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Exhibit 10.3
Dated as of April 7, 2000
GUARANTY
BY
COGENTRIX ENERGY, INC.
A North Carolina Corporation
("GUARANTOR")
IN FAVOR OF
LA COMPANIA DE ELECTRICIDAD DE SAN PEDRO DE MACORIS
A CAYMAN COMPANY
("OBLIGEE")
RELATING TO
A POWER GENERATION FACILITY LOCATED AT
SAN PEDRO DE MACORIS,
DOMINICAN REPUBLIC
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GUARANTY
This guaranty (the "Guaranty") is made as of April 7, 2000, by Cogentrix Energy,
Inc., a North Carolina corporation ("Guarantor"), in favor of La Compania de
Electricidad de San Pedro de Macoris, a Cayman company ("Obligee").
RECITALS
A. Obligee has entered into that certain Operation and Maintenance
Agreement (as the same may be amended, modified or supplemented
pursuant to its terms from time to time, the "O&M Agreement"), dated as
of April 7, 2000, with Cogentrix de la Republica Dominicana, a Cayman
company ("Obligor").
B. Obligee and Obligor have agreed to enter into the O&M Agreement on the
condition, among others, that Guarantor executes and delivers this
Guaranty.
C. Each of Guarantor and Obligor understands and has agreed that Obligee
will be relying on Guarantor's undertakings in this Guaranty in
entering into the O&M Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and other
good and valuable consideration, and to induce Obligee to enter into the O&M
Agreement with Obligor, Guarantor hereby agrees as follows:
1. Definitions. Capitalized terms used but not defined in this Guaranty
have the respective meanings given to them in the O&M Agreement.
2. Guaranty. Subject to Section 18 hereof:
(a) Guarantor unconditionally and irrevocably guarantees to
Obligee the due and punctual payment of any and every sum of
money necessary to cause the performance, observance and
compliance by Obligor of and with all its duties, obligations,
commitments, undertakings, warranties and indemnities under or
pursuant to the O&M Agreement (each an "Obligation" and
together the "Obligations"); and
(b) If and whenever Obligor defaults for any reason whatsoever in
the performance of any Obligation or fails to discharge any or
all of its liabilities under or pursuant to the O&M Agreement,
Guarantor shall forthwith upon demand unconditionally pay any
and every sum of money necessary to cause the performance,
observance and compliance by Obligee of such Obligation or
liability in regard to which such default has been made in the
manner prescribed by the O&M Agreement and shall indemnify and
keep indemnified Obligee against any and all losses, damages,
claims, costs, charges, and expenses howsoever arising from
Obligor's failure timely to perform such Obligation or meet
such liability.
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3. Guarantor's Obligations.
Guarantor's obligations under this Guaranty are unconditional and
absolute and shall not be limited, affected or impaired by:
(i) any extension of time, waiver, indulgence, concession or consent
given at any time to Obligor or any other person;
(ii) any alteration, amendment or modification to the O&M Agreement
or to any security or guarantee provided in connection with the
O&M Agreement and the Guarantor hereby agrees that the guaranty
given hereunder shall extend to the obligations and
responsibilities of Obligor under the O&M Agreement as so
altered, amended or modified regardless of whether the Guarantor
has been notified of or given its consent to such alteration,
amendment or modification;
(iii) any dispute or disagreement under or in relation to the O&M
Agreement;
(iv) the illegality, invalidity or unenforceability of or any defect
in any provision of the O&M Agreement or any of Obligor's
obligations under the O&M Agreement;
(v) any exchange or release of, or non-perfection of any Lien on or
in, any collateral, or any release or amendment or waiver of or
consent to any departure from any other guaranty, for all or any
of the Obligations;
(vi) any permitted assignment of the benefit of the O&M Agreement;
(vii) the taking or existence of any security, right of action,
guarantee or indemnity in connection with the O&M Agreement;
(viii) any change in the status, function, control or ownership of
Obligor; or
(ix) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, the Guarantor, or any
other guarantor in respect of the Obligations or the Guarantor
in respect of this Guaranty.
Without prejudice (i) to the waiver by the Guarantor as to its obligations
hereunder as set out in this Section 3, and (ii) the limitations on release,
discharge and impairment of the Guarantor hereunder as set out in Section 9
hereof, the Guarantor shall be entitled to assert as a defense to any claim for
payment in connection with the Obligations, (a) that such Obligations are not
currently due under the terms of the O&M Agreement, (b) that such Obligations
have previously been paid or performed in full, and (c) any defenses and
circumstances excusing payment or performance which the Obligor would be
entitled to assert under and pursuant to the O&M Agreement; provided, however,
that if any such defense or circumstance has been asserted by the Obligor and
the validity thereof has been resolved under and pursuant to the O&M Agreement,
the Guarantor shall not be entitled to reassert such defense or circumstance.
The Guarantor's obligations as guarantor are primary, independent of the
obligations of Obligor under the O&M Agreement, and are in addition to and
independent of any other security, right of action or other guarantee or
indemnity at any time existing in favor of the Obligee, whether from the
Guarantor or otherwise. A separate action may be brought to enforce this
Guaranty whether or not Obligor is made a party to such action; provided,
however, that no beneficiary of the Guaranty shall maintain simultaneous actions
against the Obligor and the Guarantor with respect to the same Obligation.
4. Notices. Except as otherwise specified in this Guaranty, all notices
and invoices under this Agreement shall be in writing and shall be
deemed given when (i) (a) delivered in person or by international
courier, or (b) sent by facsimile on the date of receipt of a
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facsimile, provided the sender can and does provide evidence of
successful transmission before 5:00 p.m. on a Business Day of the
receiving party, and (ii) addressed as set forth below, or to such
other address as may be hereafter designated by a party after providing
written notice to the other party. Any notice or other communication
sent by facsimile and received after 5:00 p.m. on a Business Day of the
receiving party shall be deemed given on the next following Business
Day of the receiving party.
Guarantor:
Cogentrix Energy Inc.
9405 Arrowpoint Boulevard
Charlotte, NC 28273-8110
Attention: General Counsel
Facsimile: (704) 527-4413
Obligor:
Cogentrix de la Republica Dominicana
c/o Pellerano & Herrera
Av. John F. Kennedy 10, piso 4
P.O. Box 20682
Santo Domingo, Republica Dominicana
Facsimile: (809) 567-0773
Obligee:
La Compania de Electricidad de San Pedro de Macoris
c/o Pellerano & Herrera
Av. John F. Kennedy 10, piso 4
P.O. Box 20682
Santo Domingo, Republica Dominicana
Facsimile: (809) 567-0773
5. Financial Statements. On the date hereof, and for so long as any of the
Obligations under the O&M Agreement have not been satisfied in full,
within one hundred twenty (120) Days after the close of each fiscal
year of Guarantor, Guarantor shall deliver to Obligee its audited
annual balance sheet for the fiscal year then ended; provided that
Obligee shall treat such balance sheets as confidential.
6 Cooperation. Guarantor shall, upon request of Obligee, execute such
further documents and instruments as Obligee may reasonably request
from time to time to effect the purpose of this Guaranty.
7. Existence, Conduct of Business. Guarantor shall maintain and preserve
(a) its existence as a corporation, and (b) all material rights,
privileges and franchises necessary in the normal conduct of its
business to avoid any material and adverse change in its ability to
satisfy the Obligations.
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8. Representations and Warranties. Guarantor represents and warrants as
follows:
(a) Guarantor is a corporation duly organized, validly existing
and in good standing under the laws of the State of North
Carolina and has full power, authority and ability to execute
and deliver this Guaranty and to satisfy the Obligations.
(b) Guarantor has duly authorized, executed and delivered this
Guaranty, and neither Guarantor's execution and delivery
hereof, nor the consummation of the transactions contemplated
hereby, nor its compliance with the terms of this Guaranty,
does or will (i) contravene its certificate of incorporation
or bylaws, or any law applicable to or binding on it or any of
its properties; (ii) contravene, or result in any material
breach of, or constitute any material default under, any
material agreement or instrument to which it is a party or by
which it or any of its properties are bound, or (iii) require
the consent or approval of any Person, which consent or
approval has not already been obtained.
(c) This Guaranty is a legal, valid and binding obligation of
Guarantor, enforceable against Guarantor in accordance with
the terms hereof, subject to bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights
generally or the application of general principals of equity
(regardless of whether considered in a proceeding at law or in
equity).
(d) There are no pending or, to the best of Guarantor's knowledge,
threatened actions or proceedings of any kind, including
without limitation actions or proceedings of or before any
arbitrator or any national, state or municipal court or other
local governmental authority, agency, or instrumentality
thereof to which Guarantor is subject or by which it or any of
its properties are or may be bound that, if determined
adversely, would reasonably be expected to have a material and
adverse effect on this Guaranty or on Guarantor's ability to
satisfy the Obligations.
9. Waivers.
(a) Guarantor, to the extent it legally may do so, waives any
right now or hereafter existing requiring Obligee, as a
condition to proceeding against Guarantor hereunder, to: (i)
proceed against Obligor or any other Person; (ii) proceed
against or exhaust any security held from Obligor or from any
other Person; (iii) pursue any remedy in Obligee's power; or
(iv) give notice of any sale of personal property, collateral
or security held from Obligor or any other Person.
(b) GUARANTOR WAIVES ALL RIGHTS AND DEFENSES ARISING BY REASON OF
ANY DISABILITY, LEGAL LIMITATION, INCAPACITY OR SIMILAR
CIRCUMSTANCE RELATING TO OBLIGOR OR ANY OTHER PERSON.
(c) For so long as the Obligations shall not have been satisfied
in full, Guarantor shall not exercise any right of subrogation
to Obligor and waives all rights to enforce any remedy which
Obligee now or hereafter may have against Obligor for any
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performance by Guarantor under this Guaranty; provided that
such agreement not to exercise such rights shall not apply to
the extent any such exercise by Guarantor could not in
Obligee's reasonable opinion be expected to materially and
adversely affect Obligee's rights and interests under the O&M
Agreement.
(d) Guarantor shall not assert the bankruptcy, reorganization,
amalgamation or any analogous matter of either Obligee or
Obligor or any other Person as a defense to its obligations
hereunder, and further agrees that in the event a court orders
or causes a rescission or revision of the O&M Agreement, or
releases Obligor from any of its obligations under the O&M
Agreement by reason of bankruptcy or otherwise by operation of
law other than performance in full by Obligor in accordance
with the O&M Agreement, Guarantor shall remain fully liable
hereunder for the Obligations. Guarantor waives any rights or
defenses it may otherwise have pursuant to any action under
any relevant bankruptcy laws to the extent such waiver is
permitted by applicable law.
(e) Guarantor waives any and all demands for performance,
promptness, diligence, protest, presentment, demand, notices
of dishonor, notices of default or delinquency, notices of
non-payment, notice of acceptance, notice of the amounts from
time to time owing to Obligee under the O&M Agreement, or any
other facts that may come to Obligee's attention regarding the
financial position of Obligor.
(f) Guarantor waives, to the extent applicable and to the extent
permitted by applicable laws, all suretyship and Guarantor's
defenses.
10. Payments. All payments made by Guarantor hereunder shall be made
without withholding, deduction, counterclaim or set-off for any reason
(including, without limitation, exchange charges, bank transfer charges
or taxes (which term shall include all present and future taxes,
levies, imposts, duties or charges)) of whatsoever nature or, if
Guarantor is obliged to make any withholding or deduction, Guarantor
shall gross up such payments so that the net sum received by Obligee
shall include the sum demanded hereunder.
11. Interest and Attorney's Fees. Any amount required to be paid by
Guarantor to Obligee under this Guaranty shall bear interest at a rate
of interest equal to the Base Rate plus two percent (2%) (or, if less,
the maximum rate of interest allowed by applicable law) from the date
due pursuant to the O&M Agreement until the date on which such amount
is paid in full. All reasonable costs and expenses, including but not
limited to court costs, reasonable attorneys' fees and expenses and
collection costs, incurred by Obligee to enforce this Guaranty or the
Obligations, shall be paid or reimbursed by Guarantor.
12. Transfer of Interests. Neither this Guaranty nor the rights and
obligations hereunder may be assigned by Obligee or Guarantor at any
time without the prior written consent of the other; provided that
Obligee shall have the right to assign this Guaranty without the prior
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written consent of the Guarantor as collateral security pursuant to the
Loan Agreements to be entered into by the Obligee.
13. Severability. If any provision hereof is invalid or unenforceable in
any jurisdiction, then, to the fullest extent permitted by law, (i) the
other provisions hereof shall remain in full force and effect in such
jurisdiction and shall be liberally construed in order to carry out the
intentions of the Guarantor and the Obligee in respect of and including
any provision hereof which is invalid or unenforceable as nearly as may
be possible, and (ii) the invalidity or unenforceability of any
provision hereof in any jurisdiction shall not affect the validity or
enforceability of such provision in any other jurisdiction.
14. Delay; Remedies Cumulative. No delay or failure by the parties to
exercise any right or remedy hereunder shall be construed as a waiver
of that right or remedy, and no individual waiver shall be construed as
a general waiver of that right or remedy. All remedies under this
Guaranty are cumulative and in addition to any other remedy provided
hereunder, under the O&M Agreement or under applicable law.
15. Reinstatement. This Guaranty shall continue to be effective or be
reinstated, as the case may be, if at any time any payment to Obligee
by or on behalf of Obligor or Guarantor in respect of the O&M Agreement
or this Guaranty is rescinded or otherwise must be returned by Obligee
in connection with any action or proceedings in connection with the
insolvency, bankruptcy, reorganization, dissolution or liquidation of
Obligor or otherwise by operation of law all as though such payment to
Obligee had not been made.
16. Modification. No modification shall be made of any part of this
Guaranty except in writing and signed by Guarantor and Obligee.
17. Miscellaneous. The provisions of this Guaranty will bind and benefit
the successors and assigns of Guarantor and Obligee. Whenever the
context requires, all terms used in the singular will be construed in
the plural and vice versa, and each gender will include the other
gender. The term "Obligor" means both Obligor and its successors and
permitted assigns pursuant to the O&M Agreement, the term "Obligee"
means Obligee and its successors and permitted assigns and the term
"Guarantor" means Guarantor and its successors and permitted assigns.
Captions used in this Guaranty are for convenience of reference only
and shall not be used to construe the provisions hereof.
18. Limitation on Liability. Notwithstanding anything to the contrary
contained or implied herein, and if called upon to perform hereunder,
it is expressly agreed that the Guarantor's obligations under this
Guaranty shall be subject to the limitations set forth in the O&M
Agreement (including, without limitation, Section 23 thereof), and the
aggregate liability of Guarantor under this Guaranty shall not exceed
the amount of three million Dollars (US$3,000,000), adjusted annually
in accordance with the U.S. GDP Implicit Price Deflator for the twelve
(12) month period preceding such adjustment, with the first such
adjustment commencing on January 1, 1999.
19. Release of Guaranty. Upon the earliest of (a) the replacement or
substitution of Obligor by a Person that is not an Affiliate of
Operator and all of the obligations and liabilities of
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Obligor under or pursuant to the O&M Agreement having been fully
discharged and there being no unresolved Dispute thereunder, and (b)
the date on which the aggregate limit of Guarantor's liability set
forth in Section 18 hereof shall have been reached, or (c) termination
by Obligor or Obligee of the O&M Agreement (provided all of the
Obligations and liabilities of Obligor under or pursuant to the O&M
Agreement shall have been fully discharged and all Disputes thereunder
resolved), Obligee shall immediately release this Guaranty in a written
document reasonably satisfactory to Obligee and Guarantor.
20. Counterparts. This Guaranty may be executed in any number of
counterparts, each of which shall be an original but all of which when
taken together shall constitute one instrument.
21. Governing Law. This Guaranty shall be governed by and construed
according to the laws of the State of New York, U.S.A.
22 Entire Agreement. This Guaranty constitutes the entire agreement
between the parties hereto and supersedes any understandings,
agreements or representations by or between such parties, written or
oral, made at any time prior to the date hereof, that may relate in any
way to the subject matter hereof.
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IN WITNESS WHEREOF, Guarantor has executed this Guaranty by its
authorized officer as of the date first written above.
COGENTRIX ENERGY, INC.
By: /s/ Dennis W. Alexander
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Name: Dennis W. Alexander
Title: Group Senior Vice Pres.
ACKNOWLEDGED AND AGREED BY:
LA COMPANIA DE ELECTRICIDAD
DE SAN PEDRO DE MACORIS
By: /s/ Andrew C. Aldridge
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Name: Andrew C. Aldridge
Title: Director