EXHIBIT 10.22
REIMBURSEMENT AGREEMENT
AGREEMENT, dated as of July 31, 1996, between Panda-
Rosemary, L.P., a Delaware limited partnership (the "Company"),
Panda-▇▇▇▇▇▇▇▇ Funding Corporation, a Delaware corporation
("Funding Corp."), and Bayerische Vereinsbank AG, New York Branch
(the "Bank").
WHEREAS, the Company and VEPCO are parties to the VEPCO
Power Purchase Agreement;
WHEREAS, pursuant to Section 13.4 of the VEPCO Power
Purchase Agreement, the Company is required to provide security
in the amount of $4,950,000 in a form acceptable to VEPCO to
secure the Company's performance obligations under the VEPCO
Power Purchase Agreement;
WHEREAS, the Company, The Fuji Bank Limited and the
Bank (among others) are parties to the Second Amended and
Restated Letter of Credit and Reimbursement Agreement (the
"Existing Reimbursement Agreement") dated as of January 6, 1992
pursuant to which there has been issued a letter of credit to
satisfy the requirements of Section 13.4 of the VEPCO Power
Purchase Agreement;
WHEREAS, the Company and Funding Corp. desire to repay
all of the Company's obligations under the Existing Reimbursement
Agreement and terminate such Agreement (other than the obligation
of the financing parties thereto to provide a letter of credit to
satisfy such requirements) and have requested that the Bank issue
the Letter of Credit to satisfy such requirements;
WHEREAS, the Bank is willing to issue the Letter of
Credit on the terms and subject to the conditions set forth in
this Agreement;
NOW, THEREFORE, in consideration of the premises and
for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Bank, the
Company and Funding Corp. intending to be legally bound do hereby
agree as follows:
Section 1. (a) Definitions. Capitalized terms used herein and not
otherwise defined herein shall have the respective meanings
assigned thereto in the Indenture as in effect on the date
hereof. The following terms, as used herein, have the following
respective meanings:
"Acceptable Fuel Management Contracts" means contracts
or agreements entered into by or on behalf of the Company having
a period of effectiveness of one year or less (exclusive of
extensions) or that are terminable at will upon thirty-one (31)
days or less notice without penalty, in a form typical for
transactions of the relevant type in the fuel industry for the
purchase, sale, or resale of natural gas or fuel oil or for
transportation services or storage services for natural gas or
fuel oil.
"Additional Contract" means any contract or undertaking
to which the Company is a party, entered into after the Issuance
Date, (i) related to the supply, procurement, handling or
transportation of Fuel to the Project, (ii) related to the
design, construction, operation or maintenance of the Project or
the management of the construction thereof or (iii) which is an
Ancillary Document and is delivered in connection with an
Additional Contract, in each case reasonably acceptable to the
Bank and (iv) any Non-Material Agreement.
"Agreement" means this Amended and Restated
Reimbursement Agreement, as the same may from time to time be
further amended, supplemented or modified.
"Ancillary Documents" means, with respect to each
Additional Contract, (i) each security instrument (which may
consist of an amendment to a Collateral Document) necessary to
grant to the Collateral Agent a perfected Lien in such Additional
Contract and all property interests received by the Company or
Funding Corp. in connection therewith, (ii) all recorded
financing statements and other filings required to perfect such
Liens, (iii) a Consent of each Project Participant party to such
Additional Contract and (iv) an Opinion of Counsel to the extent
obtained as set forth in Section 7(p).
"Annual Projected Debt Service" has the meaning set
forth in the Indenture.
"Authorized Representative" of a Person means the
individuals or entities authorized to act on behalf of such
Person by the governing body of such entity.
"Bond Purchase Agreement" means the Purchase Agreement
dated as of July 26, 1996 among the Company, Funding Corp., Panda
Energy International, Inc. and Jefferies & Company, Inc.
"Bonds" means the bonds issued under the Indenture.
"Business Day" means any day except a Saturday, Sunday
or other day on which commercial banks in New York, New York, are
authorized by law to close.
"Casualty Proceeds" means all Insurance Proceeds or
other amounts received on account of any Event of Loss, except
proceeds of business interruption insurance.
"Code" means the United States Internal Revenue Code of
1986, as amended.
"Collateral" means all property and interests in
property now owned or hereafter acquired in or upon which a Lien
has been or is purported or intended to have been granted to the
Collateral Agent pursuant to the Collateral Documents.
"Collateral Agent" means Fleet National Bank, a
national banking association established under the laws of the
United States, as collateral agent for the benefit of the Secured
Parties under the Collateral Documents, and its permitted
successors and assigns.
"Collateral Documents" means the Mortgages, the
Security Agreement, the Stock Pledge Agreement, the Partnership
Interests Pledge Agreement, the Company Pledge Agreement, the
Intercreditor Agreement, the Depositary Agreement, each security
instrument referred to in clause (i) of the definition of
"Ancillary Documents" and each Consent.
"Commercially Feasible Basis" means that, following an
Event of Loss, an Event of Eminent Domain or Title Event, (i) the
sum of the proceeds of business interruption insurance, moneys
held in the Debt Service Fund, any amounts that the Partners are
irrevocably committed to contribute and anticipated Project
Revenues during the estimated period of rebuilding, repair or
restoration will be sufficient to pay all Debt Service and
Operating Expenses during such estimated period and (ii) the
Project upon being rebuilt, repaired or restored can be
reasonably expected to produce Project Revenues adequate to pay
all Debt Service and Operating Expenses over the term of the
VEPCO Power Purchase Agreement taking into account any change in
projected operating results due to the impairment of any portion
of the Project and any reduction in Debt Service.
"Company Loan Agreement" means the Loan Agreement,
dated as of July __, 1996, between the Company and Funding Corp.
"Company Pledge Agreement" means the Stock Pledge and
Security Agreement, dated as of July 31, 1996, from the Company
to the Collateral Agent providing for the pledge of all the
capital stock of Funding Corp. to the Collateral Agent.
"Consent" means a consent and agreement of a Person
with respect to the assignment by the Company of its rights and
interest under each Project Agreement or Additional Contract
entered into by the Company with such Person as security pursuant
to a Collateral Document.
"Controlled Group" means all members of a controlled
group of corporations and all trades or businesses (whether or
not incorporated) under common control which, together with the
Company, are treated as a single employer under Section 414(b) or
414(c) of the Code.
"Date of Early Termination" means 30 days after the
Bank has delivered a notice to VEPCO that a Reimbursement Event
of Default has occurred.
"Debt Service" means, for any period, an amount equal
to the aggregate of, without duplication, (i) all payments of
principal and premium, if any, (including any mandatory sinking
fund payments) on any Indebtedness of the Company due and payable
during such period and (ii) all Interest Expense.
"Debt Service Coverage Ratio" for any period, means,
without duplication, the ratio of (i) (x) Project Revenues for
such period less (y) the sum of (1) Operating Expenses for such
period plus (2) the Major Maintenance Requirement required to be
funded on any day during such period plus (3) the aggregate of
(A) reimbursement obligations, interest, fees and other amounts
under this Agreement during such period, and (B) principal of,
interest on and fees and other amounts with respect to all other
Indebtedness of the Company during such period, plus (4) the
Property Tax Requirement required to be funded on any day during
such period to (ii) the sum of (A) Debt Service payable by the
Company for such period, plus (B) the aggregate amount of overdue
Debt Service payments from previous periods, all as determined on
a cash basis. Whenever the Company is required to calculate the
Debt Service Coverage Ratio, the full calculation of the Debt
Service Coverage Ratio (including any supporting documentation)
shall be set forth in a certificate of the Company to the Bank.
"Debt Termination Date" has the meaning set forth in
the Intercreditor Agreement.
"Depositary Agent" means Fleet National Bank, a
national banking association established under the laws of the
United States as depositary agent for the benefit of the Secured
Parties under the Collateral Documents, and its permitted
successors and assigns.
"Depositary Agreement" means the Deposit and
Disbursement Agreement, dated as of July 31, 1996, among the
Company, Funding Corp., the Collateral Agent and the Depositary
Agent.
"Duff & ▇▇▇▇▇▇" means Duff & ▇▇▇▇▇▇ Credit Rating Co.
(or any successor).
"Early Termination Date" means any Business Day prior
to the Termination Date on which (i) all the Obligations
hereunder have been paid in full, (ii) the Company and VEPCO have
delivered a certificate acceptable to the Bank to the effect that
either the Company is no longer required to maintain a letter of
credit or other security pursuant to the VEPCO Power Purchase
Agreement or that the Company has delivered to VEPCO a
replacement letter of credit or other security in satisfaction of
its obligations under Section 13.4 of such Agreement and (iii)
VEPCO shall have surrendered the Letter of Credit to the Bank for
cancellation without requesting a draw in connection therewith.
"Eminent Domain Proceeds" has the meaning set forth in
Section 7(k).
"Engineer's Annual Report" has the meaning set forth in
Section 7(l).
"Environmental Claim" means any complaint, order,
citation, decree, demand, judgment or written notice actually
received by the Company, Funding Corp. or any of their respective
Affiliates from any Person (a) relating to any matters of
Environmental Law affecting or relating to any activity or
operations at any time conducted by the Company, funding any of
their respective Affiliates or their agents on or in connection
with the Project, or (b) relating to Releases or the presence of
Hazardous Materials on or off-Site and related to operations of
the Project or that could impact the Site, including, without
limitation:
(i) the existence of any Hazardous Materials at the
Site or any part thereof in violation of any Environmental Law;
(ii) the release or threatened release of any
Hazardous Materials generated at the Site in violation of any
Environmental Law;
(iii) remediation of any Release at the Site or any
part thereof; and
(iv) any violation or alleged violation of any
relevant Environmental Law in connection with the Site or any
part thereof.
"Environmental Laws" means any Federal, state and local
Laws (as well as obligations, duties and requirements under
common law) relating; (i) to emissions, discharges, spills,
releases or threatened releases of pollutants, contaminants,
Hazardous Materials, materials containing Hazardous Materials, or
hazardous or toxic materials or wastes into ambient air, surface
water, groundwater, watercourses, publicly or privately-owned
treatment works, drains, sewer systems, wetlands, septic systems
or onto land surface or subsurface strata; (ii) to the use,
treatment, storage, disposal, handling, manufacturing,
transportation, or shipment of Hazardous Materials, materials
containing Hazardous Materials or hazardous and/or toxic wastes,
materials, products or by-products (or of equipment or apparatus
containing Hazardous Materials); or (iii) to pollution or the
protection of human health and/or safety, the environment or
natural resources.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended.
"Event of Eminent Domain" means any compulsory transfer
or taking or transfer under threat of compulsory transfer or
taking of any material part of the Collateral by any Governmental
Authority.
"Event of Loss" means an event which causes all or a
portion of the Project to be damaged, destroyed or rendered unfit
for normal use for any reason whatsoever, other than an Event of
Eminent Domain or a Title Event.
"Existing VEPCO Consent" means the Consent to
Assignment, Delegation and Assumption Agreement dated as of
January 6, 1992 among PRC, the Company, VEPCO and the Fuji Bank
and Trust Company.
"FERC" means the Federal Energy Regulatory Commission.
"Financing Documents" means the meaning set forth in
Section 1.2 of the Intercreditor Agreement.
"Firm Gas Transportation Contract" means (i) the
Service Agreement, dated October 22, 1991, between the Company
and Transcontinental Gas Pipe Line Corporation, as in effect on
the date hereof, (ii) any firm transportation agreement entered
into by the Company that replaces the agreement referred to in
the preceding clause (i) pursuant to a Transportation Service
Conversion, and (iii) any other firm transportation agreement
having a term (including all renewal or extension periods) of
greater than one year entered into by the Company which is needed
to transport natural gas supplied under the Gas Supply Contracts.
"First Mortgage" means the Leasehold Deed of Trust and
Security Agreement, dated as of July 15, 1996, between the
Company as Grantor, and the Collateral Agent, as mortgagee, as it
may exist at the time.
"First Series Supplemental Indenture" means the First
Supplemental Indenture, dated as of July 31, 1996, among the
Trustee, the Company and Funding Corp.
"FPA" means the Federal Power Act, as amended.
"Fuel" means natural gas, fuel oil or any other fuel to
be supplied to the Project by the Gas Suppliers or any other
Person.
"Fuel ▇▇▇▇▇▇" means any future or forward contract or
option or similar arrangements with respect to or relating to
natural gas or fuel oil providing for the transfer or mitigation
of commodity or price risks with respect to Fuel either generally
or under specific contingencies.
"Fuel Oil Contracts" means any contract or agreement
entered into by or on behalf of the Company for the purchase of
fuel oil and the delivery of such fuel oil to the Project.
"Fuel Supply Management Agreement" means the Fuel
Supply Management Agreement, effective as of October 10, 1990,
between the Company and Natural Gas Clearinghouse as in effect on
the date hereof.
"Funding Date" means the fifteenth day of each month,
or in each case if such day is not a Business Day, the next
succeeding Business Day.
"Funds" means the funds established by Section 2.1 of
the Depositary Agreement.
"GAAP" means generally accepted accounting principles
as in effect from time to time consistent with those utilized in
preparing the audited financial statements referred to in Section
6(g) except insofar as (i) the Company shall have elected (with
the concurrence of its independent public accountant) to adopt
more recently promulgated generally accepted accounting
principles (which election shall continue to be effective for
subsequent years) and (ii) the Bank shall have consented to such
election (it being understood that such consent may be
conditional upon negotiation of changes to Section 8(l).)
"Gas Consultant" means ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ and
Associates, Inc.
"Gas Contracts" means the Gas Supply Contracts and the
Gas Transportation Contracts.
"Gas Resale Agreements" means any contract or agreement
entered into by or on behalf of the Company for the resale to
third parties of natural gas purchased under the Gas Supply
Contract, the Fuel Supply Management Agreement or any Spot Gas
Contract, which natural gas (i) is not required to meet the
natural gas supply needs at the Project, or (ii) must be
purchased in amounts necessary to satisfy minimum take
obligations under the Gas Supply Contract or any Spot Gas
Contract during periods of low dispatch at the Project.
"Gas Suppliers" means Natural Gas Clearinghouse and any
other Person which shall supply natural gas to the Project
pursuant to a Gas Supply Contract.
"Gas Supply Contracts" means (i) the Gas Purchase
Contract, dated April 12, 1990 and amended on April 23, 1993,
between the Company and Natural Gas Clearinghouse, as it may
exist at the time and (ii) any firm natural gas supply contract
having a term (including all renewal or extension periods)
greater than one year entered into by the Company to supply
natural gas to the Project as a part of the Project's primary gas
supply, which is acceptable to the Bank.
"Gas Transportation Contracts" means, collectively,
(i) the ▇▇▇▇ Gas Transportation Contract, dated October 22, 1991,
between the Company and Transcontinental Gas Pipe Line
Corporation, as in effect on the date hereof, (ii) the Service
Agreement for Services Under ITS Rate Schedule, dated April 4,
1991, between the Company and Columbia Gas Transmission
Corporation, as in effect on the date hereof, and (iii) the ITS-1
Service Agreement, dated as of June 13, 1991 between the Company
and Columbia Gulf Transmission Company, as in effect on the date
hereof.
"General Partner" means Panda-▇▇▇▇▇▇▇▇ Corporation, a
Delaware corporation, the general partner of the Company.
"Good Faith Contest" means the contest of an item if
(i) the item is diligently contested in good faith by appropriate
proceedings timely instituted, (ii) adequate reserves are
established in accordance with GAAP with respect to the contested
item and held in cash or Permitted Investments, (iii) during the
period of such contest, the enforcement of such contested item is
effectively stayed, (iv) any obligations with respect to such
item are effectively stayed or suspended by, or any Lien filed in
connection therewith shall have been removed from the record by
surety bonds, performance bonds or similar arrangements provided
by a reputable surety company or similar Person, or title
insurance under the Title Policy or cash deposits are otherwise
provided to assure the discharge of the Company's or Funding
Corp.'s obligation thereunder and of any additional charge,
penalty or expense arising from or incurred as a result of such
contest; provided that the aggregate exposure of the Company and
Funding Corp. in connection with such cash deposits is less than
$250,000, (v) it becomes necessary to prevent the delivery of a
tax deed or other similar instrument conveying the Mortgaged
Property or any portion thereof because of non-payment of such
item, then the Company or Funding Corp. shall pay the same in
sufficient time to prevent the delivery of such tax deed or other
similar instrument and (vi) neither the Company nor Funding Corp.
has any knowledge of any actual or proposed deficiency or
additional assessment in connection therewith not otherwise
satisfying the requirements of clauses (i) through (v).
"Governmental Approvals" means any authorization,
consent, approval, order, consent decree, license, franchise,
lease, ruling, permit, tariff, rate, certification, exemption,
filing (other than purely ministerial filings) or registration by
or with any Governmental Authority relating to the ownership,
operation or maintenance of the Project or to the execution,
delivery or performance of any Project Document or Transaction
Document.
"Governmental Authority" means any national, state,
sovereign or government, any federal, regional, state, local or
political subdivision and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of
or pertaining to government.
"Guarantee" of any Person means any obligation,
contingent or otherwise, of such Person directly or indirectly
guaranteeing in any manner any Indebtedness or other obligation
of any other Person including without limitation any obligation
or agreement of such Person contingent or otherwise, that
directly, indirectly or in effect constitutes a guaranty by such
Person (i) to pay or purchase such Indebtedness or to advance or
supply funds for the payment or purchase of such Indebtedness, or
(ii) to purchase, sell or lease (as lessee or lessor) property,
or to purchase or sell services, primarily for the purpose of
enabling such other Person to make payment of such Indebtedness
or to assure the holder of such Indebtedness against loss, or
(iii) to supply funds to or in any other manner invest in the
debtor (including any agreement to pay for property or services
irrespective of whether or not such property is received or such
services are rendered), or (iv) otherwise to assure a creditor
against loss.
"Hazardous Materials" means (i) hazardous materials,
hazardous wastes, hazardous substances, extremely hazardous
wastes, restricted hazardous wastes, toxic substances, toxic
pollutants, contaminants, pollutants or words of similar import,
as used under Environmental Laws; (ii) petroleum and petroleum
products including crude oil and any fractions thereof;
(iii) natural gas, synthetic gas and any mixtures thereof,
(iv) asbestos and/or any material which contains any hydrated
mineral silicate, including, but not limited to, chrysolite,
amosite, crocidolite, tremolite, anthophylite and/or actinolite,
whether friable or nonfriable; (v) polychlorinated biphenyls
("PCBs"), or PCB-containing materials or fluids; (vi) any other
hazardous, radioactive or toxic substance, material, pollutant,
or solid, liquid or gaseous waste; and (vii) any substance that,
whether by its nature or its use, is subject to regulation under
any Environmental Law or with respect to which any Federal, state
or local Environmental Law or governmental agency requires
environmental investigation, monitoring or remediation.
"Indebtedness" of any Person means (i) all obligations
of such Person for borrowed money or for the deferred purchase
price of property or services, (ii) all obligations of such
Person created or arising under any conditional sale or other
title retention agreement with respect to property acquired by
such Person (even though the rights and remedies of the seller or
lender under such agreement in the event of a default are limited
to repossession or sale of such property), (iii) all obligations
of such Person evidenced by bonds, debentures, notes or other
similar instruments, (iv) all non-contingent obligations of such
Person to reimburse any bank or other Person in respect of
amounts paid under a letter of credit or similar instrument, (v)
all outstanding obligations of others secured by a Lien on any
asset of such Person, whether or not such obligations are assumed
by such Person, (vi) all obligations under leases which shall
have been or should be, in accordance with generally accepted
accounting principles, recorded as capital leases in respect of
which such Person is liable as lessee, (vii) all Guarantees,
(viii) all payments under interest rate swaps, caps, collars and
other hedging arrangements, (viii) all obligations referred to in
clause (i), (ii), (iii), (iv), (v), (vi) or (vii) above secured
by (or for which the holder of such obligations has an existing
right, contingent or otherwise, to be secured by) any Lien upon
or in property (including, without limitation, accounts and
contract rights) owned by such Person, even though such Person
has not assumed or become liable for the payment of such
Indebtedness.
"Indenture" means the Trust Indenture dated as of July
31, 1996 among Funding Corp., the Company and the Trustee.
"Independent Engineer" means ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇.
"Independent Engineer's Certificate" means a
certificate of an Authorized Representative of the Independent
Engineer.
"Insufficiency" means, with respect to any employee
benefit plan, the amount, if any, by which the present value of
the vested and non-vested benefits under such plan (determined as
of the latest actuarial valuation date for such plan and
determined in accordance with the same assumptions and methods as
used in the most recent actuarial valuation for such plan)
exceeds the fair market value of the assets of such plan
allocable to such benefits.
"Insurance Consultant" means Aon Corporation.
"Insurance Proceeds" means all amounts and proceeds
(including instruments) in respect of the proceeds of any
casualty insurance policy required to be maintained under Section
7(g), except proceeds of business interruption or title
insurance.
"Interconnection Agreement" means the Letter Agreement,
dated March 7, 1991, between the Company and Columbia Gas
Transmission Corporation.
"Intercreditor Agreement" means the Collateral Agency
and Intercreditor Agreement dated as of July 31, 1996 among the
Company, Funding Corp., the Bank, the Trustee and the Collateral
Agent.
"Interest Expense" means, for any period, all interest
on the Indebtedness of the Company due and payable during such
period.
"Interim Financing Documents" means the collective
reference to (i) Letter of Credit and Reimbursement Agreement
dated, as of July 31, 1996, among the Company, the General
Partner and Nationsbank of Texas, N.A., (ii) Collateral Agency
and Intercreditor Agreement, dated as of July 31, 1996, among the
Company, Funding Corp., Nationsbank of Texas, N.A., The Bank of
New York, as trustee, and The Bank of New York as escrow agent,
(iii) Unconditional Guaranty Agreement, dated as of July 31,
1996, of the General Partner in favor of Nationsbank of Texas,
N.A., (iv) LOC Security Agreement, dated as of July 31, 1996,
between the Company and Nationsbank of Texas, N.A. and (v)
Security Bond Agreement, dated as of July 31, 1996, between the
Company and Nationsbank of Texas, N.A.
"Issuance Date" means the date on which the Letter of
Credit is issued upon request of the Company pursuant to Section
3(a).
"Law" means, with respect to any Governmental
Authority, any constitutional provision, law, statute, rule,
regulation, ordinance, treaty, order, decree, judgment, decision,
certificate, holding, injunction, registration, license,
franchise, permit, authorization, guideline, approval, consent or
requirement of such Governmental Authority, enforceable at law or
in equity, along with the interpretation and administration
thereof by any Governmental Authority charged with the
interpretation or administration thereof.
"Letter of Credit" means the letter of credit issued by
the Bank in favor of VEPCO for the account of the Company in a
stated amount equal to the Maximum Credit Amount substantially in
the form of Exhibit A hereto.
"Lien" means, with respect to any asset, any mortgage,
lien, pledge, charge, security interest or encumbrance of any
kind in respect of such asset.
"Limited Partner" means PRC II Corporation, a Delaware
corporation.
"Major Maintenance Expenses" means all expenditures by
the Company on regularly scheduled (or reasonably anticipated)
maintenance of the Project in accordance with good utility
practice and vendor and supplier requirements constituting major
maintenance (including, without limitation, teardowns, overhauls,
capital improvements, replacements and/or refurbishment of major
components of the Project).
"Major Maintenance Requirement" means, for any Funding
Date, (i) if, on such Funding Date, the amount then on deposit in
the Overhaul Fund is $1,000,000 or less, an amount equal to the
sum of (x) the product obtained by multiplying the total number
of hours that each of the turbines constituting the Project has
operated during the 30-day period immediately preceding such
Funding Date by $100, and (y) the aggregate amount, not to exceed
$1,000,000, of the Major Maintenance Requirements for previous
Funding Dates which has not been funded or has been withdrawn
from other Funds pursuant to Section 3.12 of the Depositary
Agreement, or (ii) if, on such Funding Date, the amount then on
deposit in the Overhaul Fund exceeds $1,000,000, then the Major
Maintenance Requirement of such Funding Date shall be zero, in
each case as such amount shall be revised annually pursuant to
Section 7(l).
"Material Adverse Change" means a material change in
the business, operations, properties or condition (financial or
otherwise) of the Project, the Company, Funding Corp. or any of
their respective Affiliates, which could reasonably be expected
to have a material adverse effect on (i) the ability of the
Company to perform its obligations in all material respects under
the Project Agreements, (ii) the ability of the Company or
Funding Corp. to perform their respective obligations in all
material respects under this Agreement, any other Financing
Documents or any other agreement evidencing the financing
transactions between Funding Corp. and the Company or (iii) the
validity or the priority of the Collateral Agent's and the
Depositary Agent's Liens on the Collateral.
"Maximum Credit Amount" means $4,950,000.
"Moody's" means ▇▇▇▇▇'▇ Investment Services, Inc. or
any successor thereto.
"Mortgaged Property" has the meaning set forth
collectively in each of the Mortgages.
"Mortgages" means (i) the First Mortgage, and (ii) any
Additional Mortgages, if, as and when entered into by the
Company.
"Multiemployer Plan" means a Plan which is a
multiemployer plan as defined in Section 4001(a)(3) of ERISA.
"Non-Material Agreements" means (i) Acceptable Fuel
Management Contracts and (ii) any contract or undertaking entered
into by the Company (whether before or after the Issuance Date)
in the ordinary course of business under which the Company could
not reasonably be expected to have monetary obligations in excess
of $1,000,000 under any such contract or undertaking or related
contracts or undertakings. For purposes of this definition,
indemnity or similar obligations of the Company subject to a
maximum dollar amount shall be computed at such amount, and all
other indemnity or similar obligations of the Company shall be
computed at the amount thereof which would, at the time of such
contact or undertaking is entered into, reasonably be expected to
become due and payable.
"Obligations" means all amounts owed under this
Agreement and interest thereon (including, without limitation,
interest accruing after the filing of any petition in bankruptcy
or the commencement of any insolvency, reorganization or like
proceeding, relating to the Company or Funding Corp., as
applicable, whether or not a claim for post-filing or post-
petition interest is allowed in such proceeding), all other
obligations and liabilities of the Company to the Bank, whether
direct or indirect, absolute or contingent, due or to become due,
now existing or hereafter incurred, which may arise under, out
of, or in connection with this Agreement, the Letter of Credit,
the Intercreditor Agreement or any other document made or
delivered or given in connection therewith or herewith, whether
on account of principal, interest, fees, indemnities, costs,
expenses (including, without limitation, all fees and
disbursements of counsel to the Bank or otherwise).
"Operating Budget" means a budget of Operating Expenses
(excluding fuel and fuel transportation expenses) and capital
expenditures and a long-term maintenance program with respect to
the Project for any given fiscal year, or part thereof, of the
Company that is prepared by the Company or, on the basis of
estimated monthly requirements, showing the amounts budgeted for
operation and maintenance expenses by category for each month
during such fiscal year, or part thereof, and approved in writing
by the Bank, prior to adoption by the Company.
"Operating Expenses" means, for any period, the
operating and maintenance expenses of the Project for such period
(determined without duplication), calculated on a cash basis with
GAAP, both paid or required to be paid during such period,
including, without limitation, the following: (i) costs incurred
or amounts payable by the Company under any Project Agreement or
Non-Material Agreement (other than amounts payable as Debt
Service), (ii) general and administrative and management expenses
and major maintenance costs with respect to the Project,
including the repair, replacement or rebuilding of the Project in
connection with an Event of Eminent Domain, an Event of Loss or
Title Event (to the extent not paid from the moneys held in the
Overhaul Fund and the Restoration Fund), (iii) labor costs,
(iv) insurance premiums, (v) sales, receipts, franchise,
licensing, excise, property and other taxes imposed on the
Company (but not any partner thereof) to which the Project may be
subject, (vi) costs and fees incurred in connection with
obtaining and maintaining in effect any Governmental Approvals,
(vii) utilities costs, (viii) costs incurred by the Company or
Funding Corp. in connection with the performance hereunder and
under the Collateral Documents and other agreements anticipated
thereby, (ix) legal, accounting and other professional fees
incurred in connection with any of the foregoing or the Project,
(x) fees and expenses payable during such period in connection
with this Agreement, the Bonds and other Indebtedness of the
Company permitted under Section 8(c) (other than Debt Service and
principal of, interest on and other amounts payable by the
Company or Funding Corp. with respect to such other
Indebtedness), (xii) cash deposits in connection with any surety
bonds or similar arrangements permitted by Section 7(e)(i)(z) and
Good Faith Contests.
"Operating Plan" has the meaning set forth in
Section 7(e)(vii).
"Operation and Maintenance Agreement" means (i) the
Amended and Restated Operation and Maintenance Agreement, dated
as of December 27, 1993, between the Company and University
Technical Services, Inc., as in effect on the date hereof.
"Operation and Maintenance Procedures" means the
procedures established (i) by the Operator under the Operation
and Maintenance Agreement with respect to operation and
maintenance services and provided by the Operator in accordance
with the design engineer's recommendations, the equipment
manufacturers' recommendations, and Prudent Engineering and
Operating Practices and (ii) by any other Project Participant
with respect to the operation and maintenance of the Project in
accordance with the equipment manufacturers recommendations and
Prudent Engineering and Operating Practices.
"Operator" means University Technical Services, Inc.
"Opinion of Counsel" means a written opinion of counsel
for any Person satisfactory to the Bank which may include,
without limitation, counsel for the Company or Funding Corp.,
whether or not such counsel is an employee of any of them.
"Overhaul Fund" has the meaning ascribed thereto in
Section 3.6 of the Depositary Agreement.
"Participant" has the meaning set forth in Section 13
hereof.
"Partners" means the Limited Partner, the General
Partner and such other Persons who may from time to time become
partners of the Company in accordance with the provisions of the
Partnership Agreement.
"Partnership Agreement" means the Second Amended and
Restated Agreement of Limited Partnership, dated as of July 31,
1996, among the Partners.
"Partnership Distribution Fund" means the fund
described in Section 3.9 of the Depositary Agreement.
"Partnership Guarantee" means the Partnership
Guarantee, dated as of July 31, 1996, of the Company in favor of
the Trustee, guaranteeing the obligations of Funding Corp. under
the Indenture and the First Series Supplemental Indenture.
"Partnership Interest Pledge Agreements" means (a) the
General Partner Pledge and Security Agreement, dated as of
July 31, 1996, between Panda-▇▇▇▇▇▇▇▇ Corporation and the
Collateral Agent providing for the pledge of all the general
partnership interest of the Company to the Collateral Agent, and
(b) the Limited Partner Pledge and Security Agreement dated as of
July 31, 1996, between PRC II Corporation and the Collateral
Agent providing for the pledge of all the limited partnership
interest of the Company to the Collateral Agent.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Permitted Investments" means investments in securities
that are: (i) direct obligations of the United States, or any
agency thereof; (ii) obligations fully guaranteed by the United
States or any agency thereof; (iii) certificates of deposit
issued by commercial banks under the laws of the United States or
any political subdivision thereof having a combined capital and
surplus of at least $500,000,000 and having long-term unsecured
debt securities having a rating assigned by each of the Moody's
and Duff & ▇▇▇▇▇▇ equal to the highest rating assigned thereby to
long-term unsecured debt securities (but at the time of
investment not more than $10,000,000 may be invested in such
certificates of deposit from any one bank); (iv) repurchase
obligations with a term of not more than seven days for
underlying securities of the types described in clauses (i) and
(ii) above, entered into with any financial institution meeting
the qualifications specified in clause (iii) above; (v) open
market commercial paper of any corporation (other than an
Affiliate of the Company or Funding Corp.) incorporated or doing
business under the laws of the United States or any political
subdivision thereof having a rating assigned by each of Moody's
and Duff & ▇▇▇▇▇▇ equal to the highest rating assigned thereby to
commercial paper (but at the time of investment not more than
$10,000,000 may be invested in such commercial paper from any one
company); (vi) investments in money market funds having a rating
assigned by each of Moody's and Duff & ▇▇▇▇▇▇ equal to the
highest rating assigned thereby to money market funds (including
money market funds for which the Depositary Agent in its
individual capacity or any of its affiliates is investment
manager or adviser); or (vii) investments in money market funds
registered under the Investment Company Act of 1940, the
portfolio of which is limited to direct obligations of the United
States and agencies of the United States government.
"Permitted Liens" means the Liens permitted under
Section 8(d).
"Person" means any individual, sole proprietorship,
corporation, partnership, joint venture, limited liability
company, trust, unincorporated association, institution,
Governmental Authority or any other entity.
"Pipeline" means the approximately 10.25 mile lateral
natural gas pipeline connecting the pipelines owned by Columbia
Gas Transmission Corporation and Transcontinental Gas Pipe Line
Corporation and the Project.
"Pipeline Operating Agreement" means the Pipeline
Operating Agreement, effective as of February 14, 1990, as
amended by Amendment Number 1, dated May 7, 1990, and Amendment
Number 2, dated November 19, 1991, between the Company and North
Carolina Natural Gas Corporation.
"Plan" means at any time an employee pension benefit
plan which is covered by Title IV of ERISA or subject to the
minimum funding standards under Section 412 of the Code and is
either (i) maintained by a member of the Controlled Group for
employees of a member of the Controlled Group or (ii) maintained
pursuant to a collective bargaining agreement or any other
arrangement under which more than one employer makes
contributions and to which a member of the Controlled Group is
then making or accruing an obligation to make contributions or
has within the preceding five plan years made contributions.
"PRC" means Panda-▇▇▇▇▇▇▇▇ Corporation, a Delaware
corporation.
"Process Agent" means CT Corporation.
"Project" means the approximately 180 megawatt
electrical generating facility, the Site on which such facility
is located and all related equipment and facilities.
"Project Agreements" means, individually and
collectively, the Steam Sales Agreement, the VEPCO Power Purchase
Agreement, the Pipeline Operating Agreement, the Site Lease, the
Gas Supply Contracts, the Transco Facilities Agreement, the
Operation and Maintenance Agreement, the Interconnection
Agreement, the Gas Transportation Contracts, the Fuel Supply
Management Agreement, any Firm Gas Transportation Contract, and
any Additional Contract.
"Project Participant" means any Person who is a party
to a Project Agreement, other than the Company and the Funding
Corp.
"Project Revenue Fund" means the fund described in
Section 3.1 of the Depositary Agreement.
"Project Revenues" means, for any period, the sum of
the following (without duplication) received by the Company or
amounts credited to the Project Revenue Fund representing
monetary amounts immediately available, as described in clause
(iii) below during such period: (i) all revenues under the VEPCO
Power Purchase Agreement and the Steam Sales Agreement plus
(ii) all other revenues, whether from the sale of electrical
capacity or electricity, thermal energy byproducts of the
operation of the Project on assets of the Company otherwise, plus
(iii) investment earnings on amounts in the Funds, plus (iv) the
proceeds of any delayed opening or business interruption
insurance and other payments received for delayed opening or
interruption of operations, plus (v) refunds of deposits, plus
(vi) all rental and other payments received by the Company from
the lease or sale of any portion of the Site, plus (vii) all
revenue received by the Company from fuel management activities,
plus (viii) all other income, received by the Company during such
period. Project Revenues shall exclude, to the extent included,
proceeds of the Bonds, proceeds of all Indebtedness of the
Company or Funding Corp. Casualty Proceeds, Eminent Domain
Proceeds, Title Insurance Proceeds, any proceeds of other
insurance maintained by or the Company or Funding Corp. and
contributions to capital.
"Projected Debt Service Coverage Ratio (Three Month)"
means, on any date of determination, a projection of the Debt
Service Coverage Ratio for the three month period specified or,
if no period is specified, for any three month period commencing
on the first day of the calendar month which includes such date
of determination, in each case, prepared by the Company in good
faith based upon assumptions consistent in all material respects
with the Project Agreements and the historical operating results
of the Project (without giving effect to any historical non-
recurring extraordinary event). Whenever the Company is required
to provide a determination of a Projected Debt Service Coverage
Ratio (Three Month), the full calculation of the Projected Debt
Service Coverage Ratio (Three Month) (including any supporting
documentation) shall be set forth in such Certificate of the
Company delivered to the Bank, accompanied by an Independent
Engineer's Certificate, dated within five (5) days of the date of
such Certificate, stating that, based upon reasonable
investigation and review, the Projected Debt Service Coverage
Ratio (Three Month) is based on reasonable assumptions consistent
in all material respects with the Project Agreements and the
historical operating results of the Project and that the
Independent Engineer believes the Projected Debt Service Coverage
Ratio (Three Month) to be reasonable in light of such
assumptions.
"Property Tax Fund" means the fund described in Section
3.11 of the Depositary Agreement.
"Property Tax Requirement" means, for any Funding Date,
(i) until the date that the Company delivers to the Depositary
Agent the certificate referred to in Section 7(f), an amount
equal to 8.33% of the amount of real property taxes assessed in
the tax year immediately preceding the year in which such Funding
Date occurs against the real property owned by The ▇▇▇▇ Company
(or any successor owner of such property) that includes the Site;
provided that if the Company delivers to the Depositary Agent the
documentation required under Section 3.11(e) of the Depositary
Agreement, the Property Tax Requirement for any Funding Date
occurring during the period commencing on the date of such
delivery and ending on the last day of the tax year for which
such documents are delivered shall be zero and (ii) after the
delivery of such certificate, zero.
"Prudent Engineering and Operating Practices" means the
practices, methods and acts generally engaged in or approved by
the electric utility industry for electrical and steam generating
facilities of similar design and construction as, and otherwise
at such time similarly situated to, the Project, that in the
exercise of reasonable judgment in light of the facts known or
that reasonably should have been known at the time a decision was
made, would have been expected to accomplish the desired result
in a manner consistent with law, regulation, reliability, safety,
environmental protection, economy and expedition.
"PUHCA" means the Public Utility Holding Company Act of
1935, as amended.
"PURPA" means the Public Utility Regulatory Policies
Act of 1978, as amended.
"Qualifying Facility" means a cogeneration facility
that has satisfied the definition of "qualifying facility" as set
forth in 18 C.F.R. 292.102(b)(1), as the same may be amended or
supplemented from time to time.
"Redemption Agreement" means the Redemption Agreement,
dated as of July 31, 1996, among the Company, the General
Partner, the Limited Partner and Ford Motor Credit Company.
"Reimbursement Default" means any event or condition
which constitutes a Reimbursement Event of Default or which with
the giving of notice or the lapse of time or both would, unless
cured or waived, become a Reimbursement Event of Default.
"Reimbursement Event of Default" has the meaning set
forth in Section 9.
"Release", when used in connection with any Hazardous
Material, means any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or
migration, where such release is either regulated by applicable
Environmental Law or reasonably may be expected to serve as the
basis for liability.
"Restoration Fund" means the fund described in Section
3.8 of the Depositary Agreement.
"SEC" means the Securities and Exchange Commission.
"Secured Parties" shall have the meaning set forth in
Section 1.2 of the Intercreditor Agreement.
"Security Agreements" means the Assignment and Security
Agreement, dated as of July 31, 1996, made by the Company in
favor of the Collateral Agent and (ii) the Assignment and
Security Agreement, dated as of July 31, 1996, made by Funding
Corp. in favor of the Collateral Agent.
"Site" means the tracts of land or interests therein
located in Roanoke Rapids, North Carolina, which are more
particularly described in the Site Lease.
"Site Lease" means the Real Property Lease and Easement
Agreement, dated as of June 9, 1989, between The ▇▇▇▇ Company and
the Company, as amended as of October 1, 1989, as of January 31,
1990, and as of March 15, 1996, and as it may be further amended
or supplemented from time to time.
"Spot Gas Contract" means any contract or agreement
entered into by or on behalf of the Company for the purchase of
natural gas for the operation of the Project, other than the Gas
Supply Contract.
"Steam Sales Agreement" means the Cogeneration Energy
Supply Agreement, dated January 11, 1989, and amended on October
1, 1989 and January 3, 1990, between the Company and The ▇▇▇▇
Company.
"Stock Pledge Agreement" means the Stock Pledge and
Security Agreement, dated as of July 31, 1996, between Panda
Interholding Corporation, a Delaware corporation, and the
Collateral Agent providing for the pledge of all the capital
stock of Panda-▇▇▇▇▇▇▇▇ Corporation and PRC II Corporation to the
Collateral Agent.
"Subsidiary" means any corporation or other entity of
which securities or other ownership interests having ordinary
voting power to elect a majority of the board of directors or
other persons performing similar functions are at the time
directly or indirectly owned by the Company or one or more
Subsidiaries, or by the Company and one or more Subsidiaries.
"Successor Participant" means each Person to whom a
Participant transfers all or a part of its participation with the
consent of the Company.
"Tax" and "Taxes" have the meanings set forth in
Section 2(c)(iii).
"Termination Date" means the earliest of (i) the date
on which the Bank pays a drawing under the Letter of Credit for
the Maximum Credit Amount, (ii) if a drawing is not requested by
VEPCO after a notice of termination is given under the Letter of
Credit, the Date of Early Termination, (iii) if a drawing is
requested by VEPCO after a notice of termination is given under
the Letter of Credit, the date on which the Bank pays such
drawing and (iv) the seventh anniversary of the Issuance Date of
the Letter of Credit.
"Title Company" means Chicago Title Insurance Company.
"Title Event" means the existence of any defect of
title or lien or encumbrance on the Mortgaged Property (other
than Permitted Liens) that entitles the Collateral Agent to make
a claim under the Title Policy.
"Title Insurance Proceeds" means all amounts and
proceeds (including instruments) in respect of the proceeds of
the Title Policy.
"Title Policy" means collectively, the policy or
policies of title insurance required pursuant to Section 7( )
insuring the mortgages constituting the First Mortgage and
certain Additional Mortgages.
"Transaction Documents" means the Project Agreements,
the Finance Agreements, the Bond Purchase Agreement, the Project
Documents, the Interim Financing Documents and the Redemption
Agreement.
"Transco Facilities Agreement" means the Lateral Line
Interconnect and Reimbursement Agreement, dated August 1, 1990,
between the Company and Transcontinental Gas Pipe Line
Corporation.
"Transfer" means a sale, transfer, assignment
hypothecation, pledge, or other disposition and, when used as a
verb, shall have a correlative meaning.
"Transportation Service Conversion" means an election
by the Company to convert service under a Firm Gas Transportation
Contact from firm transportation pursuant to Part 157 of the
rules and regulations of FERC, 18 C.F.R. 157.1 et seq., to firm
transportation pursuant to Part 284 of the rules and regulations
of FERC, 18 C.F.R. 281.4 et seq.
"Trustee" means Fleet National Bank as Trustee under
the Indenture.
"VEPCO" means Virginia Electric and Power Company, a
Virginia public service corporation.
"VEPCO Power Purchase Agreement" means the Power
Purchase and Operating Agreement, dated as of January 24, 1989,
as amended on October 24, 1989 and July 30, 1993, between the
Company and VEPCO.
(a) Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be
interpreted, all accounting determinations hereunder shall be
made, and all financial statements required to be delivered
hereunder shall be prepared in accordance with GAAP.
Section 2. Reimbursement. (a) Subject to the terms and conditions
set forth herein, on the Issuance Date, the Bank shall issue the
Letter of Credit in favor of VEPCO for the account of the Company
in an amount equal to the Maximum Credit Amount.
(a) The Company agrees to pay to the Bank (i) not later
than 4:00 p.m. New York City time on the same Business Day on
which the Bank shall pay any draft under the Letter of Credit a
sum equal to the amount so paid under the Letter of Credit and
(ii) interest on any and all amounts unpaid by the Company when
due under clause (i) above from and including the date such
amount is paid by the Bank under the Letter of Credit until
payment in full, payable on demand, at a fluctuating interest
rate per annum equal to 4% per annum above the rate of interest
publicly announced by the Bank in New York City from time to time
as its prime rate, but such fluctuating interest rate shall in no
event be higher (with respect to each amount due and payable
hereunder, from the date such amount is due and payable until the
date such amount is paid in full) than the maximum rate permitted
by applicable law.
(b) (i) The Company agrees to pay to the Bank on the
Issuance Date an initial fee equal to .5% of the Maximum Drawing
Amount.
(ii) The Company agrees to pay to the Bank a fee with
respect to the Letter of Credit equal to 1.5% per annum of the
Maximum Credit Amount from the Issuance Date to, but excluding,
the Termination Date payable quarterly in arrears on each
March 31, June 30, September 30 and December 31, and the accrued
portion of such annual fee on the Termination Date, commencing
September 30, 1996 (for the amount of such fee that shall have
accrued since the Issuance Date); provided that if Moody's shall
rate the Bonds or any series thereof lower than Baa3 (or an
equivalent rating if the rating system used by ▇▇▇▇▇'▇ is
revised) or Duff & ▇▇▇▇▇▇ shall rate the Bonds or any series
thereof less than BBB- (or an equivalent rating if the rating
system used by Duff & ▇▇▇▇▇▇ is revised) the fee payable pursuant
to this subsection (b) shall be increased by .50% per annum
during the period commencing on the day on which such rating is
so lowered to, but excluding, the first day thereafter on which
such ratings are at least Baa3 and BBB-, respectively.
(c) (i) If after the date hereof, the adoption of any
applicable law, rule or regulation, or any change therein, or any
change in the interpretation or administration thereof by any
Governmental Authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance
by the Bank with any request or directive (whether or not having
the force of Law) of any such Authority, central bank or
comparable agency shall impose, modify or deem applicable any
reserve, special deposit or similar requirement (including,
without limitation, any such requirement imposed by the Board of
Governors of the Federal Reserve System) against letters of
credit issued by or assets of, deposits with or for the account
of the Bank or shall impose on the Bank any other condition
regarding this Agreement or the Letter of Credit and the result
of the foregoing shall be to increase the cost to the Bank of
issuing or maintaining the Letter of Credit (which increase in
cost shall be the result of the Bank's reasonable allocation of
the aggregate of such cost increases resulting from such events)
then, within 15 days after demand by the Bank, the Company shall
pay to the Bank all additional amounts which are necessary to
compensate the Bank for such increased cost.
(i) If, after the date hereof, the Bank shall have determined
that the adoption of any applicable Law regarding capital
adequacy, or any change therein, or any change in the
interpretation or administration thereof by any Governmental
Authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by the
Bank with any request or directive regarding capital adequacy
(whether or not having the force of Law) of any such Authority,
central bank or comparable agency, has or would have the effect
of reducing the rate of return on the Bank's capital as a
consequence of its obligations hereunder to a level below that
which the Bank would have achieved but for such adoption, change
or compliance (taking into consideration the Bank's policies with
respect to capital adequacy) by an amount deemed by the Bank to
be material, then within 15 days after demand by the Bank, the
Company shall pay to the Bank such additional amount or amounts
as will compensate the Bank for such reduction.
(ii) All payments made by the Company under this Agreement
shall be made free and clear of, and without reduction for or on
account of, any stamp or other taxes, levies, imposts, duties,
charges, fees, deductions, withholdings, restrictions or
conditions of any nature whatsoever hereafter imposed, levied,
collected, withheld or assessed by any country (or by any
political subdivision or taxing authority thereof or therein),
except for franchise taxes and taxes based on the overall net
income of the Bank (such nonexcluded taxes being called "Tax" or
"Taxes"). If any Taxes are required to be withheld from any
amounts payable to the Bank, the amounts so payable to the Bank
shall be increased to the extent necessary to yield to the Bank
(after payment of all Taxes) interest or any such other amounts
payable hereunder at the rates or in the amounts specified in
this Agreement; provided that the Company shall not be obligated
to pay such amounts with respect to any period in which the Bank
has failed (x) to file any form or certificate that it was
entitled to file which would have exempted the Bank from such
Taxes or (y) to take other action which would entitle the Bank to
an exemption from such Taxes, if such action would not, in the
reasonable judgement of the Bank, be otherwise disadvantageous to
it. Whenever any Tax is payable by the Company, as promptly as
possible thereafter, the Company shall send the Bank a receipt or
other evidence of payment thereof.
(iii) A certificate as to the nature of the occurrence
giving rise to, and the calculation (in reasonable detail) of,
compensation to the Bank pursuant to clauses (i), (ii) and (iii)
of this Section 2(d) above shall be submitted by the Bank to the
Company and shall be conclusive (absent demonstrable error) as to
the amount thereof.
(iv) The Company agrees that its obligations to pay
compensation pursuant to this Section 2(d) shall inure to the
benefit of each Participant and each Successor Participant with
respect to its respective participation to the same extent as if
such Participant or Successor Participant were named instead of
the Bank in this Section 2(d); provided that any certificate
presented by the Bank on behalf of a Participant or Successor
Participant pursuant to Section 2(d)(iv) shall provide the
identity of such Participant or Successor Participant and an
estimate of the total additional compensation which would be
payable to such Participant or Successor Participant on an annual
basis.
(v) No law, rule or regulation in the form in which it is
in effect on the Issuance Date, but excluding changes in the
interpretation or administration thereof after the Issuance Date,
or Tax to which the Bank is subject on Issuance Date shall be
used by the Bank as the basis of a claim for compensation
pursuant to Section 2(d). No law, rule or regulation in the form
in which it is in effect on the Issuance Date, but excluding
changes in the interpretation or administration thereof after the
Issuance Date, or Tax to which a Participant is subject on the
Issuance Date shall be used as the basis of a claim for
compensation pursuant to Section 2(d) by such Participant.
(d) All payments by the Company to the Bank under this
Section 2 shall be made in lawful currency of the United States
and in immediately available funds at the Bank's principal New
York office, which on the date hereof is located at ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇. Whenever any payment under
this Section 2 shall be due on a day which is not a Business Day,
the date for payment thereof shall be extended to the next
succeeding Business Day, and any interest payable thereon shall
be payable for such extended time at the specified rate.
(e) Interest payable under subsection (b) shall be computed
on the basis of a year of 360 days. The fees payable under
subsection (c) shall be computed on the basis of a year of 365
days (or 366 days in a leap year) and paid for the actual number
of days elapsed (including the first day but excluding the last
day).
Section 3. Issuance of the Letter of Credit; Conditions
Precedent to Issuance. (a) Subject to satisfaction of the conditions
precedent set forth in subsections (b), (c) and (d) of this
Section, the Bank shall issue the Letter of Credit on the date
set forth in the notice referred to in Section 3(b)(viii) (such
date or such later date on which the conditions precedent are
satisfied and the Letter of Credit is issued being herein called
the "Issuance Date"). The Letter of Credit shall be effective on
the Issuance Date and shall expire on the Termination Date.
(a) As a condition precedent to the issuance of the Letter
of Credit, the Bank shall have received on or before the Issuance
Date the following, each dated such date, in form and substance
satisfactory to the Bank:
(i) opinions of counsel for the Company, substantially in the
form of Exhibit B hereto;
(ii) copies of each of the Transaction Documents duly executed
by each Person party thereto and certified by an authorized
officer of each of Funding Corp. and the Company (including all
opinions of counsel (other than opinions delivered by counsel to
parties other than the Company and its affiliates in connection
with the Redemption Agreement and opinions delivered solely to
▇▇▇▇▇▇▇▇▇ & Company, Inc. in connection with the Bond Purchase
Agreement) delivered in connection therewith either addressed to
the Bank or permitting the Bank to rely on such opinions as if
such opinions were addressed to it and all other documents or
instruments delivered in connection with the consummation of the
transactions contemplated under the Financing Documents, the
Interim Financing Documents and the Collateral Documents);
(iii) copies of the resolutions of the Board of Directors
of the General Partner of the Company authorizing the execution,
delivery and performance by the Company of this Agreement, each
of the Transaction Documents to which the Company is a party,
certified by the Secretary or an Assistant Secretary of the
Company (which certificate shall state that such resolutions are
in full force and effect on the Issuance Date);
(iv) certified copies of all approvals, authorizations, orders
or consents of, or notices to or registrations with, any
governmental body or agency required for the Company to enter
into this Agreement and of all such approvals, authorizations,
orders, consents, notices or registrations required to be
obtained or made prior to the Issuance Date in connection with
the transactions contemplated by any of the Transaction Documents
to which the Company is a party;
(v) a certificate of the Secretary or an Assistant Secretary
of the Company certifying the names and true signatures of the
officers of the Company authorized to sign this Agreement and the
other documents to be delivered by the Company hereunder;
(vi) letters from the Company to each of the Insurance
Consultant, the Gas Consultant and the Independent Engineer
authorizing each of the foregoing to serve in such capacity on
behalf of the Bank.
(vii) a notice from the Company requesting issuance of
the Letter of Credit and stating the date on which the Company
desires such Letter of Credit be issued.
(viii) evidence that CT Corporation has been appointed as
agent for service of process for the Company and Funding Corp.
(ix) such other documents, instruments, approvals (and, if
requested by the Bank, certified duplicates of executed copies
thereof) or opinions as the Bank may reasonably request in
writing.
(b) The following statements shall be true and correct on
the Issuance Date and the Bank shall have received a certificate
signed by a duly authorized officer of the General Partner of the
Company, dated the Issuance Date, stating that:
(i) the representations and warranties contained in Section 6
are correct on and as of the Issuance Date as though made on and
as of such date; and
(ii) no Reimbursement Default shall have occurred and be
continuing and no Reimbursement Default shall result from the
issuance of the Letter of Credit.
(c) On or before the Issuance Date:
(i) each of the Transaction Documents shall have been duly
authorized and executed by the respective parties thereto and
shall be in full force and effect;
(ii) all conditions precedent to closing set forth in Section 7
of the Bond Purchase Agreement shall have been fulfilled.
Section 4. Adjustment of Maximum Drawing Amount; Terms of Drawing.
The Maximum Drawing Amount shall be modified as specified in the
fourth paragraph of the Letter of Credit and drawings under the
Letter of Credit shall be subject to the other terms and
conditions set forth in the Letter of Credit.
Section 5. Obligations Absolute. The payment obligations of the
Company under this Agreement shall be absolute, unconditional and
irrevocable, and shall be performed strictly in accordance with
the terms of this Agreement, under all circumstances whatsoever,
including, without limitation, the following circumstances:
(a) any lack of validity or enforceability of the Letter of
Credit or any of the Transaction Documents;
(b) any amendment or waiver of or any consent to departure
from all or any of the Transaction Documents;
(c) the existence of any claim, set-off, defense or other
rights which the Company may have at any time against VEPCO (or
any persons or entities for whom any of the foregoing may be
acting), the Bank or any other person or entity, whether in
connection with this Agreement, the Transaction Documents or any
unrelated transactions;
(d) any statement or any other document presented under the
Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue
or inaccurate in any respect whatsoever;
(e) payment by the Bank under the Letter of Credit against
presentation of a draft or certificate which does not comply with
the terms of such Letter of Credit; or
(f) any other circumstance or happening whatsoever, whether or
not similar to any of the foregoing.
6. Representations and Warranties. The Company and Funding
Corp. jointly and severally represent and warrant as follows:
(a) Existence and Authority. The Company is a limited
partnership duly organized and validly existing under the laws of
the State of Delaware, and is qualified to own property and
transact business in North Carolina and in every other
jurisdiction where the ownership of its property and the nature
of its business as currently conducted and as contemplated to be
conducted under each Project Document to which the Company is a
party requires it to be so qualified. The Company is not in
violation of the Partnership Agreement or its Certificate of
Limited Partnership. Each of Funding Corp. and the General
Partner, is a corporation duly organized and validly existing
under the laws of the state of its incorporation. Each of
Funding Corp. and the General Partner is qualified to own
property and transact business in North Carolina and in every
other jurisdiction where the ownership of its property and the
nature of its business as currently conducted and as contemplated
to be conducted under each Project Document to which such Person
is a party requires it to be qualified. Neither Funding Corp.
nor the General Partner is in violation of its certificate of
incorporation and by-laws. Each of the Company, Funding Corp.
and the General Partner has all powers and all material
governmental licenses, authorizations, consents and approvals
required to carry on its business as now conducted.
(b) Corporate Authorization. The execution, delivery and
performance by the Company and Funding Corp. of this Agreement
and each Transaction Document to which it is, or is to become, a
party, have been duly authorized by all necessary partnership
action on the part of the Company, all necessary corporate action
on the part of the General Partner and all necessary corporate
action on the part of Funding Corp. and do not, and will not,
require the consent or approval of any Partner of the Company,
any stockholder of Funding Corp. or any trustee or holder of any
indebtedness or other obligation of the Company or Funding Corp.,
other than such consents and approvals as have been, or on or
before the Issuance Date will be duly obtained, given or
accomplished.
(c) No Violation, etc. Neither the execution, delivery or
performance by the Company or Funding Corp. of this Agreement or
any Transaction Document to which it is, or is to become, a
party, nor the consummation by the Company and Funding Corp. of
the transactions contemplated hereby or thereby, nor compliance
by the Company and Funding Corp. with the provisions hereof or
thereof, conflicts or will conflict with, or results or will
result in a breach or contravention of any of the provisions of,
the Partnership Agreement of the Company, or the certificate of
incorporation or by-laws of Funding Corp., or any applicable law,
or any indenture, mortgage, lease or any other agreement or
instrument to which the Company or Funding Corp. or any of their
respective Affiliates is a party or by which the property of the
Company, Funding Corp. or any of their respective Affiliates is
bound, or result or will result in the creation or imposition of
any Lien (other than Permitted Liens) upon any property of the
Company and Funding Corp. or any of their respective Affiliates.
There is no provision of the Partnership Agreement of the
Company, or any applicable Law, or any such indenture, mortgage,
lease or other agreement or instrument which materially adversely
affects, or in the future is likely (so far as the Company can
now foresee) to have a Material Adverse Change on the Company or
Funding Corp.
(d) Governmental Actions. No Governmental Action under
any Federal, North Carolina or New York law or the General
Corporation Law of Delaware is or will be required in connection
with the execution, delivery or performance by the Company and
Funding Corp. of, or the consummation by the Company and Funding
Corp. of the transactions contemplated by, this Agreement or any
Transaction Document to which it is, or is to become, a party,
except such Governmental Actions (i) as have been, or will have
been, duly obtained, given or accomplished, (ii) as may be
required under existing Federal, Delaware, North Carolina or New
York law to be obtained, given or accomplished from time to time
after the Issuance Date in connection with the maintenance, use,
possession or operation of the Project or otherwise with respect
to the Project and the Company's involvement therewith and which
are routine in nature and which neither the Company nor Funding
Corp. has any reason to believe will not be timely obtained, and
(iii) as may be required under Applicable Law not now in effect.
No Governmental Action by any Federal, Delaware, North Carolina
or New York Governmental Authority is required including without
limitation any Governmental Action relating to the Securities Act
of 1933, the Securities Exchange Act of 1934, the Trust Indenture
Act of 1939, the Federal Power Act, the Investment Company Act,
PUHCA, Environmental Law, any energy matters or public utilities,
or the Project or is or will be required (x) in connection with
the participation by the Bank or any Participant in the
consummation of the transactions contemplated by this Agreement,
or in connection with the participation by the Trustee, Funding
Corp. or any Person in the consummation of the transactions
contemplated by the Transaction Documents or (y) to be obtained
by any of such Persons prior to the Termination Date, except such
Governmental Actions (A) as have been, or on or before the
Issuance Date, will be, duly obtained, given or accomplished, (B)
as may be required by Applicable Law not now in effect.
(e) Execution and Delivery. This Agreement, in Collateral
Documents and the other Transaction Documents to which the
Company and/or Funding Corp. is, or is to become, a party on or
prior to the Issuance Date have been or on or before the Issuance
Date will have been duly executed and delivered by the Company
and Funding Corp., as applicable, and this Agreement is and upon
execution and delivery thereof each such Collateral Document and
other Transaction Document will be the legal, valid and binding
obligations of the Company and Funding Corp., as applicable, in
accordance with their respective terms, subject to the
application by a court of general principles of equity and to the
effect of any applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights generally.
(f) Litigation. Except for the litigation between Panda
Energy Corporation and NNW, Inc. described in the Offering
Circular dated July 26, 1996 relating to the bonds issued under
the Bond Purchase Agreement, there is no pending action or
proceeding (including any Environmental Claim) before any court,
governmental agency or arbitrator against or directly involving
the Company, Funding Corp., or any of their respective Affiliates
and, to the best of the Company's and Funding Corp.'s knowledge,
there is no pending or threatened action or proceeding affecting
the Company, Funding Corp. or any of their respective Affiliates
before any court, governmental agency or arbitrator (A) in which
any question is raised as to the validity of this Agreement, any
Collateral Document, any other Transaction Document or any
Governmental Approval, or (B) in which there is any material
likelihood of an outcome which may materially and adversely
affect the ability of the Company, Funding Corp. or any such
Affiliate to perform its obligations hereunder, under any Project
Agreement, or under any of the other Transaction Documents.
There has been no determination (interim or final) in any action
or proceeding so disclosed which determination may materially and
adversely affect the ability of the Company or Funding Corp. to
perform its obligations hereunder under any Project Agreement,
any Collateral Document or any other Transaction Document.
(g) Material Adverse Change. The balance sheet of the
Company as at December 31, 1995, and the related statements of
income, of retained earnings and of changes in financial position
of the Company for the fiscal year then ended, copies of which
have been furnished to the Bank, present fairly the financial
position of the Company as at such date and the results of the
operations of the Company for the year ended on such date, in
accordance with GAAP. Since December 31, 1995, there has been no
Material Adverse Change.
(h) Compliance with ERISA. The Company and each member of
the Controlled Group have fulfilled their obligations under the
minimum funding standards of ERISA and the Code with respect to
each Plan (or, with respect to each Plan which is a multiemployer
plan as defined in section 4001(a)(3) of ERISA, have made all
required contributions), are in compliance (other than any
instance of non-compliance the liability for which is not
material to the Company's or the Controlled Group's financial
condition) with the presently applicable provisions of ERISA and
the Code, and no events have occurred which have or could result
in the imposition of any liability to the PBGC or a Plan under
Title IV of ERISA.
(i) Titles; Liens. The Company owns and has good and, in
the case of the Mortgaged Property, marketable title to the
Collateral pledged by it to the Collateral Agent in each case
free and clear of all Liens other than Permitted Encumbrances.
(j) Material Agreements and Licenses. The Company
possesses all licenses, franchises, trademarks, trade names,
copyrights, patents and agreements necessary for the ownership,
operation and maintenance of the Project. No licenses,
franchises, trademarks, trade names, copyrights, patents or
agreements with respect to the use of technology or other permits
not in the possession of the Company (other than those
constituting Government Approvals referred to in Section 3.03
hereof) are necessary for the construction, ownership, operation
and maintenance of the Project.
(k) No Default. Neither the Company, nor Funding Corp. nor
any of their respective Affiliates is in default under or with
respect to any Collateral Document, Financing Document, Interim
Financing Document or any provision of any other Project Document
or other agreement, lease or instrument to which it is a party or
by which it or its properties may be bound (which default or
breach has not been permanently waived by the other party to such
document). No Reimbursement Default or Reimbursement Event of
Default has occurred and is continuing.
(l) Payment of Taxes. Each of the Company, Funding Corp.
and their respective Affiliates has filed or caused to be filed
all tax returns which are required to be filed by it, and has
paid all taxes shown to be due and payable on said returns or on
any assessments made against it or any of its assets and all
other taxes, fees or other charges imposed on it by any
Governmental Authority, other than taxes and assessments the
payment of which are subject to a Good Faith Contest.
(m) Collateral Documents. Upon execution and delivery
thereof, the provisions of the Collateral Documents create, in
favor of the Collateral Agent, legal, valid and enforceable Liens
on or security interest in all of the Collateral covered thereby,
and on or prior to the Issuance Date all necessary and
appropriate recordings and filings will have been effected in all
necessary and appropriate public offices so that on the Issuance
Date each Collateral Documents will constitute a perfected Lien
on all right, title, estate and interest of the Company, Funding
Corp. and the Partners in the Collateral covered thereby, prior
and superior to all other Liens other than Permitted Liens.
(n) Delivery of Project Agreements. The Bank has received
a complete copy of each Project Agreement in effect on the
Issuance Date (including all exhibits, schedules and disclosure
letters referred to therein or delivered pursuant thereto, if
any, and all amendments and supplements thereto, if any) which
have been executed and delivered prior to or on the Issuance
Date. None of such Project Agreements has been otherwise
amended, modified or terminated, and all such Project Agreements
are in full force and effect. Each Project Agreement assigned to
the Company has been duly and validly assigned. Such assignments
are not subject to rescission and have been duly and validly
consented to by the parties to such Agreement and the obligations
thereunder have been duly and validly assumed by the Company.
(o) Disclosure. No representation, warranty or other
statement made by the Company or Funding Corp. in this Agreement,
in any other Transaction Document or in any document provided by
the Company or Funding Corp. or any of their respective
Affiliates to the Bank, the Independent Engineer, the Gas
Consultant or the Insurance Consultant contains any untrue
statement of a material fact or omits (as of the date made or
furnished) any material fact necessary to make the statements
herein or therein not misleading in light of the circumstances
under which they were made and nothing has occurred since the
date on which such representations, warranties or statements were
made to render them untrue or misleading (other than in any such
case, with respect to the identity of the Person making such
representation, warranty or statement). There is no fact known
to the Company, Funding Corp. or any of their respective
affiliates with respect to the Project, the Company, Funding
Corp. the General Partner, any Limited Partner or the Project
Documents which has been disclosed in writing to the Bank and
which materially adversely affects, or which could reasonably be
expected to material affects, or which could reasonably be
expected to materially adversely affect, the Company, Funding
Corp., the General Partner, the Project or the value of
Collateral Agent's security interest in the Collateral in the
future.
(p) Status. (i) The FERC Order granting PRC's application
for certification of the Project as a qualifying cogeneration
facility was issued on August 4, 1989. The Company's Self
Certification Filing has been filed with FERC. Except as set
forth in the Self Certification Filing, no facts contained in
PRC's original application for certification of the Project as a
Qualifying Facility or stated in such original certification
order by the FERC have changed (other than any such fact that
would not adversely affect the Project's status as a Qualifying
Facility). The Project is a Qualifying Facility.
(i) Neither the Company, Funding Corp., the General Partner,
nor any Limited Partner is an "investment company" or a company
"controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
(ii) Neither the Company, Funding Corp., the General Partner,
nor any Limited Partner is a "holding company" or a "subsidiary
company" of a "holding company" within the meaning of PUHCA.
(iii) Neither the General Partner nor the Limited Partner
is an "electric utility," an "electric utility holding company,"
or a wholly- or partially-owned subsidiary of an "electric
utility" or an "electric utility holding company," within the
meaning of PURPA and the regulations promulgated thereunder, or a
person primarily engaged in the generation or sale of electric
power (other than electric power from qualifying cogeneration
facilities or qualifying small power production facilities)
within the meaning of PURPA and the regulations promulgated
thereunder.
(iv) The Company is exempt from the provisions of the Federal
Power Act, as amended, except for the provisions set forth in
Subpart F of 18 C.F.R. Part 292.601, and neither the Company nor
the General Partner is a public utility under the laws of the
State or North Carolina and each of the Company and PRC has
complied with the applicable provisions of the Power Plant and
Industrial Fuel Use Act of 1978, as amended.
(v) The Bank will not be deemed, by reason of any transaction
contemplated by any of the Transaction Documents, to be subject
to regulation under (i) PUHCA, (ii) the Federal Power Act, (iii)
PURPA, (iv) any other Federal law regulating the generation,
transmission or sale of electricity under which the Bank would be
deemed to be the generator, transmitter or seller of such
electricity, or (v) any laws of the State of North Carolina
respecting the rates of public utilities and the financial and
organizational activities of utilities.
(q) Useful Life. As of the Closing Date, the useful life
of the Project as a whole, with the contemplated maintenance
customarily associated with similar operations, will be not less
than the remaining term of the VEPCO Power Purchase Agreement
(without giving effect to any extension of such term provided for
in Section 5.2 of such agreement).
(r) Utility Services. All electricity, water, water rights
and other utilities (including natural gas utilities) necessary
for the operation of the Project as contemplated by the Project
Agreements will be available in adequate amounts and on a timely
basis to meet the requirements necessary for the operation and
maintenance of the Project for its useful life consistent with
cash flows for the Company previously delivered to the Bank;
provided, that natural gas supply and transportation may be
subject to interruption from time to time.
(s) Solvency. On the Issuance Date, after giving effect to
the transactions contemplated by this Agreement and each of the
Transaction Documents, each of the Company and Funding Corp. is
solvent. For purposes of the foregoing, "solvent" as to any
Person shall mean that (i) the sum of the assets of such Person,
both at a fair valuation and at present fair salable value, will
exceed its liabilities, including contingent liabilities, (ii)
such Person will have sufficient capital with which to conduct
its business as presently conducted and as proposed to be
conducted, and (iii) such Person has not incurred debts, and does
not intend to incur debts, beyond its ability to pay such debts
as they mature. For purposes of the foregoing definition, "debt"
means any liability on a claim, and "claim" means (x) a right to
payment, whether or not such right is reduced to judgment,
liquidated, unliquidated, fixed, contingent, matured, unmatured,
disputed, undisputed, legal, equitable, secured, or unsecured, or
(y) a right to an equitable remedy for breach of performance if
such breach gives rise to a payment, whether or not such right to
an equitable remedy is reduced to judgment, fixed, contingent,
matured, unmatured, disputed, undisputed, secured, or unsecured.
With respect to any such contingent liabilities, such liabilities
shall be computed at the amount which, in light of all the facts
and circumstances existing at the time, represents the amount
which can reasonably be expected to become an actual or matured
liability.
(t) Additional Documents. On the Issuance Date, all the
representations and warranties contained in the Bond Purchase
Agreement, the Collateral Documents and the Interim Financing
Documents are true and correct in all material respects.
(u) Environmental. The Company, Funding Corp., the Project
and the Site are in compliance with all applicable Environmental
Laws except where such non-compliance could not reasonably be
expected to result in a Material Adverse Change or in remediation
costs in excess of $150,000 and could not reasonably be expected
to result in the imposition of a Lien by any Government Authority
or in any enforcement action by any Governmental Authority
seeking damages in excess of $150,000 or seeking remediation the
cost of which is reasonably estimated to be in excess of
$150,000. No Hazardous Material or underground storage tank is
located on, under or about, nor has there been a Release of any
Hazardous Material to or from the Site (or any other property
with respect to which the Company or Funding Corp. has or may
have retained or assumed liability for environmental conditions
or compliance) in a manner (i) which violates any Environmental
Law, (ii) for which cleanup or remedial action of any kind that
could reasonably be expected to result in a Material Adverse
Change or in remediation costs in excess of $150,000 is required
under any Environmental Law or (iii) which could reasonably be
expected to result in the imposition of a Lien by any
Governmental Authority or in any enforcement action by any
Governmental Authority seeking damages in excess of $150,000 or
seeking remediation the cost of which is reasonably estimated to
be in excess of $150,000.
7. Affirmative Covenants. The Company and Funding Corp.,
jointly and severally, covenant and agree that, so long as the
Letter of Credit shall remain outstanding hereunder and until
payment in full of all the Obligations of the Company:
(a) Maintenance of Existence, Properties, Etc. (i) The
Company shall preserve and maintain (x) its legal existence, as a
limited partnership in good standing under the laws of the State
of Delaware, (y) its qualification to do business and good
standing as a foreign limited partnership in North Carolina and
in every other jurisdiction where the ownership of its property
and the nature of its business require it to be so qualified and
(z) all its rights, licenses, patents, exemptions, privileges and
franchises necessary for the proper operation of the Project and
the maintenance of its existence except, in each case, where the
failure to so preserve and maintain could not reasonably be
expected to result in a Material Adverse Change.
(i) Each of Funding Corp. and the General Partner shall
preserve and maintain (x) its legal existence, as a corporation
organized and in good standing under the laws of the State of
Delaware, (y) its qualification to do business and good standing
as a foreign corporation in North Carolina and in every other
jurisdiction where the ownership of its property and the nature
of its business require it to be so qualified and (z) all its
rights, licenses, patents, exemptions, privileges and franchises
necessary for the maintenance of its existence except, in each
case, where the failure to so preserve and maintain could not
reasonably be expected to result in a Material Adverse Change.
(ii) Each of the Company and Funding Corp. shall comply with
the Partnership Agreement of the Company or the Certificate of
Incorporation and by-laws of Funding Corp., as the case may be.
(iii) The Company will maintain and operate the Project, or
cause the Project to be maintained and operated, in good order
and repair, ordinary wear and tear excepted, and, substantially
in accordance with Prudent Engineering and Operating Practices.
(iv) Each of the Company and Funding Corp. shall obtain and
maintain, or cause to be obtained and maintained in full force
and effect all Governmental Approvals required to be obtained by
or on behalf of the Company or Funding Corp., as applicable, (x)
to conduct its business pursuant to the Project Documents and the
Non-Material Agreements and (y) to perform its obligations under
the Project Documents, except, in either case, where failure to
so obtain or maintain such Governmental Approval could not
reasonably be expected to result in a Material Adverse Change.
Each of the Company and Funding Corp. shall use its best efforts
to obtain or cause to be obtained all Governmental Approvals
necessary in connection with the Additional Contracts to conduct
its business pursuant to the Project Documents and the Non-
Material Agreements, in each case as promptly as practicable but
in any event no later than the date required to be obtained
hereunder or under any other Project Documents.
(v) The Company shall preserve good title or valid leasehold
rights to the interests in the Site and the tangible personal
property forming a part of the Collateral purported to be subject
to the Lien of the Collateral Documents to which it is a party
(other than property subject to an Event of Loss, an Event of
Eminent Domain or a Title Event or property disposed of pursuant
to Section 8(f)), subject only to Permitted Liens.
(b) Compliance with Laws. Each of the Company and Funding
Corp. (i) shall comply with all Laws applicable to it (except
where the failure to do so, could not reasonably be expected to
result in a Material Adverse Change) and (ii) shall obtain,
maintain and comply with all Government Approvals as shall now or
hereafter be necessary under applicable Law in each case in
connection with the ownership, operation or maintenance of the
Project or the making and performance by the Company of any
material provision of the Project Documents to which it is a
party (except where the failure to do so, could not reasonably be
expected to result in a Material Adverse Change), and the Company
shall, upon request, promptly furnish copies of each such
Government Approval to the Bank.
(c) Litigation. Each of the Company and Funding Corp.
shall promptly furnish to the Bank after the Company becomes
aware of the commencement thereof, written notice of all actions,
suits and proceedings before any court or governmental
department, commission, board, bureau, agency, or
instrumentality, domestic or foreign, affecting the Company
which, if determined adversely to the Company and when aggregated
with any other such pending actions could result in a judgment
against the Company of $50,000 or more. Each of the Company and
Funding Corp. shall also notify the Bank if any such action, suit
or proceeding against it is threatened.
(d) Maintenance of Project. The Company shall cause the
Project and any properties now or hereafter owned or leased by it
to be operated and maintained (i) in good repair, working order
and condition and in accordance with Prudent Engineering and
Operating Practices as approved by the Independent Engineer, and
(ii) in accordance with the terms and conditions of the Project
Agreements; provided, that the Company's obligations under this
subsection (d) shall be suspended so long as such obligations are
relieved pursuant to the Force Majeure provisions, if any, of the
Project Agreements.
(e) Reporting Requirements. The Company shall:
(i) furnish, to the Bank as soon as practicable and in any
event within 75 days (or, if such statements are filed with or
incorporated into financial statements filed with the SEC, within
five days of such filing) after the end of the first, second and
third fiscal quarters of each fiscal year of the Company, an
unaudited consolidated and consolidating balance sheet of the
Company and its Subsidiaries as of the last day of such quarter
and the related consolidated and consolidating statements of
operations, including cash flows and partners' capital of the
Company for such quarter and (in the case of the first, second
and third fiscal quarters) for the portion of the fiscal year
ending with the last day of such quarter (prepared on a basis
consistent with that used in the preparation of corresponding
figures for the preceding fiscal year), setting forth in each
case in comparative form corresponding unaudited figures from the
preceding fiscal year and accompanied by a certificate of the
chief financial officer of the General Partner of the Company to
the effect that such consolidated financial statements fairly
present the financial condition and results of operations of the
Company on the dates and for the periods indicated in accordance
with GAAP, subject to normal recurring year-end adjustments;
(ii) furnish to the Bank as soon as practicable and in any
event within 135 days (or, if such statements is filed with or
incorporated into financial statements filed with the SEC, within
five days of such filing) after the end of each fiscal year of
the Company, a consolidated and consolidating balance sheet of
the Company and its Subsidiaries as of the end of such year and
the related consolidated and consolidating statements of
operations, income, cash flows and partners' capital of the
Company for such fiscal year (prepared on a basis consistent with
that used in the preparation of corresponding figures from the
preceding fiscal year) setting forth in each case in comparative
form corresponding figures from the preceding fiscal year and
with the opinion thereon (which shall not contain any "going
concern" or similar limitation) by Price Waterhouse LLP, or
another firm of independent public accountants of recognized
national standing, accompanied by a report of such accounting
firm stating that, in the course of its regular audit of the
consolidated financial statements of the Company, which audit was
conducted in accordance with GAAP, such accounting firm has
obtained no knowledge of any Reimbursement Default or
Reimbursement Event of Default, or, if in the opinion of such
accounting firm a Reimbursement Default or Reimbursement Event of
Default has occurred and is continuing, a statement as to the
nature thereof;
(iii) furnish to the Bank with each quarterly and annual
financial statement submitted pursuant to clauses (i) and (ii)
above:
(x) calculations of the Debt Service Coverage Ratio
for such fiscal quarter or fiscal year and for the
immediately preceding three fiscal quarters (commencing
September 30, 1996); and
(y) a certificate of an authorized officer of the
General Partner of the Company stating that all routine
maintenance to the Project has been performed substantially
in accordance with the operation and maintenance procedures
during such quarter or year; and
(z) a certificate of the chief financial officer of
the General Partner of the Company and the chief financial
officer of Funding Corp. stating that no Reimbursement
Default or Reimbursement Event of Default has occurred and
is continuing or, if such statement cannot be so certified,
specifying in reasonable detail such Default or Event of
Default and the actions taken or proposed to be taken with
respect thereto;
(iv) furnish to the Bank with each annual financial statement
submitted pursuant to clause (ii) above a certificate from an
authorized officer of the General Partner of the Company and an
authorized officer of Funding Corp. (w) confirming that all
insurance policies required pursuant to Section 7(g) are in full
force and effect on the date thereof, (x) confirming the names of
the companies issuing such policies, (y) confirming the amounts
and expiration dates of such policies, and (z) stating that such
policies comply with the requirements of Section 7(g);
(v) furnish to the Bank, as soon as practicable following the
performance of scheduled major maintenance of the Project, a
certificate of an authorized officer of the General Partner of
the Company stating that such work was performed substantially in
accordance with the Operation and Maintenance Procedures and a
certificate of the Independent Engineer verifying the information
contained in such officer's certificate; and
(vi) furnish to the Bank each of the following items:
(q) promptly after the Company or Funding
Corp. becomes aware of the occurrence and continuance
thereof, written notice of the occurrence of any event
or condition which constitutes a Reimbursement Default
or Reimbursement Event of Default, specifically
describing such Default or Event of Default and
describing any action being or proposed to be taken
with respect thereto;
(r) promptly after the Company or Funding
Corp. becomes aware of the occurrence and continuance
thereof, written notice of the occurrence of any Event
of Eminent Domain, Event of Loss or Title Event that
could reasonably be expected to give rise to Eminent
Domain Proceeds, Casualty Proceeds or Title Insurance
Proceeds, as the case may be, in an amount in excess of
$100,000 and a certificate of an authorized officer of
the General Partner of the Company setting forth the
details of such Event of Eminent Domain, Event of Loss
or Title Event and the action which the Company and
Funding Corp. are taking or propose to take with
respect thereto;
(s) promptly after the Company or Funding
Corp. becomes aware of the existence thereof, written
notice of the existence of any defect of title, any
Lien or any encumbrance on the Mortgaged Property that
could reasonably be expected to give rise to Title
Insurance Proceeds in an amount in excess of $250,000
and a certificate of an authorized officer of the
General Partner of the Company and Funding Corp.
setting forth the details of such defect of title, Lien
or encumbrance and the action which the Company and
Funding Corp. or the Title Company is taking or
proposes to take with respect thereto;
(t) promptly and in any event within five
Business Days after receipt thereof by the Company or
Funding Corp., written notice and copies of all
notices, complaints, summons, or any other
notifications received by the Company from any
Governmental Authority relating to Environmental Claims
that could reasonably be expected to exceed $50,000,
and copies of all material communications with any
Governmental Authority or other Persons regarding such
notices, complaints, summons or other notifications
with copies delivered concurrently to the Independent
Engineer;
(u) promptly after the Company or Funding
Corp. becomes aware thereof, (1) written notice of any
Release of any Hazardous Material, regardless of the
date of such Release, at, in, on, under or from the
Site, or any part thereof that is required to be
reported to any Governmental Authority or that could
reasonably be expected to result in any ordered
remediation or corrective action or obligation and (2)
copies of all communications with any Governmental
Authority or other Persons regarding the Release of any
Hazardous Materials;
(v) promptly after the Company or Funding
Corp. becomes aware of the occurrence thereof, written
notice of the occurrence of any event or condition
which constitutes a default under any Project
Agreement, specifically stating that such event or
condition has occurred and describing it and any action
being proposed to be taken with respect thereto;
(w) promptly after receipt thereof, a copy
of each notice, demand or other communication delivered
to the Company or Funding Corp. pursuant to any Project
Agreement to which the Company or Funding Corp. is a
party relating to the assertion of nonperformance of
any covenant of or a default under any Project
Agreement;
(x) promptly and in any event within five
Business Days after the Company or Funding Corp.
becomes aware of the occurrence of any of the following
with respect to any Plan (including without limitation
any Plan of a Commonly Controlled Entity) as to which
the Company or Funding Corp. may have liability,
written notice thereof, describing the same and steps
being taken by the Company or Funding Corp., as
applicable, with respect thereto: (1) the acquisition
of a Commonly Controlled Entity, (2) the occurrence of
a Reportable Event (as defined in Section 4043 of
ERISA) with respect to any such Plan, (3) the
institution of steps to withdraw from any such Plan,
(4) the institution of any steps to terminate any such
Plan, (5) the failure to make a required contribution
to any such Plan if such failure is sufficient to give
rise to a lien under Section 302(f) of ERISA or Section
412 of the Code, (6) the taking of any action with
respect to any such Plan which could result in the
requirement that the Company furnish a bond or other
security to the PBGC or such Plan, or (7) the
occurrence of any event or events with respect to any
such Plan or Plans which individually or in the
aggregate could result in material liability for the
Company;
(y) each document delivered to the Trustee
or any holder under the Indenture and not otherwise
delivered to the Bank; and
(z) from time to time, such other
information or documents (financial or otherwise) as
the Bank may reasonably request.
(vii) furnish to the Bank and the Independent Engineer
annually, at least sixty (60) days prior to the beginning of each
fiscal year for which an Operating Plan and an Operating Budget
is required pursuant to Section 7(n), a plan of the schedule
operation of the Project (an "Operating Plan") and an Operating
Budget for such fiscal year; provided that if the Company has not
adopted an annual Operating Budget before the beginning of fiscal
year of the Company, the Operating Budget for the preceding
fiscal year shall, until the adoption of an annual Operating
Budget, be deemed to be in full force and effect as the annual
Operating Budget.
(f) Site Taxes. (i) The Company shall use its best efforts
(x) to cause the Site to be replatted, as promptly as practicable
after the Issuance Date, as a parcel separate and distinct for
tax assessment purposes, from the real property of The ▇▇▇▇
Company which includes, or is contiguous to, the Site, or (y) to
obtain, as soon as practicable after the Issuance Date, a
nondisturbance agreement, satisfactory in form and substance to
the Bank from each taxing authority that assesses or collects
real property taxes on such real property in which such taxing
authority covenants that (A) if the event of the foreclosure of
any Lien arising from the failure to pay such real property
taxes, it will not disturb the Site Lease and (B) before any such
foreclosure, it shall first notify the Company and provide an
opportunity to the Company to discharge such Lien.
(ii) Upon the occurrence of either of the events
described in clauses (x) or (y) of Section 7(f), the Company
shall deliver to the Bank a certificate of an authorized officer
of the General partner of the Company stating that such event
shall have occurred, together with appropriate evidence of the
applicable replatting or an executed copy of the nondisturbance
agreement. Prior to the delivery of such certificate, the
Company shall also deliver to the Bank any notification or other
written communication it may receive from a tax authority or The
▇▇▇▇ Company concerning the assessment of, or failure to pay,
real property taxes on the real property of The ▇▇▇▇ Company
referred to in such clauses promptly after receipt of such
notification or other written communication.
(g) Insurance. (i) Subject to clause (vi), the Company
shall at all times effect, maintain and keep in force, or cause
to be effected, maintained and kept in force, insurance
sufficient to satisfy the limits and coverage provisions listed
below and the requirements, if any, set forth in the Project
Documents. Such insurance shall be with responsible insurance
carriers which are authorized to do business in the State of
North Carolina and have an Insurance Reports Rating from A.M.
Best Company, Inc. of "A" or better and a financial size category
of "VIII" or higher:
(r) Workers' Compensation Insurance:
Workers' compensation insurance as required by
applicable state laws, and employer's liability
insurance with a $1,000,000 minimum limit per accident.
(s) General Liability Insurance:
Comprehensive general liability insurance on an
occurrence basis against claims for personal injury
(including bodily injury and death) and property damage
liability. Such insurance policy shall include
insurance with respect to product/completed operations,
blanket contractual, broad form property damage,
explosion, collapse and underground hazards,
contractor's protective, owner's protective and
personal injury liability with minimum limits of
liability of at least $1,000,000 per occurrence for
combined single limit bodily injury and property damage
and at least $2,000,000 in the aggregate.
(t) Automobile Liability Insurance:
Comprehensive automobile liability insurance against
claims for bodily injury and death and property damage
liability covering all owned, non-owned and hired
vehicles with limits of liability of $1,000,000 each
occurrence for combined single limit bodily injury and
property damage, including a Motor Carrier's Act
Endorsement, if required by applicable law.
(u) Excess Insurance: Umbrella liability or
excess liability insurance with a limit of $9,000,000
per occurrence and $9,000,000 aggregate in excess of
and following the terms of the underlying insurance set
forth in clauses (r), (s) and (t) above.
(v) Physical Damage Insurance: Property
damage insurance on an "All Risk" basis including
coverage against damage or loss caused by earth
movement and flood and providing (1) coverage for the
Project in a minimum aggregate amount equal to the
"full insurable value" of the Project, (2) transit
coverage, with sub-limits sufficient to insure the full
replacement value of all property or equipment removed
from the Project, and (3) coverage for foundations and
other property below the surface of the ground. For
purposes of this clause (v) and clauses (w) and (x)
below, (A) the Project shall be deemed to include steam
and electrical transmission lines, gas pipeline
interconnection facilities (but excluding below-ground
gas pipelines), fuel storage and handling facilities,
and all equipment related to any of the foregoing in
which the Company has an insurable interest and (B)
"full insurable value" shall mean the full replacement
value of the Project, including any improvements,
equipment, fuel and supplies, without deduction for
physical depreciation and/or obsolescence. All such
policies may have deductibles of not greater than
$50,000 (except that with respect to the 40 Megawatt
Gas Turbine Generator, the 80 Megawatt Gas Turbine
Generator, and the 60 Megawatt Steam Turbine Generator,
such deductible amount may exceed $50,000 but shall not
exceed $150,000) in each case for any one loss except
for earth movement and flood which will have the lowest
deductible available (in the opinion of the Bank) on
commercially reasonable terms in the insurance market
place. Such insurance shall provide for increased cost
of construction, debris removal, and loss to undamaged
property as the result of enforcement of building laws
or ordinances.
(w) Boiler and Machinery: Boiler and
machinery insurance on the Project (as described in
clause (v) above), on a comprehensive form in an amount
necessary to insure all equipment on a replacement
value basis subject to a deductible amount determined
by the Agent to be reasonably and commercially
available, not to exceed $150,000 (except that with
respect to the 60 Megawatt Steam Turbine Generator such
deductible amount may exceed $150,000 but shall not
exceed $250,000) in each case for any one loss. The
insurance limits are to be determined with reference to
the maximum foreseeable loss.
(x) Business Interruption Insurance:
Business interruption insurance covering debt service
and other fixed expenses attributable to the Project by
reason of total or partial suspension or delay of, or
interruption in, the operation of the Project caused by
loss or damage to, or destruction of, the Project, or
equipment as a result of the perils covered in clauses
(v) through (vi) above. The policy is to include
contingent coverage to insure debt service. This
policy is to be subject to a deductible amount
determined to be reasonably and commercially available,
not to exceed thirty days. Coverage will be in a
minimum amount required to cover a period of suspension
or delay of at least twelve (12) calendar months.
(y) Title Insurance: Title insurance
policies covering the Project in the following amounts:
(A) with respect to the First Mortgage, in an initial
amount of $116,350,000 and (B) with respect to any
other Indebtedness permitted hereunder and secured by
any Additional Mortgages, in an amount equal to not
less than 75% of the principal amount of such
additional outstanding permitted Indebtedness.
(z) Liability Limits: Notwithstanding the
above, in no event shall the insurance maintained under
this Agreement cover fewer risks or have coverage in
amounts less than that required under the Indenture.
(i) The Collateral Agent shall be named as sole loss payee,
under a standard lenders loss payable clause or mortgage
endorsement substantially equivalent to the North Carolina
standard mortgage endorsement or lenders loss payable endorsement
form 438 BFU, without contribution, under insurance policies
required by clauses (w) and (x) of Section 7(g)(i). The
Collateral Agent, the Bank and the Trustee shall be added as
additional insured with respect to the coverage required by
clauses (s), (t) and (u) of Section 7(g)(i) and such insurance
shall be primary without right of contribution of any other
insurance or self-insurance carried by or on behalf of the
Collateral Agent, the Independent Engineer, the Bank or the
Trustee, with respect to its interest as such in the Project and
each policy shall contain a severability-of-interests or cross-
liability provisions. Insurance policies required under clauses
(v), (w) and (x) of Section 7(g)(i) shall be endorsed with an
agreed amount clause or waiver of co-insurance.
(ii) The insurance carried in accordance with Section 7(g)(i)
(other than title insurance) shall be endorsed as follows:
(x) All insurers shall waive all rights of
subrogation against the Collateral Agent and its
officers, employees, agents, successors and assigns,
and shall waive any right of set-off and counterclaim
and any other right to deduction whether by attachment
or otherwise; and
(y) if, at any time, such insurance is
canceled, or any substantial change is made in the
coverage which affects the interests of the Collateral
Agent, such cancellation or change shall not be
effective as to the Collateral Agent for thirty days,
except for nonpayment of premium, which shall be ten
days, after receipt by the Collateral Agent of written
notice from such insurer of such cancellation or
change.
(iii) Upon procurement by the Company of the insurance set
forth in Section 7(g)(i), the Company shall furnish to the
Collateral Agent, the Bank and the Trustee certification of all
required insurance. Such certification shall be executed by each
insurer or by an authorized representative of each insurer, where
it is not practical for such insurer to execute the certificate
itself. Such certification shall identify underwriters, the type
of insurance, the insurance limits, the risks covered thereby and
the policy term. The Company will promptly furnish to the Bank
copies of all insurance policies, binders and cover notes or
other evidence of such insurance relating to the Project.
(iv) Within ten (10) days after the certification referred to
in clause (iv) above, the Company shall furnish to the Collateral
Agent and the Trustee a report of its insurance broker stating
that all premiums then due have been paid and a certificate of
the Insurance Consultant stating that, in the opinion of
Insurance Consultant, the insurance then carried and maintained
is in accordance with the terms hereof.
(v) If at any time any of the insurance required pursuant to
Section 7(g)(i) shall no longer be available on commercially
reasonable terms, the Company, as promptly as practicable, shall
procure substitute insurance coverage that is the most equivalent
to the required coverage and available on commercially reasonable
terms. The Company shall deliver to the Bank a certificate of
the Insurance Consultant stating that the required insurance
coverage is no longer available on commercially reasonable terms
and that the proposed substitute insurance coverage is the most
equivalent to the required coverage available on commercially
reasonable terms. For purposes of this Section 7(g), insurance
shall be deemed to be available on "commercially reasonable
terms", unless the Bank (in consultation with the Insurance
Consultant) reasonably concludes that such insurance is
obtainable only at excessive cost which is not justified in terms
of the risk to be insured and such insurance is generally not
being carried by or applicable to cogeneration facilities
similarly situated to the Project because of such excessive
costs.
(vi) The loss, if any, under any insurance required to be
carried under clauses (v), (w), (x) and (y) of Section 7(g)(i)
shall be adjusted with the insurance companies or otherwise
collected, including the filing in a timely manner of appropriate
proceedings, by the Company, subject to the approval of the Bank
if such loss is in excess of $250,000. In addition, the Company
shall take all other steps necessary, or, if such loss is in
excess of $250,000, requested by the Bank in consultation with
the Insurance Consultant, to collect from insurers any loss
covered by any of the insurance policies in Section 7(g)(i). All
such policies shall provide that the loss, if any, under such
insurance shall be adjusted and paid as provided in this Section
7(g).
(vii) The Company and Funding Corp. shall promptly notify
the Bank of any loss covered by any insurance required by Section
7(g)(i) in excess of $100,000. The Company and the Bank shall
cooperate and consult with each other in all matters pertaining
to the settlement or adjustment of any and all claims and demands
for damages on account of any Event of Eminent Domain or
pertaining to the settlement, compromise or arbitration of any
claim on account of any Event of Loss or Title Event. The
Company will not compromise, settle or consent to the settlement
of any proceeding arising out of any Event of Loss, Event of
Eminent Domain or Title Event, if the amount of the related claim
exceeds $100,000, unless the terms of such compromise, settlement
or consent to settlement are concurred with by the Bank (in
consultation with the Independent Engineer and the Insurance
Consultant); provided that if a Reimbursement Default has
occurred and is continuing, the Company will not settle,
compromise or consent to the settlement of any proceeding arising
out of such Event of Loss, Event of Eminent Domain or Title Event
without the prior written consent of the Bank.
(viii) Nothing contained in this Agreement shall impose on
the Bank any duty or obligation to verify the existence or
adequacy of the insurance coverage maintained by the Company nor
shall the Bank be responsible for any representations or
warranties made by or on behalf of the Company to any insurance
company or underwriter.
(ix) The Company hereby waives any and every claim for recovery
from the Bank for any and all loss or damage coverage by any of
the insurance policies to be maintained hereunder to the extent
that such loss or damage is recovered under any such policy.
Inasmuch as the foregoing waiver will preclude the assignment of
any such claim to the extent of such recovery, by subrogation (or
otherwise), to an insurance company (or other Person), the
Company shall give written notice of the terms of such waiver to
each insurance company which has issued, or which may issue in
the future, any such insurance policy to be properly endorsed by
the issuer thereof to, or to otherwise contain one or more
provisions that prevent the invalidation of the insurance
coverage provided thereby by reason of such waiver.
(x) The Company shall cause the Operator to procure and
maintain in full force and effect at all times, or shall procure
and maintain on behalf of the Operator, liability and worker's
compensation insurance for coverage and limits not less than what
is currently required in the Operations and Maintenance
Agreement.
(xi) Notwithstanding anything to the contrary set forth in this
Section 7(g), except with respect to business interruption
insurance, no insurance required to be maintained hereunder shall
be subject to a deductible in excess of $50,000 per occurrence or
in such other amount determined to be reasonably and commercially
available and acceptable to the Bank.
(xii) The Company will comply, or cause compliance, at all
times with the insurance requirements contained in the Project
Documents to which it is a party.
(xiii) The Company will deliver to the Bank, on or prior to
the expiration date of each insurance policy required to be
maintained by it pursuant to this Section 7(g), a certificate
executed by the insurer or its duly authorized agent evidencing
the continuance of such insurance policy (or, upon request, a
certified copy of such insurance policy).
(xiv) If at any time the Company fails to maintain
insurance of the type and in the amounts required under this
Section 7(g), without otherwise limiting the Bank's rights under
Section 9, the Bank may elect to purchase such insurance on
behalf of the Company and any amounts so expended together with
interest thereon at a rate of 4% in excess of the prime rate
announced from time to time by the Bank shall be additional
Obligations of the Company.
(h) Books and Records. The Company and Funding Corp. shall
at all times keep proper books and records of all its business
and financial affairs in accordance with GAAP. The Company shall
keep books of account or records concerning its accounts,
inventory, contract rights, equipment and proceeds at its
principal offices located at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇. The Company shall not change its name or the location of
its principal office without providing at least 60 days prior
notice thereof to the Bank and the Collateral Trustee. The
Company shall at all times cause a complete set of the Operation
and Maintenance Procedures, including, without limitation,
documents relating to preventive maintenance, spare parts and
operating hours, relating to the Project to be maintained at the
Project.
(i) Right of Inspection. (i) Subject to requirements of
applicable Law and safety requirements, the Company and Funding
Corp. shall permit the Bank, the Independent Engineer, the
Collateral Agent, the Depositary Agent, the Gas Consultant or any
agents or representatives of any of the foregoing, from time to
time during normal business hours (x) to conduct reasonable
inspections and examinations of the Project and the records the
Company and Funding Corp. relating to the Project and (y) to
discuss the affairs, finances and accounts of the Company and
Funding Corp. with the officers of the General Partner of the
Company and officers of Funding Corp. and independent accountants
of the Company and Funding Corp., all upon reasonable notice
(which, in any period in which a Reimbursement Default does not
exist, shall be at least five Business Days prior to the
inspection or meeting) and at such reasonable times as the Bank,
the Independent Engineer, the Collateral Agent, the Depositary
Agent or the Gas Consultant may desire.
(i) On the written request of the Bank or the Collateral
Agent, at any time and from time to time during any period in
which a Reimbursement Default exists, the Company and Funding
Corp. will provide, at their sole cost and expense, an
environmental site assessment report in scope reasonably
acceptable to the Bank concerning the Site and any operations
thereon, prepared by an environmental consulting firm approved by
the Bank indicating the presence or absence of Hazardous
Materials and compliance with Environmental Laws including the
potential cost of any removal or remedial action in connection
with any Hazardous Materials on or under such Site and the
potential cost for coming into compliance. If the Company or
Funding Corp. fails to provide such information, after forty-five
(45) days notice, the Bank or the Collateral Agent may order the
same, and the Company and Funding Corp. shall each grant and do
hereby each grant to the Bank and the Collateral Agent and their
agents access to the Site and specifically grant the Bank and the
Collateral Agent and their agents, as the case may be, an
irrevocable non-exclusive license to undertake such an
assessment.
(j) Compliance With Environmental Laws. (i) The Company
(x) shall comply with all Environmental Laws and Governmental
Approvals applicable to the ownership, operation or use of the
Site (or other property with respect to which the Company or
Funding Corp. has or may have retained or assumed liability for
environmental conditions or compliance) or the Project, and shall
use commercially reasonable efforts to cause all tenants,
operators, lessees, employees, invitees, licensees, contractors,
sub-contractors, agents, representatives, affiliates, consultants
and other persons occupying the Site (or other property with
respect to which the Company or Funding Corp. has or may have
retained or assumed liability for environmental conditions or
compliance) or the Project to comply with all such Environmental
Laws, in either case except any such noncompliance which could
not reasonably be expected to result in a Material Adverse Change
and (y) shall promptly pay or cause to be paid when due all costs
and expenses incurred in connection with such compliance as such
costs and expenses become due and payable (unless the payment of
any such costs or expenses is being contested in good faith by
the Company and the Company has set adequate reserves as required
by GAAP and such contest does not subject the Company or the
Project to civil or criminal sanctions, and could not reasonably
be anticipated to cause a Material Adverse Change.
(i) Neither the Company nor any of its Affiliates shall
generate, use, treat, store, release, dispose of, arrange for the
disposal of or transport or permit the generation, treatment,
storage, release, disposal or transportation of Hazardous
Materials in, on, at, under, from or to the Site (or other
property with respect to which the Company or Funding Corp. has
or may have retained or assumed liability for environmental
conditions or compliance) or the Project or onto any other
property, except, in all events, in compliance with all
applicable Environmental Laws.
(ii) The Company shall conduct any investigation, study,
sampling and testing, and undertake any cleanup, removal,
remedial or other action necessary to remove and clean up all
Hazardous Materials from the Site (or other property with respect
to which the Company or Funding Corp. has or may have retained or
assumed liability for environmental conditions or compliance) and
any operations thereon in accordance with the requirements of all
applicable Environmental Laws, and in accordance with orders and
directives of all Governmental Authorities (unless such action is
being contested in good faith by the Company and the Company has
set adequate reserves as required by GAAP and such contest does
not subject the Company or the Project to civil or criminal
sanctions, and could not reasonably be anticipated to cause a
Material Adverse Change).
(k) Event of Eminent Domain; Event of Loss; Title Event.
(i) If an Event of Eminent Domain shall occur with respect to any
Collateral, the Company (w) shall promptly, upon receipt of any
such threat, provide written notice to the Bank, (x) shall
diligently pursue all its rights to compensation against the
appropriate Governmental Authority in respect of such Event of
Eminent Domain, (y) shall not, without the consent of the Bank,
compromise, settle or consent to the settlement of any claim
against the appropriate Governmental Authority, and (z) shall
hold all amounts and proceeds (including instruments) received in
respect of any Event of Eminent Domain (after deducting all
reasonable expenses incurred by it in litigating, arbitrating,
compromising, sealing or consenting to the settlement of any
claims against the appropriate Governmental Authority) ("Eminent
Domain Proceeds") in trust for the benefit of the Collateral
Agent segregated from other funds of the Company or any
Affiliate.
(i) If (x) an Event of Loss shall occur with respect to any
Collateral, the Company shall (1) diligently pursue all its
rights to compensation against any Person with respect to such
Event of Loss, (2) with the consent of the Bank shall compromise,
settle or consent to the settlement of any claim against any
Person with respect to such Event of Loss, and (3) hold all
Casualty Proceeds (including instruments) received in respect of
any Event of Loss (after deducting all reasonable expenses
incurred by it in litigating, arbitrating, compromising, settling
or consenting to the settlement of any claims) in trust for the
benefit of the Collateral Agent segregated from other funds of
the Company and its Affiliates and promptly deposit all such
Casualty Proceeds in the Project Revenue Fund, segregated from
all other moneys or (y) a Title Event shall occur with respect to
the Mortgaged Property, the Company shall (1) diligently pursue
all its rights to compensation against the Title Company with
respect to such Title Event, (2) with the consent of the Bank
shall compromise, settle or consent to the settlement of any
claim against the Title Company with respect to such Title Event,
and (3) hold all Title Insurance Proceeds (including instruments)
received in respect of any Title Event (after deducting all
reasonable expenses incurred by it in litigating, arbitrating,
compromising, settling or consenting to the settlement of any
claims) in trust for the benefit of the Collateral Agent
segregated from other funds of the Company, Funding Corp. and
their respective Affiliates and promptly deposit all such Title
Insurance Proceeds in the Project Revenue Fund, segregated from
all other moneys.
(ii) If an Event of Loss, an Event of Eminent Domain or a Title
Event shall occur, as soon as reasonably practicable, but no
later than fifteen days after the date of receipt by the Company
or the Collateral Agent of Eminent Domain Proceeds, Casualty
Proceeds or Title Insurance Proceeds, as the case may be, the
Company shall make a reasonable good faith determination as to
whether (x) the Project can be rebuilt, repaired or restored to
permit operation of the entire Project on a Commercially Feasible
Basis, and (y) the Casualty Proceeds, the Eminent Domain Proceeds
or the Title Insurance Proceeds, as the case may be, together
with any other amounts that the Company is willing to commit to
such rebuilding, repair or restoration are sufficient to permit
such rebuilding, repair or restoration of the Project. The
determination of the Company shall be evidenced by a certificate
of an officer of the General Partner of the Company which, in the
event the Company determines that the Project can be rebuilt,
repaired or restored to permit operation of the entire Project or
a portion thereof on a Commercially Feasible Basis and that the
Casualty Proceeds, the Eminent Domain Proceeds or the Title
Insurance Proceeds, as the case may be, together with any other
amounts that the Company and Funding Corp. are willing to commit
to such rebuilding, repair or restoration are sufficient, shall
also set forth a reasonable good faith estimate by the Company of
the total cost of such rebuilding, repair or restoration. Such
certificate shall be accompanied by an Independent Engineer's
Certificate, dated within five days of the date of such officer's
certificate, stating that, based upon reasonable investigation
and review of the determination made by the Company, the
Independent Engineer believes the determination and the estimate
of the total cost, if any, set forth in such officer's
certificate to be reasonable.
(iii) If the Casualty Proceeds, the Eminent Domain Proceeds
or the Title Insurance Proceeds, as the case may be, from an
Event of Loss or an Event of Eminent Domain or Title Event do not
exceed $500,000 in the aggregate and such amount is sufficient to
rebuild, repair or restore the Project to permit operation of the
Project on a Commercially Feasible Basis, the Company shall not
have to comply with the provisions of the third sentence of
clause (iii) above and any Casualty Proceeds, the Eminent Domain
Proceeds or the Title Insurance Proceeds, as the case may be,
segregated in the Project Revenue Fund in accordance with
Section 3.1(a)(ii) of the Depositary Agreement shall be paid to
the Company for payment of the cost of rebuilding, repair or
restoration pursuant to the Depositary Agreement.
(l) Annual Independent Engineer's Report. The Company
shall cooperate with the Independent Engineer who shall deliver
to the Bank, the Collateral Agent and the Depositary Agent
annually, no less than thirty days before the end of the then
current fiscal year of the Company, a report (the "Engineer's
Annual Report") containing the following:
(i) an Operating Budget for the next fiscal year and an
Operating Plan for the next fiscal year if such Plan is required
pursuant to Section 7(o);
(ii) the schedule of the Major Maintenance Requirement and the
schedule of major overhaul for the next five fiscal years, as
determined by the Company and concurred with by the Independent
Engineer, including any change in the timing of the scheduled
major overhaul;
(iii) a calculation of the projected Property Tax
Requirement for the next fiscal year;
(iv) a calculation of the Projected Debt Service Coverage Ratio
(Three Months) for the next four succeeding three-month periods
of the Company and the Annual Projected Debt Service Coverage
Ratio;
(v) a comparison of actual plant performance to expected
performance, including, without limitation, a comparison of
output, heat rate and on-line availability;
(vi) an analysis of the causes for equipment, component and
station forced outages;
(vii) an evaluation of the Project's conformance with
scheduled maintenance, preventive predictive maintenance and the
spare parts program;
(viii) a review of the operations and outage plans;
(ix) a review of the results of all performance tests;
(x) a review of revenue records of the Project;
(xi) a review of all reports of Governmental Authorities and
environmental compliance matters with respect to the Project; and
(xii) any other reports, information, or certificates as
may be reasonably requested by the Bank.
In connection with the preparation of the Engineer's
Annual Report and any certification or information the
Independent Engineer is required to deliver to the Bank, the
Company shall cooperate with and provide to the Independent
Engineer an Operating Plan and Operating Budget when required,
pursuant to Section 7(o), an estimate of the Major Maintenance
Requirement, a calculation of the Annual Projected Debt Service
Ratio and all other information regarding the Project reasonably
requested by the Independent Engineer.
(m) Taxes. Each of Funding Corp. and the Company shall pay
and discharge all taxes, assessments and governmental charges or
levies imposed on it or on its income or profits or on any of its
property prior to the date on which penalties attach thereto, and
all lawful claims which, if unpaid, could reasonably be expected
to become a Lien (other than a Permitted Lien) upon its property.
Funding Corp. and the Company may permit the taxes, assessments,
charges, levies or claims so contested to remain unpaid during
the period of any Good Faith Contest. Funding Corp. and the
Company will promptly pay or cause to be paid any valid, final
adjustment enforcing any such tax, assessment, charge, levy or
claim and cause the same to be satisfied of record.
(n) Performance of Project Documents. Each of Funding
Corp. and the Company (i) shall perform and observe in all
material respects all its covenants and agreements contained in
each of the Interim Financing Documents, the Collateral Documents
the Steam Sales Agreement and the VEPCO Power Purchase Agreement
and (ii) shall perform and observe in all material respects its
covenants and agreements contained in each of the other
Transaction Documents to which it is a party except where the
failure to do so could not reasonably be expected to result in a
Material Adverse Change.
(o) Operating Plan and Operating Budget. If, on any
Funding Date occurring within any calendar year, the amounts in
the Project Revenue Fund are not sufficient to make all the
deposits in the Operating Fund, the Debt Service Fund, the Debt
Service Reserve Fund, the Property Tax Fund, the Overhaul Fund
and the other funds established pursuant to the Depositary
Agreement required to be made on such Funding Date and to make
the other payments contemplated by Section 3.1(b)(ii), (iii),
(iv) and (v) of the Depositary Agreement, then, not less than
sixty days prior to the beginning of the next succeeding fiscal
year (or if such Funding Date shall occur within such 60-day
period, then no later than 60 days after such Funding Date), the
Company shall prepare an Operating Plan and Operating Budget for
such succeeding fiscal year and submit the Operating Plan and
Operating Budget to the Bank for its approval. Within fifteen
days after its receipt of the Operating Plan and Operating
Budget, the Bank shall approve the same or notify the Company of
the amendments that it wishes to make and the reasons therefor.
If the Bank requests an amendment, the Company and the Bank shall
endeavor in good faith to agree upon an Operating Plan and an
Operating Budget within 15 days after receipt by the Company of
the Bank's notification that it desires an amendment. If no
agreement is reached within such 15-day period, the Operating
Plan and Operating Budget, as amended by the Bank, shall
constitute the Operating Plan and Operating Budget.
(p) Further Assurances: Opinions of Counsel. (i) The
Company and the Funding Corp. shall take or cause to be taken all
action reasonably required to maintain and preserve the Lien in
favor of the Collateral Agent provided for in the Collateral
Documents. The Company and the Funding Corp. shall from time to
time execute or cause to be executed any and all further
instruments (including financing statements, continuation
statements and similar statements with respect to the Liens
granted in the Collateral Documents) reasonably required to
maintain and preserve the Lien in favor of the Collateral Agent
provided for in the Collateral Documents.
(i) If requested by the Bank, the Company and Funding Corp.
shall furnish to the Bank such Opinion or Opinions of Counsel
stating that, in the opinion of such counsel, all filings
necessary to establish, maintain, protect, perfect and continue
the perfection of the Lien intended to be created by the
Collateral Documents have been properly recorded, registered and
filed and that all financing statements and continuation
statements have been executed and filed that are necessary fully
to preserve and protect the rights of the Collateral Agent for
the benefit of the Secured Parties, or stating that, in the
opinion of such counsel, no such action is necessary to
establish, maintain, protect, perfect and continue the perfection
of such Lien and security interest.
(ii) (x) On or before each anniversary of the Issuance Date
and (y) at any other time as the Bank may reasonably request in
writing, including, but not limited to, in connection with a
change or amendment in the Laws affecting any Lien created by the
Collateral Documents, the Company and Funding Corp. shall furnish
to the Bank, such Opinion or Opinions of Counsel as the Bank may
reasonably request in writing (on or prior to the date ninety
days prior to each of the dates referred to in clause (x) above
with respect to the Opinion delivered thereunder either stating
that, in the opinion of such counsel, such action has been taken
with respect to the recording, filing, re-recording and re-filing
of the Collateral Documents and any other requisite documents and
with respect to the execution and filing of any financing
statements and continuation statements as is necessary to
maintain the Lien created by the Collateral Documents and
reciting the details of such action or stating that, in the
opinion of such Counsel, no such action is necessary to maintain
such Lien and security interest. Such Opinion of Counsel shall
also describe the recording, filing, re-recording and re-filing
of the Collateral Documents and any other requisite documents and
the execution and filing of any financing statements and
continuation statements that will, in the opinion of such
Counsel, be required to maintain the Lien created by the
Collateral Documents at least until the next regularly scheduled
date set forth in clause (x) above on which an Opinion of Counsel
may be required to be delivered pursuant to this Section
7(p)(iii).
Section 8. Negative Covenants. The Company and Funding Corp. each
agree jointly and severally that, so long as the Letter of Credit
is outstanding hereunder and until payment in full of all the
Obligations, the Company and Funding Corp. shall not:
(a) Prohibition of Fundamental Changes. (i) Enter into any
transaction of merger or consolidation, change its form of
organization or its business, liquidate, wind-up or dissolve
itself or discontinue its business;
(ii) Neither the Company nor Funding Corp. shall
acquire, by purchase or otherwise, all or substantially all the
property or assets of, any Person, enter into any partnership or
joint venture or make any equity or capital contribution to any
Person.
(b) Compliance with ERISA. (i) Enter into any prohibited
transaction (as defined in Section 4975 of the Code, as amended,
and in ERISA) involving any Plan which results in any liability
of the Company or Funding Corp. to any Person which (in the
reasonable opinion of the Bank) is material to the financial
position or operations of the company or (ii) allow or suffer to
exist any other event or condition known to the Company or
Funding Corp. which results in any liability of the Company or
Funding Corp. to the PBGC which (in the reasonable opinion of the
Bank) is material to the financial position or operations of the
Company or Funding Corp. For purposes of this Section 8(b),
"liability" shall not include the contingent liability described
in Sections 4201 and 4062 of ERISA or termination insurance
premiums payable under Section 4007 of ERISA.
(i) With respect to any Plan (including, without
limitation, any Plan of a Commonly Controlled Entity) as to which
Funding Corp. or the Company may have liability, (i) in the event
there exists an Insufficiency with respect to such Plan which
could result in a material liability to the Company or Funding
Corp., no steps shall be taken by the Company or Funding Corp. to
terminate such Plan, such Plan shall not be terminated, neither
Funding Corp. nor the Company shall withdraw from or institute
steps to withdraw from such Plan and no Reportable Event (as
defined in Section 4043 of ERISA) with respect to such Plan shall
occur, (b) neither Funding Corp. nor the Company shall permit a
lien under Section 302(f) of ERISA or Section 412 of the Code,
(c) with respect to any such Plan that is a Multiemployer Plan,
neither Funding Corp. nor the Company shall incur withdrawal
liability to such Plan which, when aggregated with the present
value of all other amounts required to be paid to Multiemployer
Plans in connection with withdrawal liabilities (determined as of
the date of notification of withdrawal liability), exceeds
$100,000 in the aggregate or requires payments exceeding $100,000
per year in the aggregate and (d) neither Funding Corp. nor the
Company shall permit any event or events to exist or transaction
to occur with respect to any such plan or plans which
individually or in the aggregate could result a material
liability to Funding Corp. or the Company.
(c) Indebtedness. Create or incur or suffer to exist any
Indebtedness except:
(i) the Obligations; and
(ii) Indebtedness permitted under the Indenture;
provided that after giving effect to any additional Indebtedness
not outstanding on the date hereof (x) no Reimbursement Default
or Reimbursement Event of Default shall have occurred that is
continuing and (y) the Debt Service Coverage Ratio of the Company
on a pro forma basis for the prior four fiscal quarters is not
less than 1.20:1.0.
(d) Liens. Create or suffer to exist or permit any Lien
upon or with respect to any of their respective properties,
except for:
(i) Liens specifically permitted or required by, or created
by, the Indenture or any Collateral Document;
(ii) Liens for taxes which are either not yet due, are due
but payable without penalty or are being contested by Good Faith
Contest;
(iii) any exceptions to title which are contained in the
Title Policy delivered to the Collateral Agent; and
(iv) Liens in connection with worker's compensation,
unemployment insurance or other social security or pension
obligations;
(v) mechanic's, worker's, materialmen's, construction or
other like Liens arising in the ordinary course of business or
incident to the construction, repair or restoration of the
Project (x) in respect of obligations which are not yet due or
which are subject to Good Faith Contest or (ii) which are subject
in full to surety bond or other similar arrangements or fully
insured by the Title Policy;
(vi) deposits or pledges to secure statutory obligations or
appeals, releases of attachments, stays of execution or
injunctions; performance bids, tenders, contracts (other than for
the repayment of borrowed money) or leases, or for purposes of
like general nature in the ordinary course of business;
(vii) The ▇▇▇▇ Company's rights as lessor of the Site
under the Site Lease;
(viii) Permitted Encumbrances (as defined in the
Mortgages);
(ix) the right of first refusal in favor of VEPCO under the
VEPCO Power Purchase Agreement;
(x) the right of first refusal in favor of The ▇▇▇▇ Company
under the Steam Sales Agreement;
(xi) the option of North Carolina Natural Gas Corporation to
purchase the Pipeline under the Pipeline Operating Agreement;
(xii) judgment Liens, so long as (x) such judgment shall
have been duly stayed, fully bonded or discharged prior to the
earlier of the commencement of proceedings for the enforcement
thereof or 60 days after such lien attached, (y) such judgment
shall have been discharged before the expiration of any such stay
and (z) such proceedings could not reasonably be expected to
result in a Material Adverse Change; and
(xiii) Liens for utilities or similar purposes;
provided that, in each case, any such Lien could not reasonably
be expected to result in a Material Adverse Change.
(e) Guarantees. (i) Contingently or otherwise be or
become liable, directly or indirectly, in connection with any
Guarantee except:
(u) the Partnership Guarantee;
(v) Guarantees arising in the ordinary course of
business in an amount not to exceed $1,000,000 in the
aggregate;
(w) indemnities or similar obligations with
respect to unfilled materialmen's, mechanics, worker's,
repairmen's, employee's or other like Liens arising in the
course of construction, repair or restoration of the Project
or in the ordinary course of operations or maintenance of
the Project;
(x) (1) indemnities, Guarantees for obligations
other than Indebtedness or similar obligations, each as
provided under or required by the Project Documents, and (2)
such additional indemnities, Guarantees or similar
obligations, each as provided under or required by the
Project Agreements after the Issuance Date, provided that
such indemnity, Guarantee, or similar obligation could not
reasonably be expected to result in a Material Adverse
Change (assuming such indemnity, Guarantee or similar
obligation is computed at the amount thereof which would
reasonably be expected to become due and payable);
(y) indemnities or similar obligations to
federal, state or local governmental agencies or authorities
relating to any expenses incurred that are incidental to
obtaining easements, rights of way or other approvals for
the benefit of the Project; and
(z) surety bonds, performance bonds or similar
arrangements with third-party sureties or similar Persons
and the aggregate exposure of the Company and Funding Corp.
in connection with all such arrangements shall not exceed
$5,000,000.
(i) Funding Corp. shall not contingently or otherwise be or
become liable directly or indirectly in connection with any
Guarantee except indemnities or similar obligations in connection
with Indebtedness permitted under the Indenture.
(f) Prohibition on Disposition of Assets. Except as
permitted pursuant to the Collateral Documents, lease (as lessor)
or Transfer (as transferor) any property or assets except (i) in
the ordinary course of business, to the extent that (x) such
property is worn out or no longer useful or usable in connection
with the operation of the Project and such property is replaced
by property having a fair market value equal to or greater than
the fair market value of the property being leased or Transferred
or (y) such lease or Transfer is required to comply with any
applicable Law, to obtain, maintain or comply with the terms and
conditions of, any Governmental Approval necessary for the
Company to conduct its business pursuant to the Project Documents
or to maintain the Project's certification as a Qualifying
Facility, (ii) the sale of natural gas or rights to the supply,
transportation and storage of natural gas under the Gas Supply
Contracts, the Gas Transportation Contracts and the Fuel Supply
Management Agreement, (iii) the sale of electricity and steam
under and in accordance with the Project Agreements and the Non-
Material Agreements or (iv) subject to the provisions of the
Collateral Documents, (x) in connection with a replacement of The
▇▇▇▇ Company as the purchaser of steam for the Project, in any
calendar year, property with a fair market value not in excess of
$3,000,000 in the aggregate or $1,000,000 with respect to any
single item of property or (y) other than in connection with such
replacement, sell in any calendar year, property with a fair
market value not in excess of $500,000; provided that, in each
case, the Company certifies to the Bank and the Collateral Agent
that such lease or Transfer could not reasonably be expected to
result in a Material Adverse Change.
(g) Amendments. Without the consent of the Bank (which
consent shall not be unreasonably withheld), terminate, amend or
modify any Project Agreement to which it is a party other than:
(x) any termination resulting from the terms of a
Project Agreement expiring by its terms; or
(y) the termination of a Gas Transportation
Contract which is not a Firm Gas Transportation Contract;
provided that, in each case, the Company shall certify to
the Bank, and if requested by the Bank, such certification
shall be accompanied by an Opinion of Counsel stating that,
as a result of such proposed termination, amendment or
modification, the Company will be able to obtain or
maintain, or comply with the terms and conditions of any
Governmental Approval necessary for the Company to conduct
its business as currently conducted or as proposed to be
conducted or to permit the Project to maintain its
certification as a Qualifying Facility.
(z) A Non-Material Agreement that is not an
Acceptable Fuel Management Agreement; provided that (i) as a
result of such proposed amendment or modification the
Company could not reasonably be expected to have monetary
obligations in excess of $500,000 under such agreement or
related agreements and prior to entering into such amendment
or modification, the Company shall certify and the Bank
shall conclude that such amendment or modification could not
reasonably be expected to result in a Material Adverse
Change.
(h) Subsidiaries. Create, maintain or cause to exist any
Subsidiaries other than Funding Corp.
(i) Distributions. Except as provided in Sections 3.5(a),
3.9(a) and 3.9(b) of the Depositary Agreement, declare or pay any
distributions or return any capital to, the Partners, pay any fee
to any Partner for management services (other then services that
as of the date hereof are provided by a third-party provider), or
authorize or make any other distribution, payment or delivery of
property or cash to the Partners as such, or redeem, retire,
purchase or otherwise acquire, directly or indirectly, any
partnership or other equity interest of the Company now or
hereafter outstanding, or any options or warrants issued with
respect thereto (other than the limited partnership interest in
the Company owned by Ford Motor Credit Company), or set aside any
funds for any of the foregoing purposes (all the foregoing being
herein referred to as "Distributions") except from, and to the
extent of, moneys then on deposit in the Partnership Distribution
Fund. Subject to the preceding sentence and the remaining
provisions of this Section, the Company may make Distributions on
each Funding Date on which each of the following conditions is
satisfied:
(i) the conditions set forth in Section 6.22(a)
of the Indenture have been satisfied;
(ii) no event or condition has occurred and is
continuing which constitutes a Reimbursement Default or
a Reimbursement Event of Default; and
(iii) after giving effect to such Distribution,
Debt Service Coverage on a pro-forma basis for the
prior four fiscal quarters shall not be less than
1.20:1.
(j) Nature of Business. In the case of the Company, engage
in any business other than owning its interest in Funding Corp.
and the development, acquisition, construction, ownership,
operation, administration, maintenance and financing of the
Project as contemplated by the Project Documents and the Non-
Material Agreements to which either the Company or Funding Corp.
is a party. Funding Corp. shall not engage in any business other
than the financing of the Project.
(k) Transactions with Affiliates. Make loans or advances
to, or investments in, any other entities or enter into any
transaction or arrangement, whether or not in the ordinary course
of business, with any Affiliate that is not on terms and
conditions at least as favorable as would be obtained in a
comparable arm's-length transaction with a Person other than an
Affiliate.
(l) Governmental Regulation. (i) Neither the Company nor
Funding Corp. shall be, as a result of the construction,
ownership, operation or maintenance of the Project or the
performance of their respective obligations under the Project
Documents or Non-Material Agreements, subject to regulation by
any Governmental Authority having jurisdiction (v) under PUHCA as
a "public utility company" or an "affiliate" or "subsidiary
company" of a "registered holding company" or of a company
subject to registration under PUHCA, (w) under the FPA, other
than as contemplated by C.F.R. 292.601, (x) as a "gas
corporation", "electric corporation", "steam corporation",
"utility corporation" or "public utility corporation" under any
law of the State of North Carolina or the equivalent under the
applicable laws of any state relating to public utilities and/or
public service corporations (y) except with respect to the resale
or transportation of natural gas in interstate commerce, or the
release of firm capacity rights held by the Company on an
interstate pipeline as a "natural gas company" under the Natural
Gas Act of 1938, as amended or (z) under any other similar
federal or state law regulating the generation, transmission or
sale of electricity under which the Company or Funding Corp.
would be deemed to be the generator, transmitter or seller of
such electricity (including, but not limited to, treatment as an
"electricity utility", "electric corporation", "electrical
company", "public utility", "public utility holding company" or
any similar entity under an existing law or an "affiliate" or
"subsidiary company" of a "registered holding company").
(i) The Project shall maintain its certification as a
Qualifying Facility; provided that it shall not be deemed a
breach of this covenant if the Project involuntarily loses its
certification as a Qualifying Facility (and if as a result
thereof the Company and Funding Corp. would become subject to
regulation not permitted by clause (i)), if (x) on the day the
loss of Qualifying Facility status becomes effective, if such
loss can reasonably be anticipated, or within the next five
Business Days if such loss cannot reasonably be anticipated the
Company shall have made a filing at the FERC to qualify as an
exempt wholesale generator within the meaning of Section 32(a)(2)
of PUHCA ("Exempt Wholesale Generator") and the Company shall
have ceased making any retail electric sales as necessary to
obtain Exempt Wholesale Generator status until such time as the
Partnership shall have received the approvals required by clause
(y)(1) below or regained Qualifying Facility status and (y)
within 360 days of such loss of certification either (1)(A) all
requisite Governmental Approvals necessary for the Partnership to
own, operate and maintain the Project and perform its obligations
under the VEPCO Power Purchase Agreement and the other Project
Documents then in effect (after giving effect to such loss of
certification) have been duly obtained or made, were validly
issued, are in full force and effect, (B) the Company shall have
delivered an Opinion of Counsel satisfactory to the Bank that all
such requisite Governmental Approvals have been duly obtained or
made, were validly issued, are in full force and effect, (C)
Project Revenues under the Project Documents then in effect
(after giving effect to such loss of certification) are
sufficient to maintain a minimum Annual Projected Debt Service
Coverage Ratios for the remaining term of the VEPCO Power
Purchase Agreement equal to or exceeding 1.2:1 and an average
Annual Projected Debt Service Coverage Ratio for such term equal
to or exceeding 1.35:1 and (D) the Partnership shall have filed
with the Bank an Independent Engineer's Certificate, dated the
date of filing, verifying the occurrence of the matters described
in clause (C) or (2)(A) the Company shall have restored the
Project's certification as a Qualifying Facility and shall be in
compliance with clause (i), (B) the Company shall have delivered
to the Bank an Opinion of Counsel satisfactory to the Bank that
the Project is a Qualifying Facility and that the Company is in
compliance with clause (i) and (C) the Company shall have
demonstrated that the Company has regained the right to the
contract rate under the VEPCO Power Purchase Agreement chargeable
prior to the Project's loss of certification as a Qualifying
Facility, as evidenced by the written acknowledgment of the VEPCO
or as otherwise evidenced to the reasonable satisfaction of the
Bank.
(m) Debt Service Coverage. Permit the Debt Service
Coverage Ratio for any period of four fiscal quarters to be less
than 1.20:1.
9. Reimbursement Events of Default. The following events
shall be Reimbursement Events of Default hereunder unless waived
by the Bank pursuant to Section 10 hereof:
(a) the Company shall fail to pay when due any amount payable
under Section 2 hereunder; or
(b) the Company or Funding Corp. shall fail to observe or
perform any covenant or agreement contained in this Agreement
(other than those covered by clause (a) above or Section 7(a),
(g) and (j), Section 8 and Section 18) for 30 days after written
notice thereof has been given to the Company by the Bank; or
(c) any representation, warranty, certification or statement
made by the Company or Funding Corp. in this Agreement or in any
certificate, financial statement or other document delivered
pursuant to this Agreement or any representation, warranty,
certification or statement made by the Company or Funding Corp.
under any Interim Financing Document or Financing Document shall
prove to have been incorrect in any material respect when made or
any representation, warranty, certification or statement made by
the Company under any other Transaction Document shall prove to
have been incorrect in any material respect and results in a
Material Adverse Change; or
(d) any material provision of this Agreement, the Depositary
Agreement or the Intercreditor Agreement shall at any time for
any reason cease to be valid and binding upon the Company, or
shall be declared to be null and void, or the validity or enfor
ceability thereof shall be contested by the Company, Funding
Corp. or any Governmental Authority, or the Company or Funding
Corp. shall deny that it has any or further liability or
obligation under this Agreement or any Financing Document to
which the Bank is a Party; or
(e) the Company or Funding Corp. shall (x) fail to make any
payment, with respect to any Indebtedness in a principal amount
of $500,000, when due (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise) and such failure
shall continue after the applicable grace period, if any,
specified in such agreement or instrument relating to the
Indebtedness, or (y) fail to perform or observe any other term,
covenant or condition on its part to be performed or observed
under any agreement or instrument relating to any Indebtedness
when required to be performed or observed, and such failure shall
continue after the applicable grace period, if any, specified in
such agreement or instrument, if the effect of such failure to
perform or observe is to accelerate, or to permit the
acceleration of, the maturity of any Indebtedness, the unpaid
principal amount of which then equals or exceeds $500,000; or
(f) the Company, Funding Corp. or any Subsidiary shall (i)
apply for or consent to the appointment of a receiver, trustee,
liquidator or custodian or the like of itself or of its property,
(ii) admit in writing its inability to pay its debts generally as
they become due, (iii) make a general assignment for the benefit
of creditors, (iv) be adjudicated a bankrupt or insolvent, or (v)
commence a voluntary case under the bankruptcy laws of the United
States or file a voluntary petition or answer seeking
reorganization, an arrangement with creditors or any order for
relief or seeking to take advantage of any insolvency law or file
an answer admitting the material allegations of a petition filed
against it in any bankruptcy, reorganization or insolvency
proceeding; or corporate action shall be taken by it for the
purpose of effecting any of the foregoing, or if without the
application, approval or consent of the Company, Funding Corp. or
any Subsidiary a proceeding shall be instituted in any court of
competent jurisdiction, seeking in respect of the Company an
adjudication in bankruptcy, reorganization, dissolution, winding
up, liquidation, a composition or arrangement with creditors, a
readjustment of debts, the appointment of a trustee, receiver,
liquidator or custodian or the like of the Company or such
Subsidiary or in either case of all or any substantial part of
its assets, or other like relief in respect thereof under any
bankruptcy or insolvency law, and, if such proceeding is being
contested by the Company or such Subsidiary in good faith, the
same shall (i) result in the entry of an order for relief of any
such adjudication or appointment or (ii) continue undismissed, or
pending and unstayed, for any period of thirty (30) consecutive
days; or
(g) any judgment or order for the payment of money exceeding
any applicable insurance coverage by more than $1,000,000 shall
be rendered against the Company or Funding Corp. and either (i)
enforcement proceedings shall have been commenced by any creditor
upon such judgment or order or (ii) there shall be any period of
ten consecutive days during which a stay of enforcement of such
judgment or order, by reason of a pending appeal or otherwise,
shall not be in effect; or
(h) Any Person shall engage in any "prohibited transaction"
(as defined in Section 406 of ERISA or Section 4975 of the Code)
involving any Plan, (ii) any "accumulated funding deficiency" (as
defined in Section 302 of ERISA), whether or not waived, shall
exist with respect to any Plan, (iii) a Reportable Event shall
occur with respect to, or proceedings shall commence to have a
trustee appointed, or a trustee shall be appointed, to administer
or to terminate, any Plan, which Reportable Event or commencement
of proceedings or appointment of a trustee is, in the reasonable
opinion of the Bank, likely to result in the termination of such
Plan for purposes of Title IV of ERISA, (iv) any Plan shall
terminate for purposes of Title IV of ERISA, (v) the Company or
any Commonly Controlled Entity shall, or is, in the reasonable
opinion of the Required Banks, likely to, incur any liability in
connection with a withdrawal from, or the ERISA insolvency or
reorganization of, a Multiemployer Plan or (vi) any other event
or condition shall occur or exist with respect to a Plan; and in
each case in clauses (i) through (vi) above, as a result of such
event or condition, together with all other such events or
conditions, the Company has incurred or, in the reasonable
opinion of the Required Banks, is likely to incur any tax,
penalty or other liabilities (other than any tax, penalty or
other liability resulting from the reversion of surplus funds to
the Company, the General Partner or a Commonly Controlled Entity
upon the termination of an overfunded Single Employer Plan) which
in the aggregate are material in relation to the business,
operations, property or financial or other condition of the
Company; or
(i) an Event of Loss, an Event of Eminent Domain or a Title
Event shall occur and the Company or the Bank shall determine
that the Project (or any material portion thereof) cannot be
rebuilt, repaired or restored to permit operation of the Project
on a Commercially Feasible Basis or that the Casualty Proceeds,
Eminent Domain Proceeds or Title Insurance Proceeds together with
any other amounts that the Company is well to commit to such
rebuilding, repair or restoration are not sufficient to permit
such rebuilding, repair or restoration or the Company elects not
to so rebuild, repair or restore;
(j) any event specified in Section 5.3 of the VEPCO Power
Purchase Agreement shall occur; or
(k) any Project Agreement shall be terminated prior to its
stated termination date, and the affected agreement is not
replaced by a replacement agreement acceptable to the Bank;
provided that it shall not be a Reimbursement Event of Default if
such termination would not constitute a Material Adverse Change
or materially adversely affect the transactions contemplated by
this Agreement and the Company shall have entered into such
replacement agreement within 120 days from the date of such
termination and, provided further, that it shall not be a
Reimbursement Event of Default hereunder if the Project Agreement
which has been terminated is one which by reason of the amounts
payable thereunder and the duration and nature thereof is not
material to the design, construction, operation or maintenance of
the Project (which shall in no event be deemed to include any
Project Agreement with the Operator, VEPCO or The ▇▇▇▇ Company in
existence on the Issuance Date); or
(l) any of the Company, the General Partner, the Limited
Partner, Funding Corp., VEPCO, Operator or The ▇▇▇▇ Company shall
breach any representation or warranty contained in any of the
Transaction Documents to which its is a party or shall fail to
perform or observe any of its covenants or obligations contained
in any of the Transaction Documents (other than the
representations, warranties, covenants and obligations referred
to in clauses (a), (b) and (c) above) within the grace period, if
any, provided for in such Documents and which failure would
result in a Material Adverse Change or would materially adversely
affect the interest of the Bank under the Transaction Documents
provided that if (i) such default cannot be cured by the payment
of money, (ii) such default is not cured, despite due diligence
and good faith in attempting to cure, within 30 days, (iii) such
Person, the Company or Funding Corp. is proceeding with due
diligence and good faith to cure such default and such Person,
the Company or Funding Corp. specifies in writing what action
such Person, the Company or Funding Corp. proposes to take to
cure such default, and (iv) such default would be cured by the
program outlined by such Person, the Company or Funding Corp. and
would not have a material adverse effect on the Project, the
transactions contemplated by this Agreement or the Bank, such
default shall not constitute a Reimbursement Event of Default
hereunder if such Person, the Company, or Funding Corp. shall at
all times diligently and in good faith attempt to cure such
default until the expiration of a period of 90 days from the date
on which such default occurred (by which time such default must
have been cured); or
(m) any material provision of any Financing Document or Interim
Financing Document shall at any time for any reason cease to be
valid and binding or in full force and effect (other than by
expiration pursuant to its terms); or any material provisions of
any Financing Document or Interim Financing Document shall be
declared to be null and void; or the validity or enforceability
of any material provision of any Financing Document or Interim
Financing Document shall be contested by any party thereto (other
than the Bank) or any Government Authority and such contest
continues for more than 30 days; or any of the Company, any
Partner, Funding Corp., VEPCO, or The ▇▇▇▇ Company shall deny
that it has any liability or obligation under any material
provision of any Financing Document except upon fulfillment of
its obligations thereunder, in each case the effect of which is
either to materially adversely affect (i) the interest of the
Bank under the Financing Documents or (ii) the ability of such
Person to perform its obligations under such Financing Document
or Interim Financing Document; or
(n) any Collateral Document shall cease to be effective to
grant the Lien purported to be granted to the secured party
thereunder, or on any material portion of the Collateral
described therein to the extent and with the priority purported
to be created thereby.
(o) (i) if at any time all the shares of the Partners are not
pledged to the Collateral Agent for the benefit of the Bank
pursuant to the Stock Pledge Agreement, (ii) if at any time all
the shares of Funding Corp. are not pledged to the Collateral
Agent for the benefit of the Bank pursuant to the Company Pledge
Agreement, and (iii) if at any time all the partnership interests
in the Company are not pledged to the Collateral Agent for the
benefit of the Bank pursuant to the Partnership Interests Pledge
Agreement.
If any Reimbursement Event of Default shall have
occurred and continuing, the Bank may (i) by notice to the
Company, declare all or a portion of the Reimbursement
Obligations to be due and payable forthwith, whereupon the same
shall immediately become due and payable, and/or (ii) proceed to
enforce all other remedies available to it under this Agreement,
any other Financing Documents and applicable law. Anything to
the contrary in this paragraph notwithstanding, if such event is
a Reimbursement Event of Default specified in clause (f) above
that relates to the Company, such Reimbursement Obligations shall
immediately and automatically become due and payable. Except as
expressly provided above in this Section 9, presentment, demand,
protest and all other notices of any kind are expressly waived.
If any Reimbursement Event of Default shall have
occurred and is continuing, the Bank may (A) exercise remedies or
direct the Collateral Agent to exercise remedies which the Banks
and the Collateral Agent may have under this Agreement or any
Collateral Document or by statute or by rule of law or (B) take
whatever action at law or in equity as may appear necessary or
desirable to collect the amounts due and payable under this
Agreement or to enforce performance or observance of any
obligation, agreement or covenant of the Company, or Funding
Corp., whether for specific performance or in aid of execution of
any power granted to the Bank or the Collateral Agent. The Bank
may cure such Reimbursement Event of Default, either in the name
of and as agent for the Company or, at the option of the Bank, in
its name or in the name of its designee, pursuant to one or more
existing contracts with the Company or otherwise, and any monies
so expended in curing such Event of Default shall, to the extent
advanced by the Banks, constitute Obligations hereunder and be
repayable hereunder together with interest thereon at the rate
set forth in Section 2(b), regardless of whether or not such
amount, as thus increased, exceeds the Maximum Credit Amount.
The Bank shall have the right at any and all times to change any
course of action undertaken by it and shall not be bound by any
limitations or requirements of time except as expressly set forth
herein.
Upon the occurrence of a Reimbursement Event of
Default, the Bank may take any of the following steps with
respect to the Letter of Credit: (i) by notice to Virginia
Power, pursuant to the terms of such Letter of Credit, instruct
Virginia Power to draw down the full Stated Amount remaining
under such Letter of Credit, or (ii) by notice to the Company,
require the Company to pay into a cash collateral account to be
held by the Collateral Agent an amount equal to the Bank's
contingent liability under such Letter of Credit as collateral
security for the obligation of the Company to reimburse drawings
thereunder.
For the purpose of carrying out the provisions and
exercising the rights, powers and privileges granted by this
Section, the Company and Funding Corp. each hereby irrevocably
constitutes and appoints the Bank its true and lawful attorney-in-
fact to execute, acknowledge and deliver any instruments and to
do and to perform any acts such as are referred to in this
paragraph in the name and on behalf of the Company and Funding
Corp. This power of attorney is a power coupled with an interest
and cannot be revoked.
Section 10. Amendments and Waivers. No amendment or waiver of any
provision of this Agreement, nor consent to any departure by the
Company therefrom nor any consent to the assignment of the
Company's obligations under the Transaction Documents shall in
any event be effective unless the same shall be in writing and
signed by the Bank. Any such waiver or consent shall be
effective only in the specific instance and for the specific
purpose for which given.
Section 11. Notices. All notices, requests and other communications
to any party hereunder shall be in writing (including facsimile
or similar writing) and shall be given to such party, addressed
to it, at its address or telecopier number set forth below or
such other address or telecopier number as such party may
hereafter specify for the purpose by notice to the other party.
Each such notice, request or communication shall be effective (i)
if given by facsimile to the number specified below, (ii) if
given by mail upon receipt or (iii) if given by any other means,
when delivered at the address specified below.
If to the Company:
Panda ▇▇▇▇▇▇▇▇ L.P.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Bank:
Bayerische Vereinsbank AG
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Project Finance Group
Telecopier:
Section 12. No Waiver; Remedies. No failure on the part of the Bank
to exercise, and no delay in exercising, any right hereunder
shall operate as a waiver thereof nor shall any single or partial
exercise of any right hereunder preclude any other further
exercise thereof or the exercise of any other right. The
remedies herein provided are cumulative and not exclusive of any
remedies provided by law.
Section 13. Sales of Participations. The Bank may grant
participations under this Agreement and the Letter of Credit
(each person to which a participation is granted being called a
"Participant") and in such event the Bank will in its own name
and as agent for any Participant, enforce all rights and
interests of any Participant under this Agreement, and accept all
performances required of the Company under this Agreement;
provided that (a) the Bank shall not agree to a substitution or
replacement of a Participant or a change in the proportionate
amount of any Participant's participation after the Issuance Date
unless the Bank shall have received the Company's prior written
consent thereto, which consent shall not be unreasonably withheld
and (b) in the event that a claim for compensation is made
pursuant to Section 2(c) on behalf of a Participant, the Company
shall have the right, with the assistance of the Bank, to seek a
substitute participant or participants, satisfactory to the Bank,
to assume the participation of such Participant.
Section 14. Continuing Obligation. The obligations of the Company and
Funding Corp. under this Agreement shall continue until the
earlier to occur of (a) the Early Termination Date and (b) the
later of (i) the Termination Date and (ii) the date upon which
all Obligations to the Bank hereunder shall have been paid in
full and shall be binding upon the Company and its successors and
assigns and inure to the benefit of and be enforceable by the
Bank and its successors, transferees and assigns; provided that
the Company may not assign all or any part of this Agreement
without the prior written consent of the Bank.
Section 15. Extension of Letter of Credit. At least 90 but not more
than 180 days before the sixth anniversary of the Issuance Date,
the Company may request the Bank in writing to extend for not
less than three years, nor more than five years, the Termination
Date of the Letter of Credit, specifying the terms and
conditions, including fees, to be applicable to such extension.
No later than the sixth anniversary of the Issuance Date, the
Bank shall notify the Company of its consent or nonconsent to
such extension request and if the Bank shall give no such notice,
the Bank shall be deemed not to have consented to such extension
request. The Bank's consent shall be conditional upon the
preparation, execution and delivery of legal documentation in
form and substance satisfactory to the Bank and its counsel
incorporating substantially the terms and conditions contained in
the extension request as the same may be modified by agreement
between the Company and the Bank.
Section 16. Limited Liability of the Bank. The Company assumes all
risks of the acts or omissions of VEPCO and any advising and
negotiating bank (including Crestar Bank) with respect to its use
of the Letter of Credit. Neither the Bank nor any of its
officers or directors shall be liable or responsible for: (a)
the use which may be made of the Letter of Credit or for any acts
or omissions of VEPCO in connection therewith; (b) the validity,
sufficiency or genuineness of documents, or of any endorsements
thereon, even if such documents should in fact prove to be in any
or all respects invalid, insufficient, fraudulent or forged; (c)
payment by the Bank against presentation of documents which do
not comply with the terms of the Letter of Credit, including
failure of any documents to bear any reference or adequate
reference to the Letter of Credit; or (d) any other circumstances
whatsoever in making or failing to make payment under the Letter
of Credit, except only that the Company shall have a claim
against the Bank, and the Bank shall be liable to the Company to
the extent, but only to the extent, of any direct, as opposed to
consequential, damages suffered by the Company which the Company
proves were caused by (i) the Bank's willful misconduct or gross
negligence in determining whether documents presented under the
Letter of Credit comply with the terms thereof or (ii) the Bank's
willful failure to pay under the Letter of Credit after the
presentation to it by VEPCO of a draft and certificate strictly
complying with the terms and conditions of the Letter of Credit.
In furtherance and not in limitation of the foregoing, the Bank
may accept documents that appear on their face to be in order,
without responsibility for further investigation, regardless of
any notice or information to the contrary unless VEPCO and the
Company have notified the Bank in writing prior to a drawing
under the Letter of Credit that such documents do not comply with
the Letter of Credit.
Section 17. Costs, Expenses and Taxes. The Company agrees to pay on
demand therefor all reasonable costs and expenses in connection
with the preparation, execution, delivery, filing and
administration of this Agreement and any other documents which
may be delivered in connection with this Agreement, including,
without limitation, the reasonable fees and out-of-pocket
expenses of counsel for the Bank with respect thereto and with
respect to advising the Bank as to its rights and
responsibilities under this Agreement or any waiver or amendment
of, or the enforcement of, this Agreement and such other
documents which may be delivered in connection with this
Agreement. In addition, the Company shall pay any and all stamp
and other taxes and fees payable or determined to be payable in
connection with the execution, delivery, filing and recording of
this Agreement and such other documents and agrees to save the
Bank harmless from and against any and all liabilities with
respect to or resulting from any delay in paying or omission to
pay such taxes and fees; provided that the Bank agrees promptly
to notify the Company of any such taxes and fees which are
incurred by the Bank.
Section 18. Indemnification. The Company and Funding Corp., jointly
and severally, hereby agree to indemnify and hold harmless the
Bank from and against any and all claims, damages, losses,
liabilities, costs or expenses whatsoever which the Bank may
incur (or which may be claimed against the Bank by any person or
entity whatsoever) (i) by reason of any inaccuracy in any
material respect, or untrue statement or alleged untrue statement
of any material fact contained or incorporated by reference in
any material delivered to the Bank by or on behalf of the Company
or Funding Corp. in connection with the issuance of any
Indebtedness for the Project, or the omission or alleged omission
to state a material fact necessary to make such statements, in
the light of the circumstances under which they are or were made,
not misleading; (ii) by reason of or in connection with the
execution, delivery and performance of the Transaction Documents;
or (iii) by reason of or in connection with the execution and
delivery or transfer of, or payment or failure to make lawful
payment under, the Letter of Credit; provided that the Company
shall not be required to indemnify the Bank for any claims,
damages, losses, liabilities, costs or expenses to the extent,
but only to the extent, caused by the willful misconduct or gross
negligence of the Bank in determining whether a draft or
certificate presented under the Letter of Credit complied with
the terms of the Letter of Credit or the Bank's willful failure
to make lawful payment under the Letter of Credit after the
presentation to it by VEPCO of a draft and certificate strictly
complying with the terms and conditions of the Letter of Credit.
Nothing in this Section 18 is intended to limit the Company's
reimbursement obligation contained in paragraph (a) of Section 2
hereof. Without prejudice to the survival of any other
obligation of the Company or Funding Corp. hereunder, the
indemnitees and obligations of the Company and Funding Corp.
contained in this Section 18 shall survive the payment in full of
amounts payable under Section 2 and the termination of the Letter
of Credit.
Section 19. Severability. Any provision of this Agreement which is
prohibited, unenforceable or not authorized in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of
such prohibition, unenforceability or non-authorization without
invalidating the remaining provisions hereof or affecting the
validity, enforceability or legality of such provision in any
other jurisdiction.
Section 20. Governing Law. This Agreement shall be governed by, and
construed and interpreted in accordance with, the laws of the
State of New York.
Section 21. Headings. Section headings in this Agreement are included
herein for convenience of reference only and shall not constitute
a part of this Agreement for any other purpose.
Section 22. Submission to Jurisdiction. Any litigation based hereon,
or arising out of, under, or in connection with, this Agreement,
or any course of conduct, course of dealing, statements (whether
oral or written) or actions of the Bank or the Company shall be
brought and maintained in the courts of the state of New York or
in the United States District Court for the Southern District of
New York. The Company and Funding Corp. hereby expressly and
irrevocably submits to the jurisdiction of such courts for the
purpose of any such litigation as set forth above and irrevocably
agrees to be bound by any final judgment rendered thereby in
connection with such litigation. Service of process may be made
upon Company or Funding Corp. by mailing or delivering a copy of
such process to it in care of the Process Agent at the Process
Agent's address and the Company and Funding Corp. hereby further
irrevocably consents to the service of process in any suit,
action or proceeding in New York arising out of this agreement by
the mailing of copies of such process to it at its address for
notices set forth in Section 11 hereto. The Company and Funding
Corp. each hereby expressly and irrevocably waives, to the
fullest extent permitted by law, any objection which it may have
or hereafter may have to the laying of venue of any such
litigation brought in any such court referred to above and any
claim that any such litigation has been brought in an
inconvenient forum.
Section 23. Waiver of Jury Trial. The Bank, the Company and Funding
Corp. hereby knowingly, voluntarily and intentionally waive any
rights they may have to a trial by jury in respect of any
litigation based hereon, or arising out of, under, or in
connection with, this Agreement or the Letter of Credit, or any
course of conduct, course of dealing, statements (whether oral or
written), or actions of the Bank, the Company or Funding Corp.
Section 24. Limitation of Liabilities. No past, present or future
officer, director or stockholder of Funding Corp., no past,
present of future partner in the Company (including, without
limitation, the General Partner) or any officer, employee,
controlling Person, stockholder, executive, director, agent,
representative or affiliate of Funding Corp., the Company or such
partner (herein referred to as "Non-recourse Persons") shall be
personally liable for payments due hereunder or under any
Collateral Document or for the performance of any obligation
hereunder of thereunder. Except as expressly provided in another
Collateral Document, the sole recourse of the Bank for
satisfaction of the obligations of the Company and Funding Corp.
hereunder and under the Collateral Documents shall be against the
assets of the Company and not against any assets or property of
any such Non-Recourse Person. In the event that a default occurs
in connection with such obligations of the Company or Funding
Corp., no action shall be brought against any such Non-Recourse
Person by virtue solely of its direct or indirect ownership
interest in the Company or Funding Corp., except that this
provision shall not restrict the Collateral Agent on behalf of
the Bank from taking action to enforce any such Non-Recourse
Person's obligations under any Collateral Document to which it is
a party in its individual capacity. In the event of foreclosure
or other sale or disposition of properties, no judgment for any
deficiency upon the obligations hereunder shall be obtainable by
the Bank against any such Non-Recourse Party by virtue solely of
its direct or indirect ownership interest in the Company or
Funding Corp. This provision shall not be deemed to waive any
cause of action the Bank may have against any Person for fraud or
willful misconduct by such Person.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their proper and duly authorized
officers as of the date first above written.
PANDA-▇▇▇▇▇▇▇▇, L.P.
By Panda-▇▇▇▇▇▇▇▇ Corporation
By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Vice President
PANDA-▇▇▇▇▇▇▇▇ FUNDING
CORPORATION
By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Vice President
BAYERISCHE VEREINSBANK AG
By: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Vice President
_________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Vice President