EXHIBIT 10.21
EXECUTION COPY
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$550,000,000
CREDIT AGREEMENT
among
PG&E NATIONAL ENERGY GROUP, INC.,
as Borrower
THE CHASE MANHATTAN BANK,
as Issuing Bank
The Several Lenders
from Time to Time Parties Hereto,
ABN AMRO BANK N.V. and
DRESDNER BANK AG, NEW YORK AND GRAND CAYMAN BRANCHES,
as Documentation Agents
CITIBANK, N.A. and SOCIETE GENERALE,
as Syndication Agents
and
THE CHASE MANHATTAN BANK,
as Administrative Agent
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▇.▇. ▇▇▇▇▇▇ SECURITIES INC.,
as Lead Arranger and Bookrunner
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Dated as of June 15, 2001
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TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS.............................................................................................1
SECTION 1.1 DEFINED TERMS..............................................................................1
SECTION 1.2 OTHER DEFINITIONAL PROVISIONS.............................................................20
ARTICLE II LETTERS OF CREDIT.....................................................................................21
SECTION 2.1 L/C COMMITMENT............................................................................21
SECTION 2.2 PROCEDURE FOR ISSUANCE OF LETTER OF CREDIT................................................21
SECTION 2.3 FEES AND OTHER CHARGES....................................................................22
SECTION 2.4 L/C PARTICIPATIONS........................................................................22
SECTION 2.5 REIMBURSEMENT OBLIGATION OF THE BORROWER..................................................23
SECTION 2.6 OBLIGATIONS ABSOLUTE......................................................................23
SECTION 2.7 LETTER OF CREDIT PAYMENTS.................................................................24
SECTION 2.8 APPLICATIONS FOR ISSUANCE.................................................................24
ARTICLE III LOANS................................................................................................24
SECTION 3.1 LOANS.....................................................................................24
SECTION 3.2 PROCEDURE FOR LOAN BORROWING..............................................................25
SECTION 3.3 EVIDENCE OF DEBT..........................................................................25
SECTION 3.4 FACILITY FEES, ETC........................................................................26
SECTION 3.5 TERMINATION OR REDUCTION OF COMMITMENTS...................................................26
SECTION 3.6 OPTIONAL PREPAYMENTS; MANDATORY PREPAYMENTS...............................................26
SECTION 3.7 CONVERSION AND CONTINUATION OPTIONS.......................................................27
SECTION 3.8 LIMITATIONS ON EURODOLLAR TRANCHES........................................................27
SECTION 3.9 INTEREST RATES AND PAYMENT DATES..........................................................27
SECTION 3.10 COMPUTATION OF INTEREST AND FEES..........................................................28
SECTION 3.11 INABILITY TO DETERMINE INTEREST RATE......................................................28
SECTION 3.12 PRO RATA TREATMENT AND PAYMENTS...........................................................29
SECTION 3.13 REQUIREMENTS OF LAW.......................................................................30
SECTION 3.14 TAXES.....................................................................................31
SECTION 3.15 INDEMNITY.................................................................................33
SECTION 3.16 ILLEGALITY................................................................................33
SECTION 3.17 CHANGE OF LENDING OFFICE..................................................................34
SECTION 3.18 REPLACEMENT OF LENDERS....................................................................34
SECTION 3.19 EXTENSION OF TERMINATION DATE.............................................................34
ARTICLE IV REPRESENTATIONS AND WARRANTIES........................................................................37
SECTION 4.1 ORGANIZATION; POWERS; OWNERSHIP OF PROPERTY...............................................37
SECTION 4.2 AUTHORIZATION.............................................................................37
SECTION 4.3 ENFORCEABILITY............................................................................37
SECTION 4.4 FINANCIAL STATEMENTS......................................................................38
SECTION 4.5 LITIGATION................................................................................38
SECTION 4.6 FEDERAL RESERVE REGULATIONS...............................................................38
SECTION 4.7 INVESTMENT COMPANY ACT; PUBLIC UTILITY HOLDING COMPANY ACT................................38
SECTION 4.8 NO MATERIAL MISSTATEMENTS.................................................................39
SECTION 4.9 TAXES.....................................................................................39
SECTION 4.10 EMPLOYEE BENEFIT PLANS....................................................................39
SECTION 4.11 GOVERNMENTAL APPROVAL; COMPLIANCE WITH LAW AND CONTRACTS..................................39
SECTION 4.12 ENVIRONMENTAL MATTERS.....................................................................40
SECTION 4.13 RANKING...................................................................................40
SECTION 4.14 UNRESTRICTED SUBSIDIARIES.................................................................40
SECTION 4.15 USE OF LETTERS OF CREDIT..................................................................40
SECTION 4.16 CPUC......................................................................................41
SECTION 4.17 SEPARATENESS FROM PG&E....................................................................41
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TABLE OF CONTENTS
ARTICLE V CONDITIONS PRECEDENT...................................................................................41
SECTION 5.1 CONDITIONS TO INITIAL EXTENSION OF CREDIT.................................................41
SECTION 5.2 CONDITIONS TO ISSUANCE OF EACH LETTER OF CREDIT UNDER SECTION 2.1 AND EACH LOAN
UNDER SECTION 3.1(A)......................................................................42
ARTICLE VI COVENANTS.............................................................................................43
SECTION 6.1 MAINTENANCE OF OWNERSHIP..................................................................43
SECTION 6.2 EXISTENCE.................................................................................43
SECTION 6.3 COMPLIANCE WITH LAW; BUSINESS AND PROPERTIES..............................................43
SECTION 6.4 FINANCIAL STATEMENTS, REPORTS, ETC........................................................44
SECTION 6.5 INSURANCE.................................................................................45
SECTION 6.6 TAXES, ETC................................................................................45
SECTION 6.7 MAINTAINING RECORDS; ACCESS TO PROPERTIES AND INSPECTIONS.................................46
SECTION 6.8 RISK MANAGEMENT PROCEDURES................................................................46
SECTION 6.9 MERGER....................................................................................46
SECTION 6.10 INVESTMENTS...............................................................................46
SECTION 6.11 LIENS.....................................................................................47
SECTION 6.12 INDEBTEDNESS..............................................................................48
SECTION 6.13 TRANSACTIONS WITH AFFILIATES..............................................................50
SECTION 6.14 DISTRIBUTIONS.............................................................................51
SECTION 6.15 FINANCIAL COVENANTS.......................................................................51
SECTION 6.16 SEPARATENESS FROM PG&E CORP...............................................................51
SECTION 6.17 PG&E GEN CREDIT AGREEMENT.................................................................51
SECTION 6.18 ASSET SALES...............................................................................52
ARTICLE VII EVENTS OF DEFAULT....................................................................................52
SECTION 7.1 EVENTS OF DEFAULT.........................................................................52
ARTICLE VIII.....................................................................................................55
SECTION 8.1 SYNDICATION COMPLETION....................................................................55
SECTION 8.2 AUTOMATIC COMMITMENT REDUCTION; MANDATORY PREPAYMENT......................................55
SECTION 8.3 UNSUCCESSFUL SYNDICATION..................................................................55
ARTICLE IX THE AGENTS............................................................................................56
SECTION 9.1 APPOINTMENT...............................................................................56
SECTION 9.2 DELEGATION OF DUTIES......................................................................56
SECTION 9.3 EXCULPATORY PROVISIONS....................................................................56
SECTION 9.4 RELIANCE BY ADMINISTRATIVE AGENT..........................................................57
SECTION 9.5 NOTICE OF DEFAULT.........................................................................57
SECTION 9.6 NON-RELIANCE ON ADMINISTRATIVE AGENT AND OTHER LENDERS....................................57
SECTION 9.7 INDEMNIFICATION...........................................................................58
SECTION 9.8 AGENT IN ITS INDIVIDUAL CAPACITY..........................................................58
SECTION 9.9 SUCCESSOR ADMINISTRATIVE AGENT............................................................59
SECTION 9.10 DOCUMENTATION AND SYNDICATION AGENTS......................................................59
ARTICLE X MISCELLANEOUS..........................................................................................59
SECTION 10.1 AMENDMENTS AND WAIVERS....................................................................59
SECTION 10.2 NOTICES...................................................................................60
SECTION 10.3 NO WAIVER; CUMULATIVE REMEDIES............................................................62
SECTION 10.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES................................................62
SECTION 10.5 PAYMENT OF EXPENSES.......................................................................62
SECTION 10.6 SUCCESSORS AND ASSIGNS; PARTICIPATIONS AND ASSIGNMENTS....................................63
SECTION 10.7 ADJUSTMENTS; SET-OFF......................................................................66
SECTION 10.8 COUNTERPARTS..............................................................................66
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TABLE OF CONTENTS
SECTION 10.9 SEVERABILITY..............................................................................67
SECTION 10.10 INTEGRATION...............................................................................67
SECTION 10.11 GOVERNING LAW.............................................................................67
SECTION 10.12 SUBMISSION TO JURISDICTION; WAIVERS.......................................................67
SECTION 10.13 ACKNOWLEDGMENTS...........................................................................68
SECTION 10.14 CONFIDENTIALITY...........................................................................68
SECTION 10.15 ACCOUNTING CHANGES........................................................................68
SECTION 10.16 DELIVERY OF LENDER ADDENDA................................................................69
SECTION 10.17 WAIVERS OF JURY TRIAL.....................................................................69
SCHEDULES:
1.1 COMMITMENTS
1.1A APPLICABLE MARGINS
1.1B PERMITTED SALE-LEASEBACK TRANSACTIONS
1.1C TERMS OF SUBORDINATION - AFFILIATES
1.1D TERMS OF SUBORDINATION - NON-AFFILIATES
2.3(B) LETTER OF CREDIT CUSTOMARY FEES AND COSTS
4.5 LITIGATION
4.12 ENVIRONMENTAL MATTERS
4.14 UNRESTRICTED SUBSIDIARIES
6.1 CERTAIN RESTRICTED SUBSIDIARIES
6.10 INVESTMENTS
6.11 OTHER LIENS
6.12(A) OTHER CREDIT FACILITIES
6.12(F) EXISTING INDEBTEDNESS
6.13 SERVICE AGREEMENTS
EXHIBITS:
A FORM OF CLOSING CERTIFICATE
B FORM OF ASSIGNMENT AND ACCEPTANCE
C-1 FORM OF LEGAL OPINION OF HUNTON & ▇▇▇▇▇▇▇▇
C-2 FORM OF OPINION OF HUNTON & ▇▇▇▇▇▇▇▇
C-3 FORM OF LEGAL OPINION OF ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
D FORM OF LENDER ADDENDUM
E FORM OF LENDER SYNDICATION AGREEMENT
F FORM OF EXEMPTION CERTIFICATE
G FORM OF APPLICATION FOR ISSUANCE
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CREDIT AGREEMENT, dated as of June 15, 2001, among PG&E NATIONAL ENERGY
GROUP, INC., a Delaware corporation ("NEG"), the several banks and other
financial institutions from time to time parties to this Agreement (the
"Lenders"), THE CHASE MANHATTAN BANK, as the letter of credit issuing bank (in
such capacity, the "Issuing Bank"), ABN AMRO BANK N.V. and DRESDNER BANK AG, NEW
YORK AND GRAND CAYMAN BRANCHES, each as a documentation agent (in such capacity,
collectively the "Documentation Agents"), CITIBANK, N.A. and SOCIETE GENERALE,
each as a syndication agent (in such capacity, collectively the "Syndication
Agents"), and THE CHASE MANHATTAN BANK, as Administrative Agent (in such
capacity, the "Administrative Agent").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Borrower has requested that the Lenders make available to the
Borrower a 364-day revolving loan and letter of credit facility in an initially
committed amount of $550 million;
WHEREAS, it is contemplated that additional lenders will become parties to
this Agreement and provide additional commitments hereunder which, when added to
the initial commitments, will total up to $1.25 billion in commitments;
WHEREAS, Borrower has also requested that the Issuing Bank issue from time
to time letters of credit and that the Lenders participate in the reimbursement
obligations of Borrower to the Issuing Bank;
WHEREAS, the Issuing Bank and the Lenders are willing to make such credit
facilities available to the Borrower upon and subject to the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and the agreements
hereinafter set forth, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Defined Terms.
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As used in this Agreement, the terms listed in this Section 1.1 shall have
the respective meanings set forth in this Section 1.1.
"$1.1 Billion PG&E Gen Credit Agreement" means the $1,100,000,000 Credit
Agreement, dated as of September 1, 1998, among PG&E Gen and the lenders party
thereto, as the same may be amended, modified or supplemented from time to time.
"Actual Knowledge" means, with respect to any Person as to any event or
circumstance, the actual knowledge of the Responsible Officer of such Person or
receipt by such Person from the Administrative Agent of notice of such event or
circumstance.
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"Additional Lenders" means the Lenders that become parties hereto pursuant
to the Lender Syndication Agreement.
"Administrative Agent" has the meaning given such term in the preamble
hereto.
"Affiliate" means, when used with respect to a specified Person, another
Person that directly or indirectly controls or is controlled by or is under
common control with the Person specified. For this purpose, "control" of a
Person shall mean the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of such Person, whether
through ownership of voting shares, by contract or otherwise.
"Agents" means the Administrative Agent, the Documentation Agents and the
Syndication Agents.
"Aggregate Exposure" means with respect to any Lender at any time, an
amount equal to the amount of such Lender's Commitment at such time or, if the
Commitments have been terminated, the amount of such Lender's Extensions of
Credit then outstanding.
"Aggregate Exposure Percentage" means with respect to any Lender at any
time, the ratio (expressed as a percentage) of such Lender's Aggregate Exposure
at such time to the sum of the Aggregate Exposures of all Lenders at such time.
"Agreement" means this Credit Agreement, as amended, supplemented or
otherwise modified from time to time.
"Applicable Margin" means for Base Rate Loans and for Eurodollar Loans, as
set forth in the Pricing Grid.
"Application for Issuance" means an application, in the form of Exhibit G,
requesting the Issuing Bank to open a Letter of Credit.
"Arrangers" means ▇.▇. ▇▇▇▇▇▇ Securities Inc., ▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc.
and Societe Generale, collectively.
"Asset Company" means any entity (a) (i) whose principal purpose is the
acquisition, improvement, installation, design, engineering, construction,
development, completion, financing, maintenance or operation of all or any part
of a project or projects, or any asset related thereto, used in the business of
generating, transmitting, transporting, distributing, producing or storing
electric power, thermal energy, natural gas or other fuel or other energy-
related businesses and (ii) substantially all its assets are limited to those
assets being financed (or to be financed), or the operation of which is being
financed (or to be financed), in whole or in part by a Project Financing
Facility entered into by such entity and/or any Investment Vehicle that owns
such entity or by contributions or intercompany loans from the Borrower, any
Restricted Subsidiary or any such Investment Vehicle or (b) which entity is a
Subsidiary of an entity described in clause (a) and the business and assets of
which are related to the business of such entity and which does not incur any
Indebtedness other than (A) intercompany loans from an Asset Company which is
the parent of such Subsidiary, the Borrower, any Restricted Subsidiary
2
or any Investment Vehicle that indirectly owns such Subsidiary, (B) Indebtedness
of the type described in Section 6.12(i) or (C) Indebtedness under a Project
Financing Facility.
"Assignee" has the meaning given such term in Section 10.6(c).
"Assignor" has the meaning given such term in Section 10.6(c).
"Available Commitment" means with respect to any Lender at any time, an
amount equal to the excess, if any, of (a) such Lender's Commitment then in
effect over (b) such Lender's Extensions of Credit.
----
"Automatic Commitment Reduction Date" means, in the event the Syndication
Completion Date occurs, the date which is the earlier of (a) August 31, 2002 and
(b) the first anniversary of the Syndication Completion Date.
"Base Rate" means for any day, a rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to the greater of (a) the Prime Rate in
effect on such day and (b) the Federal Funds Effective Rate in effect on such
day plus 1/2 of 1%. Any change in the Base Rate due to a change in the Prime
Rate or the Federal Funds Effective Rate shall be effective as of the opening of
business on the effective day of such change in the Prime Rate or the Federal
Funds Effective Rate, respectively.
"Base Rate Loans" means Loans for which the applicable rate of interest is
based upon the Base Rate.
"Benefited Lender" has the meaning given such term in Section 10.7.
"Board" means the Board of Governors of the Federal Reserve System (or any
successor).
"Borrower" has the meaning given such term in the preamble hereto.
"Borrowing Date" means any Business Day specified by the Borrower as a date
on which the Borrower requests the Lenders to make Loans hereunder.
"Business Day" means (a) for all purposes other than as covered by clause
(b) below, a day other than a Saturday, Sunday or other day on which commercial
banks in New York City are authorized or required by law to close and (b) with
respect to all notices and determinations in connection with, and payments of
principal and interest on, Eurodollar Loans, any day which is a Business Day
described in clause (a) and which is also a day for trading by and between banks
in Dollar deposits in the interbank eurodollar market.
"Cash Collateral Account" has the meaning given such term in Section 7.1.
"Cash Equivalents" means (a) any evidence of indebtedness with a maturity
of 180 days or less issued or directly and fully guaranteed or insured by the
United States, Canada or any U.S. agency or instrumentality; (b) certificates of
deposit or acceptances or Eurodollar time deposits with a maturity of 180 days
or less of, and overnight bank deposits and demand
3
accounts with (i) any financial institution that is not a foreign bank or a
foreign bank holding company that has a bankwatch rating of at least B/C by
Fitch and a commercial paper rating of at least A-1 by S&P, F1 by Fitch or P-1
by ▇▇▇▇▇'▇ or (ii) any financial institution that is a foreign bank or a foreign
bank holding company that has a sovereign risk rating of at least AA by Fitch, a
bankwatch rating of at least B by Fitch, a commercial paper rating of at least
A-1 by S&P, F1 by Fitch or P-1 by ▇▇▇▇▇'▇ and a minimum of US$20 billion in
assets; (c) commercial paper with a maturity of 180 days or less issued by a
U.S. or Canadian incorporated company that is not an Affiliate of the Borrower
and rated at least A-1 by S&P, F1 by Fitch or at least P-1 by ▇▇▇▇▇'▇; (d)
Repurchase Agreements with a maturity of 90 days or less made with banks which
meet the criteria in clause (b) above and primary government security dealers
(as defined by the Federal Reserve System) which meet the criteria in clause (c)
above, and are fully collateralized by investments meeting the criteria of
clause (a) above; (e) tax-exempt municipal obligations of any state of the
United States, or any municipality of any such state which mature within 180
days from the date of acquisition thereof and which, in each case, are rated at
least MIG-1 or VMIG-1 by ▇▇▇▇▇'▇, and SP-1/A-1 or AA/A-1 by S&P; and (f)
institutional money market funds that exclusively invest in any of the
foregoing.
"Cash Flow Available for Fixed Charges" for any period means, without
duplication, (i) EBITDA of the Borrower and its Consolidated Subsidiaries which
are not Unrestricted Subsidiaries for such period, minus (ii) EBITDA for such
period of such Consolidated Subsidiaries that are financed with Indebtedness of
such Subsidiary or which are direct or indirect Subsidiaries of a Financed
Subsidiary of the Borrower, plus (iii) Distributions received by the Borrower
from Subsidiaries described in the foregoing clause (ii) during such period
except to the extent the amount of such Distributions previously constituted
"Cash Flow Available for Fixed Charges" during such period as a result of clause
(viii) below, minus (iv) Distributions described in the foregoing clause (iii)
that are attributable to extraordinary gains or other non-recurring items
described in clause (iii) of the definition of "EBITDA", minus (v) any income
reported by the Borrower for such period for Persons that are not Consolidated
Subsidiaries of the Borrower, plus (vi) Distributions received by the Borrower
from Persons described in the foregoing clause (v) during such period, minus
(vii) Distributions described in the foregoing clause (vi) that are attributable
to extraordinary gains or other non-recurring items described in clause (iii) of
the definition of "EBITDA", plus, (viii) cash and Cash Equivalents of
Subsidiaries described in clause (ii) above that are legally and contractually
available to such Subsidiary for the payment of dividends to the Borrower, but
only to the extent that the source of such cash and Cash Equivalents is from
such Subsidiary's EBITDA for such period or from repayments during such period
to such Subsidiary of loans made by such Subsidiary.
"Closing Date" means the date on which the conditions precedent set forth
in Section 5.1 shall have been satisfied, which date is June 15, 2001.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Commitment" means as to any Lender, the obligation of such Lender to make
Loans and participate in Letters of Credit pursuant to the terms hereof, in an
aggregate principal and/or stated amount not to exceed the amount set forth
under the heading "Commitment" opposite such Lender's name (i) on Schedule 1 to
the Lender Addendum delivered by such Lender, (ii) on Schedule 1 of the Lender
Syndication Agreement or (iii) in the Assignment and Acceptance
4
pursuant to which such Lender became a party hereto, as applicable, as the same
may be changed from time to time pursuant to the terms hereof.
"Commitment Period" means the period from and including the Closing Date to
the Termination Date.
"Conduit Lender" means any special purpose corporation organized and
administered by any Lender for the purpose of making Loans otherwise required to
be made by such Lender and designated by such Lender in a written instrument;
provided, that the designation by any Lender of a Conduit Lender shall not
relieve the designating Lender of any of its obligations to fund a Loan under
this Agreement if, for any reason, its Conduit Lender fails to fund any such
Loan, and the designating Lender (and not the Conduit Lender) shall have the
sole right and responsibility to deliver all consents and waivers required or
requested under this Agreement with respect to its Conduit Lender, and provided,
further, that no Conduit Lender shall (a) be entitled to receive any greater
amount pursuant to Section 3.13, 3.14, 3.15 or 10.5 than the designating Lender
would have been entitled to receive in respect of the extensions of credit made
by such Conduit Lender or (b) be deemed to have any Commitment.
"Consolidated Net Worth" means, as of any date of determination thereof,
the amount which would be reflected as stockholders' equity upon a consolidated
balance sheet of the Borrower (but excluding any portion thereof attributable to
Unrestricted Subsidiaries) determined in accordance with GAAP, excluding other
comprehensive income arising from the accounting treatment of hedging and ▇▇▇▇-
to-market transactions.
"Consolidated Subsidiary" means with respect to any Person at any date any
Subsidiary or other entity the accounts of which would be consolidated in
accordance with GAAP with those of such Person in its consolidated financial
statements as of such date.
"Consolidated Tangible Net Assets" means at any date the total net assets
of the Borrower and its Consolidated Subsidiaries (other than Unrestricted
Subsidiaries) determined in accordance with GAAP, excluding, however, from the
determination of total net assets (i) goodwill, organizational expenses,
research and product development expenses, trade marks, trade names, copyrights,
patents, patent applications, licenses and rights in any thereof, and other
similar intangibles, (ii) all deferred charges or unamortized debt discount and
expenses, (iii) all reserves carried and not deducted from assets, (iv)
securities which are not readily marketable, (v) cash held in sinking or other
analogous funds established for the purpose of redemption, retirement or
prepayment of capital stock or other equity interests or Indebtedness, and (vi)
any items not included in clauses (i) through (v) above which are treated as
intangibles in conformity with GAAP.
"Credit Support Arrangements" means any Guaranty, letter of credit or other
instrument or arrangement issued as support for the payment or performance
obligations of a party under any Trading Arrangement.
"Default" means any of the events specified in Section 7.1, which with the
giving of notice, the lapse of time, or both, will become an Event of Default.
5
"Distribution" means, in respect of any Person, (i) any payment of any
dividends or other distributions with respect to the capital stock or other
equity interests of such Person (except distributions in such capital stock or
other equity interests) and (ii) any purchase, redemption or other acquisition
or retirement for value of any capital stock or other equity interests of such
Person or any Affiliate of such Person unless made contemporaneously from the
net proceeds of the sale of capital stock or other equity interests.
"Documentation Agents" has the meaning given such term in the preamble
hereto.
"Dollars" and "$" means lawful currency of the United States of America.
"Downgrade Event" means (i) the Borrower's senior unsecured long term debt
(x) ceases to be rated at least BBB- by S&P and (y) ceases to be rated at least
Baa3 by ▇▇▇▇▇'▇ (or if ratings of such debt have not been issued by such rating
agencies, such debt ceases to be impliedly rated by an issuer rating or
indicative rating at least BBB- by S&P and Baa3 by Moody's).
"EBITDA" means, with respect to any Person for any period, the (i) income
(or loss) before interest and taxes of such Person, plus (ii) to the extent
deducted in determining such income (or loss), depreciation, amortization and
other similar non-cash charges and reserves, minus (iii) to the extent
recognized in determining such income (or loss), extraordinary gains (or
losses), restructuring charges or other non-recurring items, plus (iv) to the
extent deducted in determining such income (or loss), Lease Payment Obligations
described in clause (iii) of the definition of "Lease Payment Obligations".
"Equity Funding Arrangement" means (i) an agreement to provide a capital
contribution to or other equity investment in any Asset Company or Investment
Vehicle in connection with any Project Financing Facility, (ii) a Guaranty,
letter of credit or other similar arrangement with respect to any obligations of
any Asset Company or Investment Vehicle under a Project Financing Facility,
(iii) a Guaranty of any Investment Vehicle's obligation to make a capital
contribution to or other equity investment in any Asset Company or Investment
Vehicle in connection with a Project Financing Facility or (iv) a Guaranty,
letter of credit or other similar arrangement to support any of the obligations
or arrangements described in clauses (i) through (iii) hereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"ERISA Affiliate" means any trade or business (whether or not incorporated)
that is a member of a group of (i) organizations described in Sections 414(b) or
414(c) of the Code and (ii) solely for purposes of the Lien created under
Section 412(n) of the Code, organizations described in Sections 414(m) or 414(o)
of the Code of which the Borrower is a member.
"ERISA Event" means (i) the Borrower or any ERISA Affiliate shall fail to
pay when due an amount or amounts aggregating in excess of $15,000,000 which it
shall have become liable to pay under Title IV of ERISA; or (ii) notice of
intent to terminate a Material Plan shall be filed under Title IV of ERISA by
the Borrower or any ERISA Affiliate, any plan administrator or any combination
of the foregoing; or (iii) the PBGC shall institute proceedings
6
under Title IV of ERISA to terminate, to impose liability (other than for
premiums under Section 4007 of ERISA) in respect of, or to cause a trustee to be
appointed to administer any Material Plan; or (iv) a condition shall exist by
reason of which the PBGC would be entitled to obtain a decree adjudicating that
any Material Plan must be terminated; or (v) there shall occur a complete or
partial withdrawal from, or a default, within the meaning of Section 4219(c)(5)
of ERISA, with respect to, one or more Multiemployer Plans which could cause the
Borrower or any ERISA Affiliate to incur a current payment obligation in excess
of $15,000,000; or (vi) receipt by the Borrower or any ERISA Affiliate of notice
from one or more Multiemployer Plans of intent to terminate or that it is
insolvent or in reorganization (within the meaning of Section 4241 or 4245 of
ERISA, as applicable) which termination, insolvency or reorganization,
individually or together with other such events, could cause the Borrower and/or
any ERISA Affiliate, individually or in the aggregate, to incur a current
payment obligation in excess of $15,000,000; or (vii) the Borrower or any ERISA
Affiliate shall engage in one or more non-exempt "prohibited transactions" (as
defined in Section 406 of ERISA or Section 4975 of the Code) which could result
in a current payment obligation of the Borrower and/or any ERISA Affiliate
individually or in the aggregate, in an amount or amounts aggregating in excess
of $15,000,000; or (viii) the occurrence of any event or series of events of
which the nature described in clauses (i) through (vii) with respect to any Plan
or Multiemployer Plan which, individually or in the aggregate, could result in a
liability to the Borrower and/or any ERISA Affiliate, individually or in the
aggregate, in an amount or amounts aggregating in excess of $50,000,000.
"ET Credit Agreements" means (i) the $50,000,000 Credit Agreement, dated as
of November 13, 1998, between PG&E Energy Trading Gas Corporation, PG&E Energy
Trading, Canada Corporation, ET Holdings, PG&E Energy Trading Power, L.P. and
Bank of Montreal and (ii) the $35,000,000 Credit Agreement, dated as of November
13, 1998, between PG&E Energy Trading Gas Corporation, PG&E Energy Trading,
Canada Corporation, PG&E Energy Trading Power Holdings Corporation, PG&E Energy
Trading Power, L.P. and The Chase Manhattan Bank, as each may be amended,
modified or supplemented from time to time.
"ET Holdings" means PG&E Energy Trading Holdings Corporation, a California
corporation.
"Eurocurrency Reserve Requirements" means for any day, the aggregate
(without duplication) of the maximum rates (expressed as a decimal fraction) of
reserve requirements in effect on such day (including, without limitation,
basic, supplemental, marginal and emergency reserves) under any regulations of
the Board or other Governmental Authority having jurisdiction with respect
thereto dealing with reserve requirements prescribed for eurocurrency funding
(currently referred to as "Eurocurrency Liabilities" in Regulation D of the
Board) maintained by a member bank of the Federal Reserve System.
"Eurodollar Base Rate" means with respect to each day during each Interest
Period, the rate per annum determined on the basis of the rate for deposits in
Dollars for a period equal to such Interest Period commencing on the first day
of such Interest Period appearing on Page 3750 of the Telerate screen as of
11:00 A.M., London time, two Business Days prior to the beginning of such
Interest Period. In the event that such rate does not appear on Page 3750 of
the Telerate screen (or otherwise on such screen), the "Eurodollar Base Rate"
for purposes of this definition
7
shall be determined by reference to such other comparable publicly available
service for displaying eurodollar rates as may be selected by the Administrative
Agent.
"Eurodollar Loans" means Loans for which the applicable rate of interest is
based upon the Eurodollar Rate.
"Eurodollar Rate" means with respect to each day during each Interest
Period, a rate per annum determined for such day in accordance with the
following formula (rounded upward to the nearest 1/100th of 1%):
Eurodollar Base Rate
------------------------------------
1.00 - Eurocurrency Reserve Requirements
"Eurodollar Tranche" means the collective reference to Eurodollar Loans the
then current Interest Periods with respect to all of which begin on the same
date and end on the same later date (whether or not such Loans shall originally
have been made on the same day).
"Event of Default" means any of the events specified in Section 7.1,
provided that any requirement for the giving of notice, the lapse of time, or
both, has been satisfied.
"Extensions of Credit" means as to any Lender at any time, an amount equal
to the sum of (a) the aggregate principal amount of all Loans made by such
Lender then outstanding and (b) such Lender's Aggregate Exposure Percentage of
the L/C Obligations then outstanding.
"Facility Fee Rate" means as set forth in the Pricing Grid.
"Federal Funds Effective Rate" means for any day, the weighted average of
the rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day which is a Business Day, the average of the
quotations for the day of such transactions received by the Reference Lender
from three federal funds brokers of recognized standing selected by it.
"Federal Reserve System" means the Federal Reserve System of the United
States of America.
"Financed Subsidiary" means any direct or indirect Subsidiary of the
Borrower that is financed with Indebtedness of such Subsidiary.
"Financial Officer" of any Person means the chief financial officer,
principal accounting officer, treasurer, associate or assistant treasurer, or
any responsible officer analogous to the foregoing or designated by the one of
the foregoing Persons, of such Person.
"Fitch" means Fitch, Inc.
"Fixed Charges" means, with respect to the Borrower for any period, the
sum, without duplication, of (i) the aggregate amount of interest expense and
commitment and other periodic fees with respect to Funded Indebtedness of the
Borrower Scheduled to be Paid for such period,
8
including (A) the net costs under Swaps, (B) all capitalized interest, (C) the
interest portion of any deferred payment obligation and (D) the Lease Payment
Obligations of the Borrower Scheduled to be Paid by the Borrower during such
period, and (ii) the aggregate amount of all mandatory scheduled payments
(whether designated as payments or prepayments) and scheduled sinking fund
payments with respect to principal of any Funded Indebtedness of the Borrower,
including payments in the nature of principal under Lease Obligations, provided
that with respect to any Funded Indebtedness of the Borrower consisting of
Equity Funding Arrangements, "Fixed Charges" shall not include any of the
foregoing enumerated items to the extent paid by a Subsidiary of the Borrower
(so long as the funds used to make such payments were not provided by the
Borrower).
"Funded Indebtedness" of a Person means all Indebtedness of such Person
(after intercompany eliminations) other than any Guaranty obligations that are
not reasonably quantifiable under standard accounting practices as of the date
of determination.
"Funding Office" means the office of the Administrative Agent specified in
Section 10.2 or such other office as may be specified from time to time by the
Administrative Agent as its funding office by written notice to the Borrower and
the Lenders.
"GAAP" means generally accepted accounting principles in the United States
of America as in effect from time to time.
"Government Authority" means any Federal, state, county, municipal or other
local governmental authority or judicial or regulatory agency, board, body,
commission or instrumentality.
"Governmental Approvals" means all authorizations, consents, approvals,
licenses and exemptions of, registrations and filings with, and notices and
reports to all Governmental Authorities.
"GTN" means PG&E Gas Transmission, Northwest Corporation, a California
corporation.
"GTN Credit Agreements" means (i) the $750,000,000 Indenture, dated as of
May 22, 1995, between GTN and The First National Bank of Chicago, as trustee and
(ii) the $100,000,000 Amended and Restated Credit Agreement, dated May 24, 1999,
between GTN, the lenders party thereto and Citicorp USA, Inc., as administrative
agent for such lenders, including any commercial paper supported by credit
facilities made available under such credit agreements, as the same may be
amended, modified or supplemented from time to time.
"Guaranty" means (a) a guaranty by a Person (other than by endorsement of
negotiable instruments for collection in the ordinary course of business),
directly or indirectly, in any manner, of any part or all of the obligations of
another Person; and (b) an agreement by a Person, direct or indirect, contingent
or otherwise, and whether or not constituting a guaranty, the practical effect
of which is to assure the payment or performance (or payment of damages in the
event of nonperformance) of any part or all of the obligations of another Person
(other than in respect of operating leases not otherwise included in the
definition of "Lease Obligations"), whether by (i) the purchase of securities or
obligations, (ii) the purchase, sale or lease of property
9
or the purchase or sale of services primarily for the purpose of enabling the
obligor with respect to such obligation to make any payment or performance (or
payment of damages in the event of nonperformance) of or on account of any part
or all of such obligation, or to assure the obligee of such obligation against
loss, (iii) repayment of amounts drawn down by beneficiaries of letters of
credit, (iv) the maintenance of working capital, equity capital, available cash
or other financial statement condition so as to enable the primary obligor to
pay Indebtedness; (v) the provision of equity or other capital under or in
respect of equity or other capital subscription arrangements, (vi) the supplying
of funds to or investing in a Person on account of all or any part of such
Person's obligation or indemnifying or holding harmless, in any way, such Person
against any part or all of such obligation or (vii) the placing of any Lien on
property (including, without limitation, accounts and contract rights) of a
Person to secure another Person's Indebtedness.
"Indebtedness" of any Person means (i) all indebtedness of such Person for
borrowed money, (ii) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments, (iii) all obligations of such
Person to pay the deferred purchase price of property or services, (iv) all
indebtedness 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 default are limited to repossession or sale of such property), (v)
all Lease Obligations of such Person, (vi) all obligations, contingent or
otherwise, of such Person under any issued and outstanding acceptance, letter of
credit or similar instruments, (vii) all obligations of such Person to redeem or
purchase any capital stock of such Person which is mandatorily redeemable,
(viii) all Swaps of such Person and (ix) any Guaranty of such Person with
respect to liabilities of the type described in clauses (i) through (viii)
hereof.
"Indemnified Liabilities" has the meaning given such term in Section 10.5.
"Indemnitee" has the meaning given such term in Section 10.5.
"Interest Payment Date" means (a) as to any Base Rate Loan, the last day of
each March, June, September and December to occur while such Loan is outstanding
and the final maturity date of such Loan, (b) as to any Eurodollar Loan having
an Interest Period of three months or shorter, the last day of such Interest
Period, (c) as to any Eurodollar Loan having an Interest Period longer than
three months, each day that is three months, or a whole multiple thereof, after
the first day of such Interest Period and the last day of such Interest Period
and (d) as to any Loan, the date of any repayment or prepayment made in respect
thereof.
"Interest Period" means as to any Eurodollar Loan, (a) initially, the
period commencing on the conversion date with respect to such Eurodollar Loan
and ending one, two, three or six months thereafter, as selected by the Borrower
in its notice of conversion given with respect thereto; and (b) thereafter, each
period commencing on the last day of the next preceding Interest Period
applicable to such Eurodollar Loan and ending one, two, three or six months
thereafter, as selected by the Borrower by irrevocable notice to the
Administrative Agent not less than three Business Days prior to the last day of
the then current Interest Period with respect thereto; provided that, all of the
foregoing provisions relating to Interest Periods are subject to the following:
10
(i) if any Interest Period would otherwise end on a day that is not
a Business Day, such Interest Period shall be extended to the next
succeeding Business Day unless the result of such extension would be to
carry such Interest Period into another calendar month in which event such
Interest Period shall end on the immediately preceding Business Day;
(ii) any Interest Period that would otherwise extend beyond the
Termination Date or beyond the date final payment is due on any Loan shall
end on the Termination Date or such due date, as applicable; and
(iii) any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding
day in the calendar month at the end of such Interest Period) shall end on
the last Business Day of the calendar month at the end of such Interest
Period.
"Investment" means the acquisition of any interest in any Person or
property, a loan or advance to any Person or other arrangement for the purpose
of providing funds or credit to any Person, a capital contribution in or to any
Person, or any other investment in any Person or property, or any Guaranty of
any of the foregoing.
"Investment Vehicle" means each Subsidiary of the Borrower which is
organized solely to acquire, make or hold one or more Investments in an Asset
Company or Asset Companies, either directly or indirectly through one or more
other Investment Vehicles.
"Issuing Bank" has the meaning given such term in the preamble hereto.
"L/C Fee Payment Date" means the last day of each March, June, September
and December and the last day of the Commitment Period.
"L/C Obligations" means at any time, an amount equal to the sum of (a) the
aggregate of the stated amounts of the then outstanding Letters of Credit and
(b) the aggregate amount of drawings under Letters of Credit that have not been
reimbursed pursuant to Section 2.4.
"L/C Participants" means all the Lenders other than the Issuing Bank.
"Lease Obligations" means, without duplication, (i) any Indebtedness
represented by obligations under a lease that is required to be capitalized for
financial reporting purposes and (ii) the present value, determined using a
discount rate equal to the incremental borrowing rate (as defined in Statement
of Financial Accounting Standards No. 13) of the Person incurring such
obligations, of rent obligations under leases of electric generating assets or
natural gas pipelines and related facilities.
"Lease Payment Obligations" means, with respect to any Person for any
period, (i) the interest component of all Lease Obligations of such Person that
are described in clause (i) of the definition of "Lease Obligations" and that
are Scheduled to be Paid during such period, plus (ii) the principal portion of
all Lease Obligations of such Person that are described in clause (i) of the
definition of "Lease Obligations" that are Scheduled to be Paid during such
period, plus
11
(iii) all rent payment obligations relating to Lease Obligations of such Person
described in clause (ii) of the definition of "Lease Obligations" and that are
Scheduled to be Paid during such period.
"Lender Addendum" means with respect to any initial Lender, a Lender
Addendum, substantially in the form of Exhibit D, to be executed and delivered
by such Lender on the Closing Date as provided in Section 10.16.
"Lender Affiliate" (a) any Affiliate of any Lender, (b) any Person that is
administered or managed by any Lender and that is engaged in making, purchasing,
holding or otherwise investing in commercial loans and similar extensions of
credit in the ordinary course of its business and (c) with respect to any Lender
which is a fund that invests in commercial loans and similar extensions of
credit, any other fund that invests in commercial loans and similar extensions
of credit and is managed or advised by the same investment advisor as such
Lender or by an Affiliate of such Lender or investment advisor.
"Lender Syndication Agreement" means the Lender Syndication Agreement,
substantially in the form of Exhibit E.
"Lenders" has the meaning given such term in the preamble hereto; provided,
that unless the context otherwise requires, each reference herein to the Lenders
shall be deemed to include any Conduit Lender.
"Letter Agreement" means the Letter Agreement, dated as of June 15, 2001,
from NEG LLC addressed to the Administrative Agent, for the benefit of the
Lenders.
"Letter of Credit Limit" means $500 million.
"Letters of Credit" has the meaning given such term in Section 2.1(a).
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset or
any interest or title of a vendor or lessor under any conditional sale
agreement, capital lease or other title retention agreement relating to such
asset.
"Loan Documents" means this Agreement, the Applications for Issuance, the
Notes and the Lender Syndication Agreement.
"Loans" has the meaning given such term in Section 3.1.
"Margin Stock" has the meaning given such term under Regulation U.
"Material Adverse Effect" means a material adverse effect on (a) the
business, assets, property, condition (financial or otherwise) or prospects of
Borrower and its Subsidiaries taken as a whole or (b) the validity or
enforceability of this Agreement or any of the other Loan Documents or the
rights or remedies of the Administrative Agent or the Lenders hereunder or
thereunder.
12
"Material Plan" means any Plan or Plans having aggregate Unfunded
Liabilities in excess of $50,000,000.
"Minimum Consolidated Net Worth" means $1.8 billion.
"Minimum Non-Trading Consolidated Net Worth" means $1.4 billion.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc.
"Multiemployer Plan" means a multiemployer plan as defined in Section
4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate is making, or
accruing an obligation to make, contributions, or has within any of the
preceding six years made, or accrued an obligation to make, contributions.
"NEG Guarantees" means (i) the Guarantee and Agreement (La Paloma), dated
as of April 6, 2001, made by the Borrower in favor of Citibank, N.A., for the
benefit of the creditors identified therein, (ii) the Guarantee and Agreement
(Lake Road), dated as of April 6, 2001, made by the Borrower in favor of
Citibank, N.A., for the benefit of the creditors identified therein, (iii) the
Guarantee and Agreement (Harquahala), dated as of April 30, 2001, made by the
Borrower in favor of State Street Bank and Trust Company, for the benefit of the
creditors identified therein and (iv) the Guarantee and Agreement (Turbine
Credit Agreement), dated as of May 29, 2001, made by the Borrower in favor of
Societe Generale, for the benefit of the lenders identified therein.
"NEG Indenture" means the Indenture, dated as of May 22, 2001, between the
Borrower and Wilmington Trust Company, as trustee.
"NEG LLC" means PG&E National Energy Group, LLC, a Delaware limited
liability company.
"Non-Excluded Taxes" has the meaning given such term in Section 3.14(a).
"Non-Trading Consolidated Net Worth" means, as of any date of determination
thereof, the amount which would be reflected as stockholders' equity upon a
consolidated balance sheet of the Borrower (but excluding any portion thereof
attributable to (i) Unrestricted Subsidiaries or (ii) ET Holdings or any
Subsidiary thereof) excluding other comprehensive income arising from the
accounting treatment of hedging and ▇▇▇▇-to-market transactions.
"Non-U.S. Lender" has the meaning given such term in Section 3.14(d).
"Note" means any promissory note evidencing any Loan.
"Obligations" means the unpaid principal of and interest on (including,
without limitation, interest accruing after the maturity of the Loans and
interest accruing after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating to
the Borrower, whether or not a claim for post-filing or post-petition interest
is allowed in such proceeding) the Loans and all other obligations and
liabilities of the Borrower to the Administrative Agent or to any Lender,
whether direct or indirect, absolute or
13
contingent, due or to become due, or now existing or hereafter incurred, which
may arise under, out of, or in connection with, this Agreement, any other Loan
Document, the Letters of Credit or any other document made, delivered or given
in connection herewith or therewith, whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses (including,
without limitation, all fees, charges and disbursements of counsel to the
Administrative Agent or to any Lender that are required to be paid by the
Borrower pursuant hereto) or otherwise.
"Other Taxes" means any and all present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made hereunder or from the execution, delivery or enforcement
of, or otherwise with respect to, this Agreement or any other Loan Document.
"Participant" means as defined in Section 10.6(b).
"Payment Amount" has the meaning given such term in Section 2.4.
"Payment Office" means the office specified from time to time by the
Administrative Agent as its payment office by notice to the Borrower and the
Lenders.
"PBGC" means the Pension Benefit Guaranty Corporation established pursuant
to Subtitle A of Title IV of ERISA (or any successor).
"Permitted Encumbrances" means, as to any Person at any date, any of the
following:
(i) Liens for taxes, assessments or governmental charges not then
delinquent, and Liens for taxes, assessments or governmental charges then
delinquent but the validity of which is being contested at the time by such
Person in good faith and for which adequate reserves have been established
in accordance with GAAP, and (ii) Liens incurred or created in connection
with or to secure the performance of bids, tenders, contracts (other than
for the payment of money), leases, statutory obligations, surety bonds or
appeal bonds, and carriers', warehousemen's, mechanics' or materialmen's
Liens, assessments or similar encumbrances incurred in the ordinary course
of business;
(ii) easements, restrictions, exceptions or reservations in any
property and/or rights of way of such Person for the purpose of roads, pipe
lines, substations, transmission lines, transportation lines, distribution
lines, removal of oil, gas, lignite, coal or other minerals or timber, and
other like purposes, or for the joint or common use of real property,
rights of way, facilities and/or equipment, and defects, irregularities and
deficiencies in titles of any property and/or rights of way, which do not
individually or in the aggregate materially impair the use or value of such
property and/or rights of way for the purposes for which such property
and/or rights of way are held by such Person;
(iii) rights reserved to or vested in any municipality or public
authority to use, control or regulate any property of such Person;
(iv) any obligations or duties, affecting the property of such
Person, to any municipality or public authority with respect to any
franchise, grant, license or permit;
14
(v) any judgment Lien against such Person securing a judgment for
an amount not exceeding $50,000,000, so long as the finality of such
judgment is being contested by appropriate proceedings conducted in good
faith and execution thereon is stayed;
(vi) any Lien arising by reason of deposits with or giving of any
form of security to any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic
or foreign, for any purpose at any time as required by law or governmental
regulation as a condition to the transaction of any business or the
exercise of any privilege or license, or to enable such Person to maintain
self-insurance or to participate in any fund for liability on any insurance
risks or in connection with workers' compensation, unemployment insurance,
old age pensions or other social security or to share in the privileges or
benefits required for companies participating in such arrangements; or
(vii) any landlords' Lien on fixtures or movable property located on
premises leased by such Person in the ordinary course of business so long
as the rent secured thereby is not in default.
"Permitted Sale-Leaseback Transactions" means (i) Sale-Leaseback
transactions by any Restricted Subsidiary or Asset Company, entered into on or
prior to the date of this Credit Agreement and identified on Schedule 1.1B and
(ii) one or more Sale/Leaseback transactions entered into by any Asset Company
in connection with or as part of a Project Financing Facility entered into after
the date of execution of this Agreement.
"Permitted Subordinated Indebtedness" means all unsecured Indebtedness of
the Borrower that shall have been subordinated to all Indebtedness of the
Borrower under this Agreement and otherwise containing terms and conditions set
forth in Schedule 1.1C with respect to Indebtedness of the Borrower to
Affiliates of the Borrower or in Schedule 1.1D with respect to Indebtedness of
the Borrower to non-Affiliates of the Borrower.
"Person" means an individual, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated association,
joint venture, Governmental Authority or other entity of whatever nature.
"PG&E" means Pacific Gas & Electric Company, a California corporation.
"PG&E Corp." means PG&E Corporation, a California corporation.
"PG&E Gen" means PG&E Generating Company, LLC, a Delaware limited liability
company, formerly known as U.S. Generating Company, LLC.
"PG&E Gen Credit Agreement Refinancing Date" means the date on which the
commitments under the $1.1 Billion PG&E Gen Credit Agreement are cancelled and
all amounts outstanding under such credit agreement are refinanced by one or
more credit facilities of the Borrower.
"PG&E Gen Credit Agreements" means (i) the $1.1 Billion PG&E Gen Credit
Agreement, including any commercial paper supported by credit facilities made
available
15
thereunder, and (ii) the $10,000,000 Credit Agreement, dated as of
December 14, 1999, between PG&E Gen and ABN AMRO Bank N.V., as each may be
amended, modified or supplemented from time to time.
"Plan" means any employee pension benefit plan described under Section 3(2)
of ERISA (other than a Multiemployer Plan) subject to the provisions of Title IV
of ERISA that is maintained by the Borrower or any ERISA Affiliate or with
respect to which the Borrower or any ERISA Affiliate could have liability under
Section 4069 of ERISA.
"Pricing Grid" means as set forth in Schedule 1.1A.
"Prime Rate" means the rate of interest per annum publicly announced from
time to time by the Reference Lender as its prime or base rate in effect at its
principal office in New York City.
"Project Financing Facility" means any loan, note purchase agreement,
indenture, lease, credit agreement, reimbursement agreement, letter of credit or
other facility pursuant to which an Asset Company or Investment Vehicle which
directly or indirectly owns an Asset Company incurs Indebtedness, provided that
any such Indebtedness is recourse only to (a) the assets of such Asset Company
or any Asset Company which is a Subsidiary of such Asset Company, (b) the equity
or ownership interests of such Asset Company or any Investment Vehicle which
owns such Asset Company or (c) any Equity Funding Arrangements provided with
respect to such Asset Company or Investment Vehicle or a Lien on any such Equity
Funding Arrangements.
"Projections" means the projections contained in the presentation materials
distributed by the Borrower to its lenders during the bank meeting held on March
21, 2001 in New York City, as updated and provided to the Administrative Agent
on April 24, 2001 and May 19, 2001.
"PUHCA" means the Public Utility Holding Company Act of 1935, as amended.
"Ratio of Cash Flow to Fixed Charges" means, as of the end of each fiscal
quarter of the Borrower, the ratio of (a) Cash Flow Available for Fixed Charges
of the Borrower for the period of four consecutive fiscal quarters ending on, or
most recently ended prior to, such date to (b) Fixed Charges of the Borrower for
such period, excluding from the calculation of Fixed Charges all Trading
Arrangements and Credit Support Arrangements.
"Ratio of Debt to Capitalization" means, as of any date, the ratio of the
aggregate principal amount of Funded Indebtedness of the Borrower and PG&E Gen
to the Total Capitalization of the Borrower (excluding from the calculation of
Funded Indebtedness all Trading Arrangements, Credit Support Arrangements and
Swaps); provided that any Equity Funding Arrangements shall only be included in
Funded Indebtedness in an amount equal to the lesser of (x) the maximum amount
that would be payable under such Equity Funding Arrangements (assuming a drawing
is permissible as of the date of determination) and (y) the amount outstanding
under any underlying Indebtedness to which any payment under such Equity Funding
Arrangements would be applied (assuming such Indebtedness were due and payable
as of the date of determination).
"Reference Lender" means The Chase Manhattan Bank.
16
"Refinanceable Facilities" has the meaning ascribed thereto in Section
6.12(a).
"Register" has the meaning given such term in Section 10.6(d).
"Regulation U" means Regulation U of the Board as in effect from time to
time.
"Reimbursement Date" has the meaning given such term in Section 2.4.
"Reimbursement Obligation" means the obligation of the Borrower to
reimburse the Issuing Bank pursuant to Section 2.5 for amounts drawn under
Letters of Credit issued by the Issuing Bank.
"Repurchase Agreement" means any written agreement:
(i) that provides for (i) the transfer of one or more United States
or Canadian Governmental Securities or any security issued by a U.S.
agency or instrumentality in an aggregate principal amount at least
equal to the amount of the Transfer Price (defined below) to the
Borrower or any Restricted Subsidiary from a financial institution that
is (1) a member of the Federal Reserve System having a minimum of US$20
billion in assets, and (2) has commercial paper rated at least A-1 by
S&P, at least F1 by Fitch or at least P-1 by ▇▇▇▇▇'▇, against a transfer
of funds (the "Transfer Price") by the Borrower or such Restricted
Subsidiary to such financial institution and (ii) a simultaneous
agreement by the Borrower or such Restricted Subsidiary, in connection
with such transfer of funds, to transfer to such financial institution
the same or substantially similar United States or Canadian Governmental
Securities or any security issued by a U.S. agency or instrumentality
for a price not less than the Transfer Price plus a reasonable return
thereon at a date certain not later than 180 days after such transfer of
funds,
(ii) in respect of which the Borrower or such Restricted Subsidiary
shall have the right, whether by contract or pursuant to applicable law,
to liquidate such agreement upon the occurrence of any default
thereunder, and
(iii) in connection with which the Borrower or such Restricted
Subsidiary, or an agent thereof, shall have taken all action required by
applicable law or regulations to perfect a Lien in such United States or
Canadian Governmental Securities or any security issued by a U.S. agency
or instrumentality.
"Required Lenders" means at any time, Lenders whose Aggregate Exposure
Percentages are, in the aggregate, greater than 50%.
"Requirement of Law" means as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.
17
"Responsible Officer" of the Borrower, shall mean any president or senior
vice president of the Borrower.
"Restricted Subsidiary" means any Subsidiary of the Borrower that is not
(x) an Asset Company, (y) an Investment Vehicle or (z) an Unrestricted
Subsidiary.
"S&P" means Standard & Poor's Ratings Service, a division of McGraw Hill
Companies, Inc.
"Sale/Leaseback" means any lease whereby any Person becomes or remains
liable as lessee or as Borrower or other surety of any property, whether now
owned or hereafter acquired, that such Person has sold or transferred or is to
sell or transfer to any other Person (other than any Subsidiary of such Person),
as part of a financing transaction to which such Person is a party, in
contemplation of leasing such property to such Person.
"Scheduled to be Paid" means, with respect to any liability or expense for
any period, the amount of such liability or expense scheduled to be paid during
such period or the amount of such liability or expense that would have been
scheduled to be paid during such period had the payment schedule with respect to
such liability or expense been divided equally into successive periods having a
duration equal to the duration of such period.
"SEC" means the Securities and Exchange Commission (or successors thereto
or an analogous Governmental Authority).
"Subsidiary" means, with respect to any Person (the "Parent"), any
corporation or other entity of which sufficient 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 such Parent.
"Swaps" means, with respect to any Person, payment obligations with respect
to interest rate swaps, currency swaps and similar obligations obligating such
Person to make payments, whether periodically or upon the happening of a
contingency. The amount of the obligation under any Swap shall be the amount
determined in respect thereof as of the end of the then most recently ended
fiscal quarter of such Person, based on the assumption that such Swap had
terminated at the end of such fiscal quarter, and in making such determination,
if any agreement relating to such Swap provides for the netting of amounts
payable by and to such Person thereunder or if any such agreement provides for
the simultaneous payment of amounts by and to such Person, then in each such
case, the amount of such obligation shall be the net amount so determined.
"Syndication Agents" has the meaning given such term in the preamble
hereto.
"Syndication Completion Date" has the meaning given such term in Section
8.1.
"Termination Date" means the date which is 364 days from the Closing Date,
subject to extension in accordance with Section 8.1.
18
"Total Capitalization" means, with respect to the Borrower, the sum,
without duplication, of (i) total common stock equity or analogous ownership
interests of the Borrower, (ii) preferred stock and preferred securities of the
Borrower, (iii) additional paid in capital or analogous interests of the
Borrower, (iv) retained earnings of the Borrower, excluding other comprehensive
income arising from accounting treatment of hedging and ▇▇▇▇-to-market
transactions and (v) the aggregate principal amount of Funded Indebtedness of
the Borrower and PG&E Gen.
"Total Commitments" means at any time, the aggregate amount of the
Commitments then in effect. The original amount of Total Commitments is Five
Hundred Fifty Million Dollars ($550,000,000).
"Total Extensions of Credit" means at any time, the aggregate amount of the
Extensions of Credit of the Lenders outstanding at such time.
"Trading Arrangement" means any transaction entered into by PG&E Energy
Trading - Power, L.P., a Delaware limited partnership, PG&E Energy Trading Gas
Corporation, a California corporation, or PG&E Energy Trading, Canada
Corporation, an Alberta corporation, any other Restricted Subsidiary, Asset
Company or Investment Vehicle, whether pursuant to master trading agreements or
otherwise, for (1) the purchase and sale of energy, capacity, ancillary services
and other energy or energy-related products, including transmission rights,
environmental allowances and offsets and storage; (2) the purchase and sale of
natural gas, coal, oil and other fuel, including transportation and storage
rights; (3) the purchase and sale of fuel conversion services, including tolling
arrangements; (4) the purchase and sale of any energy or energy-related
derivatives, including weather derivatives; (5) hedging arrangements with
respect to any of the foregoing and interest rate, foreign currency or credit
exposure; or (6) any similar arrangements entered into in the ordinary course of
business as conducted by such Persons or by other Persons in the energy trading,
energy services, power generating, electric transmission or gas transmission and
storage businesses (including technologies related to such businesses).
"Transferee" has the meaning given such term in Section 10.15.
"Type" means as to any Loan, its nature as a Base Rate Loan or a Eurodollar
Loan.
"Unfunded Liabilities" means, with respect to any Plan at any time, the
amount (if any) by which (i) the value of all benefit liabilities under such
Plan, determined on a plan termination basis using the assumptions prescribed by
the PBGC for purposes of Section 4044 of ERISA, exceeds (ii) the fair market
value of all Plan assets allocable to such liabilities under Title IV of ERISA
(excluding any accrued but unpaid contributions), all determined as of the then
most recent valuation date for such Plan, but only to the extent that such
excess represents a potential liability of the Borrower or any ERISA Affiliate
to the PBGC or any other Person under Title IV of ERISA.
"United States" or "U.S." or "US" means the United States of America.
"Unrestricted Subsidiary" means any Subsidiary of the Borrower designated
as such on the Closing Date, or, after the Closing Date, designated as such at
the time of formation thereof or, if acquired by the Borrower, at the time of
acquisition thereof, but, in any such case, only if at
19
such time (i) no Event of Default, Incipient Event of Default or Downgrade Event
has occurred and is continuing or would occur as a result thereof and (ii) such
Subsidiary or any of its Subsidiaries does not own any capital stock or
Indebtedness of or have any Investment in, or own or hold any Lien on any
property of, any other Subsidiary of the Borrower which is not a Subsidiary of
the Subsidiary to be so designated or otherwise an Unrestricted Subsidiary.
"USGenNE" means USGen New England, Inc., a Delaware corporation and an
indirect, wholly-owned Subsidiary of the Borrower.
"USGenNE Credit Agreement" means the $575,000,000 Credit Agreement, dated
as of September 1, 1998, among USGenNE, the lenders party thereto, The Chase
Manhattan Bank, as competitive advance facility agent and as administrative
agent for the lenders thereunder, and The Chase Manhattan Bank, as the issuer of
letters of credit thereunder, as the same may be amended, modified or
supplemented from time to time.
SECTION 1.2 Other Definitional Provisions.
-----------------------------
The following rules of usage shall apply unless otherwise required by the
context or unless otherwise specified herein:
(a) Definitions set forth herein shall be equally applicable to the
singular and plural forms of the terms defined.
(b) References in this Agreement to articles, sections, paragraphs,
clauses, annexes, appendices, schedules or exhibits are references to articles,
sections, paragraphs, clauses, annexes, appendices, schedules or exhibits in
such document.
(c) The headings, subheadings and table of contents used herein are solely
for convenience of reference and shall not constitute a part hereof nor shall
they affect the meaning, construction or effect of any provision hereof.
(d) References to any Person shall include such Person, its successors and
permitted assigns and transferees.
(e) Reference to any agreement means such agreement as amended,
supplemented or otherwise modified from time to time in accordance with the
applicable provisions thereof.
(f) References to any law includes any amendment or modification to such
law and any rules or regulations issued thereunder or any law enacted in
substitution or replacement thereof.
(g) The words "hereof," "herein", "hereto" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement.
(h) References to "including" means including without limiting the
generality of any description preceding such term and for purposes hereof the
rule of ejusdem generis shall not be
20
applicable to limit a general statement, followed by or referable to an
enumeration of specific matters, to matters similar to those specifically
mentioned.
(i) Each of the parties to this Agreement and their counsel have reviewed
and revised, or requested revisions to this Agreement, and the usual rule of
construction that any ambiguities are to be resolved against the drafting party
shall be inapplicable in the construing and interpretation of this Agreement and
any amendments hereto and the other Loan Documents.
(j) Except as otherwise expressly provided herein, all terms of an
accounting or financial nature shall be construed in accordance with GAAP, as in
effect from time to time; provided that for purposes of determining compliance
with any covenant set forth herein, such terms shall be construed in accordance
with GAAP as in effect on the date hereof applied on a basis consistent with the
application used in preparing the Borrower's audited financial statements.
ARTICLE II
LETTERS OF CREDIT
SECTION 2.1 L/C Commitment.
---------------------------
(a) Subject to the terms and conditions hereof, the Issuing Bank, in
reliance on the agreements of the Lenders set forth in Section 2.4(a), agrees to
issue, from time to time, letters of credit (each a "Letter of Credit" and
collectively, "Letters of Credit") for the account of the Borrower on any
Business Day during the Commitment Period pursuant to the procedures set forth
in Section 2.2; provided, that the Issuing Bank shall not have any obligation to
issue any Letter of Credit if, after giving effect to such issuance, (i) the
Total Extensions of Credit would exceed the Total Commitments or (ii) the
aggregate of the stated amounts of all outstanding Letters of Credit would
exceed the Letter of Credit Limit. Each Letter of Credit shall (i) be
denominated in Dollars, (ii) be in a minimum stated amount of $500,000 and (iii)
(x) prior to the Syndication Completion Date, expire no later than five Business
Days prior to the first anniversary of the Termination Date, and (y) on and
after the Syndication Completion Date, expire no later than five Business Days
prior to the Termination Date (as extended pursuant to Section 8.1(b)).
(b) The Issuing Bank shall not at any time be obligated to issue any
Letter of Credit hereunder if such issuance would conflict with, or cause the
Issuing Bank or any L/C Participant to exceed any limits imposed by, any
applicable Requirement of Law.
SECTION 2.2 Procedure for Issuance of Letter of Credit.
-------------------------------------------------------
(a) Subject to the terms and conditions hereof, each Letter of Credit
shall be issued (or the stated maturity thereof extended or terms thereof
modified or amended) on not less than two Business Days' prior notice thereof
waivable by the Administrative Agent by delivery to the address set forth in
Section 10.2 of an Application for Issuance to the Administrative Agent (which
shall promptly distribute copies thereof to the Lenders) and the Issuing Bank.
Each Application for Issuance shall specify (i) the date (which shall be a
Business Day) of issuance of
21
such Letter of Credit (or the date of effectiveness of such extension,
modification or amendment) and the stated expiry date thereof, (ii) the proposed
stated amount of such Letter of Credit, (iii) the name and address of the
beneficiary of such Letter of Credit and (iv) a statement of drawing conditions
applicable to such Letter of Credit, and if such Application for Issuance
relates to an amendment or modification of a Letter of Credit, it shall be
accompanied by the consent of the beneficiary of the Letter of Credit thereto.
Each Application for Issuance shall be irrevocable unless modified or rescinded
by the Borrower not less than one day prior to the proposed date of issuance (or
effectiveness) specified therein. Not later than 12:00 noon (New York City time)
on the proposed date of issuance (or effectiveness) specified in such
Application for Issuance, and upon fulfillment of the applicable conditions
precedent and the other requirements set forth herein, the Issuing Bank shall
issue (or extend, amend or modify) such Letter of Credit and provide notice and
a copy thereof to the Borrower and the Administrative Agent, which shall
promptly furnish copies thereof to the Lenders.
SECTION 2.3 Fees and Other Charges.
-----------------------------------
(a) The Borrower will pay to the Administrative Agent, for the account of
the Lenders, a fee on the stated amount of each outstanding Letter of Credit at
a per annum rate equal to the Applicable Margin in effect from time to time with
respect to Eurodollar Loans, shared ratably among the Lenders in accordance with
their respective Aggregate Exposure Percentages and payable in arrears on each
L/C Fee Payment Date after the issuance date of such Letter of Credit. In
addition, the Borrower shall pay to the Issuing Bank, for its own account, a
fronting fee at the rate of 0.10% per annum on the undrawn and unexpired amount
of each Letter of Credit issued by it, payable in arrears on each L/C Fee
Payment Date after the issuance date.
(b) In addition to the foregoing fees, the Borrower shall pay or reimburse
the Issuing Bank on demand for such normal and customary fees and costs as are
incurred or charged by the Issuing Bank in issuing, negotiating, effecting
payment under, amending, cancelling or otherwise administering any Letter of
Credit. A schedule of such normal and customary fees and costs is attached as
Schedule 2.3(b).
SECTION 2.4 L/C Participations.
-------------------------------
(a) The Issuing Bank irrevocably agrees to grant and hereby grants to each
L/C Participant, and, to induce the Issuing Bank to issue Letters of Credit,
each L/C Participant irrevocably agrees to accept and purchase and hereby
accepts and purchases from the Issuing Bank, on the terms and conditions set
forth below, for such L/C Participant's own account and risk an undivided
interest equal to such L/C Participant's Aggregate Exposure Percentage in the
Issuing Bank's obligations and rights under and in respect of each Letter of
Credit and the amount of each draft paid by the Issuing Bank thereunder. Each
L/C Participant unconditionally and irrevocably agrees with the Issuing Bank
that, if a draft is paid under any Letter of Credit for which the Issuing Bank
is not reimbursed in full by the Borrower in accordance with the terms of this
Agreement, such L/C Participant shall pay to the Issuing Bank upon demand at the
Issuing Bank's address for notices specified herein an amount equal to such L/C
Participant's Aggregate Exposure Percentage of the amount of such draft, or any
part thereof, that is not so reimbursed.
22
(b) If any amount required to be paid by any L/C Participant to the
Issuing Bank pursuant to Section 2.4(a) in respect of any unreimbursed portion
of any payment made by the Issuing Bank under any Letter of Credit is paid to
the Issuing Bank within three Business Days after the date such payment is due,
such L/C Participant shall pay to the Issuing Bank on demand an amount equal to
the product of (i) such amount, (ii) the daily average Federal Funds Effective
Rate during the period from and including the date such payment is required to
the date on which such payment is immediately available to the Issuing Bank, and
(iii) a fraction the numerator of which is the number of days that elapse during
such period and the denominator of which is 360. If any such amount required to
be paid by any L/C Participant pursuant to Section 2.4(a) is not made available
to the Issuing Bank by such L/C Participant within three Business Days after the
date such payment is due, the Issuing Bank shall be entitled to recover from
such L/C Participant, on demand, such amount with interest thereon calculated
from such due date at the rate per annum applicable to Base Rate Loans. A
certificate of the Issuing Bank submitted to any L/C Participant with respect to
any amounts owing under this Section shall be conclusive in the absence of
manifest error.
(c) Whenever, at any time after the Issuing Bank has made payment under
any Letter of Credit and has received from any L/C Participant its pro rata
share of such payment in accordance with Section 2.4(a), the Issuing Bank
receives any payment related to such Letter of Credit (whether directly from the
Borrower or otherwise), or any payment of interest on account thereof, the
Issuing Bank will distribute to such L/C Participant its pro rata share thereof;
provided, however, that in the event that any such payment received by the
Issuing Bank shall be required to be returned by the Issuing Bank, such L/C
Participant shall return to the Issuing Bank the portion thereof previously
distributed by the Issuing Bank to it.
SECTION 2.5 Reimbursement Obligation of the Borrower. The Borrower
-----------------------------------------------------
agrees to reimburse the Issuing Bank on the second Business Day next succeeding
the Business Day on which the Issuing Bank notifies the Borrower of the date and
amount of a draft presented under any Letter of Credit and paid by the Issuing
Bank in the amount of (a) such draft so paid and (b) any taxes, fees, charges or
other costs or expenses incurred by the Issuing Bank in connection with such
payment. Each such payment shall be made to the Administrative Agent for
disbursement to the Issuing Bank in Dollars and in immediately available funds.
Interest shall be payable on any such amounts from the date on which the
relevant draft is paid by the Issuing Bank until payment in full by the Borrower
at the rate set forth in (i) until the second Business Day next succeeding the
date of the relevant notice, Section 3.9(b) and (ii) thereafter, Section 3.9(c).
SECTION 2.6 Obligations Absolute. The Borrower's obligations under this
---------------------------------
Section 2 shall be absolute and unconditional under any and all circumstances
and irrespective of any setoff, counterclaim or defense to payment that the
Borrower may have or have had against the Issuing Bank, any beneficiary of a
Letter of Credit or any other Person. The Borrower also agrees with the Issuing
Bank that the Issuing Bank shall not be responsible for, and the Borrower's
Reimbursement Obligations under Section 2.5 shall not be affected by, among
other things, the validity or genuineness of documents or of any endorsements
thereon, even though such documents shall in fact prove to be invalid,
fraudulent or forged, or any dispute between or among the Borrower and any
beneficiary of any Letter of Credit or any other party to which such Letter of
Credit may be transferred or any claims whatsoever of the Borrower against any
23
beneficiary of such Letter of Credit or any such transferee. The Issuing Bank
shall not be liable for any error, omission, interruption or delay in
transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with any Letter of Credit, except for errors or
omissions found by a final and non-appealable decision of a court of competent
jurisdiction to have resulted from the gross negligence or willful misconduct of
the Issuing Bank. The Borrower agrees that any action taken or omitted by the
Issuing Bank under or in connection with any Letter of Credit or the related
drafts or documents, if done in the absence of gross negligence or willful
misconduct and in accordance with the standards of care specified in the Uniform
Commercial Code of the State of New York, shall be binding on the Borrower and
shall not result in any liability of the Issuing Bank to the Borrower.
SECTION 2.7 Letter of Credit Payments. If any draft shall be presented
--------------------------------------
for payment under any Letter of Credit, the Issuing Bank shall promptly notify
the Borrower of the date and amount thereof. The responsibility of the Issuing
Bank to the Borrower in connection with any draft presented for payment under
any Letter of Credit shall, in addition to any payment obligation expressly
provided for in such Letter of Credit, be limited to determining that the
documents (including each draft) delivered under such Letter of Credit in
connection with such presentment appear on their face to be in conformity with
such Letter of Credit.
SECTION 2.8 Applications for Issuance. To the extent that any provision
--------------------------------------
of any Application for Issuance is inconsistent with the provisions of this
Section 2, the provisions of this Section 2 shall apply.
ARTICLE III
LOANS
SECTION 3.1 Loans.
------------------
(a) Subject to the terms and conditions of this Agreement, each Lender
severally agrees to make revolving credit loans (the "Loans") to the Borrower
from time to time during the Commitment Period in an aggregate principal amount
at any one time outstanding which, when added to such Lender's Aggregate
Exposure Percentage of the L/C Obligations then outstanding does not exceed the
amount of such Lender's Commitment. During the Commitment Period, the Borrower
may use the Commitments by borrowing, prepaying the Loans in whole or in part,
and reborrowing, all in accordance with the terms and conditions hereof. The
Loans may from time to time be Eurodollar Loans or Base Rate Loans, as
determined by the Borrower and notified to the Administrative Agent in
accordance with this Section and Section 3.7.
(b) The Borrower shall pay all outstanding Loans on the Termination Date.
SECTION 3.2 Procedure for Loan Borrowing. The Borrower may borrow under
-----------------------------------------
the Commitments during the Commitment Period on any Business Day, provided that
the Borrower shall give the Administrative Agent irrevocable notice (which
notice must be received by the Administrative Agent prior to 12:00 Noon, New
York City time, (a) three Business Days prior to the requested Borrowing Date,
in the case of Eurodollar Loans, or (b) one Business Day
24
prior to the requested Borrowing Date, in the case of Base Rate Loans),
specifying (i) the amount and Type of Loans to be borrowed, (ii) the requested
Borrowing Date and (iii) in the case of Eurodollar Loans, the respective amounts
of each such Type of Loan and the respective lengths of the initial Interest
Period therefore (each, a "Notice of Borrowing"). Any Loans made on the Closing
Date shall initially be Base Rate Loans. Each borrowing under the Commitments
shall be in an amount equal to (x) in the case of Base Rate Loans, $1,000,000 or
a whole multiple thereof (or, if the then aggregate Available Commitments are
less than $1,000,000, such lesser amount) and (y) in the case of Eurodollar
Loans, $1,000,000 or a whole multiple of $1,000,000 in excess thereof. Upon
receipt of any such notice from the Borrower, the Administrative Agent shall
promptly notify each Lender thereof. Each Lender will make the amount of its pro
rata share of each borrowing available to the Administrative Agent for the
account of the Borrower at the Funding Office prior to 12:00 Noon, New York City
time, on the Borrowing Date requested by the Borrower in funds immediately
available to the Administrative Agent. The proceeds of each such Loan shall be
disbursed by the Administrative Agent in accordance with instructions provided
by the Borrower in each Notice of Borrowing, which, if so specified in the
applicable Notice of Borrowing, may be used to repay the Borrower's
Reimbursement Obligations in respect of a drawing under a Letter of Credit.
SECTION 3.3 Evidence of Debt.
-----------------------------
(a) Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing indebtedness of the Borrower to such Lender
resulting from each Loan of such Lender from time to time, including the amounts
of principal and interest payable and paid to such Lender from time to time
under this Agreement.
(b) The Administrative Agent, on behalf of the Borrower, shall maintain
the Register pursuant to Section 10.6(d), and a subaccount therein for each
Lender, in which shall be recorded (i) the amount of each Loan made hereunder
and any Note evidencing such Loan, the Type of such Loan and each Interest
Period applicable thereto, (ii) the amount of any principal or interest due and
payable or to become due and payable from the Borrower to each Lender hereunder
and (iii) both the amount of any sum received by the Administrative Agent
hereunder from the Borrower and each Lender's share thereof.
(c) The entries made in the Register and the accounts of each Lender
maintained pursuant to Section 3.3(a) shall, to the extent permitted by
applicable law, be prima facie evidence of the existence and amounts of the
obligations of the Borrower therein recorded; provided, however, that the
failure of any Lender or the Administrative Agent to maintain the Register or
any such account, or any error therein, shall not in any manner affect the
obligation of the Borrower to repay (with applicable interest) the Loans made to
the Borrower by such Lender in accordance with the terms of this Agreement.
(d) The Borrower agrees that, upon the request to the Administrative Agent
by any Lender, the Borrower will promptly execute and deliver to such Lender a
promissory note of the Borrower evidencing any Loans of such Lender, with
appropriate insertions as to date and principal amount.
SECTION 3.4 Facility Fees, etc.
-------------------------------
25
(a) The Borrower agrees to pay to the Administrative Agent for the account
of each Lender a facility fee for the period from and including the Closing Date
to the last day of the Commitment Period, computed at the Facility Fee Rate on
such Lender's Commitment during the period for which payment is made, payable
quarterly in arrears on the last day of each March, June, September and December
and on the Termination Date, commencing on the first of such dates to occur
after the date hereof.
(b) The Borrower agrees to pay to each Agent the fees in the amounts and
on the dates previously agreed to in writing by the Borrower and such Agent.
SECTION 3.5 Termination or Reduction of Commitments. The Borrower shall
----------------------------------------------------
have the right, upon not less than three Business Days' notice to the
Administrative Agent, to terminate the Commitments or, from time to time, to
reduce the aggregate amount of the Commitments; provided, that no such
termination or reduction of Commitments shall be permitted if, after giving
effect thereto and to any prepayments of the Loans made on the effective date
thereof, the Total Extensions of Credit would exceed the Total Commitments. Any
such reduction shall be in an amount equal to $10,000,000, or a whole multiple
thereof, and shall reduce permanently the Commitments then in effect. On the
Automatic Commitment Reduction Date, the Commitments shall be reduced in
accordance with Section 8.2.
SECTION 3.6 Optional Prepayments; Mandatory Prepayments. The Borrower
--------------------------------------------------------
may at any time and from time to time prepay the Loans, in whole or in part,
without premium or penalty, upon irrevocable notice delivered to the
Administrative Agent at least three Business Days prior thereto in the case of
Eurodollar Loans and at least one Business Day prior thereto in the case of Base
Rate Loans, which notice shall specify the date and amount of such prepayment,
and whether such prepayment is of Eurodollar Loans or Base Rate Loans; provided,
that if a Eurodollar Loan is prepaid on any day other than the last day of the
Interest Period applicable thereto, the Borrower shall also pay any amounts
owing pursuant to Section 3.15. Upon receipt of any such notice the
Administrative Agent shall promptly notify each relevant Lender thereof. If any
such notice is given, the amount specified in such notice shall be due and
payable on the date specified therein, together with accrued interest to such
date on the amount prepaid. The principal amount of any prepayment received by
the Administrative Agent shall be delivered to the Lenders ratably in accordance
with their Aggregate Exposure Percentages. Partial prepayments of Loans shall be
in a minimum aggregate principal amount of the lesser of (i) $5,000,000 or (ii)
the outstanding principal amount of the Loans being prepaid. On the Automatic
Commitment Reduction Date, the Borrower shall prepay outstanding Loans to the
extent required pursuant to Section 8.2.
SECTION 3.7 Conversion and Continuation Options.
------------------------------------------------
(a) The Borrower may elect from time to time to convert Eurodollar Loans
to Base Rate Loans by giving the Administrative Agent at least two Business
Days' prior irrevocable notice of such election, provided that any such
conversion of Eurodollar Loans may be made only on the last day of an Interest
Period with respect thereto. The Borrower may elect from time to time to convert
Base Rate Loans to Eurodollar Loans by giving the Administrative Agent at least
three Business Days' prior irrevocable notice of such election (which notice
shall specify the length of the initial Interest Period therefor), provided that
no Base Rate Loan may be
26
converted into a Eurodollar Loan (i) when any Event of Default has occurred and
is continuing and the Administrative Agent has, or the Required Lenders have,
determined in its or their sole discretion not to permit such conversions or
(ii) after the date that is one month prior to the final scheduled termination
or maturity date of such Loan. Upon receipt of any such notice the
Administrative Agent shall promptly notify each relevant Lender thereof.
(b) The Borrower may elect to continue any Eurodollar Loan as such upon
the expiration of the then current Interest Period with respect thereto by
giving irrevocable notice to the Administrative Agent, in accordance with the
applicable provisions of the term "Interest Period" set forth in Section 1.1, of
the length of the next Interest Period to be applicable to such Loans, provided
that no Eurodollar Loan may be continued as such (i) when any Event of Default
has occurred and is continuing and the Administrative Agent has, or the Required
Lenders have, determined in its or their sole discretion not to permit such
continuations or (ii) after the date that is one month prior to the final
scheduled termination or maturity date of such Loan, and provided, further, that
if the Borrower shall fail to give any required notice as described above in
this paragraph or if such continuation is not permitted pursuant to the
preceding proviso, such Loans shall be converted automatically to Base Rate
Loans on the last day of such then expiring Interest Period. Upon receipt of any
such notice the Administrative Agent shall promptly notify each relevant Lender
thereof.
SECTION 3.8 Limitations on Eurodollar Tranches. Notwithstanding anything
-----------------------------------------------
to the contrary in this Agreement, all borrowings, conversions, continuations
and optional prepayments of Eurodollar Loans and all selections of Interest
Periods shall be in such amounts and be made pursuant to such elections so that,
(a) after giving effect thereto, the aggregate principal amount of the
Eurodollar Loans comprising each Eurodollar Tranche shall be equal to $5,000,000
or a whole multiple of $1,000,000 in excess thereof and (b) no more than ten
Eurodollar Tranches shall be outstanding at any one time.
SECTION 3.9 Interest Rates and Payment Dates.
---------------------------------------------
(a) Each Eurodollar Loan shall bear interest for each day during each
Interest Period with respect thereto at a rate per annum equal to the Eurodollar
Rate determined for such day plus the Applicable Margin for Eurodollar Loans in
effect for such day.
(b) Each Base Rate Loan shall bear interest for each day on which it is
outstanding at a rate per annum equal to the Base Rate in effect for such day
plus the Applicable Margin for Base Rate Loans.
(c) (i) If all or a portion of the principal amount of any Reimbursement
Obligation or Loan shall not be paid when due (whether at the stated maturity,
by acceleration or otherwise), all outstanding Loans (whether or not overdue)
(to the extent legally permitted) shall bear interest at a rate per annum that
is equal to in the case of the Loans, the rate that would otherwise be
applicable thereto pursuant to the provisions of Section 2 or Section 3, as
applicable, plus 2%, and (ii) if all or a portion of any interest payable on any
Loan or any facility fee or other amount or fee payable hereunder shall not be
paid when due (whether at the stated maturity, by acceleration or otherwise),
such overdue amount shall bear interest at a rate per annum equal to the rate
then applicable to Base Rate Loans plus 2%, in each case, with respect to
clauses (i) and
27
(ii) above, from the date of such non-payment until such amount is paid in full
(after as well as before judgment).
(d) Interest shall be payable in arrears on each Interest Payment Date,
provided that interest accruing pursuant to paragraph (c) of this Section shall
be payable from time to time on demand.
SECTION 3.10 Computation of Interest and Fees.
----------------------------------------------
(a) Interest, fees and commissions payable pursuant hereto shall be
calculated on the basis of a 360-day year for the actual days elapsed, except
that, with respect to Base Rate Loans on which interest is calculated on the
basis of the Prime Rate, the interest thereon shall be calculated on the basis
of a 365- (or 366-, as the case may be) day year for the actual days elapsed.
The Administrative Agent shall as soon as practicable notify the Borrower and
the Lenders of each determination of a Eurodollar Rate. Any change in the
interest rate on a Loan resulting from a change in the Base Rate or the
Eurocurrency Reserve Requirements shall become effective as of the opening of
business on the day on which such change becomes effective. The Administrative
Agent shall as soon as practicable notify the Borrower and the Lenders of the
effective date and the amount of each such change in interest rate.
(b) Each determination of an interest rate by the Administrative Agent
pursuant to any provision of this Agreement shall be conclusive and binding on
the Borrower and the Lenders in the absence of manifest error. The
Administrative Agent shall, at the request of the Borrower, deliver to the
Borrower a statement showing the quotations used by the Administrative Agent in
determining any interest rate pursuant to Section 3.9(a).
SECTION 3.11 Inability to Determine Interest Rate. If prior to the first
--------------------------------------------------
day of any Interest Period:
(a) the Administrative Agent shall have determined (which determination
shall be conclusive and binding upon the Borrower) that, by reason of
circumstances affecting the relevant market, adequate and reasonable means do
not exist for ascertaining the Eurodollar Rate for such Interest Period, or
(b) the Administrative Agent shall have received notice from the Required
Lenders that the Eurodollar Rate determined or to be determined for such
Interest Period will not adequately and fairly reflect the cost to such Lenders
(as conclusively certified by such Lenders) of making or maintaining their
affected Loans during such Interest Period,
the Administrative Agent shall give telecopy or telephonic notice thereof to the
Borrower and the relevant Lenders as soon as practicable thereafter. If such
notice is given (x) any Loans that were to have been converted on the first day
of such Interest Period to Eurodollar Loans shall be continued as Base Rate
Loans and (y) any outstanding Eurodollar Loans shall be converted, on the last
day of the then current Interest Period with respect thereto, to Base Rate
Loans. Until such notice has been withdrawn by the Administrative Agent, no
further Eurodollar Loans shall be continued as such, nor shall the Borrower have
the right to convert Loans to Eurodollar Loans.
28
SECTION 3.12 Pro Rata Treatment and Payments.
---------------------------------------------
(a) Each borrowing by the Borrower from the Lenders hereunder, each
payment by the Borrower on account of any facility fee, and any reduction of the
Commitments of the Lenders, shall be made pro rata according to the respective
Aggregate Exposure Percentages of the Lenders. Each payment in respect of
principal or interest in respect of the Loans shall be applied to the amounts of
such obligations owing to the Lenders pro rata according to the respective
Aggregate Exposure Percentages of the Lenders.
(b) Each payment to the Administrative Agent of amounts owing to the
Issuing Bank pursuant to Section 2.3 shall be promptly transferred by the
Administrative Agent to the Issuing Bank.
(c) Each payment (including each prepayment) by the Borrower on account of
principal of the Loans shall be accompanied by accrued interest to the date of
such payment on the amount paid.
(d) All payments (including prepayments) to be made by the Borrower
hereunder, whether on account of principal, interest, fees or otherwise, shall
be made without setoff or counterclaim and shall be made prior to 12:00 Noon,
New York City time, on the due date thereof to the Administrative Agent, for the
account of the Lenders or the Issuing Bank, as the case may be, at the Payment
Office, in Dollars and in immediately available funds. Any payment made by the
Borrower after 12:00 Noon, New York City time, on any Business Day shall be
deemed to have been on the next following Business Day. The Administrative Agent
shall distribute such payments to the Lenders or the Issuing Bank, as the case
may be, promptly upon receipt in like funds as received. If any payment
hereunder (other than payments on the Eurodollar Loans) becomes due and payable
on a day other than a Business Day, such payment shall be extended to the next
succeeding Business Day. If any payment on a Eurodollar Loan becomes due and
payable on a day other than a Business Day, the maturity thereof shall be
extended to the next succeeding Business Day unless the result of such extension
would be to extend such payment into another calendar month, in which event such
payment shall be made on the immediately preceding Business Day. In the case of
any extension of any payment of principal pursuant to the preceding two
sentences, interest thereon shall be payable at the then applicable rate during
such extension.
(e) Unless the Administrative Agent shall have been notified in writing by
any Lender prior to a borrowing that such Lender will not make the amount that
would constitute its share of such borrowing available to the Administrative
Agent, the Administrative Agent may assume that such Lender is making such
amount available to the Administrative Agent, and the Administrative Agent may,
in reliance upon such assumption, make available to the Borrower a corresponding
amount. If such amount is not made available to the Administrative Agent by the
required time on the Borrowing Date therefor, such Lender shall pay to the
Administrative Agent, on demand, such amount with interest thereon at a rate
equal to the daily average Federal Funds Effective Rate for the period until
such Lender makes such amount immediately available to the Administrative Agent.
A certificate of the Administrative Agent submitted to any Lender with respect
to any amounts owing under this paragraph shall be conclusive in the absence of
manifest error. If such Lender's share of such borrowing is not made available
to the
29
Administrative Agent by such Lender within three Business Days after such
Borrowing Date, the Administrative Agent shall also be entitled to recover such
amount with interest thereon at the rate per annum applicable to Base Rate
Loans, on demand, from the Borrower.
(f) Unless the Administrative Agent shall have been notified in writing by
the Borrower prior to the date of any payment due to be made by the Borrower
hereunder that the Borrower will not make such payment to the Administrative
Agent, the Administrative Agent may assume that the Borrower is making such
payment, and the Administrative Agent may, but shall not be required to, in
reliance upon such assumption, make available to the Lenders their respective
pro rata shares of a corresponding amount. If such payment is not made to the
Administrative Agent by the Borrower within three Business Days after such due
date, the Administrative Agent shall be entitled to recover, on demand, from
each Lender to which any amount which was made available pursuant to the
preceding sentence, such amount with interest thereon at the rate per annum
equal to the daily average Federal Funds Effective Rate. Nothing herein shall be
deemed to limit the rights of the Administrative Agent or any Lender against the
Borrower.
SECTION 3.13 Requirements of Law.
---------------------------------
(a) If the adoption of or any change in any Requirement of Law or in the
interpretation or application thereof or compliance by the Issuing Bank or any
Lender (the term "Lender" as used below in this Section to include the Issuing
Bank) with any request or directive (whether or not having the force of law)
from any central bank or other Governmental Authority made subsequent to the
date hereof:
(i) shall subject any Lender to any tax of any kind whatsoever with
respect to this Agreement, any Letter of Credit, any Application for
Issuance or any Eurodollar Loan made by it, or change the basis of taxation
of payments to such Lender in respect thereof (except for Non-Excluded
Taxes covered by Section 3.14 and changes in the rate of tax on the overall
net income of such Lender);
(ii) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held by,
deposits or other liabilities in or for the account of, advances, loans or
other extensions of credit by, or any other acquisition of funds by, any
office of such Lender that is not otherwise included in the determination
of the Eurodollar Rate hereunder; or
(iii) shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting into,
continuing or maintaining Eurodollar Loans, or to reduce any amount receivable
hereunder in respect thereof, then, in any such case, the Borrower shall
promptly pay such Lender, upon its demand, any additional amounts necessary to
compensate such Lender for such increased cost or reduced amount receivable. If
any Lender becomes entitled to claim any additional amounts pursuant to this
Section, it shall promptly notify the Borrower (with a copy to the
Administrative Agent) of the event by reason of which it has become so entitled.
30
(b) If any Lender shall have determined that the adoption of or any change
in any Requirement of Law regarding capital adequacy or in the interpretation or
application thereof or compliance by such Lender or any corporation controlling
such Lender with any request or directive regarding capital adequacy (whether or
not having the force of law) from any Governmental Authority made subsequent to
the date hereof shall have the effect of reducing the rate of return on such
Lender's or such corporation's capital as a consequence of its obligations
hereunder or under or in respect of any Letter of Credit to a level below that
which such Lender or such corporation could have achieved but for such adoption,
change or compliance (taking into consideration such Lender's or such
corporation's policies with respect to capital adequacy) by an amount deemed by
such Lender to be material, then from time to time, after submission by such
Lender to the Borrower (with a copy to the Administrative Agent) of a written
request therefor, the Borrower shall pay to such Lender such additional amount
or amounts as will compensate such Lender or such corporation for such
reduction.
(c) A certificate as to any additional amounts payable pursuant to this
Section submitted by any Lender to the Borrower (with a copy to the
Administrative Agent) shall be conclusive in the absence of manifest error. The
obligations of the Borrower pursuant to this Section shall survive the
termination of this Agreement and the payment of the Loans and all other amounts
payable hereunder.
SECTION 3.14 Taxes.
-------------------
(a) All payments made by the Borrower under this Agreement shall be made
free and clear of, and without deduction or withholding for or on account of,
any present or future income, stamp or other taxes, levies, imposts, duties,
charges, fees, deductions or withholdings, now or hereafter imposed, levied,
collected, withheld or assessed by any Governmental Authority, excluding net
income taxes and franchise taxes (imposed in lieu of net income taxes) imposed
on the Administrative Agent or any Lender as a result of a present or former
connection between the Administrative Agent or such Lender and the jurisdiction
of the Governmental Authority imposing such tax or any political subdivision or
taxing authority thereof or therein (other than any such connection arising
solely from such Administrative Agent's or such Lender's having executed,
delivered or performed its obligations or received a payment under, or enforced,
this Agreement or any other Loan Document). If any such non-excluded taxes,
levies, imposts, duties, charges, fees, deductions or withholdings ("Non-
Excluded Taxes") or any Other Taxes are required to be withheld from any amounts
payable to the Administrative Agent or any Lender hereunder, the amounts so
payable to the Administrative Agent or such Lender shall be increased to the
extent necessary to yield to the Administrative Agent or such Lender (after
payment of all Non-Excluded Taxes and Other Taxes) interest or any such other
amounts payable hereunder at the rates or in the amounts specified in this
Agreement; provided, however, that the Borrower shall not be required to
increase any such amounts payable to any Lender with respect to any Non-Excluded
Taxes (i) that are attributable to such Lender's failure to comply with the
requirements of paragraph (d) or (e) of this Section or (ii) that are United
States withholding taxes imposed on amounts payable to such Lender at the time
such Lender becomes a party to this Agreement, except to the extent that such
Lender's assignor (if any) was entitled, at the time of assignment, to receive
additional amounts from the Borrower with respect to such Non-Excluded Taxes
pursuant to this paragraph (a).
31
(b) In addition, the Borrower shall pay any Other Taxes to the relevant
Governmental Authority in accordance with applicable law.
(c) Whenever any Non-Excluded Taxes or Other Taxes are payable by the
Borrower, as promptly as possible thereafter the Borrower shall send to the
Administrative Agent for the account of the Administrative Agent or the relevant
Lender, as the case may be, a certified copy of an original official receipt
received by the Borrower showing payment thereof. If the Borrower fails to pay
any Non-Excluded Taxes or Other Taxes when due to the appropriate taxing
authority or fails to remit to the Administrative Agent the required receipts or
other required documentary evidence, the Borrower shall indemnify the
Administrative Agent and the Lenders for any incremental taxes, interest or
penalties that may become payable by the Administrative Agent or any Lender as a
result of any such failure.
(d) Each Lender (or Transferee) that is not a citizen or resident of the
United States of America, a corporation, partnership or other entity created or
organized in or under the laws of the United States of America (or any
jurisdiction thereof), or any estate or trust that is subject to federal income
taxation regardless of the source of its income (a "Non-U.S. Lender") shall
deliver to the Borrower and the Administrative Agent (or, in the case of a
Participant, to the Lender from which the related participation shall have been
purchased) two copies of either U.S. Internal Revenue Service Form W-8BEN or
Form W-8ECI, or, in the case of a Non-U.S. Lender claiming exemption from U.S.
federal withholding tax under Section 871(h) or 881(c) of the Code with respect
to payments of "portfolio interest" a statement substantially in the form of
Exhibit F and a Form W-8BEN, or any subsequent versions thereof or successors
thereto properly completed and duly executed by such Non-U.S. Lender claiming
complete exemption from, or a reduced rate of, U.S. federal withholding tax on
all payments by the Borrower under this Agreement and the other Loan Documents.
Such forms shall be delivered by each Non-U.S. Lender on or before the date it
becomes a party to this Agreement (or, in the case of any Participant, on or
before the date such Participant purchases the related participation). In
addition, each Non-U.S. Lender shall deliver such forms promptly upon the
obsolescence or invalidity of any form previously delivered by such Non-U.S.
Lender. Each Non-U.S. Lender shall promptly notify the Borrower at any time it
determines that it is no longer in a position to provide any previously
delivered certificate to the Borrower (or any other form of certification
adopted by the U.S. taxing authorities for such purpose). Notwithstanding any
other provision of this paragraph, a Non-U.S. Lender shall not be required to
deliver any form pursuant to this paragraph that such Non-U.S. Lender is not
legally able to deliver.
(e) A Lender that is entitled to an exemption from or reduction of non-
U.S. withholding tax under the law of the jurisdiction in which the Borrower is
located, or any treaty to which such jurisdiction is a party, with respect to
payments under this Agreement shall deliver to the Borrower (with a copy to the
Administrative Agent), at the time or times prescribed by applicable law or
reasonably requested by the Borrower, such properly completed and executed
documentation prescribed by applicable law as will permit such payments to be
made without withholding or at a reduced rate, provided that such Lender is
legally entitled to complete, execute and deliver such documentation and in such
Lender's reasonable judgment such completion, execution or submission would not
materially prejudice the legal position of such Lender.
32
(f) The agreements in this Section shall survive the termination of this
Agreement and the payment of the Loans and all other amounts payable hereunder.
SECTION 3.15 Indemnity. The Borrower agrees to indemnify each Lender
-----------------------
for, and to hold each Lender harmless from, any loss or expense that such Lender
may sustain or incur as a consequence of (a) default by the Borrower in making a
borrowing of, conversion into or continuation of Eurodollar Loans after the
Borrower has given a notice requesting the same in accordance with the
provisions of this Agreement, (b) default by the Borrower in making any
prepayment of or conversion from Eurodollar Loans after the Borrower has given a
notice thereof in accordance with the provisions of this Agreement or (c) the
making of a prepayment or conversion of Eurodollar Loans on a day that is not
the last day of an Interest Period with respect thereto. Such indemnification
may include an amount equal to the excess, if any, of (i) the amount of interest
that would have accrued on the amount so prepaid, or not so borrowed, converted
or continued, for the period from the date of such prepayment or of such failure
to borrow, convert or continue to the last day of such Interest Period (or, in
the case of a failure to borrow, convert or continue, the Interest Period that
would have commenced on the date of such failure) in each case at the applicable
rate of interest for such Loans provided for herein (excluding, however, the
Applicable Margin included therein, if any) over (ii) the amount of interest (as
----
reasonably determined by such Lender) that would have accrued to such Lender on
such amount by placing such amount on deposit for a comparable period with
leading banks in the interbank eurodollar market. A certificate as to any
amounts payable pursuant to this Section submitted to the Borrower by any Lender
shall be conclusive in the absence of manifest error. This covenant shall
survive the termination of this Agreement and the payment of the Loans and all
other amounts payable hereunder.
SECTION 3.16 Illegality. Notwithstanding any other provision herein, if
------------------------
the adoption of or any change in any Requirement of Law or in the interpretation
or application thereof shall make it unlawful for any Lender to make or maintain
Eurodollar Loans as contemplated by this Agreement, (a) the commitment of such
Lender hereunder to make Eurodollar Loans, continue Eurodollar Loans as such and
convert Base Rate Loans to Eurodollar Loans shall forthwith be canceled and (b)
such Lender's Loans then outstanding as Eurodollar Loans, if any, shall be
converted automatically to Base Rate Loans on the respective last days of the
then current Interest Periods with respect to such Loans or within such earlier
period as required by law. If any such conversion of a Eurodollar Loan occurs on
a day which is not the last day of the then current Interest Period with respect
thereto, the Borrower shall pay to such Lender such amounts, if any, as may be
required pursuant to Section 3.15.
SECTION 3.17 Change of Lending Office. Each of the Issuing Bank and the
--------------------------------------
Lenders (the term "Lender" as used below in this Section to include the Issuing
Bank) agrees that, upon the occurrence of any event giving rise to the operation
of Section 3.13, 3.14(a) or 3.16 with respect to such Lender, it will, if
requested by the Borrower, use reasonable efforts (subject to overall policy
considerations of such Lender) to designate another lending office for any Loans
or Letters of Credit affected by such event with the object of avoiding the
consequences of such event; provided, that such designation is made on terms
that, in the sole judgment of such Lender, cause such Lender and its lending
office(s) to suffer no economic, legal or regulatory disadvantage, and provided,
further, that nothing in this Section shall affect or
33
postpone any of the obligations of any Borrower or the rights of any Lender
pursuant to Section 3.13, 3.14(a) or 3.16.
SECTION 3.18 Replacement of Lenders. The Borrower shall be permitted to
------------------------------------
replace any Lender that (a) requests reimbursement for amounts owing pursuant to
Section 3.13 or 3.14(a) or (b) defaults in its obligation to make Loans
hereunder, with a replacement financial institution; provided that (i) such
replacement does not conflict with any Requirement of Law, (ii) except in the
case of a replacement as a result of a default described in clause (b) above, no
Event of Default shall have occurred and be continuing at the time of such
replacement, (iii) prior to any such replacement, such Lender shall have taken
no action under Section 3.17 so as to eliminate the continued need for payment
of amounts owing pursuant to Section 3.13 or 3.14(a), (iv) the replacement
financial institution shall purchase, at par, all Loans and other amounts owing
to such replaced Lender on or prior to the date of replacement, (v) the
replacement financial institution, if not already a Lender, shall be reasonably
satisfactory to the Administrative Agent, (vi) the replaced Lender shall be
obligated to make such replacement in accordance with the provisions of Section
10.6 (provided that the Borrower shall be obligated to pay the registration and
processing fee referred to therein), (viii) until such time as such replacement
shall be consummated, the Borrower shall pay all additional amounts (if any)
required pursuant to Section 3.13 or 3.14(a), as the case may be, and (ix) any
such replacement shall not be deemed to be a waiver of any rights that the
Borrower, the Administrative Agent or any other Lender shall have against the
replaced Lender.
SECTION 3.19 Extension of Termination Date.
--------------------------------------------
(a) Subject to Section 8.1(b) and the other provisions of this Agreement,
the Commitments of the Lenders shall be effective for an initial period from the
Closing Date to the Termination Date; provided that so long as no Default or
Event of Default shall have occurred and be continuing, the Termination Date,
and concomitantly the Commitments of the Lenders, may be extended for successive
364-day periods expiring on the date which is 364 days from the then scheduled
Termination Date. In order to request such extension, the Borrower will deliver
to the Administrative Agent not more than sixty (60) days nor less than forty-
five (45) days prior to the then scheduled Termination Date a written request
that the Termination Date be extended for 364 days from the then scheduled
Termination Date. The Administrative Agent shall then promptly notify each
Lender of such request, and each Lender shall notify the Administrative Agent in
writing no later than ten Business Days after receipt by the Lenders of the
relevant request for an extension from the Borrower, pursuant to this Section
3.19, whether such Lender, in the exercise of its sole discretion, will extend
the Termination Date for such 364-day period. Any Lender which shall not timely
notify the Administrative Agent whether it will extend the Termination Date
shall be deemed not to have agreed to the extension. No Lender shall have any
obligation whatsoever to agree to extend the Termination Date. Any agreement to
extend the Termination Date by any Lender shall be irrevocable, except to the
extent revocable by the Borrower as provided in Section 3.19(c)(C)(iii).
(b) If all the Lenders notify the Administrative Agent pursuant to the
foregoing provisions of this Section 3.19 of their agreement to extend the
Termination Date (such Lenders agreeing to extend the Termination Date, the
"Accepting Lenders"), then the Administrative
34
Agent shall so notify each Lender and the Borrower, and such extension shall
become effective without further action by any party hereto.
(c) If Lenders constituting at least the Required Lenders approve the
extension of the Termination Date and if one or more of the Lenders shall
notify, or be deemed to have notified, the Administrative Agent that they will
not extend the then scheduled Termination Date (such Lenders, the "Declining
Lenders"), then (A) the Administrative Agent shall promptly so notify the
Borrower and the Accepting Lenders, (B) the Accepting Lenders shall, upon the
Borrower's election to extend the then scheduled Termination Date in accordance
with clause (C)(i) or (C)(ii) below, extend the then scheduled Termination Date
and (C) the Borrower shall, pursuant to a notice delivered to the Administrative
Agent, the Accepting Lenders and the Declining Lenders, no later than the tenth
day following the date by which each Lender is required, pursuant to this
Section 3.19, to approve or disapprove the requested extension, either:
(i) elect to extend the Termination Date with respect to the
Accepting Lenders and direct the Declining Lenders to terminate their
Commitments, which termination shall become effective on the date which
would have been the Termination Date except for the operation of this
Section 3.19. On such date, (x) the Borrower shall deliver a notice of the
effectiveness of such termination to the Declining Lenders with a copy to
the Administrative Agent, (y) the Borrower shall pay in full in immediately
available funds all Obligations owing to the Declining Lenders and (z) upon
the occurrence of the events set forth in clauses (x) and (y), the
Declining Lenders shall each cease to be a Lender hereunder for all
purposes and the Declining Lenders shall no longer have any obligations
hereunder; provided, however, such Person shall be obligated to make or
entitled to receive payments pursuant to Sections 3.13, 3.15, 9.7 and 10.5
(but only to the extent the event giving rise to such payment occurred
prior to the time at which the events set forth in clauses (x) and (y)
shall have occurred) as if it were a Lender, and the Administrative Agent
shall promptly notify the Accepting Lenders and the Borrower of the new
Total Commitments and the new Termination Date; or
(ii) elect to extend the Termination Date with respect to the
Accepting Lenders and, prior to or no later than the then scheduled
Termination Date, (a) the Borrower shall replace the Declining Lenders with
one or more lenders reasonably acceptable to the Administrative Agent (such
lenders, the "Replacement Lenders") or with any one or more of the
Accepting Lenders, if any, which have agreed with the Borrower to increase
their respective Commitments (the "Increasing Accepting Lenders") or to the
extent the Borrower is not able to replace all Commitments of any Declining
Lender, direct such Declining Lenders to terminate any such Commitments not
being replaced as provided in clause (i) above and (b) the Borrower shall
pay in full in immediately available funds all Obligations owed by the
Borrower to the Declining Lenders which are not being replaced; provided
that (x) the Replacement Lenders and Increasing Accepting Lenders shall
purchase, and the Declining Lenders being replaced shall sell, the interest
of the Declining Lenders being replaced and their rights hereunder without
recourse or expense to, or warranty (except warranty of ownership which is
free and clear of any adverse claims) by, such Declining Lenders being
replaced for a purchase price equal to the aggregate outstanding principal
amount of Obligations payable to such Declining Lenders plus any accrued
but unpaid interest on such
35
Obligations and accrued but unpaid fees in respect of such Declining
Lenders' Loans and Commitments hereunder, and (y) all Obligations of the
Borrower owing under or in connection with this Agreement with respect to
the Declining Lenders being replaced (including, without limitation, such
increased costs, breakage fees payable under Sections 3.13 and 3.14 and all
other costs and expenses payable to each such Declining Lender) shall be
paid in full in immediately available funds to such Declining Lenders
concurrently with such replacement, and (z) upon the payment of such
amounts referred to in clauses (x) and (y), the Replacement Lenders shall
each constitute a Lender hereunder and the Declining Lenders being so
replaced shall no longer constitute a Lender or Issuing Bank (if
applicable) and shall no longer have any obligations hereunder. However,
such Person shall be obligated to make or entitled to receive payments
pursuant to Sections 3.13, 3.15, 9.7 and 10.5 (but only to the extent the
event giving rise to such payment occurred prior to the time at which the
events set forth in clauses (x) and (y) shall have occurred) as if it were
a Lender; or
(iii) elect to revoke and cancel such extension request by giving
notice of such revocation and cancellation to the Administrative Agent
(which shall promptly notify the Lenders thereof) no later than the tenth
day following the date by which each Lender is required, pursuant to this
Section 3.19, to approve or disapprove the requested extension of the
Termination Date, and concomitantly the Commitments of the Lenders. If the
Borrower fails to timely provide the election notice referred to in this
clause (C), the Borrower shall be deemed to have revoked and canceled such
extension request and to have elected not to extent the Termination Date
and the Commitments of the Lenders, and, on the then scheduled Termination
Date, the Borrower shall repay in full all Obligations under the Loan
Documents.
(d) Notwithstanding any of the foregoing, in the event that the Issuing
Bank is a Declining Lender, the Borrower shall implement arrangements
satisfactory in all respects to the Issuing Bank with respect to all Letters of
Credit that would remain outstanding after the Issuing Bank ceases to be a
Lender and Issuing Bank under this Agreement.
(e) On and after the effectiveness of any extension under this Section
3.19, in no event shall the aggregate stated amount of all outstanding Letters
of Credit exceed the Total Commitments.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agent, the Issuing Bank and the Lenders to
enter into this Agreement, to issue the Letters of Credit and to make the Loans,
the Borrower hereby represents and warrants to the Administrative Agent, the
Issuing Bank and each Lender that:
SECTION 4.1 Organization; Powers; Ownership of Property. The Borrower
--------------------------------------------------------
and each of its Subsidiaries (other than Unrestricted Subsidiaries) (a) is duly
formed, validly existing and in good standing under the laws of the jurisdiction
of its formation, except, with respect to such Subsidiaries, where the failure
to be validly existing or in good standing is not reasonably
36
likely to result in a Material Adverse Effect, (b) has all requisite power and
authority to own its property and assets and to carry on its business as now
conducted and as proposed to be conducted, (c) is qualified to do business in
every jurisdiction where such qualification is required, except where the
failure so to qualify is not reasonably likely to result in a Material Adverse
Effect, (d) as to the Borrower only, has the power and authority to execute,
deliver and perform its obligations under this Agreement and the other Loan
Documents, and (e) owns and has good and marketable title to all of its
properties and assets, subject to no Liens other than those permitted by Section
6.11 hereof, except where the failure to own or to have good and marketable
title to such property or asset is not reasonably likely to result in a Material
Adverse Effect.
SECTION 4.2 Authorization. The execution, delivery and performance by
--------------------------
the Borrower of this Agreement and the other Loan Documents each (a) have been
duly authorized by all requisite corporate action on the part of the Borrower,
and (b) will not (i) violate (A) any provision of any law, statute, rule or
regulation to which the Borrower is subject, (B) the articles of incorporation
or by-laws of the Borrower, (C) any order of any Governmental Authority to which
the Borrower is subject, or (D) any material provision of any indenture,
agreement or other instrument to which the Borrower is a party or by which it or
any of its property is or may be bound, which such violation is reasonably
likely to result in a Material Adverse Effect, (ii) constitute (alone or with
notice or lapse of time or both) a default under any such indenture, agreement
or other instrument, which such default is reasonably likely to result in a
Material Adverse Effect or (iii) result in the creation or imposition of any
Lien upon any property or assets of the Borrower, which such Lien is reasonably
likely to result in a Material Adverse Effect.
SECTION 4.3 Enforceability. This Agreement and the other Loan Documents
---------------------------
each constitutes a legal, valid and binding obligation of the Borrower
enforceable in accordance with its terms except to the extent that enforcement
may be limited by bankruptcy, insolvency or similar laws affecting the
enforcement of creditors' rights generally.
SECTION 4.4 Financial Statements.
---------------------------------
(a) The consolidated balance sheet of the Borrower and its Subsidiaries as
of December 31, 1999 and December 31, 2000, reported on by an independent public
accountant of nationally recognized standing, and the related consolidated
statements of income, retained earnings and cash flows for the fiscal periods
then ended, copies of which have been delivered to the Administrative Agent,
fairly presented in conformity with GAAP, the consolidated financial position of
the Borrower and its Subsidiaries as of such dates and their consolidated
results of operations and cash flows for such periods ending on such dates.
(b) The assumptions used in preparing the Projections were made in good
faith and are reasonable as of the date of such Projections and as of the date
hereof.
(c) Since December 31, 2000, there has been no development or condition
that has had, or could reasonably be expected to result in, a Material Adverse
Effect.
37
SECTION 4.5 Litigation. Except as set forth on Schedule 4.5, there is
-----------------------
no investigation, action, suit or proceeding pending against, or to the Actual
Knowledge of the Borrower threatened against or affecting, the Borrower or any
of its Subsidiaries (other than Unrestricted Subsidiaries) before any court or
arbitrator or any governmental body, agency or official in which an adverse
decision is reasonably likely to result in a Material Adverse Effect or call
into question the enforceability of this Agreement or the other Loan Documents.
SECTION 4.6 Federal Reserve Regulations.
----------------------------------------
(a) Neither the Borrower nor any of its Subsidiaries is engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of "buying" or "carrying" Margin Stock (within the
respective meanings of each of the quoted terms under Regulation U). No part of
the proceeds of any Loans, and no other extensions of credit hereunder, will be
used for "buying" or "carrying" Margin Stock (within the respective meanings of
such quoted terms under Regulation U) or for any purpose that violates the
provisions of the regulations of the Board. If requested by any Lender or the
Administrative Agent, the Borrower will furnish to the Administrative Agent and
each Lender a statement to the foregoing effect in conformity with the
requirements of FR Form G-3 or FR Form U-1, as applicable, referred to in
Regulation U.
(b) Not more than 25 % of the value of the assets of the Borrower is
represented by Margin Stock.
SECTION 4.7 Investment Company Act; Public Utility Holding Company Act.
-----------------------------------------------------------------------
(a) Neither the Borrower nor any of its Subsidiaries is an "investment
company" as defined in, or subject to regulation under, the Investment Company
Act of 1940.
(b) The Borrower is not a "holding company" but is a "subsidiary company"
and an "affiliate" of a "holding company", PG&E Corp., that is exempt from all
provisions, except Section 9(a)(2), of the Public Utility Holding Company Act of
1935, as amended, and the execution, delivery and performance by the Borrower of
this Agreement and the other Loan Documents and its obligations hereunder and
thereunder do not violate any provision of such Act or any rule or regulation
thereunder.
SECTION 4.8 No Material Misstatements. The reports, financial statements
--------------------------------------
and other written information furnished by or on behalf of the Borrower to the
Administrative Agent, the Issuing Bank or any Lender pursuant to or in
connection with this Agreement and the other Loan Documents do not contain, when
taken as a whole, any untrue statement of a material fact and do not omit, when
taken as a whole, to state any fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading in any
material respect.
SECTION 4.9 Taxes. The Borrower has filed or caused to be filed all
------------------
Federal and material state and local tax returns which to its Actual Knowledge
are required to be filed by it, and has paid or caused to be paid all material
taxes shown to be due and payable on such returns or on any assessments received
by it, other than any taxes or assessments the validity of which is being
contested in good faith by appropriate proceedings and with respect to which
appropriate
38
accounting reserves have to the extent required by GAAP been set aside. Each
Subsidiary of the Borrower (other than any Unrestricted Subsidiary) has filed or
caused to be filed all Federal and material state and local tax returns which to
the Actual Knowledge of the Borrower or such Subsidiary are required to be filed
by such Subsidiary, and has paid or caused to be paid all material taxes shown
to be due and payable on such returns or on any assessments received by it,
other than the taxes the failure of which to pay or file a return with respect
thereto is not reasonably likely to result in a Material Adverse Effect.
SECTION 4.10 Employee Benefit Plans. With respect to each Plan, the
------------------------------------
Borrower and its ERISA Affiliates are in compliance in all material respects
with the applicable provisions of ERISA and the Code and the final regulations
and published interpretations thereunder. No ERISA Event has occurred that alone
or together with any other ERISA Event has resulted or is reasonably likely to
result in a Material Adverse Effect.
SECTION 4.11 Governmental Approval; Compliance with Law and Contracts.
----------------------------------------------------------------------
The Borrower and each of its Subsidiaries (other than Unrestricted Subsidiaries)
is in compliance with (a) and has obtained each Governmental Approval applicable
to it in respect of this Agreement and the other Loan Documents, the conduct of
its business and the ownership of its property, each of which (i) is in full
force and effect, (ii) is sufficient for its purpose without any material
restraint or adverse condition and (iii) is not subject to any waiting period,
further action on the part of any Governmental Authority or other Person, or
stay or injunction, (b) all applicable laws relating to its business and (c)
each indenture, agreement or other instrument to which it is a party or by which
it or any of its property is or may be bound that is material to the conduct of
its business, except in each such case for noncompliances which, and
Governmental Approvals the failure to possess which, are not, singly or in the
aggregate, reasonably likely to result in a Material Adverse Effect.
SECTION 4.12 Environmental Matters. Except as set forth in Schedule 4.12
-----------------------------------
or as set forth in or contemplated by the financial statements or other reports
of the type referred to in Section 4.4 hereof and which have been delivered to
the Administrative Agent on or prior to the date hereof, the Borrower and each
of its Subsidiaries (other than Unrestricted Subsidiaries) have complied in all
material respects with all Federal, state, local and other statutes, ordinances,
orders, judgments, rulings and regulations relating to environmental pollution
or to environmental or nuclear regulation or control, except to the extent that
failure to so comply is not reasonably likely to result in a Material Adverse
Effect. Except as set forth in or contemplated by such financial statements or
other reports, neither the Borrower nor any of its Subsidiaries (other than
Unrestricted Subsidiaries) has received notice of any material failure so to
comply, except where such failure is not reasonably likely to result in a
Material Adverse Effect. Except as set forth in or contemplated by such
financial statements or other reports, no facilities of the Borrower or any of
its Subsidiaries (other than Unrestricted Subsidiaries) are used to manage any
hazardous wastes, hazardous substances, hazardous materials, toxic substances,
toxic pollutants or substances similarly denominated, as those terms or similar
terms are used in the Resource Conservation and Recovery Act, the Comprehensive
Environmental Response Compensation and Liability Act, the Hazardous Materials
Transportation Act, the Toxic Substance Control Act, the Clean Air Act, the
Clean Water Act or any other applicable law relating to environmental pollution,
or any nuclear fuel or other radioactive materials, in violation of any law or
any regulations promulgated pursuant thereto, except to the extent that
39
such violations, individually or in the aggregate, are not reasonably likely to
result in a Material Adverse Effect. Except as set forth in or contemplated by
such financial statements or other reports, the Borrower is aware of no events,
conditions or circumstances involving environmental pollution or contamination
that are reasonably likely to result in a Material Adverse Effect.
SECTION 4.13 Ranking. Under applicable laws in force on the date hereof,
---------------------
the claims and rights of the Lenders under this Agreement and the other Loan
Documents in respect of the Obligations shall not be subordinate to, and shall
rank at least pari passu in all respects with, the claims and rights of any
other holders of unsecured Indebtedness of the Borrower.
SECTION 4.14 Unrestricted Subsidiaries. All Unrestricted Subsidiaries
---------------------------------------
designated as such on the date hereof are identified on Schedule 4.14.
SECTION 4.15 Use of Letters of Credit. The Letters of Credit shall not
--------------------------------------
be used as payment assurance in connection with any Equity Funding Arrangement
of the Borrower or any of its Subsidiaries.
SECTION 4.16 CPUC. Neither the Borrower nor any of its Subsidiaries are
------------------
regulated by the California Public Utilities Commission.
SECTION 4.17 Separateness from PG&E.
------------------------------------
(a) The Borrower has operated as a business entity separate and distinct
in all relevant respects from PG&E Corp. and PG&E such that the Borrower
believes there exists no reasonable basis for a substantive consolidation of NEG
LLC with either PG&E Corp. or PG&E in the event of a bankruptcy proceeding with
respect to either of such Persons.
(b) Any transfer of assets or funds from PG&E Corp. or PG&E (either
directly or through PG&E Corp.) to the Borrower during the period from the date
of the Borrower's incorporation on December 18, 1998 until the date hereof (i)
to the Borrower's knowledge, after due inquiry, was made at a time when the
transferor was solvent and was able to pay its reasonably anticipated
liabilities as they became due, (ii) was received by the Borrower in good faith
and (iii) to the Borrower's knowledge, was made without intent to hinder, delay
or defraud creditors of the transferor.
ARTICLE V
CONDITIONS PRECEDENT
SECTION 5.1 Conditions to Initial Extension of Credit. The obligations
------------------------------------------------------
of the Issuing Bank to issue the initial Letter of Credit requested by Borrower
pursuant to Section 2.1 of this Agreement and of the Lenders to make the initial
Loans requested by Borrower to be made pursuant to Section 3.1(a) of this
Agreement are subject to the satisfaction of the following conditions precedent:
(a) Loan Documents. The Administrative Agent shall have received (i) this
--------------
Agreement, executed and delivered by the Agents, the Borrower and each Person
listed on
40
Schedule 1.1, (ii) an Application for Issuance, if applicable, executed by the
Borrower and (iii) the Letter Agreement, executed by NEG LLC.
(b) Financial Statements. The Administrative Agent shall have received
--------------------
(i) audited consolidated financial statements of the Borrower for the 1999 and
2000 fiscal years, (ii) unaudited unconsolidated financial statements of the
Borrower for the 2000 fiscal year and (iii) unaudited interim consolidated and
unconsolidated financial statements of the Borrower, in each case, for each
quarterly period ended subsequent to the date of the latest applicable financial
statements delivered pursuant to clauses (i) and (ii) of this paragraph as to
which such financial statements are available; and such financial statements
shall not, in the reasonable judgment of the Administrative Agent, reflect any
material adverse change in the consolidated financial condition of the Borrower,
as reflected in the financial statements or Projections previously disclosed to
the Administrative Agent.
(c) Approvals. All Governmental Approvals and third party approvals
---------
necessary in connection with the financing contemplated hereby shall have been
obtained and be in full force and effect.
(d) Related Agreements. The Administrative Agent shall have received (in
------------------
a form reasonably satisfactory to the Administrative Agent), true and correct
copies, certified as to authenticity by the Borrower, of such other documents or
instruments as may be reasonably requested by the Administrative Agent,
including, without limitation, a copy of any debt instrument, security agreement
or other material contract to which Borrower may be a party. The Administrative
Agent shall be reasonably satisfied that no such instrument, agreement or
contract shall be in default immediately prior to or after giving effect to this
Agreement and the other Loan Documents, and the Borrower shall so certify in
writing.
(e) Fees. The Lenders and the Administrative Agent shall have received
----
all fees required to be paid, and all expenses for which invoices have been
presented (including reasonable fees, disbursements and other charges of counsel
to the Administrative Agents), on or before the Closing Date. All such amounts
may be paid with proceeds of Loans made on the Closing Date and may be reflected
in the funding instructions given by the Borrower to the Administrative Agent on
or before the Closing Date.
(f) Closing Certificate. The Administrative Agent shall have received a
-------------------
certificate of the Borrower, dated the Closing Date, substantially in the form
of Exhibit A, with appropriate insertions and attachments.
(g) Legal Opinions. The Administrative Agent shall have received the
--------------
following executed legal opinions:
(i) the legal opinion of Hunton & ▇▇▇▇▇▇▇▇, counsel to Borrower,
substantially in the form of Exhibit C-1;
(ii) the legal opinion of Hunton & ▇▇▇▇▇▇▇▇, substantially in the form
of Exhibit C-2;
41
(iii) the legal opinion of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, general counsel of the
Borrower, substantially in the form of Exhibit C-3.
SECTION 5.2 Conditions to Issuance of Each Letter of Credit under Section
--------------------------------------------------------------------------
2.1 and each Loan under Section 3.1(a). The obligations of the Issuing Bank to
--------------------------------------
issue any Letter of Credit requested to be issued by it hereunder on any date,
and the Lenders to make a Loan under Section 3.1(a) hereof is subject to the
satisfaction of the following conditions precedent:
(a) Representations and Warranties. Each of the representations and
------------------------------
warranties made by Borrower in or pursuant to the Loan Documents shall be true
and correct on and as of such date as if made on and as of such date.
(b) No Default. No Default or Event of Default shall have occurred and be
----------
continuing on such date or after giving effect to the extensions of credit
requested to be made on such date.
Each request by the Borrower for issuance of a Letter of Credit under Section
2.1 hereof or a Loan under Section 3.1(a) shall constitute a representation and
warranty by the Borrower as of the date of such issuance that the conditions
contained in this Section 5.2 have been satisfied.
ARTICLE VI
COVENANTS
The Borrower hereby agrees that, so long as the Commitments remain in
effect, any Letter of Credit remains outstanding or any Loan or other amount is
owing to the Issuing Bank, any Lender or the Administrative Agent hereunder, the
Borrower shall and shall cause each of its Subsidiaries to comply with each of
the following covenants:
SECTION 6.1 Maintenance of Ownership. The Borrower shall continue (x) to
-------------------------------------
own at least 50% of the equity ownership interests of, and (y) control the
management and operations of, each of its Restricted Subsidiaries (except for
certain Restricted Subsidiaries listed on Schedule 6.1); provided that (I) the
Borrower will in any event continue to own at least 80% of the equity ownership
interests of ET Holdings and GTN, and (II) the Borrower will continue to own (i)
prior to the PG&E Gen Credit Agreement Refinancing Date, 100% of the equity
ownership interests of PG&E Gen; and (ii) thereafter, at least 80% of the equity
ownership interests of PG&E Gen; provided, further, that the Borrower may wind
up, dissolve or liquidate any Restricted Subsidiary (other than PG&E Gen, ET
Holdings and GTN) without complying with the foregoing, so long as assets
thereof are transferred or otherwise conveyed to another Restricted Subsidiary
or the Borrower.
SECTION 6.2 Existence. The Borrower will, and will cause each of its
----------------------
Subsidiaries (other than Unrestricted Subsidiaries) to, do or cause to be done
all things necessary to preserve and keep in full force and effect its legal
existence and all rights, licenses, permits, franchises and authorizations
necessary or desirable in the normal conduct of its business, except as
otherwise permitted pursuant to Sections 6.1 (including Schedule 6.1) and 6.9,
and in the case of any such Subsidiaries, except as such failure to so preserve
or to keep its legal existence and
42
such rights, licenses, permits, franchises or authorizations in full force and
effect is not reasonably likely to result in a Material Adverse Effect.
SECTION 6.3 Compliance with Law; Business and Properties. The Borrower
---------------------------------------------------------
will, and will cause each of its Restricted Subsidiaries to, comply with all
applicable material laws, rules, regulations and orders of any Governmental
Authority, whether now in effect or hereafter enacted, except where the validity
or applicability of such laws, rules, regulations or orders is being contested
by appropriate proceedings in good faith or where such non-compliance is not
reasonably likely to result in a Material Adverse Effect; comply with the terms
of each indenture, agreement or other instrument to which it is a party and
enforce all of its rights thereunder, except to the extent that noncompliance or
failure to enforce is not reasonably likely to cause a Material Adverse Effect;
and at all times maintain and preserve all property material to the conduct of
its business and keep such property in good repair, working order and condition
and from time to time make, or cause to be made, all needful and proper repairs,
renewals, additions, improvements and replacements thereto necessary in order
that the business carried on in connection therewith may be properly conducted
at all times, except where the failure to take any such actions is not
reasonably likely to result in a Material Adverse Effect.
SECTION 6.4 Financial Statements, Reports, Etc The Borrower will furnish
-----------------------------------------------
to the Administrative Agent, which will promptly forward the same to each
Lender:
(a) as soon as available and in any event within 120 days after the end of
each fiscal year of the Borrower, an audited consolidated balance sheet of the
Borrower and its Subsidiaries as of the end of such fiscal year and the related
audited consolidated statements of income, retained earnings and cash flows for
such fiscal year, setting forth in each case in comparative form the figures for
the previous fiscal year, to the extent available, all reported on by an
independent public accountant of nationally recognized standing;
(b) as soon as available and in any event within 45 days after the end of
each of the first three quarters of each fiscal year of the Borrower a
consolidated balance sheet of the Borrower and its Subsidiaries as of the end of
such quarter and the related consolidated statements of income for such quarter
and for the portion of the Borrower's fiscal year ended at the end of such
quarter, and the related consolidated statement of cash flows for such quarter
and for the portion of the Borrower's fiscal year ended at the end of such
quarter, in each case setting forth comparative figures for the previous dates
and periods, to the extent available, all certified (subject to normal year-end
adjustments) as to fairness of presentation, GAAP and consistency by a Financial
Officer of the Borrower;
(c) simultaneously with any delivery of each set of financial statements
referred to in paragraphs (a) and (b) above, (i) an unconsolidated balance sheet
of the Borrower and the related unconsolidated statements of income, retained
earnings and cash flows as of the same date and for the same periods applicable
to the statements delivered pursuant to paragraph (a) or (b) above, as
applicable, all certified (subject to normal year-end adjustments in the case of
quarterly statements) as to fairness of presentation by a Financial Officer of
the Borrower and (ii) a certificate of a Financial Officer of the Borrower (A)
setting forth in reasonable detail the calculations required to establish
whether the Borrower was in compliance with the requirements of Section 6.15 on
the date of such financial statements, and schedules setting forth all
43
Indebtedness described in Section 6.12(o) that was incurred during the
applicable period and (B) stating whether any Default or Event of Default exists
on the date of such certificate and, if any Default or Event of Default then
exists, setting forth the details thereof and the action which the Borrower is
taking or proposes to take with respect thereto;
(d) simultaneously with the delivery of each set of financial statements
referred to in paragraph (a) above, a statement of the firm of independent
public accountants which reported on such statements confirming the calculations
set forth in the Financial Officer's certificate delivered simultaneously
therewith pursuant to subsection (c) above;
(e) promptly upon a Responsible Officer of the Borrower obtaining Actual
Knowledge of the occurrence of any Default or Event of Default, a certificate of
a Financial Officer of the Borrower setting forth the details thereof and the
action which the Borrower is taking or proposes to take with respect thereto;
(f) on or prior to the date of incurrence of any Indebtedness pursuant to
Section 6.12(c) or (l) or the date of any Distribution pursuant to Section 6.14,
(i) a certificate of a Financial Officer of the Borrower setting forth in
reasonable detail the calculations demonstrating compliance by the Borrower with
the applicable financial tests, together with the pro forma calculations
referred to in the applicable Section, and copies of all financial statements
and other supporting documents and reports, if any, upon which the Borrower
relied in making such calculations, and (ii) with respect to Section 6.12(c) and
(l) only, written evidence of the confirmation of the rating agency ratings, to
the extent such confirmation is required under Section 6.12 (c) or (l), as the
case may be;
(g) (i) on or prior to the date hereof, copies of the PG&E Gen Credit
Agreements, ET Credit Agreements, GTN Credit Agreements, USGenNE Credit
Agreements, NEG Guarantees and NEG Indenture in each case accompanied by a
certificate of a Responsible Officer of the Borrower stating that such copies
are true and complete, and (ii) promptly upon any refinancing of the loans under
any such facility, copies of the refinancing documents, accompanied by a
certificate of a Responsible Officer of the Borrower stating that such copies
are true and complete;
(h) promptly upon a Responsible Officer of the Borrower obtaining Actual
Knowledge of any change in the credit rating of the Borrower by S&P or ▇▇▇▇▇'▇,
a notice thereof.
SECTION 6.5 Insurance. The Borrower will, and will cause each of its
----------------------
Subsidiaries (other than Unrestricted Subsidiaries) to, maintain such insurance
or self insurance, to such extent and against such risks, including fire and
other risks insured against by extended coverage, as is customary with companies
similarly situated and in the same or similar businesses except, in the case of
any such Subsidiaries, where such failure to so maintain is not reasonably
likely to result in a Material Adverse Effect.
SECTION 6.6 Taxes, Etc. The Borrower will, and will cause each of its
-----------------------
Subsidiaries (other than Unrestricted Subsidiaries) to, pay and discharge
promptly when due all material taxes, assessments and governmental charges
imposed upon it or upon its income or
44
profits or in respect of its property, in each case before the same shall become
delinquent or in default and before penalties accrue thereon, unless and to the
extent that the same are being contested in good faith by appropriate
proceedings and adequate reserves with respect thereto shall, to the extent
required by GAAP, have been set aside except, in the case of any such
Subsidiaries, where such failure to so pay or discharge is not reasonably likely
to result in a Material Adverse Effect.
SECTION 6.7 Maintaining Records; Access to Properties and Inspections. The
--------------------------------------------------------------------
Borrower will, and will cause each of its Restricted Subsidiaries to, maintain
financial records in accordance with GAAP and, upon reasonable notice and at
reasonable times, permit authorized representatives designated by the
Administrative Agent to visit and inspect its properties, books and records and
to discuss its affairs, finances and condition with its officers.
SECTION 6.8 Risk Management Procedures. The Borrower will, and will cause
-------------------------------------
each of its Restricted Subsidiaries to, maintain in effect prudent risk
management procedures with respect to Trading Arrangements and Swaps.
SECTION 6.9 Merger. The Borrower will not consolidate or merge with or
-------------------
into any Person, or sell, lease or otherwise transfer, in a single transaction
or in a series of transactions, all or substantially all of its assets to any
Person or Persons, unless (i) the surviving Person or transferee is formed under
the laws of a State of the United States of America and assumes or is
responsible by operation of law for all the Obligations and (ii) no Default,
Event of Default or Downgrade Event shall have occurred or be continuing at the
time of or after giving effect to such consolidation or merger or transfer.
SECTION 6.10 Investments. The Borrower will not make any Investment, or
-------------------------
permit any of its Restricted Subsidiaries to make any Investment, except:
(a) Investments in any Restricted Subsidiary, Investment Vehicle or Asset
Company (or any Person that will become a Restricted Subsidiary, Investment
Vehicle or Asset Company, as the case may be, upon the making of such
Investment); or
(b) Investments (not otherwise permitted under this Section 6.10) existing
on the date of execution of this Agreement which are identified on a Schedule
6.10; or
(c) Investments permitted to be incurred as Indebtedness under Section
6.12; or
(d) (i) Investments made by any Restricted Subsidiary in the Borrower or
any Restricted Subsidiary in connection with the Borrower's cash management
program or (ii) Investments in Cash Equivalents; or
(e) Investments constituting "Equity Funding Arrangements" permitted
hereunder; or
(f) Investments otherwise made by the Borrower and its Restricted
Subsidiaries in the ordinary course of business as conducted by the Borrower or
its Restricted Subsidiaries or by other Persons in the energy trading, energy
services, power generation, electric transmission or gas transmission and
storage businesses (including technologies related to such businesses); or
45
(g) Investments in connection with obligations in support of Trading
Arrangements; or
(h) Investments in any Unrestricted Subsidiary with amounts which would
otherwise be available for distribution in accordance with Section 6.14.
SECTION 6.11 Liens. The Borrower will not create or assume or permit to
--------------------
exist any Lien, or permit any Restricted Subsidiary, Investment Vehicle or Asset
Company to, create or assume or permit to exist any Lien, in respect of any of
its property or assets of any kind (real or personal, tangible or intangible),
except:
(a) Liens granted pursuant to Lease Obligations described in clause (i) of
the definition of "Lease Obligations" and permitted by Section 6.12; or
(b) Liens on cash collateral securing Equity Funding Arrangements, Credit
Support Arrangements, Investments or Indebtedness permitted hereunder; or
(c) Prior to the Syndication Completion Date, Liens in favor of the agent
under the $1.1 Billion PG&E Gen Credit Agreement on funds in the "Cash
Collateral Account" and on the "Cash Collateral Account" in each case as defined
therein to secure the reimbursement obligations of PG&E Gen in respect of
letters of credit as provided for in the $1.1 Billion PG&E Gen Credit Agreement;
or
(d) Liens existing on the assets of any Person at the time such Person
becomes a Subsidiary of the Borrower; or
(e) Liens on the equity or ownership interests of any Asset Company or any
Investment Vehicle which owns such Asset Company and Liens on any Equity Funding
Arrangements securing the applicable Project Financing Facility; or
(f) Liens on any of the assets of any Asset Company or Investment Vehicle
securing or in connection with the applicable Project Financing Facility; or
(g) Liens on any asset of the Borrower or any Restricted Subsidiary
incurred or assumed for the purpose of financing all or any part of the cost of
acquiring, constructing or improving such asset, provided that such Lien
attaches contemporaneously with, or within 12 months of, the purchase,
construction or improvement of such asset; or
(h) Other Liens (not otherwise permitted under this Section 6.11) existing
as of the date of this Credit Agreement and identified on Schedule 6.11; or
(i) Permitted Encumbrances; or
(j) without limiting the ability to incur Liens under the other
subsections of this Section 6.11, extensions or renewals of any Lien otherwise
permitted to be incurred under this Section 6.11 securing Indebtedness in an
amount not exceeding the principal amount of, and accrued interest on, the
Indebtedness secured by such Lien as so extended or renewed at the time
46
of such extension or renewal; provided that such Lien shall apply only to the
same property theretofore subject to the same and fixed improvements constructed
thereon.
SECTION 6.12 Indebtedness. The Borrower will not incur, create, assume or
---------------------------
permit to exist Indebtedness, or permit any Restricted Subsidiary, Investment
Vehicle or Asset Company to, incur, create, assume or permit to exist
Indebtedness, except:
(a) Indebtedness under (i) this Agreement, the USGenNE Credit Agreement,
the GTN Credit Agreements, the ET Credit Agreements (the "Refinanceable
Facilities"), (ii) the NEG Indenture and the NEG Guarantees, (iii) prior to the
Syndication Completion Date, the $1.1 Billion PG&E Gen Credit Agreement and (iv)
the credit facility referred to in clause (ii) of the definition of PG&E Gen
Credit Agreements and other credit facilities entered into by the Borrower or
any Restricted Subsidiary prior to the date of this Agreement and identified on
Schedule 6.12(a); provided, that this subsection (a) shall not be deemed to
permit an amendment to the facilities referred to in this subsection (a) which
has the effect of increasing the available commitments thereunder or, in the
case of the $1.1 Billion PG&E Gen Credit Agreement, extending the maturity of
the loans thereunder; or
(b) Lease Obligations (1) under leases for any office buildings in which
the Borrower or any of its Subsidiaries has or will have offices; (2) under
leases for any equipment not to exceed $10,000,000 in the aggregate outstanding
at any time; or (3) described in clause (i) of the definition thereof of the
Borrower and its Restricted Subsidiaries if, immediately after the incurrence of
any such Lease Obligation, the outstanding aggregate principal amount of all
such Lease Obligations (other than those Lease Obligations incurred under
subsections (c), (j), (l) and (q) below) would not exceed 2% of Consolidated
Tangible Net Assets; or
(c) Indebtedness of (i) any Asset Company under any Project Financing
Facility or (ii) any Investment Vehicle under any Project Financing Facility;
provided, that if any Asset Company owned (directly or indirectly) by such
Investment Vehicle has incurred any Indebtedness under a Project Financing
Facility, then such Investment Vehicle may only incur Indebtedness under a
Project Financing Facility if (I)(x) after giving effect to such Indebtedness,
the Ratio of Cash Flow to Fixed Charges of the Borrower would not be less than
2.0:1.0, calculated on a pro forma basis to include such Indebtedness and
related cash flows, (y) the Borrower's senior unsecured long-term debt is, at
the time of such incurrence, rated at least BBB by S&P and Baa2 by ▇▇▇▇▇'▇ (or
if ratings of such debt have not been issued by such rating agencies, such debt
is impliedly rated by an issuer rating or indicative rating of at least BBB by
S&P and Baa2 by ▇▇▇▇▇'▇), and (z) the Borrower obtains a reaffirmation of such
ratings from S&P and ▇▇▇▇▇'▇ (taking into account the Indebtedness to be
incurred by such Investment Vehicle under this Section 6.12(c)) or (II) such
Investment Vehicle owns only one Asset Company and such Indebtedness is incurred
in connection with a Project Financing Facility and the proceeds thereof are
promptly invested in such Asset Company; or
(d) Trading Arrangements and Credit Support Arrangements, to the extent
such arrangements constitute Indebtedness; or
47
(e) Indebtedness with respect to any securitization, receivables financing
or similar transaction entered into by ET Holdings, GTN, USGenNE or any of their
respective Subsidiaries; or
(f) Indebtedness not otherwise permitted under this Section 6.12, existing
on the date of this Agreement and set forth on Schedule 6.12(f); or
(g) Indebtedness under any Swap; or
(h) Permitted Subordinated Indebtedness; or
(i) Indebtedness between any of the Borrower, any Restricted Subsidiary,
Investment Vehicle, any Asset Company or any Indebtedness under any short-term
overdraft lines of credit or similar arrangements entered into in the ordinary
course of business, in each case associated with the Borrower's cash management
program; or
(j) Indebtedness attributable to any Permitted Sale-Leaseback
Transactions; or
(k) Any Guaranty constituting Indebtedness of the Borrower or any
Restricted Subsidiary, Investment Vehicle or Asset Company under clause (ix) of
the definition of "Indebtedness" to the extent that the obligations covered by
such Guaranty are not reasonably quantifiable under GAAP; or
(l) other Indebtedness of the Borrower or any Restricted Subsidiary (other
than PG&E Gen) incurred after the date of this Agreement, provided that (i)
after giving effect to any such Indebtedness, the Ratio of Cash Flow to Fixed
Charges of the Borrower would not be less than 2.0:1.0 (calculated on a pro
forma basis as of the end of the most recent fiscal quarter with respect to
which financial statements of the Borrower are available and assuming for such
purpose that such Indebtedness was incurred one year prior to the end of such
fiscal quarter and taking into account any related cash flows) and (ii) if such
Indebtedness would constitute Indebtedness of a Restricted Subsidiary, no Asset
Company, Investment Vehicle or Restricted Subsidiary owned directly or
indirectly by such Restricted Subsidiary has Indebtedness outstanding which
would otherwise be permitted under Section 6.12(a), (b)(3), (c), (h), (j), (l),
(o) or (p); provided, further, that clause (ii) of this Section 6.12(l) will not
be applicable if the Borrower obtains a reaffirmation of the rating of its
senior unsecured long-term debt of at least BBB by S&P and Baa2 by ▇▇▇▇▇'▇ (or
if ratings of such debt have not been issued by such rating agencies, such debt
is impliedly rated by an issuer rating or indicative rating of at least BBB by
S&P and Baa2 by ▇▇▇▇▇'▇) after taking into account the Indebtedness to be
incurred by such Restricted Subsidiary and related cash flows; or
(m) Indebtedness of the Borrower or any Restricted Subsidiary in respect
of letters of credit or surety, performance or bid bonds used in the ordinary
course of business not in excess of $25,000,000 in the aggregate outstanding at
any time; or
(n) Indebtedness constituting intercompany loans (1) between the Borrower
and its Restricted Subsidiaries or between such Restricted Subsidiaries or (2)
made by the Borrower, any Restricted Subsidiary, any Investment Vehicle or any
Asset Company to any Investment
48
Vehicle or any Asset Company or (3) made by any Investment Vehicle to the
Borrower, any Restricted Subsidiary, or any other Investment Vehicle; or
(o) Equity Funding Arrangements; or
(p) without limiting the ability to incur Indebtedness under the other
subsections of this Section 6.12, any refinancing of any Indebtedness permitted
under Section 6.12(f) and under the Refinanceable Facilities, provided that
either (i) (x) the average life of any refinanced Indebtedness shall not be less
than the average life of the Indebtedness so refinanced (plus fees and expenses,
including any premium or defeasance costs, of such refinancing), taking into
account the prepayment or repayment of a portion of any such Indebtedness, and
(y) the principal amount of the refinanced Indebtedness shall not exceed the
principal amount plus accrued interest thereon of the Indebtedness so
refinanced, or (ii) the Borrower shall demonstrate pro forma compliance with the
financial ratio described in Section 6.12(l) above; or
(q) Indebtedness of any Subsidiary of the Borrower existing at the time
such Person becomes a Subsidiary of the Borrower (except for any such
Indebtedness of such Subsidiary incurred in contemplation of or to finance the
acquisition of such Subsidiary).
SECTION 6.13 Transactions with Affiliates. The Borrower will not enter
-------------------------------------------
into, or permit any Restricted Subsidiary, Investment Vehicle or Asset Company
to enter into, any transaction with any Affiliate of the Borrower (other than
the Borrower, any Subsidiary of the Borrower, any Investment Vehicle and any
Asset Company), except:
(a) transactions with such Affiliates upon fair and reasonable terms which
are no less favorable to the Borrower than would be obtained in a comparable
arm's length transaction with a Person not an Affiliate of the Borrower;
(b) management, operating, sharing or other similar services arrangements
or promissory notes between and among the Borrower, its Subsidiaries and its
other Affiliates either existing on the date hereof and described on Schedule
6.13 or entered into after the date hereof on commercially reasonable terms;
(c) tax sharing arrangements between the Borrower and PG&E Corp.
approximating the tax position that the Borrower would be in if it were not part
of PG&E Corp.'s consolidated group, as determined by the management of the
Borrower in its reasonable business judgment or such other arrangements as may
be approved by the Lenders prior to the date hereof; or
(d) paying or declaring any Distribution to the extent permitted under
Section 6.14.
The provisions of this Section 6.13 shall not apply to (i) transactions
between the Borrower or any of its Subsidiaries, on the one hand, and any
employee of the Borrower or any of its Subsidiaries, on the other hand, that are
approved by the Board of Directors of the Borrower or any committee of the Board
of Directors and (ii) the payment of reasonable and customary regular fees to
directors of the Borrower or any Subsidiary of the Borrower.
SECTION 6.14 Distributions. The Borrower will not declare or make any
---------------------------
Distribution if (a) a Default, Event of Default or Downgrade Event has occurred
and is
49
continuing or shall occur after giving effect to such Distribution, (b) the
Ratio of Cash Flow to Fixed Charges of the Borrower determined as of the end of
the immediately preceding fiscal quarter was not at least 2.0:1.0 or (c) the
Borrower fails to satisfy the requirements of the test set forth in Section
6.15(b), or the Borrower fails to have a Consolidated Net Worth of at least
$2.15 billion, in each case calculated on a pro forma basis as of the end of the
most recent fiscal period with respect to which financial statements of the
Borrower are available (assuming such Distribution and all material events with
respect to the Borrower and its Subsidiaries which occurred after the end of
such fiscal period had occurred on the last day of such fiscal period); provided
that the Borrower may declare and make Distributions of assets of or equity
ownership interests in any Unrestricted Subsidiary at any time without complying
with the foregoing.
SECTION 6.15 Financial Covenants.
---------------------------------
(a) The Borrower shall not, as of the end of each fiscal quarter, permit
the Ratio of Cash Flow to Fixed Charges to be less than 1.5:1.0.
(b) The Borrower shall not, as of the end of each fiscal quarter, permit
the Ratio of Debt to Capitalization to be greater than 0.6:1.0.
(c) The Borrower shall not, at the end of each fiscal quarter, permit (i)
Consolidated Net Worth to be less than the Minimum Consolidated Net Worth and
(ii) Non-Trading Consolidated Net Worth to be less than the Minimum Non-Trading
Consolidated Net Worth.
SECTION 6.16 Separateness from PG&E Corp. The Borrower shall (i) maintain
-----------------------------------------
adequate capital in light of the business in which it is engaged; (ii) maintain
books and corporate records separate from PG&E Corp. and PG&E; (iii) not
commingle assets with PG&E Corp. or PG&E; and (iv) conduct business in its own
name and hold itself out as separate from PG&E Corp. and PG&E. The Borrower
shall promptly notify the Administrative Agent upon a Responsible Officer of the
Borrower obtaining Actual Knowledge that a creditor of PG&E Corp. or of PG&E has
made a claim or filing in writing seeking the substantive consolidation of NEG
LLC in any bankruptcy proceeding of PG&E Corp. or of PG&E.
SECTION 6.17 PG&E Gen Credit Agreement.
----------------------------------------
(a) Prior to the PG&E Gen Credit Agreement Refinancing Date, the Borrower
will not permit PG&E Gen to default in any material respect in the due
observance or performance of its covenants under Sections 5.08, 5.11, 5.12, 5.13
and 5.14 of the $1.1 Billion PG&E Gen Credit Agreement.
(b) No later than the first Business Day after the Closing Date, the
Borrower shall provide the administrative agent under the $1.1 Billion PG&E Gen
Credit Agreement the written irrevocable notice required thereunder of its
election to permanently reduce the aggregate commitments thereunder by an amount
equal to the Total Commitments as of the Closing Date minus $500 million.
SECTION 6.18 Asset Sales. Except for the sale of all or substantially all
--------------------------
of the assets of the Borrower pursuant to Section 6.9, and other than assets
required to be sold to conform with governmental regulations, the Borrower shall
not, and shall cause its Subsidiaries
50
not to, sell or otherwise dispose of any assets (other than short-term, readily
marketable investments purchased for cash management purposes with funds not
representing the proceeds of other asset sales) if, on a pro forma basis, the
aggregate net book value of all such sales during the most recent 12-month
period would exceed 10% of Consolidated Tangible Net Assets computed as of the
end of the most recent quarter preceding such sale; provided, however, that any
such sales shall be disregarded for purposes of this 10% limitation if the
proceeds are invested in assets in the Borrower's business in the energy
trading, energy services, power generation, electric transmission or gas
transmission and storage businesses or in similar or related lines of business,
and, provided further, that the Borrower may sell or otherwise dispose of assets
in excess of such 10% limitation if the proceeds from such sales or
dispositions, which are not reinvested as provided above, are retained by the
Borrower as cash or Cash Equivalents or are used by the Borrower to prepay the
Loans hereunder or to purchase and retire notes or Indebtedness ranking pari
passu in right of payment to the Loans or Indebtedness of the Borrower's
Subsidiaries. (For the avoidance of doubt, any sale of assets otherwise
permitted by this Section 6.18 shall not be permitted if such sale would result
in a violation of any other provision of this Agreement.)
ARTICLE VII
EVENTS OF DEFAULT
SECTION 7.1 Events of Default. If any of the following events shall
--------------------------------
occur and be continuing:
(a) The Borrower shall fail to pay any principal of any Loan when due in
accordance with the terms hereof; or the Borrower shall fail to pay any interest
on any Loan, or any other amount payable hereunder or under any other Loan
Document, within five days after any such interest or other amount becomes due
in accordance with the terms hereof or thereof; or
(b) Any representation or warranty made or deemed made by any Borrower
herein or in any other Loan Document or that is contained in any certificate,
document or financial or other statement furnished by it at any time under or in
connection with this Agreement or any such other Loan Document shall prove to
have been inaccurate in any material respect on or as of the date made or deemed
made or furnished; or
(c) the Borrower shall default in any material respect in the due
observance or performance of any agreement contained in Sections 6.1, 6.2, 6.9,
6.11, 6.12, 6.13, 6.14, 6.15 or 6.16; or
(d) Borrower shall default in the observance or performance of any other
agreement contained in this Agreement or any other Loan Document (other than as
provided in paragraphs (a) through (c) of this Section), and such default shall
continue unremedied for a period of 30 days after notice thereof from the
Administrative Agent, which may be at the request of any Lender, to the
Borrower; or
(e) the Borrower or any Restricted Subsidiary shall default in respect of
any Indebtedness or default in its obligations to make payments when due under
any Equity Funding
51
Arrangements which at the time have an aggregate principal amount outstanding
or, in the case of Equity Funding Arrangements, due and unpaid, in excess of
$50,000,000, and such Indebtedness is then due and payable in full at maturity
or as a result thereof such Indebtedness shall have been accelerated or
otherwise become due or subject to prepayment in full prior to its stated
maturity; or
(f) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed in a court of competent jurisdiction seeking (i) relief
in respect of the Borrower or any Restricted Subsidiary or of a substantial part
of the property or assets of the Borrower or any Restricted Subsidiary under
Title 11 of the United States Code, as now constituted or hereafter amended, or
any other Federal or state bankruptcy, insolvency, receivership or similar law,
(ii) the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for the Borrower or any Restricted Subsidiary or
(other than in connection with any proceeding relating solely to one or more
Unrestricted Subsidiaries, Investment Vehicles or Project Companies of the
Borrower) for a substantial part of the property or assets of the Borrower or
any Restricted Subsidiary or (iii) the winding up or liquidation of the Borrower
or any Restricted Subsidiary; and such proceeding or petition shall continue
undismissed for 60 days or an order or decree approving or ordering any of the
foregoing shall be entered; or
(g) the Borrower or any Restricted Subsidiary shall (i) voluntarily
commence any proceeding or file any petition seeking relief under Title 11 of
the United States Code, as now constituted or hereafter amended, or any other
Federal or state bankruptcy, insolvency, receivership or similar law, (ii)
consent to the institution of, or fail to contest in a timely and appropriate
manner, any proceeding or the filing of any petition described in Section
5.01(f) above, (iii) apply for or consent to the appointment of a receiver,
trustee, custodian, sequestrator, conservator or similar official for the
Borrower or any Restricted Subsidiary (other than in connection with any
proceeding relating solely to one or more Unrestricted Subsidiaries, Investment
Vehicles or Project Companies of the Borrower) for a substantial part of the
property or assets of the Borrower or any Restricted Subsidiary, (iv) file an
answer admitting the material allegations of a petition filed against it in any
such proceeding, (v) make a general assignment for the benefit of creditors, or
(vi) take any corporate action for the purpose of effecting any of the
foregoing, become unable, admit in writing its inability, or fail generally, to
pay its debts as they become due; or
(h) one or more final judgments for the payment of money in an aggregate
amount in excess of $50,000,000 (exclusive of amounts covered by insurance)
shall be rendered against the Borrower or any Restricted Subsidiary and such
judgment or order shall remain undischarged, unbonded or unstayed for a period
of 60 days; or
(i) an ERISA Event shall have occurred that, either alone or in
combination with other ERISA Events that shall have occurred, is reasonably
likely to result in a Material Adverse Effect; or
(j) a court of competent jurisdiction shall issue an order, decree or
judgment requiring the substantive consolidation of the Borrower with PG&E Corp.
or PG&E or a court of competent jurisdiction with administrative oversight over
the assets and liabilities of PG&E
52
Corp. or PG&E shall issue an order, decree or judgment otherwise subjecting the
any material assets and liabilities of the Borrower to administration by such
court;
then, and in any such event, (A) if such event is an Event of Default specified
in paragraphs (f) or (g) above with respect to the Borrower, automatically the
Commitments shall immediately terminate and the Loans hereunder (with accrued
interest thereon) and all other amounts owing under this Agreement and the other
Loan Documents (including all L/C Obligations, whether or not the beneficiaries
of the then outstanding Letters of Credit shall have presented the documents
required for drawings thereunder) shall immediately become due and payable, and
(B) if such event is any other Event of Default, either or both of the following
actions may be taken: (i) with the consent of the Required Lenders, the
Administrative Agent may, or upon the request of the Required Lenders, the
Administrative Agent shall, by notice to the Borrower declare the Commitments to
be terminated forthwith, whereupon the Commitments shall immediately terminate;
and (ii) with the consent of the Required Lenders, the Administrative Agent may,
or upon the request of the Required Lenders, the Administrative Agent shall, by
notice to the Borrower, declare the Loans hereunder (with accrued interest
thereon) and all other amounts owing under this Agreement and the other Loan
Documents (including all L/C Obligations, whether or not the beneficiaries of
the then outstanding Letters of Credit shall have presented the documents
required for drawings thereunder) to be due and payable forthwith, whereupon the
same shall immediately become due and payable. In the case of all Letters of
Credit with respect to which presentment for honor shall not have occurred at
the time of an acceleration pursuant to this paragraph, the Borrower shall at
such time deposit in a cash collateral account opened by the Administrative
Agent (the "Cash Collateral Account") an amount equal to the then aggregate
undrawn and unexpired amount of such Letters of Credit. The Borrower shall
grant a security interest on the Cash Collateral Account to the Administrative
Agent, for the benefit of the Lenders, on such terms as are reasonably
satisfactory to the Administrative Agent. Amounts held in the Cash Collateral
Account shall be applied by the Administrative Agent to the payment of drafts
drawn under such Letters of Credit, and the unused portion thereof after all
such Letters of Credit shall have expired or been fully drawn upon, if any,
shall be applied to repay other obligations of the Borrower hereunder and under
the other Loan Documents. After all such Letters of Credit shall have expired
or been fully drawn upon, all Reimbursement Obligations shall have been
satisfied and all other obligations of the Borrower hereunder and under the
other Loan Documents shall have been paid in full, the balance, if any, in the
Cash Collateral Account shall be returned to the Borrower (or such other Person
as may be lawfully entitled thereto). Except as expressly provided above in
this Section, presentment, demand, protest and all other notices of any kind are
hereby expressly waived by the Borrower.
ARTICLE VIII
SYNDICATION COMPLETION
SECTION 8.1 Syndication Completion. On the effective date of the Lender
----------------------------------
Syndication Agreement which shall occur no later than September 30, 2001 or such
later date as may be mutually agreed upon between the Borrower and the Arrangers
(the "Syndication Completion Date"):
53
(a) the Total Commitments shall be increased in accordance with the Lender
Syndication Agreement;
(b) the Termination Date shall be extended to the earlier of (i) August
31, 2003, and (ii) the second anniversary of the Syndication Completion Date;
and
(c) the assignment of Loans contemplated by the Lender Syndication
Agreement shall occur in accordance with the terms thereof.
SECTION 8.2 Automatic Commitment Reduction; Mandatory Prepayment. In the
-----------------------------------------------------------------
event the Total Commitments in effect on the Automatic Commitment Reduction Date
exceed $500 million, then (i) the Total Commitments shall be automatically
reduced to $500 million on such date and the Commitment of each Lender shall
equal the product of (x) $500 million and (y) such Lender's Aggregate Exposure
Percentage in effect immediately prior to the reduction of the Total Commitments
and (ii) the Borrower shall, without regard to the second sentence of Section
3.5, prepay Loans on such date so that, immediately after giving effect to such
prepayment, the Total Extensions of Credit do not exceed $500 million.
SECTION 8.3 Unsuccessful Syndication. If the Syndication Completion Date
-------------------------------------
has not occurred on the date that is five Business Days prior to the Termination
Date, in the case of all Letters of Credit with respect to which presentment for
honor shall not have occurred on such date, the Borrower shall at such time
deposit in the Cash Collateral Account an amount equal to the then aggregate
undrawn and unexpired amount of such Letters of Credit. Amounts held in the Cash
Collateral Account shall be applied by the Administrative Agent to the payment
of drafts drawn under such Letters of Credit, and the unused portion thereof
after all such Letters of Credit shall have expired or been fully drawn upon, if
any, shall be applied to repay other obligations of the Borrower hereunder and
under the other Loan Documents. The Borrower shall grant a security interest on
the Cash Collateral Account to the Administrative Agent, for the benefit of the
Lenders, on such terms as are reasonably satisfactory to the Administrative
Agent. After all such Letters of Credit shall have expired or been fully drawn
upon, all Reimbursement Obligations shall have been satisfied and all other
obligations of the Borrower hereunder and under the other Loan Documents shall
have been paid in full, the balance, if any, in the Cash Collateral Account
shall be returned to the Borrower (or such other Person as may be lawfully
entitled thereto). Except as expressly provided above in this Section,
presentment, demand, protest and all other notices of any kind are hereby
expressly waived by the Borrower.
ARTICLE IX
THE AGENTS
SECTION 9.1 Appointment. Each Lender (the term "Lender" as used in this
------------------------
Section 9 to include the Issuing Bank, except as specified below) hereby
irrevocably designates and appoints the Administrative Agent as the
Administrative Agent of such Lender under this Agreement and the other Loan
Documents, and each Lender irrevocably authorizes the Administrative Agent, in
such capacity, to take such action on its behalf under the provisions of this
Agreement and the other Loan Documents and to exercise such powers and perform
such duties as are expressly delegated to the Administrative Agent by the terms
of this Agreement and
54
the other Loan Documents, together with such other powers as are reasonably
incidental thereto. Notwithstanding any provision to the contrary elsewhere in
this Agreement, the Administrative Agent shall not have any duties or
responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the
Administrative Agent.
SECTION 9.2 Delegation of Duties. The Administrative Agent may execute
---------------------------------
any of its duties under this Agreement and the other Loan Documents by or
through agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Administrative Agent shall
not be responsible for the negligence or misconduct of any agents or attorneys
in fact selected by it with reasonable care.
SECTION 9.3 Exculpatory Provisions. None of the Agents or any of their
-----------------------------------
respective officers, directors, employees, agents, attorneys-in-fact or
affiliates shall be (i) liable for any action lawfully taken or omitted to be
taken by it or such Person under or in connection with this Agreement or any
other Loan Document (except to the extent that any of the foregoing are found by
a final and non-appealable decision of a court of competent jurisdiction to have
resulted from its or such Person's own gross negligence or willful misconduct)
or (ii) responsible in any manner to any of the Lenders for any recitals,
statements, representations or warranties made by the Borrower or any officer
thereof contained in this Agreement or any other Loan Document or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Agents under or in connection with, this Agreement or any
other Loan Document or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan Document or
for any failure of the Borrower to perform its obligations hereunder or
thereunder. The Agents shall not be under any obligation to any Lender to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of the Borrower.
SECTION 9.4 Reliance by Administrative Agent. The Administrative Agent
---------------------------------------------
shall be entitled to rely, and shall be fully protected in relying, upon any
instrument, writing, resolution, notice, consent, certificate, affidavit,
letter, telecopy, telex or teletype message, statement, order or other document
or conversation believed by it to be genuine and correct and to have been
signed, sent or made by the proper Person or Persons and upon advice and
statements of legal counsel (including, without limitation, counsel to the
Borrower), independent accountants and other experts selected by the
Administrative Agent. The Administrative Agent may deem and treat the payee of
any Note as the owner thereof for all purposes unless such Note shall have been
transferred in accordance with Section 10.6 and all actions required by such
Section in connection with such transfer shall have been taken. The
Administrative Agent shall be fully justified in failing or refusing to take any
action under this Agreement or any other Loan Document unless it shall first
receive such advice or concurrence of the Required Lenders (or, if so specified
by this Agreement, all Lenders or any other instructing group of Lenders
specified by this Agreement) as it deems appropriate or it shall first be
indemnified to its satisfaction by the Lenders against any and all liability and
expense that may be incurred by it by reason of taking or continuing to take any
such action. The Administrative Agent shall in all cases be fully protected in
acting, or in refraining from acting, under this Agreement and the other Loan
55
Documents in accordance with a request of the Required Lenders (or, if so
specified by this Agreement, all Lenders or any other instructing group of
Lenders specified by this Agreement), and such request and any action taken or
failure to act pursuant thereto shall be binding upon all the Lenders and all
future holders of the Loans.
SECTION 9.5 Notice of Default. The Administrative Agent shall not be
------------------------------
deemed to have knowledge or notice of the occurrence of any Default or Event of
Default hereunder unless the Administrative Agent shall have received notice
from a Lender, or the Borrower referring to this Agreement, describing such
Default or Event of Default and stating that such notice is a "notice of
default". In the event that the Administrative Agent shall receive such a
notice, the Administrative Agent shall give notice thereof to the Lenders. The
Administrative Agent shall take such action with respect to such Default or
Event of Default as shall be reasonably directed by the Required Lenders (or, if
so specified by this Agreement, all Lenders or any other instructing group of
Lenders specified by this Agreement); provided that unless and until the
Administrative Agent shall have received such directions, the Administrative
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it shall
deem advisable in the best interests of the Lenders.
SECTION 9.6 Non-Reliance on Administrative Agent and Other Lenders. Each
-------------------------------------------------------------------
Lender expressly acknowledges that none of the Agents or any of their respective
officers, directors, employees, agents, attorneys-in-fact or affiliates have
made any representations or warranties to it and that no act by any Agent
hereafter taken, including any review of the affairs of the Borrower or any
affiliate of the Borrower, shall be deemed to constitute any representation or
warranty by any Agent to any Lender. Each Lender represents to the Agents that
it has, independently and without reliance upon any Agent or any other Lender,
and based on such documents and information as it has deemed appropriate, made
its own appraisal of and investigation into the business, operations, property,
financial and other condition and creditworthiness of the Borrower and their
affiliates and made its own decision to make its Loans hereunder and enter into
this Agreement. Each Lender also represents that it will, independently and
without reliance upon any Agent or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit analysis, appraisals and decisions in taking or not taking action
under this Agreement and the other Loan Documents, and to make such
investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of the
Borrower and their affiliates. Except for notices, reports and other documents
expressly required to be furnished to the Lenders by the Administrative Agent
hereunder, the Administrative Agent shall not have any duty or responsibility to
provide any Lender with any credit or other information concerning the business,
operations, property, condition (financial or otherwise), prospects or
creditworthiness of the Borrower or any affiliate of the Borrower that may come
into the possession of the Administrative Agent or any of its officers,
directors, employees, agents, attorneys-in-fact or affiliates.
SECTION 9.7 Indemnification. The Lenders (other than the Issuing Bank)
----------------------------
agree to indemnify each Agent in its capacity as such (to the extent not
reimbursed by the Borrower and without limiting the obligation of the Borrower
to do so), ratably according to their respective Aggregate Exposure Percentages
in effect on the date on which indemnification is
56
sought under this Section (or, if indemnification is sought after the date upon
which the Commitments shall have terminated and the Loans shall have been paid
in full, ratably in accordance with such Aggregate Exposure Percentages
immediately prior to such date), for, and to save each Agent harmless from and
against, any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind
whatsoever that may at any time (including, without limitation, at any time
following the payment of the Loans) be imposed on, incurred by or asserted
against such Agent in any way relating to or arising out of, the Commitments,
this Agreement, any of the other Loan Documents or any documents contemplated by
or referred to herein or therein or the transactions contemplated hereby or
thereby or any action taken or omitted by such Agent under or in connection with
any of the foregoing; provided that no Lender shall be liable for the payment of
any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements that are found by a
final and non-appealable decision of a court of competent jurisdiction to have
resulted from such Agent's gross negligence or willful misconduct. The
agreements in this Section 9.7 shall survive the payment of the Loans and all
other amounts payable hereunder.
SECTION 9.8 Agent in Its Individual Capacity. Each Agent, in its
---------------------------------------------
individual capacity, and its affiliates may make loans to, accept deposits from
and generally engage in any kind of business with the Borrower as though such
Agent were not the Agent. With respect to its Loans made or renewed by it and
with respect to any Letter of Credit issued or participated in by it, each
Agent, in its individual capacity, shall have the same rights and powers under
this Agreement and the other Loan Documents as any Lender and may exercise the
same as though it were not an Agent, and the terms "Lender" and "Lenders" shall
include the Agent, in its individual capacity.
SECTION 9.9 Successor Administrative Agent. The Administrative Agent may
-------------------------------------------
resign as Administrative Agent upon (i) 10 Business Day's notice to the Lenders
and the Borrower and (ii) the appointment of a successor Administrative Agent in
accordance with this Section 9.9. If the Administrative Agent shall give notice
of its intent to resign as Administrative Agent under this Agreement and the
other Loan Documents, then the Required Lenders shall appoint from among the
Lenders a successor Administrative Agent for the Lenders, which successor
Administrative Agent shall (unless an Event of Default under Section 7.1(a) or
Section 7.1(f) or Section 7.1(g) with respect to the Borrower shall have
occurred and be continuing) be subject to approval by the Borrower (which
approval shall not be unreasonably withheld or delayed), whereupon such
successor Administrative Agent shall succeed to the rights, powers and duties of
the Administrative Agent, and the term "Administrative Agent" shall mean such
successor Administrative Agent effective upon such appointment and approval, and
the former Administrative Agent's rights, powers and duties as Administrative
Agent shall be terminated, without any other or further act or deed on the part
of such former Administrative Agent or any of the parties to this Agreement or
any holders of the Loans. If no successor agent has accepted appointment as
Administrative Agent by the date that is 30 days following a retiring
Administrative Agent's notice of resignation, the retiring Administrative
Agent's resignation shall nevertheless thereupon become effective, and the
Lenders shall assume and perform all of the duties of the Administrative Agent
hereunder until such time, if any, as the Required Lenders appoint a successor
agent as provided for above. After any retiring Administrative Agent's
resignation as Administrative Agent, the provisions of this Section 8 shall
inure to its benefit as
57
to any actions taken or omitted to be taken by it while it was Administrative
Agent under this Agreement and the other Loan Documents.
SECTION 9.10 Documentation and Syndication Agents. Neither the
--------------------------------------------------
Documentation Agents nor the Syndication Agents shall have any duties or
responsibilities hereunder in its capacity as such.
ARTICLE X
MISCELLANEOUS
SECTION 10.1 Amendments and Waivers. Neither this Agreement or any
------------------------------------
other Loan Document, nor any terms hereof or thereof may be amended,
supplemented or modified except in accordance with the provisions of this
Section 10.1. The Required Lenders and the Borrower may, or (with the written
consent of the Required Lenders) the Administrative Agent and the Borrower to
the relevant Loan Document may, from time to time, (a) enter into written
amendments, supplements or modifications hereto and to the other Loan Documents
(including amendments and restatements hereof or thereof) for the purpose of
adding any provisions to this Agreement or the other Loan Documents or changing
in any manner the rights of the Lenders or of the Borrower hereunder or
thereunder or (b) waive, on such terms and conditions as may be specified in the
instrument of waiver, any of the requirements of this Agreement or the other
Loan Documents or any Default or Event of Default and its consequences;
provided, however, that no such waiver and no such amendment, supplement or
modification shall:
(i) forgive the principal amount or extend the final scheduled date
of maturity of any Loan or extend the expiry date of any Letter of Credit
(beyond the dates provided in Section 2.1(a)), reduce the stated rate of
any interest or fee payable hereunder or extend the scheduled date of any
payment thereof, or increase the amount or extend the expiration date of
any Commitment of any Lender, in each case without the written consent of
each Lender or Issuing Bank, as the case may be, directly affected thereby;
(ii) amend, modify or waive any provision of this Section or reduce
any percentage specified in the definition of Required Lenders, consent to
the assignment or transfer by the Borrower of any of its rights and
obligations under this Agreement and the other Loan Documents;
(iii) eliminate or reduce the voting rights of any Lender under this
Section 10.1 without the written consent of such Lender;
(iv) amend, modify or waive any provision of Section 8 without the
written consent of any Administrative Agent directly affected thereby;
(v) amend, modify or waive any provision of Section 3.12 without
the written consent of each Lender directly affected thereby; or
(vi) amend, modify or waive any provision of Section 2 without the
written consent of the Issuing Bank.
58
Any such waiver and any such amendment, supplement or modification shall apply
equally to each of the Issuing Bank and the Lenders and shall be binding upon
the Borrower, the Issuing Bank, the Lenders and the Administrative Agent. In
the case of any waiver, the Borrower, the Issuing Bank, the Lenders and the
Administrative Agent shall be restored to their former position and rights
hereunder and under the other Loan Documents, and any Default or Event of
Default waived shall be deemed to be cured and not continuing; but no such
waiver shall extend to any subsequent or other Default or Event of Default, or
impair any right consequent thereon. Any such waiver, amendment, supplement or
modification shall be effected by a written instrument signed by the parties
required to sign pursuant to the foregoing provisions of this Section; provided,
that delivery of an executed signature page of any such instrument by facsimile
transmission shall be effective as delivery of a manually executed counterpart
thereof.
SECTION 10.2 Notices. All notices, requests and demands to or upon the
----------------------
respective parties hereto to be effective shall be in writing (including by
telecopy), and, unless otherwise expressly provided herein, shall be deemed to
have been duly given or made when delivered, or three Business Days after being
deposited in the mail, postage prepaid, or, in the case of telecopy notice, when
received, addressed (a) in the case of the Borrower, the Issuing Bank and the
Administrative Agent, as follows and (b) in the case of the Lenders, as set
forth in an administrative questionnaire delivered to the Administrative Agent
or on Schedule I to the Lender Addendum to which such Lender is a party or, in
the case of a Lender which becomes a party to this Agreement pursuant to an
Assignment and Acceptance, in such Assignment and Acceptance or (c) in the case
of any party, to such other address as such party may hereafter notify to the
other parties hereto:
The Borrower:
PG&E National Energy Group, Inc.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Senior Vice President and General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
The Administrative Agent:
The Chase Manhattan Bank
One Chase ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
The Issuing Bank:
The Chase Manhattan Bank
4 Chase MetroTech Center, ▇▇▇ ▇▇▇▇▇
▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Standby Letter of Credit Department
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
; provided that any notice, request or demand to or upon the Administrative
Agent, the Issuing Bank or any Lender shall not be effective until received.
All Applications for Issuance shall be delivered to the Issuing Bank as follows:
Deliver Application for Issuance to:
The Chase Manhattan Bank
4 Chase MetroTech Center, 8th Floor
Brooklyn, New York 11245-0001
Attention: Standby Letter of Credit Department
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
SECTION 10.3 No Waiver; Cumulative Remedies. No failure to exercise and
--------------------------------------------
no delay in exercising, on the part of the Administrative Agent, the Issuing
Bank or any Lender, any right, remedy, power or privilege hereunder or under the
other Loan Documents shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power or privilege. The rights, remedies, powers and privileges herein provided
are cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.
SECTION 10.4 Survival of Representations and Warranties. All
---------------------------------------------------------
representations and warranties made herein, in the other Loan Documents and in
any document, certificate or statement delivered pursuant hereto or in
connection herewith shall survive the execution and delivery of this Agreement
and the making of the Loans and other extensions of credit hereunder.
SECTION 10.5 Payment of Expenses. The Borrower agrees (a) to pay or
---------------------------------
reimburse the Issuing Bank and the Administrative Agent for all their reasonable
out-of-pocket costs and expenses incurred in connection with the syndication of
the facilities herein (other than fees payable to syndicate members) and the
development, preparation and execution of, and any amendment, supplement or
modification to, this Agreement and the other Loan Documents and any other
documents prepared in connection herewith or therewith, and the consummation and
administration of the transactions contemplated hereby and thereby, including,
without limitation, the reasonable fees and disbursements and other charges of
single counsel to both the Issuing Bank and the Administrative Agent, (b) to pay
or reimburse the Issuing Bank, each Lender and the Administrative Agent for all
their costs and expenses incurred in connection with the enforcement or
preservation of any rights under this Agreement, the other Loan Documents and
any other documents prepared in connection herewith or therewith, including,
without limitation, the fees and disbursements of counsel to the Lenders, the
Issuing Bank and the Administrative Agent, (c) to pay, indemnify, or reimburse
the Issuing Bank, each Lender and the Administrative Agent for, and hold the
Issuing Bank, each Lender and the Administrative Agent harmless from, any and
all recording and filing fees and any and all liabilities with respect to, or
60
resulting from any delay in paying, stamp, excise and other taxes, if any, which
may be payable or determined to be payable in connection with the execution and
delivery of, or consummation or administration of any of the transactions
contemplated by, or any amendment, supplement or modification of, or any waiver
or consent under or in respect of, this Agreement, the other Loan Documents and
any such other documents, and (d) to pay, indemnify or reimburse the Issuing
Bank, each Lender, the Administrative Agent, their respective affiliates, and
their respective officers, directors, trustees, employees, advisors,
Administrative Agents and controlling persons (each, an "Indemnitee") for, and
hold each Indemnitee harmless from and against any and all other liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever with respect to the
execution, delivery, enforcement, performance and administration of, and the
syndication of commitments under, this Agreement, the other Loan Documents and
any such other documents or any investigation, litigation or proceeding relating
to or arising out of any of the foregoing (whether or not any Indemnitee is a
party thereto), including, without limitation, any of the foregoing relating to
the use of proceeds of the Loans and the fees and disbursements and other
charges of legal counsel in connection with claims, actions or proceedings by
any Indemnitee against the Borrower hereunder (all the foregoing in this clause
(d), collectively, the "Indemnified Liabilities"), provided, that the Borrower
shall have no obligation hereunder to any Indemnitee with respect to Indemnified
Liabilities to the extent such Indemnified Liabilities are found by a final and
non-appealable decision of a court of competent jurisdiction to have resulted
from the gross negligence or willful misconduct of such Indemnitee. All amounts
due under this Section shall be payable not later than 30 days after written
demand therefor. Statements payable by the Borrower pursuant to this Section
shall be submitted to PG&E National Energy Group, Inc. Attention: Accounts
Payable (Telephone No. ▇▇▇-▇▇▇-▇▇▇▇) (Fax No. ▇▇▇-▇▇▇-▇▇▇▇), at the address of
the Borrower set forth in Section 10.2, or to such other Person or address as
may be hereafter designated by the Borrower in a notice to the Administrative
Agent. The agreements in this Section shall survive repayment of the Loans and
all other amounts payable hereunder.
SECTION 10.6 Successors and Assigns; Participations and Assignments.
---------------------------------------------------------------------
(a) This Agreement shall be binding upon and inure to the benefit of the
Borrower, the Issuing Bank, the Lenders, the Administrative Agent, all future
holders of the Loans and their respective successors and assigns, except that
the Borrower may not assign or transfer any of its rights or obligations under
this Agreement without the prior written consent of the Administrative Agent,
the Issuing Bank and each Lender.
(b) Any Lender other than any Conduit Lender may, without the consent of
the Borrower, in accordance with applicable law, at any time sell to one or more
banks, financial institutions or other entities (each, a "Participant")
participating interests in any Loan owing to such Lender, any Commitment of such
Lender or any other interest of such Lender hereunder and under the other Loan
Documents. In the event of any such sale by a Lender of a participating interest
to a Participant, such Lender's obligations under this Agreement to the other
parties to this Agreement shall remain unchanged, such Lender shall remain
solely responsible for the performance thereof, such Lender shall remain the
holder of any such Loan for all purposes under this Agreement and the other Loan
Documents, and the Borrower, the Issuing Bank and the Administrative Agent shall
continue to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement and the
61
other Loan Documents. In no event shall any Participant under any such
participation have any right to approve any amendment or waiver of any provision
of any Loan Document, or any consent to any departure by the Borrower therefrom,
except to the extent that such amendment, waiver or consent would require the
consent of all Lenders pursuant to Section 10.1. The Borrower agrees that if
amounts outstanding under this Agreement and the Loans are due or unpaid, or
shall have been declared or shall have become due and payable upon the
occurrence of an Event of Default, each Participant shall, to the maximum extent
permitted by applicable law, be deemed to have the right of setoff in respect of
its participating interest in amounts owing under this Agreement to the same
extent as if the amount of its participating interest were owing directly to it
as a Lender under this Agreement, provided that, in purchasing such
participating interest, such Participant shall be deemed to have agreed to share
with the Lenders the proceeds thereof as provided in Section 10.7(a) as fully as
if such Participant were a Lender hereunder. The Borrower also agrees that each
Participant shall be entitled to the benefits of Sections 3.13, 3.14 and 3.15
with respect to its participation in the Commitments and the Loans outstanding
from time to time as if such Participant were a Lender; provided that, in the
case of Section 3.14, such Participant shall have complied with the requirements
of said Section, and provided, further, that no Participant shall be entitled to
receive any greater amount pursuant to any such Section than the transferor
Lender would have been entitled to receive in respect of the amount of the
participation transferred by such transferor Lender to such Participant had no
such transfer occurred.
(c) Any Lender other than any Conduit Lender (an "Assignor") may, in
accordance with applicable law and upon written notice to the Administrative
Agent, at any time and from time to time assign to any Lender or any Lender
Affiliate or, with the consent of the Borrower, the Issuing Bank and the
Administrative Agent (which, in each case, shall not be unreasonably withheld or
delayed), to an additional bank, financial institution or other entity (an
"Assignee") all or any part of its rights and obligations under this Agreement
pursuant to an Assignment and Acceptance, substantially in the form of Exhibit
B, executed by such Assignee and such Assignor (and, where the consent of the
Borrower, the Issuing Bank or the Administrative Agent is required pursuant to
the foregoing provisions, by the Borrower and such other Persons) and delivered
to the Administrative Agent for its acceptance and recording in the Register;
provided that no such assignment to an Assignee (other than any Lender or any
affiliate thereof) shall be in an aggregate principal amount of less than
$10,000,000 or result in the assigning Lender holding an aggregate principal
amount of less than $10,000,000 (other than in the case of an assignment of all
of a Lender's interests under this Agreement), unless otherwise agreed by the
Borrower and the Administrative Agent. For purposes of the proviso contained in
the preceding sentence, the amount described therein shall be aggregated in
respect of each Lender and its Lender Affiliates, if any. Upon such execution,
delivery, acceptance and recording, from and after the effective date determined
pursuant to such Assignment and Acceptance, (x) the Assignee thereunder shall be
a party hereto and, to the extent provided in such Assignment and Acceptance,
have the rights and obligations of a Lender hereunder with Commitments and/or
Loans as set forth therein, and (y) the Assignor thereunder shall, to the extent
provided in such Assignment and Acceptance, be released from its obligations
under this Agreement (and, in the case of an Assignment and Acceptance covering
all of an Assignor's rights and obligations under this Agreement, such Assignor
shall cease to be a party hereto, except as to Section 3.13, 3.14 and 10.5 in
respect of the period prior to such effective date). Notwithstanding any
provision of this Section, the consent of the Borrower shall not be required for
any assignment that occurs at
62
any time when any Event of Default shall have occurred and be continuing.
Notwithstanding the foregoing, any Conduit Lender may assign at any time to its
designating Lender hereunder without the consent of the Borrower or the
Administrative Agent any or all of the Loans it may have funded hereunder and
pursuant to its designation agreement and without regard to the limitations set
forth in the first sentence of this Section 10.6(c).
(d) The Administrative Agent shall, on behalf of the Borrower, maintain at
its address referred to in Section 10.2 a copy of each Assignment and Acceptance
delivered to it and a register (the "Register") for the recordation of the names
and addresses of the Lenders and the Commitment of, and principal amount of the
Loans owing to, each Lender from time to time. The entries in the Register shall
be conclusive, in the absence of manifest error, and the Borrower, the Issuing
Bank, the Administrative Agent and the Lenders shall treat each Person whose
name is recorded in the Register as the owner of the Loans and any Notes
evidencing such Loans recorded therein for all purposes of this Agreement. Any
assignment of any Loan, whether or not evidenced by a Note, shall be effective
only upon appropriate entries with respect thereto being made in the Register
(and each Note shall expressly so provide). Any assignment or transfer of all or
part of a Loan evidenced by a Note shall be registered on the Register only upon
surrender for registration of assignment or transfer of the Note evidencing such
Loan, accompanied by a duly executed Assignment and Acceptance; thereupon one or
more new Notes in the same aggregate principal amount shall be issued to the
designated Assignee, and the old Notes shall be returned by the Administrative
Agent to the Borrower marked "canceled". The Register shall be available for
inspection by the Borrower or any Lender (with respect to any entry relating to
such Lender's Loans) at any reasonable time and from time to time upon
reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed by an
Assignor, an Assignee and any other Person whose consent is required by Section
10.6(c), together with payment by either the Assignor or the Assignee, as they
may agree upon between themselves, to the Administrative Agent of a registration
and processing fee of $4,000 (provided, that such registration and processing
fee shall not be required to be paid if the assignment is between a Lender and
such Lender's Lender Affiliate), the Administrative Agent shall (i) promptly
accept such Assignment and Acceptance and (ii) on the effective date determined
pursuant thereto record the information contained therein in the Register and
give notice of such acceptance and recordation to the Borrower. On or prior to
such effective date, the Borrower, at its own expense, upon request, shall
execute and deliver to the Administrative Agent (in exchange for the Note of the
assigning Lender) new Note to the order of such Assignee in an amount equal to
the applicable Loans assumed or acquired by it pursuant to such Assignment and
Acceptance and, if the Assignor has retained Commitments, upon request, a new
Note to the order of the Assignor in an amount equal to the applicable Loans
retained by it hereunder. Such new Note or Notes shall be dated the Closing Date
and shall otherwise be in the form of the Note or Notes replaced thereby.
(f) For avoidance of doubt, the parties to this Agreement acknowledge that
the provisions of this Section concerning assignments of Loans and Notes relate
only to absolute assignments and that such provisions do not prohibit
assignments creating security interests in Loans and Notes, including, without
limitation, any pledge or assignment by a Lender of any Loan or Note to any
Federal Reserve Bank in accordance with applicable law.
63
(g) Each of the Borrower, each Lender and the Administrative Agent hereby
confirms that it will not institute against a Conduit Lender or join any other
Person in instituting against a Conduit Lender any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceeding under any state bankruptcy or
similar law, for one year and one day after the payment in full of the latest
maturing commercial paper note issued by such Conduit Lender; provided, however,
that each Lender designating any Conduit Lender hereby agrees to indemnify, save
and hold harmless each other party hereto for any loss, cost, damage or expense
arising out of its inability to institute such a proceeding against such Conduit
Lender during such period of forbearance.
SECTION 10.7 Adjustments; Set-off.
----------------------------------
(a) Except to the extent that this Agreement provides for payments to be
allocated to a particular Lender or to the Lenders, if any Lender (a "Benefited
Lender") shall at any time receive any payment of all or part of the Obligations
owing to it, or receive any collateral in respect thereof (whether voluntarily
or involuntarily, by set-off, pursuant to events or proceedings of the nature
referred to in Section 7.1(f), Section 7.1(g) or otherwise), in a greater
proportion than any such payment to or collateral received by any other Lender,
if any, in respect of the Obligations owing to Lender, such Benefited Lender
shall purchase for cash from the other Lenders a participating interest in such
portion of the Obligations owing to each such other Lender, or shall provide
such other Lenders with the benefits of any such collateral, as shall be
necessary to cause such Benefited Lender to share the excess payment or benefits
of such collateral ratably with each of the Lenders; provided, however, that if
all or any portion of such excess payment or benefits is thereafter recovered
from such Benefited Lender, such purchase shall be rescinded, and the purchase
price and benefits returned, to the extent of such recovery, but without
interest unless the Benefited Lender is required by law to pay interest thereon,
in which case, each Lender returning funds to the Benefited Lender shall pay its
pro rata share of such interest.
(b) In addition to any rights and remedies of the Lenders provided by law,
each Lender shall have the right, without prior notice to the Borrower, any such
notice being expressly waived by the Borrower to the extent permitted by
applicable law, upon any amount becoming due and payable by the Borrower
hereunder (whether at the stated maturity, by acceleration or otherwise), to set
off and appropriate and apply against such amount any and all deposits (general
or special, time or demand, provisional or final), in any currency, and any
other credits, indebtedness or claims, in any currency, in each case whether
direct or indirect, absolute or contingent, matured or unmatured, at any time
held or owing by such Lender or any branch, agency or affiliate thereof (other
than any such affiliate engaged in the energy trading business) to or for the
credit or the account of the Borrower. Each Lender agrees promptly to notify the
Borrower and the Administrative Agent after any such setoff and application made
by such Lender, provided that the failure to give such notice shall not affect
the validity of such setoff and application.
SECTION 10.8 Counterparts. This Agreement may be executed by one or
--------------------------
more of the parties to this Agreement on any number of separate counterparts,
and all of said counterparts taken together shall be deemed to constitute one
and the same instrument. Delivery of an executed signature page of this
Agreement or of a Lender Addendum by facsimile transmission
64
shall be effective as delivery of a manually executed counterpart hereof. A set
of the copies of this Agreement signed by all the parties shall be lodged with
the Borrower and the Administrative Agent.
SECTION 10.9 Severability. Any provision of this Agreement that is
---------------------------
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 10.10 Integration. This Agreement and the other Loan Documents
--------------------------
represent the entire agreement of the Borrower, the Administrative Agent, the
Issuing Bank and the Lenders with respect to the subject matter hereof and
thereof, and there are no promises, undertakings, representations or warranties
by the Administrative Agent, the Issuing Bank or any Lender relative to subject
matter hereof not expressly set forth or referred to herein or in the other Loan
Documents.
SECTION 10.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
----------------------------
OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
SECTION 10.12 Submission To Jurisdiction; Waivers. Borrower hereby
--------------------------------------------------
irrevocably and unconditionally:
(a) submits in any legal action or proceeding relating to this Agreement
and the other Loan Documents to which it is a party, or for recognition and
enforcement of any judgment in respect thereof, to the non-exclusive general
jurisdiction of the courts of the State of New York, the courts of the United
States of America for the Southern District of New York, and appellate courts
from any thereof;
(b) consents that any such action or proceeding may be brought in such
courts and waives any objection that it may now or hereafter have to the venue
of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or claim
the same;
(c) agrees that service of process in any such action or proceeding may be
effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to the Borrower, as the
case may be, at its address set forth in Section 10.2 or at such other address
of which the Administrative Agent shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect service of
process in any other manner permitted by law or shall limit the right to ▇▇▇ in
any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right it may
have to claim or recover in any legal action or proceeding related to the Loan
Documents any special, exemplary, punitive or consequential damages.
65
SECTION 10.13 Acknowledgments. Borrower hereby acknowledges that:
------------------------------
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents;
(b) neither the Administrative Agent, the Issuing Bank nor any Lender has
any fiduciary relationship with or duty to the Borrower arising out of or in
connection with this Agreement or any of the other Loan Documents, and the
relationship between the Administrative Agent, the Issuing Bank and the Lenders,
on one hand, and the Borrower, on the other hand, in connection herewith or
therewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan Documents or
otherwise exists by virtue of the transactions contemplated hereby among the
Administrative Agent, the Issuing Bank and the Lenders or among the Borrower,
the Issuing Bank and the Lenders.
SECTION 10.14 Confidentiality. Each of the Administrative Agent, the
------------------------------
Issuing Bank and the Lenders agrees to keep confidential all non-public
information provided to it by Borrower pursuant to this Agreement that is
designated by Borrower as confidential; provided that nothing herein shall
prevent the Administrative Agent, the Issuing Bank or any Lender from disclosing
any such information (a) to the Administrative Agent, the Issuing Bank, any
other Lender or any affiliate of any thereof, (b) to any Participant or Assignee
(each, a "Transferee") or prospective Transferee that agrees to comply with the
provisions of this Section, (c) to any of its employees, directors, agents,
attorneys, accountants and other professional advisors, (d) to any financial
institution that is a direct or indirect contractual counterparty in swap
agreements or such contractual counterparty's professional advisor (so long as
such contractual counterparty or professional advisor to such contractual
counterparty agrees to be bound by the provisions of this Section), (e) upon the
request or demand of any Governmental Authority having jurisdiction over it, (f)
in response to any order of any court or other Governmental Authority or as may
otherwise be required pursuant to any requirement of law, (g) in connection with
any litigation or similar proceeding, (h) that has been publicly disclosed other
than in breach of this Section, (i) to the National Association of Insurance
Commissioners or any similar organization or any nationally recognized rating
agency that requires access to information about a Lender's investment portfolio
in connection with ratings issued with respect to such Lender or (j) in
connection with the exercise of any remedy hereunder or under any other Loan
Document.
SECTION 10.15 Accounting Changes. In the event that any "Accounting
---------------------------------
Change" (as defined below) shall occur and such change results in a change in
the method of calculation of financial covenants, standards or terms in this
Agreement, then the Borrower and the Administrative Agent agree to enter into
negotiations in order to amend such provisions of this Agreement so as to
equitably reflect such Accounting Change with the desired result that the
criteria for evaluating the financial condition of the Borrower shall be the
same after such Accounting Change as if such Accounting Change had not been
made. Until such time as such an amendment shall have been executed and
delivered by the Borrower, the Administrative Agent and the Required Lenders,
all financial covenants, standards and terms in this Agreement shall continue to
be calculated or construed as if such Accounting Change had not occurred.
"Accounting Change" refers to any change in accounting principles required by
the promulgation
66
of any rule, regulation, pronouncement or opinion by the Financial Accounting
Standards Board of the American Institute of Certified Public Accountants or, if
applicable, the SEC.
SECTION 10.16 Delivery of Lender Addenda. Each initial Lender shall
-----------------------------------------
become a party to this Agreement by delivering to the Administrative Agent a
Lender Addendum duly executed by such Lender, the Borrower, the Issuing Bank and
the Administrative Agent.
SECTION 10.17 WAIVERS OF JURY TRIAL. THE BORROWER, THE ADMINISTRATIVE
------------------------------------
AGENT, THE ISSUING BANK AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT
OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
67
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
PG&E NATIONAL ENERGY GROUP, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President
THE CHASE MANHATTAN BANK,
as Issuing Bank
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Vice President
THE CHASE MANHATTAN BANK,
as Administrative Agent
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Vice President
[CREDIT AGREEMENT]
THE CHASE MANHATTAN BANK,
as a Lender
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Vice President
[CREDIT AGREEMENT]
CITIBANK, N.A.,
as a Syndication Agent and as a Lender
By: /s/ ▇▇▇▇▇▇ ▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇
Title: Managing Director
[CREDIT AGREEMENT]
SOCIETE GENERALE,
as a Syndication Agent and as a Lender
By: /s/ ▇. ▇. ▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Managing Director
[CREDIT AGREEMENT]
ABN AMRO BANK N.V.,
as a Documentation Agent and as a Lender
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇
Title: Group Vice President
By: /s/ ▇▇▇▇ ▇. Qais
-------------------------------------
Name: ▇▇▇▇ ▇. Qais
Title: Assistant Vice President
[CREDIT AGREEMENT]
CREDIT LYONNAIS NEW YORK BRANCH,
as a Lender
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Vice President
[CREDIT AGREEMENT]
DRESDNER BANK AG, NEW YORK AND
GRAND CAYMAN BRANCHES,
as a Documentation Agent and as a Lender
By: /s/ ▇▇▇▇▇▇ ▇. Lofts
-------------------------------------
Name: ▇▇▇▇▇▇ ▇. Lofts
Title: Managing Director
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
[CREDIT AGREEMENT]
Schedule 1.1
------------
COMMITMENTS
Lender Commitment
------ ----------
ABN AMRO Bank N.V. $100,000,000
Citibank, N.A. $100,000,000
Credit Lyonnais New York Branch $50,000,000
Dresdner Bank AG, New York and
Grand Cayman Branches $100,000,000
Societe Generale $100,000,000
The Chase Manhattan Bank $100,000,000
Total Commitments $550,000,000
----------------- ============
Schedule 1.1A - 1
Schedule 1.1A
-------------
APPLICABLE MARGIN AND PRICING GRID
---------------------------------------------------------------------------------------------------------------------------
Applicable
S&P Ratings/▇▇▇▇▇'▇ Applicable Margin for Facility All In LIBOR
Ratings Margin for Base Eurodollar Fee Rate Drawn spread
Rate Loans Loans
---------------------------------------------------------------------------------------------------------------------------
A- or higher/A3 or higher 0.000% 0.625% 0.125% 0.750%
---------------------------------------------------------------------------------------------------------------------------
BBB+/Baa1 0.000% 1.000% 0.250% 1.250%
---------------------------------------------------------------------------------------------------------------------------
BBB/Baa2 0.250% 1.250% 0.375% 1.625%
---------------------------------------------------------------------------------------------------------------------------
BBB-/Baa3 1.000% 2.000% 0.500% 2.500%
---------------------------------------------------------------------------------------------------------------------------
BB+/Ba1 1.875% 2.875% 0.625% 3.500%
---------------------------------------------------------------------------------------------------------------------------
lower than BB+/lower than Ba1 2.750% 3.750% 0.750% 4.500%
---------------------------------------------------------------------------------------------------------------------------
For purposes of the foregoing, with respect to the Borrower, (i) if the
ratings established by the rating agencies are one rating level apart, the
applicable rating level shall be determined by reference to the less favorable
rating; if the ratings established by the rating agencies are two or four rating
levels apart, the applicable rating level shall be determined by reference to
the rating that is midway between the two rating levels; and if the ratings
established by the rating agencies are three rating levels apart, the applicable
rating level shall be determined by reference to the rating level above the
lower rating level; (ii) if ratings are not available from S&P or ▇▇▇▇▇'▇, the
last rating level shall be deemed applicable; (iii) if determinative or implied
ratings shall change (other than as a result of a change in the rating system
used by any applicable rating agency) such that a change in the applicable
rating level would result, such change shall effect a change in the applicable
rating level as of the day on which it is first announced by the applicable
rating agency, and any change in the Applicable Margin shall apply commencing on
the effective date of such change and ending on the date immediately preceding
the effective date of the next such change; and (iv) if the rating system of any
of the rating agencies shall change prior to the date all obligations hereunder
have been paid and the commitments cancelled, the Borrower shall negotiate in
good faith to amend the reference to specific ratings above to reflect such
changed rating system, and pending such amendment, if no applicable rating level
is otherwise determinable based on the foregoing, the last rating level shall
apply.
Schedule 1.1A - 1
Schedule 1.1C
-------------
TERMS OF SUBORDINATION - AFFILIATES
All Permitted Subordinated Indebtedness (as defined in the Credit
Agreement to which this Schedule 1.01B is attached) incurred by PG&E National
Energy Group, Inc., a Delaware corporation (the "Borrower"), owing to any
Affiliate (as defined in the Credit Agreement) of the Borrower shall be subject
to the following terms and conditions, which shall be incorporated in a written
agreement (the "Agreement") between the Borrower and any Affiliate to which any
such Indebtedness is owed.
Section 1.01. Subordination of Liabilities. The Borrower, for
-------------------------------------------
itself, its successors and assigns, covenants and agrees and each holder of the
indebtedness evidenced by [DESCRIBE INDEBTEDNESS DOCUMENTATION] (the
"Subordinated Indebtedness") by its acceptance thereof likewise covenants and
agrees that the payment of the principal of, and interest on, and all other
amounts owing in respect of, the Subordinated Indebtedness is hereby expressly
subordinated, to the extent and in the manner hereinafter set forth, to the
prior payment in full in cash or discharge in full of Senior Indebtedness (as
defined in Section 1.08) in cash. The subordination provisions set forth herein
shall constitute a continuing offer to all persons who, in reliance upon such
provisions, become holders of, or continue to hold, Senior Indebtedness, and
such provisions are made for the benefit of the holders of Senior Indebtedness,
and such holders are hereby made obligees hereunder to the same extent as if
their names were written herein as such, and they and/or each of them may
proceed to enforce such provisions.
Section 1.02. Borrower Not to Make Payments with Respect to
------------------------------------------------------------
Subordinated Indebtedness in Certain Circumstances. (a) Upon the maturity of
--------------------------------------------------
any Senior Indebtedness (including interest thereon or fees or any other amounts
owing in respect thereof), whether at stated maturity, by acceleration or
otherwise, all principal thereof and premium, if any, and interest thereon or
fees or any other amounts owing in respect thereof, in each case to the extent
due and owing at such time, shall first be paid in full in cash or discharge in
full, or such payment duly provided for in cash or in a manner satisfactory to
the holder or holders of such Senior Indebtedness, before any payment is made on
account of the principal of (including installments thereof), or interest on, or
any amount otherwise owing in respect of, the Subordinated Indebtedness. Each
holder of the Subordinated Indebtedness hereby agrees that, so long as an Event
of Default (as defined below), or event that with notice or lapse of time or
both would constitute an Event of Default, in respect of any Senior Indebtedness
exists, it will not ask, demand, ▇▇▇ for, or otherwise take, accept or receive,
any amounts owing in respect of the Subordinated Indebtedness. As used herein,
the term "Event of Default" shall mean any Event of Default (as defined below)
or any "Event of Default", under and as defined in, the relevant documentation
governing any Senior Indebtedness, and in any event shall include any payment
default with respect to any Senior Indebtedness.
(b) In the event that notwithstanding the provisions of the preceding
subsection (a) of this Section 1.02, the Borrower shall make any payment on
account of the principal of, or interest on, or amounts otherwise owing in
respect of, the Subordinated Indebtedness at a time when payment is not
permitted by said subsection (a), such payment shall be held by the holder
of the Subordinated Indebtedness, in trust for the
Schedule 1.1C - 1
benefit of, and shall be paid forthwith over and delivered to, the holders
of Senior Indebtedness or their representative or representatives under the
agreements pursuant to which the Senior Indebtedness may have been issued,
as their respective interests may appear, for application pro rata to the
payment of all Senior Indebtedness remaining unpaid to the extent necessary
to pay all Senior Indebtedness in full in cash in accordance with the terms
of such Senior Indebtedness, after giving effect to any concurrent payment
or distribution to or for the holders of Senior Indebtedness. Without in
any way modifying the subordination provisions set forth herein or
affecting the subordination effected hereby, the Borrower shall give the
holder of the Subordinated Indebtedness prompt written notice of any
maturity of Senior Indebtedness after which such Senior Indebtedness
remains unsatisfied.
Section 1.03. Subordinated Indebtedness Subordinated to Prior Payment
----------------------------------------------------------------------
of all Senior Indebtedness on Dissolution, Liquidation or Reorganization of
---------------------------------------------------------------------------
Borrower. Upon any distribution of assets of the Borrower upon any dissolution,
--------
winding up, liquidation or reorganization of the Borrower (whether in
bankruptcy, insolvency or receivership proceedings or upon an assignment for the
benefit of creditors or otherwise):
(a) the holders of all Senior Indebtedness shall first be entitled to
receive payment in full in cash or in a manner satisfactory to the holder
or holders of such Senior Indebtedness of the principal thereof, premium,
if any, and interest (including, without limitation, all interest accruing
after the commencement of any bankruptcy, insolvency, receivership or
similar proceeding at the rate provided in the governing documentation
whether or not such interest is an allowed claim in such proceeding) and
all other amounts due thereon before the holder of the Subordinated
Indebtedness is entitled to receive any payment on account of the principal
of or interest on or any other amount owing in respect of the Subordinated
Indebtedness,
(b) any payment or distribution of assets of the Borrower of any kind
or character, whether in cash, property or securities to which the holder
of the Subordinated Indebtedness would be entitled except for the
subordination provisions set forth herein, shall be paid by the liquidating
trustee or agent or other person making such payment or distribution,
whether a trustee or agent, directly to the holders of Senior Indebtedness
or their representative or representatives under the agreements pursuant to
which the Senior Indebtedness may have been issued, to the extent necessary
to make payment in full of all Senior Indebtedness remaining unpaid, after
giving effect to any concurrent payment or distribution to the holders of
such Senior Indebtedness; and
(c) in the event that, notwithstanding the foregoing provisions of
this Section 1.03, any payment or distribution of assets of the Borrower of
any kind or character, whether in cash, property or securities, shall be
received by the holder of the Subordinated Indebtedness on account of
principal of, or interest or other amounts due on, the Subordinated
Indebtedness before all Senior Indebtedness is paid in full in cash or in a
manner satisfactory to the holder or holders of such Senior Indebtedness or
otherwise discharged in full, or effective provisions made for its payment,
such payment or distribution shall be received and held in trust for and
shall be paid over to the holders of the Senior Indebtedness remaining
unpaid or unprovided for or their representative or
Exhibit E
representatives under the agreements pursuant to which the Senior
Indebtedness may have been issued, for application to the payment of such
Senior Indebtedness until all such Senior Indebtedness shall have been paid
in full in cash or in a manner satisfactory to the holder or holders of
such Senior Indebtedness or otherwise discharged in full, after giving
effect to any concurrent payment or distribution to the holders of such
Senior Indebtedness.
Without in any way modifying the subordination provisions set forth
herein or affecting the subordination effected hereby, the Borrower shall give
prompt written notice to the holder of the Subordinated Indebtedness of any
dissolution, winding up, liquidation or reorganization of the Borrower (whether
in bankruptcy, insolvency or receivership proceedings or upon an assignment for
the benefit of creditors or otherwise).
Section 1.04. Furtherance of Subordination. Each holder of the
-------------------------------------------
Subordinated Indebtedness agrees as follows:
(a) If any proceeding referred to in Section 1.03 above is commenced
by or against the Borrower:
(i) the Admnistrative Agent (as defined in the Credit Agreement
referred to in Section 1.08 below), acting on behalf of each holder of
the Senior Indebtedness, is hereby irrevocably authorized and
empowered (in its own name or in the name of the holder of the
Subordinated Indebtedness or otherwise), but shall have no obligation,
to demand, ▇▇▇ for, collect and receive every payment or distribution
referred to in Section 1.03(b) and give acquittance therefor and to
file claims and proofs of claim and take such other action (including,
without limitation, voting the claims arising under the Subordinated
Indebtedness or enforcing any security interest or other lien securing
payment of the Subordinated Indebtedness) as it may deem necessary or
advisable for the exercise or enforcement of or causing enforcement of
any of the rights or interests of the holders of the Senior
Indebtedness hereunder; and
(ii) each holder of the Subordinated Indebtedness shall duly and
promptly take such action as the holders of the Senior Indebtedness
may request (A) to collect the Subordinated Indebtedness for the
account of the holders of the Senior Indebtedness and to file
appropriate claims or proofs of claim in respect of the Subordinated
Indebtedness, (B) to execute and deliver to the holders of the Senior
Indebtedness such powers of attorney, assignments or other instruments
as the holders of the Senior Indebtedness may request in order to
enable the holders of the Senior Indebtedness to enforce any and all
claims with respect to, and any security interests and other liens
securing payment of, the Subordinated Indebtedness, and (C) to collect
and receive any and all payments or distributions that may be payable
or deliverable upon or with respect to the Subordinated Indebtedness.
(iii) The holders of the Senior Indebtedness are hereby
authorized to demand specific performance of this Agreement, whether
or not the Borrower
Exhibit E
shall have complied with any of the provisions hereof applicable to
it, at any time when the holder of the Subordinated Indebtedness shall
have failed to comply with any of the provisions of this Agreement
applicable to it. The holder of the Subordinated Indebtedness hereby
irrevocably waives any defense based on the adequacy of a remedy at
law that might be asserted as a bar to such remedy of specific
performance.
Section 1.05. Subrogation. Subject to the prior payment in cash in
--------------------------
full or discharge in full of all Senior Indebtedness in cash, the holder of the
Subordinated Indebtedness shall be subrogated to the rights of the holders of
Senior Indebtedness to receive payments or distributions of assets of the
Borrower applicable to the Senior Indebtedness until all amounts owing in
respect of the Subordinated Indebtedness shall be paid or discharged in full,
and for the purpose of such subrogation no payments or distributions to the
holders of the Senior Indebtedness by or on behalf of the Borrower or by or on
behalf of the holder of the Subordinated Indebtedness by virtue of the
subordination provisions set forth herein that otherwise would have been made to
the holder of the Subordinated Indebtedness, shall be deemed to be payment by
the Borrower to or on account of the Senior Indebtedness, it being understood
that the subordination provisions set forth herein are and are intended solely
for the purpose of defining the relative rights of the holder of the
Subordinated Indebtedness, on the one hand, and the holders of the Senior
Indebtedness, on the other hand.
Section 1.06. Obligation of the Borrower Unconditional. Nothing
-------------------------------------------------------
contained in the subordination provisions set forth herein or in the documents
evidencing the Subordinated Indebtedness is intended to or shall impair, as
between the Borrower and the holder of the Subordinated Indebtedness, the
obligation of the Borrower, which is absolute and unconditional, to pay to the
holder of the Subordinated Indebtedness the principal of and interest on the
Subordinated Indebtedness as and when the same shall become due and payable in
accordance with its terms, or is intended to or shall affect the relative rights
of the holder of the Subordinated Indebtedness and creditors of the Borrower
other than the holders of the Senior Indebtedness, nor shall anything herein or
therein prevent the holder of the Subordinated Indebtedness from exercising all
remedies otherwise permitted by applicable law, subject to the rights, if any,
under the subordination provisions set forth herein of the holders of Senior
Indebtedness in respect of cash, property, or securities of the Borrower
received upon the exercise of any such remedy. Upon any distribution of assets
of the Borrower referred to herein, the holder of the Subordinated Indebtedness
shall be entitled to rely upon any order or decree made by any court of
competent jurisdiction in which such dissolution, winding up, liquidation or
reorganization proceedings are pending, or a certificate of the liquidating
trustee or agent or other person making any distribution to the holder of the
Subordinated Indebtedness, for the purpose of ascertaining the persons entitled
to participate in such distribution, the holders of the Senior Indebtedness and
other indebtedness of the Borrower, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon and all other facts pertinent
thereto or hereto.
Section 1.07. Subordination Rights Not Impaired by Acts or Omissions
---------------------------------------------------------------------
of Borrower or Holders of Senior Indebtedness. No rights of any present or
---------------------------------------------
future holders of any Senior Indebtedness to enforce subordination as herein
provided shall at any time in any way be prejudiced or impaired by an act or
failure to act on the part of the Borrower or by any act or failure to act in
good faith by any such holder, or by any noncompliance by the Borrower with
Exhibit E
the terms and provisions of the Subordinated Indebtedness, regardless of any
knowledge thereof which any such holder may have or be otherwise charged with.
The holders of the Senior Indebtedness may, without in any way affecting the
obligations of the holder of the Subordinated Indebtedness with respect thereto,
at any time or from time to time and in their absolute discretion, change the
manner, place or terms of payment of, change or extend the time of payment of,
or renew or alter, any Senior Indebtedness, or amend, modify or supplement any
agreement or instrument governing or evidencing such Senior Indebtedness or any
other document referred to therein, or exercise or refrain from exercising any
other of their rights under the Senior Indebtedness including, without
limitation, the waiver of a default thereunder and the release of any collateral
securing such Senior Indebtedness, all without notice to or consent from the
holder of the Subordinated Indebtedness.
Section 1.08. Senior Indebtedness. (a) The term "Senior
---------------------------------
Indebtedness" shall mean all Obligations (as defined below) of the Borrower
under the Credit Agreement (as defined below).
(b) As used in this Agreement, the terms set forth below shall have
the respective meanings provided below:
"Credit Agreement" shall mean the Credit Agreement, dated as of June
15, 2001, among the Borrower, the Lenders party thereto, the Documentation
Agents and Syndication Agents named therein and The Chase Manhattan Bank,
as administrative agent for the Lenders (in such capacity, the
"Administrative Agent"), as same may be amended, modified, extended,
renewed, restated or supplemented from time to time, and including any
agreement extending the maturity of, refinancing or restructuring all or
any portion of, or increasing the Obligations under such agreement or of
any successor agreements.
"Event of Default" shall have the meaning assigned to such term in the
Credit Agreement.
"Obligations" shall mean the Obligations (as defined in the Credit
Agreement) and all other payment obligations of the Borrower under the
Credit Agreement.
Exhibit E
Schedule 1.1D
-------------
TERMS OF SUBORDINATION - NON-AFFILIATES
All Permitted Subordinated Indebtedness (as defined in the Credit
Agreement to which this Schedule 1.01C is attached) incurred by PG&E National
Energy Group, Inc., a Delaware corporation (the "Borrower") owing to any person
other than an Affiliate (as defined in the Credit Agreement) of the Borrower
shall be evidenced by a promissory note and shall have the following
subordination provisions attached as Annex A thereto or incorporated within the
text thereof (mutatis mutandis), and shall include in the text of such
promissory note the language: "THE INDEBTEDNESS EVIDENCED BY THIS NOTE IS
SUBORDINATE AND JUNIOR IN RIGHT OF PAYMENT TO ALL SENIOR INDEBTEDNESS (AS
DEFINED IN ANNEX A HERETO) TO THE EXTENT PROVIDED IN ANNEX A."
ANNEX A
Section 1.01. Subordination of Liabilities. The Borrower for itself,
-------------------------------------------
its successors and assigns, covenants and agrees and each holder of the
promissory note to which this Annex A is attached (the "Note") by its acceptance
thereof likewise covenants and agrees that the payment of the principal of, and
interest on, and all other amounts owing in respect of, the Note is hereby
expressly subordinated, to the extent and in the manner hereinafter set forth,
to the prior payment in full in cash or discharge in full of the Senior
Indebtedness (as defined in Section 1.08) in cash. The provisions of this Annex
A shall constitute a continuing offer to all persons who, in reliance upon such
provisions, become holders of, or continue to hold, Senior Indebtedness, and
such provisions are made for the benefit of the holders of Senior Indebtedness,
and such holders are hereby made obligees hereunder to the same extent as if
their names were written herein as such, and they and/or each of them may
proceed to enforce such provisions.
Section 1.02. Borrower Not to Make Payments with Respect to Notes in
---------------------------------------------------------------------
Certain Circumstances.
---------------------
(c) Upon the maturity of any Senior Indebtedness (including interest
thereon or fees or any other amounts owing in respect thereof), whether at
stated maturity, by acceleration or otherwise, all principal thereof and
premium, if any, and interest thereon or fees or any other amounts owing in
respect thereof, in each case to the extent due and owing at such time,
shall first be paid in full in cash or discharged in full, or such payment
duly provided for in cash or in a manner satisfactory to the holder or
holders of such Senior Indebtedness, before any payment is made on account
of the principal of (including installments thereof), or interest on, or
any amount otherwise owing in respect of, the Note. Each holder of the Note
hereby agrees that, so long as an Event of Default (as defined below), or
event that with notice or lapse of time or both would constitute an Event
of Default, in respect of any Senior Indebtedness exists, it will not ask,
demand, ▇▇▇ for, or otherwise take, accept or receive, any amounts owing in
respect of the Note. As used herein, the term "Event of Default" shall mean
any Event of Default or any "Event of Default", under and as defined in,
the relevant documentation governing any Senior Indebtedness, and, in any
event shall include any payment default with respect to any Senior
Indebtedness.
Schedule 1.1D - 1
(d) In the event that notwithstanding the provisions of the preceding
subsection (a) of this Section 1.02, the Borrower shall make any payment on
account of the principal of, or interest on, or amounts otherwise owing in
respect of, the Note at a time when payment is not permitted by said
subsection (a), such payment shall be held by the holder of the Note, in
trust for the benefit of, and shall be paid forthwith over and delivered
to, the holders of Senior Indebtedness or their representative or
representatives under the agreements pursuant to which the Senior
Indebtedness may have been issued, as their respective interests may
appear, for application pro rata, to the payment of all Senior Indebtedness
remaining unpaid to the extent necessary to pay all Senior Indebtedness in
full in cash in accordance with the term of such Senior Indebtedness, after
giving effect to any concurrent payment or distribution to or for the
holders of Senior Indebtedness. Without in any way modifying the
provisions of this Annex A or affecting the subordination effected hereby,
the Borrower shall give the holder of the Note prompt written notice of any
maturity of Senior Indebtedness after which such Senior Indebtedness
remains unsatisfied.
Section 1.03. Note Subordinated to Prior Payment of all Senior
---------------------------------------------------------------
Indebtedness on Dissolution, Liquidation or Reorganization of Borrower. Upon
----------------------------------------------------------------------
any distribution of assets of the Borrower upon any dissolution, winding up,
liquidation or reorganization of the Borrower (whether in bankruptcy, insolvency
or receivership proceedings or upon an assignment for the benefit of creditors
or otherwise):
(a) the holders of all Senior Indebtedness shall first be entitled to
receive payment in full in cash or in a manner satisfactory to the holder
or holders of such Senior Indebtedness of the principal thereof, premium,
if any, and interest (including, without limitation, all interest accruing
after the commencement of any bankruptcy, insolvency, receivership or
similar proceeding at the rate provided in the governing documentation
whether or not such interest is an allowed claim in such proceeding) and
all other amounts due thereon before the holder of the Note is entitled to
receive any payment on account of the principal of or interest on or any
other amount owing in respect of the Note;
(b) any payment or distribution of assets of the Borrower of any kind
or character, whether in cash, property or securities to which the holder
of the Note would be entitled except for the provisions of this Annex A
shall be paid by the liquidating trustee or agent or other person making
such payment or distribution, whether a trustee or agent; directly to the
holders of Senior Indebtedness or their representative or representatives
under the agreements pursuant to which the Senior Indebtedness may have
been issued, to the extent necessary to make payment in full of all Senior
Indebtedness remaining unpaid, after giving effect to any concurrent
payment or distribution to the holders of such Senior Indebtedness; and
(c) in the event that, notwithstanding the foregoing provisions of
this Section 1.03, any payment or distribution of assets of the Borrower of
any kind or character, whether in cash, property or securities, shall be
received by the holder of the Note on account of principal of, or interest
or other amounts due on, the Note before all Senior Indebtedness is paid in
full in cash or in a manner satisfactory to the holder or holders of
Exhibit E
such Senior Indebtedness or otherwise discharged in full, or effective
provisions made for its payment, such payment or distribution shall be
received and held in trust for and shall be paid over to the holders of the
Senior Indebtedness remaining unpaid or unprovided for or their
representative or representatives under the agreements pursuant to which
the Senior Indebtedness may have been issued, for application to the
payment of such Senior Indebtedness until all such Senior Indebtedness
shall have been paid in full in cash or in a manner satisfactory to the
holder or holders of such Senior Indebtedness or otherwise discharged in
full, after giving effect to any concurrent payment or distribution to the
holders of such Senior Indebtedness.
Without in any way modifying the provisions of this Annex A or
affecting the subordination effected hereby, the Borrower shall give prompt
written notice to the holder of the Note of any dissolution, winding up,
liquidation or reorganization of the Borrower (whether in bankruptcy, insolvency
or receivership proceedings or upon an assignment for the benefit of creditors
or otherwise).
Section 1.04. In Furtherance of Subordination. Each holder of the
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Note agrees as follows:
(a) If any proceeding referred to in Section 1.03 above is commenced
by or against the Borrower
(i) the Administrative Agent (as defined in the Credit Agreement
referred to in Section 1.08 below), acting on behalf of each holder of
the Senior Indebtedness, is hereby irrevocably authorized and
empowered (in its own name or in the name of the holder of the Note or
otherwise), but shall have no obligation, to demand, ▇▇▇ for, collect
and receive every payment or distribution referred to in Section
1.03(b) and give acquittance therefor and to file claims and proofs of
claim and take such other action (including, without limitation,
voting the claims arising under the Note or enforcing any security
interest or other lien securing payment of the Note) as it may deem
necessary or advisable for the exercise or enforcement of or causing
enforcement of any of the rights or interests of the holders of the
Senior Indebtedness hereunder; and
(ii) The holders of the Senior Indebtedness are hereby authorized
to demand specific performance of this Note, whether or not the
Borrower shall have complied with any of the provisions hereof
applicable to it, at any time when the holder of the Note shall have
failed to comply with any of the provisions of this Note applicable to
it. The holder of the Note hereby irrevocably waives any defense based
on the adequacy of a remedy at law that might be asserted as a bar to
such remedy of specific performance.
Section 1.05. Subrogation. Subject to the prior payment in cash in
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full or discharge in full of all Senior Indebtedness in cash, the holder of the
Note shall be subrogated to the rights of the holders of Senior Indebtedness to
receive payments or distributions of assets of the Borrower applicable to the
Senior Indebtedness until all amounts owing on the Note shall be paid or
discharged in full, and for the purpose of such subrogation no payments or
distributions
Exhibit E
to the holders of the Senior Indebtedness by or on behalf of the Borrower or by
or on behalf of the holder of the Note by virtue of this Annex A which otherwise
would have been made to the holder of the Note, shall be deemed to be payment by
the Borrower to or on account of the Senior Indebtedness, it being understood
that the provisions of this Annex A are and are intended solely for the purpose
of defining the relative rights of the holder of the Note, on the one hand, and
the holders of the Senior Indebtedness, on the other hand.
Section 1.06. Obligation of the Borrower Unconditional. Nothing
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contained in this Annex A or in the Note is intended to or shall impair, as
between the Borrower and the holder of the Note, the obligation of the Borrower,
which is absolute and unconditional, to pay to the holder of the Note the
principal of and interest on the Note as and when the same shall become due and
payable in accordance with its terms, or is intended to or shall affect the
relative rights of the holder of the Note and creditors of the Borrower other
than the holders of the Senior Indebtedness, nor shall anything herein or
therein prevent the holder of the Note from exercising all remedies otherwise
permitted by applicable law, subject to the rights, if any, under this Annex A
of the holders of Senior Indebtedness in respect of cash, property, or
securities of the Borrower received upon the exercise of any such remedy. Upon
any distribution of assets of the Borrower referred to in this Annex A, the
holder of the Note shall be entitled to rely upon any order or decree made by
any court of competent jurisdiction in which such dissolution, winding up,
liquidation or reorganization proceedings are pending, or a certificate of the
liquidating trustee or agent or other person making any distribution to the
holder of the Note, for the purpose of ascertaining the persons entitled to
participate in such distribution, the holders of the Senior Indebtedness and
other indebtedness of the Borrower, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Annex A.
Section 1.07. Subrogation Rights Not Impaired by Acts or Omissions of
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Borrower or Holders of Senior Indebtedness. No rights of any present or future
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holders of any Senior Indebtedness to enforce subordination as herein provided
shall at any time in any way be prejudiced or impaired by an act or failure to
act on the part of the Borrower or by any act or failure to act in good faith by
any such holder, or by any noncompliance by the Borrower with the terms and
provisions of the Note, regardless of any knowledge thereof which any such
holder may have or be otherwise charged with. The holders of the Senior
Indebtedness may, without in any way affecting the obligations of the holder of
the Note with respect thereto, at any time or from time to time and in their
absolute discretion, change the manner, place or terms of payment of, change or
extend the time of payment of, or renew or alter, any Senior Indebtedness, or
amend, modify or supplement any agreement or instrument governing or evidencing
such Senior Indebtedness or any other document referred to therein, or exercise
or refrain from exercising any other of their rights under the Senior
Indebtedness including, without limitation, the waiver of a default thereunder
and the release of any collateral securing such Senior Indebtedness, all without
notice to or consent from the holder of the Note.
Section 1.08. Senior Indebtedness. (a) The term "Senior
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Indebtedness" shall mean all Obligations (as defined below) of the Borrower
under the Credit Agreement (as defined below).
Exhibit E
(b) As used in this Agreement, the terms set forth below shall have
the respective meanings provided below:
"Credit Agreement" shall mean the Credit Agreement, dated as of June
15, 2001, among the Borrower, the Lenders party thereto, the Documentation
Agents and Syndication Agents named therein and The Chase Manhattan Bank,
as administrative agent for the Lenders (in such capacity, the
"Administrative Agent"), as same may be amended, modified, extended,
renewed, restated or supplemented from time to time, and including any
agreement extending the maturity of, refinancing or restructuring all or
any portion of, or increasing the Obligations under such agreement or of
any successor agreements.
"Event of Default" shall have the meaning assigned to such term in the
Credit Agreement.
"Obligations" shall mean the Obligations (as defined in the Credit
Agreement) and all other payment obligations of the Borrower under the
Credit Agreement.
Exhibit E