices to third parties as may be necessary to
countermand any notices previously sent to them pursuant hereto.
Section 12.15 Entire Agreement. This Agreement, including the documents
referred to herein, embodies the entire agreement and understanding of the
parties hereto and supersedes all prior agreements and understandings of the
parties hereto relating to the subject matter herein contained.
Section 12.16 Survival of Indemnities. All indemnities set forth herein
and in any document, certificate or statement delivered pursuant hereto or in
connection herewith shall survive the execution and delivery of this Agreement
and the making and repayment of the Loans and the expiration or cancellation of
all Letters of Credit.
33
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized officers, all as of the date first above
written.
ORION POWER CAPITAL, LLC
By:
---------------------------------
Name:
Title:
Address for Notices:
Address: 1111 Louisiana Street
Houston, TX 77002
Attn: Senior Vice President-
Finance
Telephone: (713) 207-3160
Telecopier: (713) 207-0988
With a copy to:
Address: 1111 Louisiana Street
Houston, TX 77002
Attn: General Counsel
Telephone: (713) 207-7265
Telecopier: (713) 393-0140
BANK OF AMERICA, N.A., not in its individual
capacity but solely as Collateral Agent
By:
--------------------------------
Name:
Title:
Address for Notices:
Bank of America, N.A.
101 North Tryon Street
NC1-001-08-19
Charlotte, NC 28255
Telephone: 704-388-6833
Telecopier: 704-386-3324
EXHIBIT A
to
DEPOSIT ACCOUNT AGREEMENT
Form of Monthly Notice of Deposits and Withdrawals
[Letterhead of Collateral Agent]
FORM OF MONTHLY NOTICE OF DEPOSITS AND WITHDRAWALS
, 20 (1)
------- --------
Orion Power Capital, LLC
[Insert Current Address]
[Administrative Agents]
RE: ORION POWER CAPITAL, LLC
This notice is made pursuant to the Deposit Account Agreement (as amended,
supplemented or otherwise modified from time to time, the "Deposit Account
Agreement"), dated as of October 28, 2002 between Orion Power Capital, LLC
("Holdco") and Bank of America, N.A., as collateral agent (the "Collateral
Agent"). Capitalized terms used herein without definition shall have the
meanings specified in the Deposit Account Agreement.
Pursuant to Section 3.1 of the Deposit Account Agreement, the undersigned
representative of the Collateral Agent hereby notifies you that as of the date
hereof, attached is a schedule of all amounts deposited and withdrawn from the
Accounts (including any earnings thereon from Permitted Investments) during, and
for the month ending, , 20 .
BANK OF AMERICA, N.A., as Collateral Agent
By
----------------------------------------
Name:
Title:
Attachment
1. Schedule of Deposits, Withdrawals and the earnings on Accounts
- --------------------
(1) Insert date which is on or before the tenth (10th) day of each calendar
month.
A-1
EXHIBIT B
to
DEPOSIT ACCOUNT AGREEMENT
Form of Notice of Closing Expenses
[Letterhead of Holdco]
FORM OF MONTHLY NOTICE OF DEPOSITS AND WITHDRAWALS
, 20 (1)
------- --------
Bank of America, N.A., as Collateral Agent
[Insert Current Address]
[Administrative Agents]
RE: ORION POWER CAPITAL, LLC
This notice is made pursuant to the Deposit Account Agreement (as amended,
supplemented or otherwise modified from time to time, the "Deposit Account
Agreement"), dated as of October 28, 2002 between Orion Power Capital, LLC
("Holdco") and yourself. Capitalized terms used herein without definition shall
have the meanings specified in the Deposit Account Agreement.
Pursuant to Section 3.5 of the Deposit Account Agreement, the undersigned
representative of Holdco hereby notifies you that as of the date hereof,
attached is a schedule of all Closing Expenses due and payable to the Person(s)
set forth on such schedule and hereby directs you to withdraw such Closing
Expenses from the Restructuring Cost Reserve Account and deposit such funds in
the account(s) and on or before the Business Day specified on the attached
schedule.
ORION POWER CAPITAL, LLC
By
----------------------------------------
Name:
Title:
Attachment
1. Schedule of Closing Expenses due and payable
- --------------------
(1) Any Business Day before [March 31, 2003].
B-1
EXHIBIT C
to
DEPOSIT ACCOUNT AGREEMENT
FORM OF PERIODIC NOTICE
, 20 (1)
------- --------
Bank of America, N.A.,
As Collateral Agent
[Insert Current Address]
RE: ORION POWER CAPITAL, LLC
This notice is made pursuant to the Deposit Account Agreement (as amended,
supplemented or otherwise modified from time to time, the "Deposit Account
Agreement"), dated as of October 28, 2002 between Orion Power Capital, LLC
("Holdco") and Bank of America, N.A., as collateral agent (the "Collateral
Agent"). Capitalized terms used herein without definition shall have the
meanings specified in the Deposit Account Agreement.
Pursuant to Section 3.3 of the Deposit Account Agreement, the undersigned
Responsible Officer of Holdco hereby notifies you, as set forth on the attached
Schedule I hereto, including relevant calculations, of:
(i) the Debt Service Coverage Ratio of Holdco for the Measurement Period
ending on , 20 ;(2)
(ii) the Debt Service Coverage Ratio of each Borrower Subsidiary for the
Measurement Period ending on such date;
(iii) [the Scheduled Indenture Debt Service Deposit Amount for the
calendar quarter ending as of , 20 ;(3)]
(iv) [the Target Principal Amount as of the immediately preceding
Quarterly Payment Date [and the Net Voluntary Prepayment Amount as
of the date of this notice, if any](4);]
(v) [the OPH Net Cash Flows and the Indenture Payment Offset Amount for
the two calendar quarters most recently ended(5); and]
- --------------------
(1) Insert date which is on or before Transfer Date immediately preceding the
relevant Periodic Date.
(2) Insert last day of the month ended immediately prior to the date of this
Notice.
(3) Insert date that is the last day of the calendar quarter most recently ended
[include if required under Section 3.3].
(4) Only include in notices if Target Principal Amount is greater than or equal
to $1,000,000,000 [include if required under Section 3.3].
(5) Insert date which is on or before Transfer Date immediately preceding the
relevant Periodic Date [include if required under Section 3.3].
C-1
(vi) [Scheduled Indenture Debt Service Payment Amount, the IDSRA Deposit
Amount and the IDSRA Distribution Amount as of the Periodic Date
immediately following the date hereof.(6)]
The undersigned Responsible Officer of Holdco hereby certifies, as of the
date hereof, that (a) [the IDSRA Distribution Amount is sufficient to pay in
full the Scheduled Indenture Debt Service Payment Amount] OR [(i) the IDSRA
Distribution Amount is not sufficient to pay in full the Scheduled Indenture
Debt Service Payment Amount, (ii) the amount of the shortfall between the IDSRA
Distribution Amount and the Scheduled Indenture Debt Service Payment Amount,
including calculations thereof, is set forth on Schedule II hereto, and (iii)
OPH shall, or shall cause, the amount of such shortfall to be deposited in the
Indenture Debt Service Reserve Account on or before the upcoming Indenture
Payment Date for transfer by the Collateral Agent from the Indenture Debt
Service Reserve Account to the account designated by the relevant Indenture
Trustee for payment of the Scheduled Indenture Debt Service Payment Amount then
due and payable](7), (b) [OPNY and/or OPMW is in compliance with its Minimum
Debt Service Coverage Ratio as of the Quarterly Payment Date most recently ended
AND/OR [OPNY and/or OPMW is not in compliance with its Minimum Debt Service
Coverage Ratio as of the Quarterly Payment Date most recently ended and the
related Debt Service Coverage Compliance Prepayment Amount, including
calculations thereof, is set forth on Schedule II hereto](8), (c) all the
calculations set forth on Schedule I [II and III] are true and correct, and (d)
no Distribution Blocking Event has occurred and is continuing.
ORION POWER CAPITAL, LLC
By: [Orion Power Holdings, Inc.,
its sole member]
By
----------------------------------------
Name:
Title:
Attachment[s]
1. Schedule I
[2. Schedule II]
[3. Schedule III]
- --------------------
(6) Insert last day of the month ended immediately prior to the date of this
Notice.
(7) Insert date that is the last day of the calendar quarter most recently ended
[include if required under Section 3.3].
(8) Only include in notices if Target Principal Amount is greater than or equal
to $1,000,000,000 [and include if required under Section 3.3].
C-2
EXHIBIT D
to
DEPOSIT ACCOUNT AGREEMENT
FORM OF NOTICE OF ALLOWANCE PURCHASE
, 20
------- --------
Bank of America, N.A.,
As Collateral Agent
[Insert Current Address]
RE: ORION POWER CAPITAL, LLC
This notice is made pursuant to the Deposit Account Agreement (as amended,
supplemented or otherwise modified from time to time, the "Deposit Account
Agreement"), dated as of October 28, 2002 between Orion Power Capital, LLC
("Holdco") and Bank of America, N.A., as collateral agent (the "Collateral
Agent"). Capitalized terms used herein without definition shall have the
meanings specified in the Deposit Account Agreement.
Pursuant to Section 3.4 of the Deposit Account Agreement, the undersigned
Responsible Officer of Holdco hereby:
(a) notifies you that
(i) the Borrower Entity described on Schedule I hereto desires to make
an Allowance Purchase;
(ii) the amount on deposit in the Allowance Purchase Reserve Account is
$ ;
(iii) the Allowance Purchase Amount is $ ;
(iv) therefore, the undersigned requests that you distribute $ (1)
to [the Person(s) listed on Schedule I hereto] [the [OPNY/OPMW]
Operating Account]; and
(v) the date on which the Collateral Agent should distribute the
requested amount [to the Person described on Schedule I hereto] [the
[OPNY/OPMW] Operating Account] is , 20 (2); and
certifies that the Allowance Purchase requested by this Notice is in compliance
with the terms of the [OPMW] [OPNY] Credit Agreement.
- --------------------
(1) The lesser of item (ii) and item (iii).
(2) A Business Day no earlier than the first Business Day following the date
hereof.
D-1