U.S. $125,000,000
CREDIT AGREEMENT,
dated as of June 23, 1997,
among
CALPINE FINANCE COMPANY,
as the Borrower,
and
CERTAIN COMMERCIAL LENDING INSTITUTIONS,
as the Lenders,
and
THE BANK OF NOVA SCOTIA
as the Agent for the Lenders.
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of June 23, 1997, among
CALPINE FINANCE COMPANY, a Delaware corporation (the "Borrower"),
the various financial institutions as are or may become parties
hereto (collectively, the "Lenders"), and THE BANK OF NOVA SCOTIA
("Scotiabank"), as agent (the "Agent") for the Lenders,
W I T N E S S E T H:
WHEREAS, pursuant to a Purchase and Sale Agreement, dated as
of March 27, 1997 (as so originally executed and delivered, the
"Purchase Agreement"), between the Borrower and Enron Power
Corp., a Delaware corporation ("Seller"), Seller has agreed to
sell, and the Borrower has agreed to purchase, 7,095 shares of
Class A Common Stock of Enron/Dominion Cogen Corp., a Delaware
corporation ("EDCC"), constituting all of the issued and
outstanding shares of Class A Common Stock of EDCC (the "Stock
Purchase"), which constitutes 50% of the total issued and
outstanding shares of capital stock of EDCC, the other 50% being
held by Dominion Cogen, Inc., a Virginia corporation
("Dominion");
WHEREAS, EDCC owns 100% of the issued and outstanding stock
of Enron Cogeneration One Company, a Delaware corporation
("EC1"), which in turn owns 100% of the issued and outstanding
stock of Cogenron Inc., a Delaware corporation ("Cogenron");
WHEREAS, EDCC owns a 98% limited partnership interest in
Clear Lake Cogeneration Limited Partnership, a Texas limited
partnership ("Clear Lake") and 100% of Enron Cogeneration Three
Company, a Delaware corporation ("EC3") which owns a 2% general
partnership interest in Clear Lake;
WHEREAS, the Borrower has acquired all of the project
financed indebtedness of Cogenron incurred pursuant to the Credit
Agreement dated as of January 17, 1991 among Cogenron, Cogenron
Funding Corp., a Delaware corporation, the lenders named therein
(the "Cogenron Lenders") and The Bank of New York, as agent
("BONY") (the "Cogenron Credit Agreement") pursuant to an
Assignment Agreement dated June 23, 1997 among the Borrower, BONY
and the Cogenron Lenders (the "Cogenron Debt Acquisition");
WHEREAS, the Borrower has acquired all of the project
financed indebtedness of Clear Lake incurred pursuant to the
Amended and Restated Credit Agreement dated as of January 18,
1994 among Clear Lake, the lenders named therein (the "Clear Lake
Lenders") and Barclays Bank plc, as Agent ("Barclays") (the
"Clear Lake Credit Agreement") pursuant to an Assignment
Agreement dated June 23, 1997 among the Borrower, Barclays and
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the Clear Lake Lenders (the "Clear Lake Debt Acquisition") (the
Cogenron Debt Acquisition and the Clear Lake Debt Acquisition are
referred to herein collectively as the "Debt Acquisitions") (the
Stock Purchase and the Debt Acquisitions are referred to
collectively as the "Transaction");
WHEREAS, EDCC owns 100% of the issued and outstanding stock
of Enron Cogeneration Five Company, a Delaware corporation
("EC5"), which in turn owns a 7.06% joint venture interest in
Cogen Technologies NJ Venture, a New Jersey joint venture ("Cogen
Venture");
WHEREAS, pursuant to the Reorganization Agreement, Dominion
receives all the economic benefits and undertakes all the
liabilities with respect to EDCC's indirect interest in Cogen
Venture;
WHEREAS, in connection with the Transaction, the Borrower
desires to obtain Commitments from the Lenders pursuant to which
Loans, in a maximum aggregate principal amount not to exceed
$125,000,000, will be made to the Borrower on the closing date;
and
WHEREAS, the Lenders are willing, on the terms and subject
to the conditions hereinafter set forth (including Article V), to
extend such Commitments and make such Loans to the Borrower; and
WHEREAS, the proceeds of such Loans will be used
(a) to finance a portion of the Stock Purchase, in an
amount not to exceed $35,450,000 as adjusted pursuant to the
Purchase Agreement;
(b) to finance a portion of the Cogenron Debt
Acquisition, in a principal amount not to exceed $52,999,300
(plus accrued interest);
(c) to finance a portion of the Clear Lake Debt
Acquisition, in a principal amount not to exceed
$102,622,665 (plus accrued interest); and
(d) to finance a portion of the expenses incurred in
connection with the Transaction, in an amount not to exceed
$3,500,000;
NOW, THEREFORE, the parties hereto agree as follows:
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ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1. Defined Terms. The following terms (whether
or not underscored) when used in this Agreement, including its
preamble and recitals, shall, except where the context otherwise
requires, have the following meanings (such meanings to be
equally applicable to the singular and plural forms thereof):
"Affiliate" of any Person means any other Person which,
directly or indirectly, controls, is controlled by or is under
common control with such Person (excluding any trustee under, or
any committee with responsibility for administering, any Plan).
A Person shall be deemed to be "controlled by" any other Person
if such other Person possesses, directly or indirectly, power
(a) to vote 10% or more of the securities (on a fully
diluted basis) having ordinary voting power for the election
of directors or managing general partners; or
(b) to direct or cause the direction of the management
and policies of such Person whether by contract or
otherwise.
"Agent" is defined in the preamble and includes each other
Person as shall have subsequently been appointed as the successor
Agent pursuant to Section 9.4.
"Agreement" means, on any date, this Credit Agreement as
originally in effect on the Effective Date and as thereafter from
time to time amended, supplemented, amended and restated, or
otherwise modified and in effect on such date.
"Alternate Base Rate" means, on any date and with respect to
all Base Rate Loans, a fluctuating rate of interest per annum
equal to the higher of
(a) the rate of interest most recently announced by
Scotiabank at its Domestic Office as its base rate; and
(b) the Federal Funds Rate most recently determined by
the Agent plus 1/2 of 1%.
The Alternate Base Rate is not necessarily intended to be the
lowest rate of interest determined by the Scotiabank in
connection with extensions of credit. Changes in the rate of
interest on that portion of any Loans maintained as Base Rate
Loans will take effect simultaneously with each change in the
Alternate Base Rate. The Agent will give notice promptly to the
Borrower and the Lenders of changes in the Alternate Base Rate.
-3-
"Asset Sale" means any sale, assignment, transfer or other
disposition of any Property (whether now owned or hereafter
acquired) by the Borrower or any of its Subsidiaries to any
Person excluding any sale, assignment, transfer or other
disposition of any equipment which, in the reasonable judgment of
the Borrower, has become obsolete, worn out or uneconomic in the
ordinary course of business, the proceeds of which are used to
purchase replacement equipment within 60 days from the date of
sale, assignment, transfer or other disposition.
"Assignee Lender" is defined in Section 10.11.1.
"Authorized Officer" means, relative to any Obligor, those
of its officers whose signatures and incumbency shall have been
certified to the Agent and the Lenders pursuant to Section 5.1.8.
"Barclays" is defined in the fifth recital.
"Base Rate Loan" means a Loan bearing interest at a
fluctuating rate determined by reference to the Alternate Base
Rate.
"Basic Documents" means the Loan Documents, the Purchase
Documents, the Debt Assignment Documents, the Project Loan
Documents and the Project Documents.
"BONY" is defined in the fourth recital.
"Borrower" is defined in the preamble.
"Borrowing" means the Loans of the same type and, in the
case of LIBO Rate Loans, having the same Interest Period made by
all Lenders on the same Business Day and pursuant to the same
Borrowing Request in accordance with Section 2.1.
"Borrowing Request" means a loan request and certificate
duly executed by an Authorized Officer of the Borrower,
substantially in the form of Exhibit B hereto.
"Business Day" means
(a) any day which is neither a Saturday or Sunday nor
a legal holiday on which banks are authorized or required to
be closed in San Francisco, California or New York, New
York; and
(b) relative to the making, continuing, prepaying or
repaying of any LIBO Rate Loans, any day on which dealings
in Dollars are carried on in the London interbank market.
"Calpine" means Calpine Corporation, a Delaware corporation.
-4-
"Calpine Equity Contribution" means the cash contribution by
Calpine to the equity of the Borrower.
"Calpine Subordinated Indebtedness" means all Indebtedness
of the Borrower to Calpine which is subordinated pursuant to the
Subordination Agreement to the Obligations.
"Capitalized Lease Liabilities" means all rental obligations
of the Borrower or any of its Subsidiaries under any leasing or
similar arrangement which, in accordance with GAAP, would be
classified as capitalized leases, and, for purposes of this
Agreement and each other Loan Document, the amount of such
obligations shall be the capitalized amount thereof, determined
in accordance with GAAP, and the stated maturity thereof shall be
the date of the last payment of rent or any other amount due
under such lease prior to the first date upon which such lease
may be terminated by the lessee without payment of a penalty.
"Cash Equivalent Investment" means, at any time:
(a) any evidence of the Indebtedness, maturing not
more than one year after such time, issued or guaranteed by
the United States Government or an agency or instrumentality
thereof;
(b) commercial paper, maturing not more than nine
months from the date of issue, which is issued by
(i) a corporation (excluding Affiliates of any
Obligor other than Credit Suisse) organized under the
laws of any state of the United States or of the
District of Columbia and rated A-l by Standard & Poor's
Corporation or P-l by ▇▇▇▇▇'▇ Investors Service, Inc.,
or
(ii) any Lender (or its holding company or
Affiliate);
(c) any certificate of deposit or bankers acceptance,
maturing not more than one year after such time, which is
issued by either
(i) a commercial banking institution that is a
member of the Federal Reserve System and has a combined
capital and surplus and undivided profits of not less
than $500,000,000, or
(ii) any Lender; or
(d) money market mutual funds registered with the
Securities and Exchange Commission;
-5-
(e) corporate evidences of indebtedness rated A or
better by S&P or A2 or better by Moody's;
(f) any repurchase agreement entered into with any
Lender (or other commercial banking institution of the
stature referred to in clause (c)(i)) which
(i) is secured by a fully perfected security
interest in any obligation of the type described in any
of clauses (a) through (c); and
(ii) has a market value at the time such
repurchase agreement is entered into of not less than
100% of the repurchase obligation of such Lender (or
other commercial banking institution) thereunder.
"Cash Flow" means, for any period, as applied to the
Borrower, the amount of all cash received from all sources,
including (i) dividends or other distributions from EDCC, and
(ii) any Project Indebtedness Payments received from Cogenron or
Clear Lake under the Project Loan Documents, but excluding
payments and other amounts received by the Borrower pursuant to
the Project Loan Documents in its capacity as "Bank" of "Lender"
thereunder which, under the terms of the Project Loan Documents,
are to be applied (i) to payments under the Project Documents
prior to the payment of Project Indebtedness Payments or (ii)
which are to be deposited into reserve or similar accounts or
which are distributable to the respective borrowers under the
Project Loan Documents after the payment of Project Indebtedness
Payments.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended.
"CERCLIS" means the Comprehensive Environmental Response
Compensation Liability Information System List.
"Change in Control" means (i)the acquisition by any Person,
or two or more Persons acting in concert, of beneficial ownership
(within the meaning of Rule 13d-3 of the Securities and Exchange
Commission under the Securities Exchange Act of 1934) of 20% or
more of the outstanding shares of voting stock of Calpine,
(ii) the failure of Calpine to own, directly or indirectly, free
and clear of all Liens or other encumbrances (other than those
created pursuant to the Loan Documents), 100% of the issued and
outstanding shares of voting stock of the Borrower on a fully
diluted basis or (iii) the failure of the Borrower to own 50% of
the issued and outstanding shares of voting stock of EDCC on a
fully diluted basis.
"Clear Lake" is defined in the third recital.
-6-
"Clear Lake Credit Agreement" is defined in the fifth
recital.
"Clear Lake Debt Acquisition" is defined in the fifth
recital.
"Clear Lake Lenders" is defined in the fifth recital.
"Clear Lake Project" means the approximately 377 megawatt
gas-fired combined-cycle power plant located in Pasadena, Texas
and owned by Clear Lake.
"Clear Lake Standstill Agreement" means the Override and
Standstill Agreement dated as of June 23, 1997 among Clear Lake,
EC3, EDCC, DEI Texas, Inc., Dominion Cogen, Inc., Dominion
Energy, Inc., Dominion Resources, Inc. and the Borrower.
"Clear Lake Subordinated Indebtedness" means the
subordinated Indebtedness of Clear Lake to EDCC subordinated
pursuant to the Subordination Agreement (Clear Lake) to the
Indebtedness of Clear Lake under the Clear Lake Credit Agreement.
"Code" means the Internal Revenue Code of 1986, as amended,
reformed or otherwise modified from time to time.
"Cogen Venture" is defined in the sixth recital.
"Cogenron" is defined in the second recital.
"Cogenron Credit Agreement" is defined in the fourth
recital.
"Cogenron Debt Acquisition" is defined in the fourth
recital.
"Cogenron Lenders" is defined in the fourth recital.
"Cogenron Project" means the approximately 450 megawatt gas-
fired combined-cycle power plant located in Texas City, Texas and
owned by Cogenron.
"Cogenron Standstill Agreement" means the Override and
Standstill Agreement date as of June 23, 1997 among Cogenron,
Cogenron Funding Corp., EC1, EDCC, DEI Texas, Inc., Dominion
Cogen, Inc., Dominion Energy, Inc., Dominion Resources, Inc. and
the Borrower.
"Collateral" means the collective reference to all property,
and the proceeds thereof, described in the Collateral Security
Documents.
-7-
"Collateral Security Documents" means the Deposit and
Disbursement Agreement(s), the Pledge Agreement(s) and the
Security Agreements.
"Commitment" means, relative to any Lender, such Lender's
obligation to make Loans pursuant to Section 2.1.
"Commitment Amount" means $125,000,000.
"Contingent Liability" means any agreement, undertaking or
arrangement by which any Person guarantees, endorses or otherwise
becomes or is contingently liable upon (by direct or indirect
agreement, contingent or otherwise, to provide funds for payment,
to supply funds to, or otherwise to invest in, a debtor, or
otherwise to assure a creditor against loss) the indebtedness,
obligation or any other liability of any other Person (other than
by endorsements of instruments in the course of collection), or
guarantees the payment of dividends or other distributions upon
the shares of any other Person. The amount of any Person's
obligation under any Contingent Liability shall be calculated on
a net basis (i.e., after taking into effect agreements,
undertakings and other arrangements between the Person whose
obligations are being guaranteed and the counterparty to such
Person's obligations) and shall (subject to any limitation set
forth therein) be deemed to be the outstanding net principal
amount (or maximum net principal amount, if larger) of the debt,
obligation or other liability guaranteed thereby, or, if the
principal amount is not stated or determinable, the maximum
reasonably anticipated net liability in respect thereof as
determined by the Person in good faith, provided that (y) the
amount of any Contingent Liability arising out of any
indebtedness, obligation or liability other than the items
described in clauses (a), (b) and (c) of the definition of
"Indebtedness" shall be deemed to be zero unless and until the
Borrower's independent auditors have quantified the amount of the
exposure thereunder (and thereafter shall be deemed to be the
amount so quantified from time to time), and (z) the amount of
any Contingent Liability consisting of a "keep-well", "make well"
or other similar arrangement shall be deemed to be zero unless
and until the Borrower is required to make any payment with
respect thereto (and shall thereafter be deemed to be the amount
required to be paid)..
"Continuation/Conversion Notice" means a notice of
continuation or conversion and certificate duly executed by an
Authorized Officer of the Borrower, substantially in the form of
Exhibit C hereto.
"Controlled Group" means all members of a controlled group
of corporations and all members of a controlled group of trades
or businesses (whether or not incorporated) under common control
-8-
which, together with the Borrower, are treated as a single
employer under Section 414(b) or 414(c) of the Code or Section
4001 of ERISA.
"Debt Acquisitions" is defined in the fifth recital.
"Debt Assignment Documents" means the documents pursuant to
which the Debt Acquisitions are consummated.
"Default" means any Event of Default or any condition,
occurrence or event which, after notice or lapse of time or both,
would constitute an Event of Default.
"Deposit and Disbursement Agreement" means the Deposit and
Disbursement Agreement executed and delivered by the Borrower
pursuant to Section 5.1.11, substantially in the form of Exhibit
D hereto, as amended, supplemented, restated or otherwise
modified from time to time.
"Disclosure Schedule" means the Disclosure Schedule attached
hereto as Schedule 1, as it may be amended, supplemented or
otherwise modified from time to time by the Borrower with the
written consent of the Agent and the Required Lenders.
"Dollar" and the sign "$" mean lawful money of the United
States.
"Domestic Office" means, relative to any Lender, the office
of such Lender designated as such below its signature hereto or
designated in the Lender Assignment Agreement or such other
office of a Lender (or any successor or assign of such Lender)
within the United States as may be designated from time to time
by notice from such Lender, as the case may be, to each other
Person party hereto.
"Dominion" is defined in the first recital.
"EC1" is defined in the second recital.
"EC3" is defined in the third recital.
"EC5" is defined in the sixth recital.
"EDCC" is defined in the first recital.
"EDCC Distribution" means any distribution received by the
Borrower from EDCC or any of its Subsidiaries, whether in cash or
other property, and whether in respect of dividends, advances or
otherwise except any dividends issued pursuant to paragraph 1 of
Article FOURTH of the amended certificate of incorporation of
EDCC to the extent such dividends are required to and are
-9-
promptly recontributed to EDCC pursuant to a Recontribution
Agreement (as defined in such paragraph 1).
"Effective Date" means the date this Agreement becomes
effective pursuant to Section 10.8.
"Environmental Laws" means all applicable federal, state or
local statutes, laws, ordinances, codes, rules, regulations and
guidelines (including consent decrees and administrative orders)
relating to public health and safety and protection of the
environment.
"Equity Issuance" means (a) any issuance or sale by the
Borrower or any of its Subsidiaries after the Effective Date of
(i) any capital stock, (ii) any warrants or options exercisable
in respect of capital stock, (iii) any other security or
instrument representing an equity interest (or the right to
obtain an equity interest) in the issuance or selling Person or
(b) the receipt by the Company or by any of its Subsidiaries
after the Effective Date of any capital contribution received
(whether or not evidenced by any equity security issued by the
recipient of such contribution).
"Equity Support Agreements" means the equity support and
guaranty agreements more specifically described in Schedule 8.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and any successor statute of similar import,
together with the regulations thereunder, in each case as in
effect from time to time. References to sections of ERISA also
refer to any successor sections.
"Event of Default" is defined in Section 8.1.
"Federal Funds Rate" means, for any period, a fluctuating
interest rate per annum equal for each day during such period to
(a) 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 for such day (or, if such day is not a Business
Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York; or
(b) if such rate is not so published for any day which
is a Business Day, the average of the quotations for such
day on such transactions received by Scotiabank from three
federal funds brokers of recognized standing selected by it.
-10-
"Financial Projections" means the pro forma financial
projections, dated April 1, 1997, a copy of which is attached
hereto as Schedule 7.
"Fiscal Quarter" means any quarter of a Fiscal Year.
"Fiscal Year" means any period of twelve consecutive
calendar months ending on December 31; references to a Fiscal
Year with a number corresponding to any calendar year (e.g. the
"1996 Fiscal Year") refer to the Fiscal Year ending on the
December 31 occurring during such calendar year.
"F.R.S. Board" means the Board of Governors of the Federal
Reserve System or any successor thereto.
"GAAP" is defined in Section 1.4.
"Guaranty Agreement (By Enron)" means the Guaranty Agreement
(By Enron) dated as of March 27, 1997 issued by Enron Corp.
"Hazardous Material" means
(a) any "hazardous substance", as defined by CERCLA;
(b) any "hazardous waste", as defined by the Resource
Conservation and Recovery Act, as amended;
(c) any petroleum product; or
(d) any pollutant or contaminant or hazardous,
dangerous or toxic chemical, material or substance within
the meaning of any other applicable federal, state or local
law, regulation, ordinance or requirement (including consent
decrees and administrative orders) relating to or imposing
liability or standards of conduct concerning any hazardous,
toxic or dangerous waste, substance or material, all as
amended or hereafter amended.
"Hedging Obligations" means, with respect to any Person, all
liabilities of such Person under interest rate swap agreements,
interest rate cap agreements and interest rate collar agreements,
and all other agreements or arrangements designed to protect such
Person against fluctuations in interest rates or currency
exchange rates.
"herein", "hereof", "hereto", "hereunder" and similar terms
contained in this Agreement or any other Loan Document refer to
this Agreement or such other Loan Document, as the case may be,
as a whole and not to any particular Section, paragraph or
provision of this Agreement or such other Loan Document.
-11-
"Impermissible Qualification" means, relative to the opinion
or certification of any independent public accountant as to any
financial statement of the Borrower, any qualification or
exception to such opinion or certification
(a) which is of a "going concern" or similar nature;
(b) except with respect to EC5 and Cogen Venture,
which relates to the limited scope of examination of matters
relevant to such financial statement; or
(c) which relates to the treatment or classification
of any item in such financial statement and which, as a
condition to its removal, would require an adjustment to
such item the effect of which would be to cause the Borrower
to be in default of any of its obligations under Section
7.2.4.
"including" means including without limiting the generality
of any description preceding such term, and, for purposes of this
Agreement and each other Loan Document, the parties hereto agree
that the rule of ejusdem generis shall not be applicable to limit
a general statement, which is followed by or referable to an
enumeration of specific matters, to matters similar to the
matters specifically mentioned.
"Income Tax Expense" means, for any period, as applied to
the Borrower, the provision for local, state, federal or foreign
income taxes on a consolidated basis for such period determined
in accordance with GAAP.
"Indebtedness" of any Person means, without duplication:
(a) all obligations of such Person for borrowed money
and all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments;
(b) all obligations, contingent or otherwise, relative
to the face amount of all letters of credit, whether or not
drawn, and banker's acceptances issued for the account of
such Person;
(c) all obligations of such Person as lessee under
leases which have been or should be, in accordance with
GAAP, recorded as Capitalized Lease Liabilities;
(d) all other items other than deferred taxes,
deferred revenue and deferred leases which, in accordance
with GAAP, would be included as liabilities on the liability
side of the balance sheet of such Person as of the date at
which Indebtedness is to be determined;
-12-
(e) net liabilities of such Person under all Hedging
Obligations;
(f) whether or not so included as liabilities in
accordance with GAAP, all obligations of such Person to pay
the deferred purchase price of property or services, and
indebtedness (excluding prepaid interest thereon) secured by
a Lien on property owned or being purchased by such Person
(including indebtedness arising under conditional sales or
other title retention agreements), whether or not such
indebtedness shall have been assumed by such Person or is
limited in recourse; and
(g) all Contingent Liabilities of such Person in
respect of any of the foregoing.
For all purposes of this Agreement, the Indebtedness of any
Person shall include the Indebtedness of any partnership or joint
venture in which such Person is a general partner or a joint
venturer, unless the indebtedness of such partnership or joint
venture is expressly nonrecourse to such Person.
"Indemnification Agreement" means the Indemnification
Agreement executed and delivered by Calpine pursuant to Section
5.1.22, substantially in the form of Exhibit L hereto, as
amended, supplemented, restated or otherwise modified from time
to time.
"Indemnification and Allocation Agreement" means the
Indemnification and Allocation Agreement dated as of March 27,
1997 by and between the Borrower and the Seller.
"Indemnified Liabilities" is defined in Section 10.4.
"Indemnified Parties" is defined in Section 10.4.
"Independent Engineer" means the ▇▇▇▇▇▇ Group, or such other
independent engineering firm as shall be engaged by the Agent to
examine the Projects, and to advise and render such other reports
to the Agent concerning the Projects or in connection with the
Transaction or the Basic Documents as the Agent shall deem
necessary or advisable.
"Interest Coverage Ratio" means, for the four most recent
Fiscal Quarters (or the period from the Effective Date to the
date of determination, if four Fiscal Quarters have not occurred
since the Effective Date), the ratio of (x) Cash Flow during such
period to (y) Interest Expense incurred during such period.
"Interest Expense" means, for any period, as applied to the
Borrower, the sum of (a) the total interest expense of the
-13-
Borrower and its consolidated Subsidiaries for such period as
determined in accordance with GAAP (other than interest expense
under the Calpine Subordinated Indebtedness that is not paid
currently or held under the Deposit and Disbursement Agreement as
provided in Section 7.2.6(b)(ii), plus (b) all but the principal
component of rentals in respect of Capitalized Lease Liabilities
paid, accrued, or scheduled to be paid or accrued by the Borrower
or its consolidated Subsidiaries, plus (c) capitalized interest
of the Borrower and its consolidated Subsidiaries (other than
capitalized interest under the Calpine Subordinated
Indebtedness).
"Interest Period" means, relative to any LIBO Rate Loans,
the period beginning on (and including) the date on which such
LIBO Rate Loan is made or continued as, or converted into, a LIBO
Rate Loan pursuant to Section 2.2 or 2.3 and ending on (but
excluding) the day which numerically corresponds to such date
one, three or six months thereafter (or, if such month has no
numerically corresponding day, on the last Business Day of such
month), in either case as the Borrower may select in its relevant
notice pursuant to Section 2.2 or 2.3; provided, however, that
(a) the Borrower shall not be permitted to select
Interest Periods to be in effect at any one time which have
expiration dates occurring on more than five different
dates;
(b) Interest Periods commencing on the same date for
Loans comprising part of the same Borrowing shall be of the
same duration; and
(c) if such Interest Period would otherwise end on a
day which is not a Business Day, such Interest Period shall
end on the next following Business Day (unless, if such
Interest Period applies to LIBO Rate Loans, such next
following Business Day is the first Business Day of a
calendar month, in which case such Interest Period shall end
on the Business Day next preceding such numerically
corresponding day).
"Investment" means, relative to any Person,
(a) any loan or advance made by such Person to any
other Person (excluding commission, travel and similar
advances to officers and employees made in the ordinary
course of business);
(b) any Contingent Liability of such Person; and
(c) any ownership or similar interest held by such
Person in any other Person.
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The amount of any Investment shall be the original principal or
capital amount thereof less all returns of principal or equity
thereon (and without adjustment by reason of the financial
condition of such other Person) and shall, if made by the
transfer or exchange of property other than cash, be deemed to
have been made in an original principal or capital amount equal
to the fair market value of such property.
"Lender Assignment Agreement" means a Lender Assignment
Agreement substantially in the form of Exhibit I hereto.
"Lenders" is defined in the preamble.
"LIBO Rate" is defined in Section 3.2.1.
"LIBO Rate Loan" means a Loan bearing interest, at all times
during an Interest Period applicable to such Loan, at a fixed
rate of interest determined by reference to the LIBO Rate
(Reserve Adjusted).
"LIBO Rate (Reserve Adjusted)" is defined in Section 3.2.1.
"LIBOR Office" means, relative to any Lender, the office of
such Lender designated as such below its signature hereto or
designated in the Lender Assignment Agreement or such other
office of a Lender as designated from time to time by notice from
such Lender to the Borrower and the Agent, whether or not outside
the United States, which shall be making or maintaining LIBO Rate
Loans of such Lender hereunder.
"LIBOR Reserve Percentage" is defined in Section 3.2.1.
"Lien" means any security interest, mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance, lien
(statutory or otherwise), charge against or interest in property
to secure payment of a debt or performance of an obligation or
other priority or preferential arrangement of any kind or nature
whatsoever.
"Loan" is defined in Section 2.1.
"Loan Document" means this Agreement, the Notes, the
Collateral Security Documents, the Subordination Agreement, the
Swap Agreements, the Indemnification Agreement and each other
agreement, document or instrument delivered in connection
therewith.
"Loan Purchase Agreement" means the Loan Purchase Agreement
executed and delivered by Calpine and the Borrower pursuant to
Section 5.1.21, substantially in the form of Exhibit K hereto, as
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amended, supplemented, restated or otherwise modified from time
to time.
"Material Adverse Effect" means (a) a material adverse
change in, or a material adverse effect upon the Transaction,
either Project, or the financial condition, operations or assets
(including any power projects) of the Borrower and its
Subsidiaries taken as a whole; or (b) a material adverse change
in the ability of the Borrower or any other Obligor to perform
under any Loan Document.
"Monthly Payment Date" means the last day of each calendar
month or, if any such day is not a Business Day, the next
succeeding Business Day.
"Net Available Proceeds" means (i) in the case of any Asset
Sale, the gross cash proceeds available to the Borrower less all
transaction costs, and less the amount of all Indebtedness (other
than Loans) secured by the Property sold and repaid in connection
with such Asset Sale, (ii) in the case of any Equity Issuance,
the gross consideration available to the Borrower received by or
for account of the issuer less underwriting and brokerage
commissions, discounts and fees and other professional fees and
expenses relating to such issuance that are payable by the
issuer, and all transaction costs, and less all amounts paid by
the Borrower or its Subsidiaries to third parties under the
Project Documents and all Project Indebtedness Payments made with
the proceeds of such Equity Issuance and (iii) in the case of
Project Indebtedness Payments or EDCC Distributions, the gross
amount (except for netting of payments under Hedging Obligations)
received by the Borrower with respect thereto.
"Note" means a promissory note of the Borrower payable to
any Lender, in the form of Exhibit A hereto (as such promissory
note may be amended, endorsed or otherwise modified from time to
time), evidencing the aggregate Indebtedness of the Borrower to
such Lender resulting from outstanding Loans, and also means all
other promissory notes accepted from time to time in substitution
therefor or renewal thereof.
"Obligations" means all obligations (monetary or otherwise)
of the Borrower and each other Obligor arising under or in
connection with this Agreement, the Notes and each other Loan
Document.
"Obligor" means the Borrower or any other Person (other
than the Agent or any Lender) obligated under any Loan Document.
"Organic Document" means, relative to any Obligor, its
certificate of incorporation, its by-laws and all shareholder
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agreements, voting trusts and similar arrangements applicable to
any of its authorized shares of capital stock.
"Participant" is defined in Section 10.11.
"PBGC" means the Pension Benefit Guaranty Corporation and
any entity succeeding to any or all of its functions under ERISA.
"Pension Plan" means a "pension plan", as such term is
defined in section 3(2) of ERISA, which is subject to Title IV of
ERISA (other than a multiemployer plan as defined in section
4001(a)(3) of ERISA), and to which the Borrower or any
corporation, trade or business that is, along with the Borrower,
a member of a Controlled Group, may have liability, including any
liability by reason of having been a substantial employer within
the meaning of section 4063 of ERISA at any time during the
preceding five years, or by reason of being deemed to be a
contributing sponsor under section 4069 of ERISA.
"Percentage" means, relative to any Lender, the percentage
set forth opposite its signature hereto or set forth in the
Lender Assignment Agreement, as such percentage may be adjusted
from time to time pursuant to Lender Assignment Agreement(s)
executed by such Lender and its Assignee Lender(s) and delivered
pursuant to Section 10.11.
"Person" means any natural person, corporation, partnership,
firm, association, trust, government, governmental agency or any
other entity, whether acting in an individual, fiduciary or other
capacity.
"Plan" means any Pension Plan or Welfare Plan.
"Pledge Agreement" means the Pledge Agreement executed and
delivered pursuant to Section 5.1.10, substantially in the form
of Exhibit G hereto, as amended, supplemented, restated or
otherwise modified from time to time.
"Process Agent" is defined in Section 10.13(b).
"Project Documents" means (i) the "Project Documents" as
defined in the Clear Lake Credit Agreement which have not
terminated, including those more specifically described in
Schedule 3 and (ii) "Material Project Contracts" as defined in
the Cogenron Credit Agreement which have not terminated,
including those more specifically described in Schedule 4.
"Project Indebtedness Payments" means payments of principal
and interest under the Project Loan Documents.
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"Project Loan Documents" means (i) the Clear Lake Credit
Agreement and each other "Credit Document" (as defined in the
Clear Lake Credit Agreement), including those more specifically
described in Schedule 5 and (ii) the Cogenron Credit Agreement
and each other "Loan Document" (as defined in the Cogenron Credit
Agreement), including those more specifically described in
Schedule 6.
"Project Swap Agreements" means (i) the Interest Rate and
Currency Exchange Agreement dated June 23, 1989 between Barclays
Bank PLC and Clear Lake and (ii) the Interest Rate and Currency
Exchange Agreement dated January 22, 1991 between The Bank of New
York and Cogenron.
"Projects" means the Clear Lake Project and the Cogenron
Project.
"Property" means any right or interest in or to property of
any kind whatsoever, whether real, personal or mixed and whether
tangible or intangible.
"Purchase Agreement" is defined in the first recital.
"Purchase Documents" means the Purchase Agreement, the
Guaranty Agreement (By Enron) and the Indemnification and
Allocation Agreement.
"Quarterly Payment Date" means the last day of each March,
June, September, and December or, if any such day is not a
Business Day, the next succeeding Business Day.
"Release" means a "release", as such term is defined in
CERCLA.
"Reorganization Agreement" means that certain Reorganization
Agreement dated as of April 14, 1989 by and among Dominion
Resources, Inc., Dominion, Enron Corporation and EDCC, as amended
by that certain Amendment to Reorganization Agreement dated as of
June 30, 1991 by and among such parties.
"Required Lenders" means, at any time, Lenders holding at
least 66 2/3% of the then aggregate outstanding principal amount
of the Notes then held by the Lenders, or, if no such principal
amount is then outstanding, Lenders having at least 66 2/3% of
the Commitments.
"Resource Conservation and Recovery Act" means the Resource
Conservation and Recovery Act, 42 U.S.C. Section 690, et seq., as
in effect from time to time.
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"Security Agreements" means the Security Agreement and the
Assignment and Security Agreement executed and delivered pursuant
to Section 5.1.12, substantially in the form of Exhibit E and
Exhibit F hereto, as amended, supplemented, restated or otherwise
modified from time to time.
"Seller" is defined in the first recital.
"Senior Debt" means the outstanding principal amount of all
Indebtedness of the Borrower and its Subsidiaries of the nature
referred to in clauses (a), (b), (c) and (f) of the definition of
"Indebtedness," but excluding Calpine Subordinated Indebtedness.
"Senior Debt to Cash Flow Ratio" means, for any period of
four Fiscal Quarters (or if four Fiscal Quarters have not passed
from the Effective Date, the period from the Effective Date to
the most recent Fiscal Quarter end), the ratio of (x) the
consolidated Senior Debt of the Borrower and its Subsidiaries as
of the end of the most recent Fiscal Quarter (after giving effect
to payments made as of the end of such Fiscal Quarter) to
(y) Cash Flow during such period (and, if four Fiscal Quarters
have not passed from the Effective Date, converted to an
annualized amount).
"Shareholder's Agreement" means the Stockholder's Agreement
dated as of June 27, 1988, among Enron Corp., Dominion Cogen,
Inc. and Dominion Resources, Inc., as assigned by Enron Corp. to
Calpine.
"Standstill Agreements" means the Clear Lake Standstill
Agreement and the Cogenron Standstill Agreement.
"Stated Maturity Date" means June 22, 1998.
"Stock Purchase" is defined in the first recital.
"Subordination Agreement" means the Subordination Agreement
executed and delivered by Calpine pursuant to Section 5.1.13,
substantially in the form of Exhibit H hereto, as amended,
supplemented, restated or otherwise modified from time to time.
"Subordination Agreement (Clear Lake)" means the Amended and
Restated Subordination Agreement dated as of January 18, 1994, by
and among Clear Lake, EDCC and Barclays Bank PLC, as agent, as
amended, supplemented, restated or otherwise modified from time
to time.
"Subsidiary" means, with respect to any Person, any
corporation of which 50% or more of the outstanding capital stock
having ordinary voting power to elect a majority of the board of
directors of such corporation (irrespective of whether at the
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time capital stock of any other class or classes of such
corporation shall or might have voting power upon the occurrence
of any contingency) is at the time directly or indirectly owned
by such Person, by such Person and one or more other Subsidiaries
of such Person, or by one or more other Subsidiaries of such
Person.
"Swap Agreements" means (i) the Interest Rate and Currency
Exchange Agreement dated concurrently herewith between the
Borrower and Scotiabank, relating to the Cogenron Project, and
(ii) the Interest Rate and Currency Exchange Agreement dated
concurrently herewith between the Borrower and Scotiabank
relating to the Clear Lake Project.
"Tangible Net Worth" means the consolidated net worth of the
Borrower and its Subsidiaries (including the Calpine Subordinated
Indebtedness) after subtracting therefrom the aggregate amount of
any intangible assets of the Borrower and its Subsidiaries,
including goodwill, franchises, licenses, patents, trademarks,
trade names, copyrights, service marks and brand names.
"Taxes" is defined in Section 4.6.
"Transaction" is defined in the fifth recital.
"type" means, relative to any Loan, the portion thereof, if
any, being maintained as a Base Rate Loan or a LIBO Rate Loan.
"United States" or "U.S." means the United States of
America, its fifty States and the District of Columbia.
"Welfare Plan" means a "welfare plan", as such term is
defined in section 3(1) of ERISA.
"Wholly Owned Subsidiary" means a Subsidiary all the capital
stock of which (other than directors' qualifying shares) is owned
by the Borrower or another Wholly Owned Subsidiary.
SECTION 1.2. Use of Defined Terms. Unless otherwise
defined or the context otherwise requires, terms for which
meanings are provided in this Agreement shall have such meanings
when used in the Disclosure Schedule and in each Note, Borrowing
Request, Continuation/Conversion Notice, Loan Document, notice
and other communication delivered from time to time in connection
with this Agreement or any other Loan Document. Unless the
context otherwise requires, references (i) to agreements shall be
deemed to mean and include such agreements as amended,
supplemented and otherwise modified from time to time in a manner
not in violation of the Loan Documents and (ii) to parties to
agreements shall be deemed to include the permitted successors
and assigns of such parties.
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SECTION 1.3. Cross-References. Unless otherwise specified,
references in this Agreement and in each other Loan Document to
any Article or Section are references to such Article or Section
of this Agreement or such other Loan Document, as the case may
be, and, unless otherwise specified, references in any Article,
Section or definition to any clause are references to such clause
of such Article, Section or definition.
SECTION 1.4. Accounting and Financial Determinations.
Unless otherwise specified, all accounting terms used herein or
in any other Loan Document shall be interpreted, all accounting
determinations and computations hereunder or thereunder
(including under Section 7.2.4) shall be made, and all financial
statements required to be delivered hereunder or thereunder shall
be prepared in accordance with, those generally accepted
accounting principles ("GAAP") applied in the preparation of the
financial statements referred to in Section 6.5.
ARTICLE II
COMMITMENTS, BORROWING PROCEDURES AND NOTES
SECTION 2.1. Commitments. On the terms and subject to the
conditions of this Agreement (including Article V), each Lender
severally agrees to make Loans pursuant to the Commitments
described in this Section 2.1. On or before June 30, 1997, upon
the satisfaction or waiver of the conditions precedent set forth
in Article V, each Lender will make Loans (relative to such
Lender, and of any type, its "Loans") to the Borrower equal to
such Lender's Percentage of $125,000,000. The commitment of each
Lender described in this Section 2.1 is herein referred to as its
"Commitment". No amounts paid or prepaid with respect to any
Loans may be reborrowed.
SECTION 2.2. Borrowing Procedure. By delivering a
Borrowing Request to the Agent on or before 10:00 a.m., San
Francisco time, on a Business Day not later than June 30, 1997,
the Borrower may from time to time irrevocably request, on not
less than three Business Days' notice, in the case of LIBO Rate
Loans, or one Business Day's notice, in the case of Base Rate
Loans, that a Borrowing be made in the amount of $125,000,000.
On the terms and subject to the conditions of this Agreement,
each Borrowing shall be comprised of the type of Loans, and shall
be made on the Business Day, specified in such Borrowing Request.
On or before 11:00 a.m., San Francisco time, on such Business Day
each Lender shall deposit with the Agent same day funds in an
amount equal to such Lender's Percentage of the requested
Borrowing. Such deposit will be made to an account which the
Agent shall specify from time to time by notice to the Lenders.
To the extent funds are received from the Lenders by such time,
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the Agent shall make such funds available to the Borrower by wire
transfer to the accounts the Borrower shall have specified in its
Borrowing Request by 12:00 p.m. on such Business Day. No
Lender's obligation to make any Loan shall be affected by any
other Lender's failure to make any Loan.
SECTION 2.3. Continuation and Conversion Elections. By
delivering a Continuation/Conversion Notice to the Agent on or
before 10:00 a.m., San Francisco time, on a Business Day, the
Borrower may from time to time irrevocably elect, on not less
than three nor more than five Business Days' notice that all, or
any portion in an aggregate minimum amount of $5,000,000, of any
Loans be, in the case of Base Rate Loans, converted into LIBO
Rate Loans or, in the case of LIBO Rate Loans, be converted into
a Base Rate Loan or continued as a LIBO Rate Loan (in the absence
of delivery of a Continuation/ Conversion Notice with respect to
any LIBO Rate Loan at least three Business Days before the last
day of the then current Interest Period with respect thereto,
such LIBO Rate Loan shall, on such last day, automatically
convert to a Base Rate Loan); provided, however, that (i) each
such conversion or continuation shall be prorated among the
applicable outstanding Loans of all Lenders, and (ii) no portion
of the outstanding principal amount of any Loans may be continued
as, or be converted into, LIBO Rate Loans when any Default has
occurred and is continuing. The Agent shall promptly transmit
the information in each Continuation/Conversion Notice to each
Lender.
SECTION 2.4. Funding. Each Lender may, if it so elects,
fulfill its obligation to make, continue or convert LIBO Rate
Loans hereunder by causing one of its foreign branches or
Affiliates (or an international banking facility created by such
Lender) to make or maintain such LIBO Rate Loan; provided,
however, that such LIBO Rate Loan shall nonetheless be deemed to
have been made and to be held by such Lender, and the obligation
of the Borrower to repay such LIBO Rate Loan shall nevertheless
be to such Lender for the account of such foreign branch,
Affiliate or international banking facility; provided, further,
that each Lender shall use reasonable efforts in making any such
election to minimize the costs payable by Borrower hereunder with
respect to any Loan or Commitment. In addition, the Borrower
hereby consents and agrees that, for purposes of any
determination to be made for purposes of Sections 4.1, 4.2, 4.3
or 4.4, it shall be conclusively assumed that each Lender elected
to fund all LIBO Rate Loans by purchasing Dollar deposits in its
LIBOR Office's interbank eurodollar market.
SECTION 2.5. Notes. Each Lender's Loans under its
Commitment shall be evidenced by a Note payable to the order of
such Lender in a maximum principal amount equal to such Lender's
Percentage of the original Commitment Amount. The Borrower
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hereby irrevocably authorizes each Lender to make (or cause to be
made) appropriate notations on the grid attached to such Lender's
Note (or on any continuation of such grid), which notations, if
made, shall evidence, inter alia, the date of, the outstanding
principal of, and the interest rate and Interest Period
applicable to the Loans evidenced thereby. Such notations shall
be conclusive and binding on the Borrower absent manifest error;
provided, however, that the failure of any Lender to make any
such notations shall not limit or otherwise affect any
Obligations of the Borrower.
ARTICLE III
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES
SECTION 3.1. Repayments and Prepayments. The Borrower
shall repay in full the unpaid principal amount of each Loan upon
the Stated Maturity Date therefor. Prior thereto, the Borrower
(a) may, from time to time on any Business Day, make
a voluntary prepayment, in whole or in part, of the
outstanding principal amount of any Loans; provided,
however, that
(i) any such prepayment shall be made pro rata
among Loans of the same type and, if applicable, having
the same Interest Period of all Lenders;
(ii) no such prepayment of any LIBO Rate Loan
may be made on any day other than the last day of the
Interest Period for such Loan, unless Borrower also
pays all losses and expenses as a result of such
prepayment as provided in Section 4.4;
(iii) all such voluntary prepayments shall
require at least three but no more than five Business
Days' prior written notice to the Agent; and
(iv) all such voluntary partial prepayments shall
be in an aggregate minimum amount of $500,000 and an
integral multiple of $500,000;
(b) shall, within two Business Day's after receipt of
Net Available Proceeds from (i) Asset Sales, (ii) Equity
Issuances, (iii) Project Indebtedness Payments (excluding
that portion of the first Project Indebtedness Payments made
after the Effective Date under the Clear Lake Credit
Agreement and the Cogenron Credit Agreement representing
interest accrued under each of the Clear Lake Credit
Agreement and the Cogenron Credit Agreement from the last
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principal payment date under each of the Clear Lake Credit
Agreement and the Cogenron Credit Agreement through the
Effective Date, which amounts may be used by the Borrower to
repay Calpine Subordinated Indebtedness or to pay a dividend
to Calpine), or (iv) EDCC Distributions, deposit any such
amounts with the Agent to be held pursuant to the Deposit
and Disbursement Agreement and applied first to repayment of
interest on the Loans, and then to repayment of the
principal amount of the Loans, such repayment to occur (A)
in the case of Base Rate Loans, on the third Business Day
after receipt of such Net Available Proceeds by the
Borrower, and (B) in the case of LIBO Rate Loans, on the
next day or days on which amounts are payable with respect
thereto without the payment of losses and expenses as
described in Section 4.4; and
(c) shall, immediately upon any acceleration of the
Stated Maturity Date of any Loans pursuant to Section 8.2
or Section 8.3, repay all Loans, unless, pursuant to
Section 8.3, only a portion of all Loans is so accelerated.
Each prepayment of any Loans made pursuant to this Section
shall be without premium or penalty, except as may be required by
Section 4.4.
SECTION 3.2. Interest Provisions. Interest on the
outstanding principal amount of Loans shall accrue and be payable
in accordance with this Section 3.2.
SECTION 3.2.1. Rates. Pursuant to an appropriately
delivered Borrowing Request or Continuation/Conversion Notice,
the Borrower may elect that Loans comprising a Borrowing accrue
interest at a rate per annum:
(a) on that portion maintained from time to time as a
Base Rate Loan, equal to the sum of the Alternate Base Rate
from time to time in effect plus a margin of .75%; and
(b) on that portion maintained as a LIBO Rate Loan,
during each Interest Period applicable thereto, equal to
the sum of the LIBO Rate (Reserve Adjusted) for such
Interest Period plus a margin of 1.25%.
The "LIBO Rate (Reserve Adjusted)" means, relative to any
Loan to be made, continued or maintained as, or converted into, a
LIBO Rate Loan for any Interest Period, a rate per annum (rounded
upwards, if necessary, to the nearest 1/16 of 1%) determined
pursuant to the following formula:
LIBO Rate = LIBO Rate
(Reserve Adjusted) 1.00 - LIBOR Reserve Percentage
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The LIBO Rate (Reserve Adjusted) for any Interest Period
for LIBO Rate Loans will be determined by the Agent on the basis
of the LIBOR Reserve Percentage in effect on, and the applicable
rates furnished to and received by the Agent from Scotiabank, two
Business Days before the first day of such Interest Period.
"LIBO Rate" means, relative to any Interest Period for LIBO
Rate Loans, the rate of interest equal to the average (rounded
upwards, if necessary, to the nearest 1/16 of 1%) of the rates
per annum at which Dollar deposits in immediately available funds
are offered to Scotiabank's LIBOR Office in the London interbank
market as at or about 11:00 a.m. London time two Business Days
prior to the beginning of such Interest Period for delivery on
the first day of such Interest Period, and in an amount
approximately equal to the amount of the LIBO Rate Loans and for
a period approximately equal to such Interest Period.
"LIBOR Reserve Percentage" means, relative to any Interest
Period for LIBO Rate Loans, the reserve percentage (expressed as
a decimal) equal to the maximum aggregate reserve requirements
(including all basic, emergency, supplemental, marginal and other
reserves and taking into account any transitional adjustments or
other scheduled changes in reserve requirements) specified under
regulations issued from time to time by the F.R.S. Board and then
applicable to assets or liabilities consisting of and including
"Eurocurrency Liabilities", as currently defined in Regulation D
of the F.R.S. Board, having a term approximately equal or
comparable to such Interest Period.
All LIBO Rate Loans shall bear interest from and including
the first day of the applicable Interest Period to (but not
including) the last day of such Interest Period at the interest
rate determined as applicable to such LIBO Rate Loan.
SECTION 3.2.2. Post-Maturity Rates. After the date any
principal amount of any Loan is due and payable (whether on the
Stated Maturity Date, upon acceleration or otherwise), or after
any other monetary Obligation of the Borrower shall have become
due and payable, the Borrower shall pay, but only to the extent
permitted by law, interest (after as well as before judgment) on
such amounts at a rate per annum equal to the Alternate Base Rate
plus a margin of 2.75%.
SECTION 3.2.3. Payment Dates. Interest accrued on each
Loan shall be payable, without duplication:
(a) on the Stated Maturity Date therefor;
(b) on the date of any payment or prepayment, in
whole or in part, of principal outstanding on such Loan;
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(c) with respect to Base Rate Loans, on each
Quarterly Payment Date occurring after the Effective Date;
(d) with respect to LIBO Rate Loans, the last day of
each applicable Interest Period (and, if such Interest
Period shall exceed 3 months, on each day which occurs
during such Interest Period every three months from the
first day of such Interest Period);
(e) with respect to any Base Rate Loans converted
into LIBO Rate Loans on a day when interest would not
otherwise have been payable pursuant to clause (c), on the
date of such conversion; and
(f) on that portion of any Loans the Stated Maturity
Date of which is accelerated pursuant to Section 8.2 or
Section 8.3, immediately upon such acceleration.
Interest accrued on Loans or other monetary Obligations arising
under this Agreement or any other Loan Document after the date
such amount is due and payable (whether on the Stated Maturity
Date, upon acceleration or otherwise) shall be payable upon
demand.
ARTICLE IV
CERTAIN LIBO RATE AND OTHER PROVISIONS
SECTION 4.1. LIBO Rate Lending Unlawful. If any Lender
shall determine (which determination shall, upon notice thereof
to the Borrower and the Lenders, be conclusive and binding on the
Borrower) that the introduction of or any change in or in the
interpretation of any law makes it unlawful, or any central bank
or other governmental authority asserts that it is unlawful, for
such Lender to make, continue or maintain any Loan as, or to
convert any Loan into, a LIBO Rate Loan, the obligations of all
Lenders to make, continue, maintain or convert any such Loans
shall, upon such determination, forthwith be suspended until such
Lender shall notify the Agent that the circumstances causing such
suspension no longer exist, and all LIBO Rate Loans shall
automatically convert into Base Rate Loans at the end of the then
current Interest Periods with respect thereto or sooner, if
required by such law or assertion.
SECTION 4.2. Deposits Unavailable. If the Agent shall
have determined that
(a) Dollar certificates of deposit or Dollar
deposits, as the case may be, in the relevant amount and
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for the relevant Interest Period are not available to
Scotiabank in its relevant market; or
(b) by reason of circumstances affecting Scotiabank's
relevant market, adequate means do not exist for
ascertaining the interest rate applicable hereunder to LIBO
Rate Loans,
then, upon notice from the Agent to the Borrower and the Lenders,
the obligations of all Lenders under Section 2.2 and Section 2.3
to make or continue any Loans as, or to convert any Loans into,
LIBO Rate Loans shall forthwith be suspended until the Agent
shall notify the Borrower and the Lenders that the circumstances
causing such suspension no longer exist.
SECTION 4.3. Increased LIBO Rate Loan Costs, etc. The
Borrower agrees to reimburse each Lender for any increase in the
cost to such Lender of, or any reduction in the amount of any sum
receivable by such Lender in respect of, making, continuing or
maintaining (or of its obligation to make, continue or maintain)
any Loans as, or of converting (or of its obligation to convert)
any Loans into, LIBO Rate Loans as a result in any change after
the Effective Date in applicable law, regulation, rule, decree or
regulatory requirement or in the interpretation or application by
any judicial or regulatory authority of any law, regulation,
rule, decree or regulatory requirement. Such Lender shall
promptly notify the Agent and the Borrower in writing of the
occurrence of any such event, such notice to state, in reasonable
detail, the reasons therefor and the additional amount required
fully to compensate such Lender for such increased cost or
reduced amount. Such additional amounts shall be payable by the
Borrower directly to such Lender within five days of its receipt
of such notice, and such notice shall, in the absence of manifest
error, be conclusive and binding on the Borrower.
SECTION 4.4. Funding Losses. In the event any Lender
shall incur any loss or expense (including any loss or expense
incurred by reason of the liquidation or reemployment of deposits
or other funds acquired by such Lender to make, continue or
maintain any portion of the principal amount of any Loan as, or
to convert any portion of the principal amount of any Loan into,
a LIBO Rate Loan) as a result of
(a) any conversion or repayment or prepayment of the
principal amount of any LIBO Rate Loans on a date other
than the scheduled last day of the Interest Period
applicable thereto, whether pursuant to Section 3.1 or
otherwise;
(b) any Loans not being made as LIBO Rate Loans in
accordance with the Borrowing Request therefor; or
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(c) any Loans not being continued as, or converted
into, LIBO Rate Loans in accordance with the Continuation/
Conversion Notice therefor,
then, upon the written notice of such Lender to the Borrower
(with a copy to the Agent), the Borrower shall, within five days
of its receipt thereof, pay directly to such Lender such amount
as will (in the reasonable determination of such Lender)
reimburse such Lender for such loss or expense. Such written
notice (which shall include calculations in reasonable detail)
shall, in the absence of manifest error, be conclusive and
binding on the Borrower.
SECTION 4.5. Increased Capital Costs. If any change in,
or the introduction, adoption, effectiveness, interpretation,
reinterpretation or phase-in of, any law or regulation,
directive, guideline, decision or request (whether or not having
the force of law) of any court, central bank, regulator or other
governmental authority causes the amount of capital required or
expected to be maintained by any Lender or any Person controlling
such Lender to be increased, and such Lender determines (in its
reasonable discretion) that the rate of return on its or such
controlling Person's capital as a consequence of its Commitment
or the Loans made by such Lender is reduced to a level below that
which such Lender or such controlling Person could have achieved
but for the occurrence of any such circumstance, then, in any
such case upon notice from time to time by such Lender to the
Borrower, the Borrower shall immediately pay directly to such
Lender additional amounts sufficient to compensate such Lender or
such controlling Person for such reduction in rate of return. A
statement of such Lender as to any such additional amount or
amounts (including calculations thereof in reasonable detail)
shall, in the absence of manifest error and if made in good
faith, be conclusive and binding on the Borrower. In determining
such amount, such Lender may use any method of averaging and
attribution that it (in its good faith discretion) shall deem
applicable.
SECTION 4.6. Taxes. All payments by the Borrower of
principal of, and interest on, the Loans and all other amounts
payable hereunder shall be made free and clear of and without
deduction for any present or future income, excise, stamp or
franchise taxes and other taxes, fees, duties, withholdings or
other charges of any nature whatsoever imposed by any taxing
authority, but excluding franchise taxes and taxes imposed on or
measured by any Lender's net income or receipts (such non-
excluded items being called "Taxes"). In the event that any
withholding or deduction from any payment to be made by the
Borrower hereunder is required in respect of any Taxes pursuant
to any applicable law, rule or regulation, then the Borrower will
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(a) pay directly to the relevant authority the full
amount required to be so withheld or deducted;
(b) promptly forward to the Agent an official receipt
or other documentation satisfactory to the Agent evidencing
such payment to such authority; and
(c) pay to the Agent for the account of the Lenders
such additional amount or amounts as is necessary to ensure
that the net amount actually received by each Lender will
equal the full amount such Lender would have received had
no such withholding or deduction been required.
Moreover, if any Taxes are directly asserted against the Agent or
any Lender with respect to any payment received by the Agent or
such Lender hereunder, the Agent or such Lender may pay such
Taxes and the Borrower will promptly pay such additional amounts
(including any penalties, interest or expenses) as is necessary
in order that the net amount received by such person after the
payment of such Taxes (including any Taxes on such additional
amount) shall equal the amount such person would have received
had not such Taxes been asserted.
If the Borrower fails to pay any Taxes when due to the
appropriate taxing authority or fails to remit to the Agent, for
the account of the respective Lenders, the required receipts or
other required documentary evidence, the Borrower shall indemnify
the Lenders for any incremental Taxes, interest or penalties that
may become payable by any Lender as a result of any such failure.
For purposes of this Section 4.6, a distribution hereunder by the
Agent or any Lender to or for the account of any Lender shall be
deemed a payment by the Borrower.
Upon the request of the Borrower or the Agent, each Lender
that is organized under the laws of a jurisdiction other than the
United States shall, prior to the due date of any payments under
the Notes, execute and deliver to the Borrower and the Agent, on
or about the first scheduled payment date in each Fiscal Year,
one or more (as the Borrower or the Agent may reasonably request)
United States Internal Revenue Service Forms 4224 or Forms 1001
or such other forms or documents (or successor forms or
documents), appropriately completed, as may be applicable to
establish the extent, if any, to which a payment to such Lender
is exempt from withholding or deduction of Taxes.
SECTION 4.7. Payments, Computations, etc. Unless
otherwise expressly provided, all payments by the Borrower
pursuant to this Agreement, the Notes or any other Loan Document
shall be made by the Borrower to the Agent for the pro rata
account of the Lenders entitled to receive such payment. All
such payments required to be made to the Agent shall be made,
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without setoff, deduction or counterclaim, not later than 11:00
a.m., San Francisco time, on the date due, in same day or
immediately available funds, to such account as the Agent shall
specify from time to time by notice to the Borrower. Funds
received after that time shall be deemed to have been received by
the Agent on the next succeeding Business Day. The Agent shall
promptly remit in same day funds to each Lender its share, if
any, of such payments received by the Agent for the account of
such Lender. All interest and fees shall be computed on the
basis of the actual number of days (including the first day but
excluding the last day) occurring during the period for which
such interest or fee is payable over a year comprised of 360 days
(or, in the case of interest on a Base Rate Loan (other than when
calculated with respect to the Federal Funds Rate), 365 days or,
if appropriate, 366 days). Whenever any payment to be made shall
otherwise be due on a day which is not a Business Day, such
payment shall (except as otherwise required by clause (c) of the
definition of the term "Interest Period" with respect to LIBO
Rate Loans) be made on the next succeeding Business Day and such
extension of time shall be included in computing interest and
fees, if any, in connection with such payment.
SECTION 4.8. Sharing of Payments. If any Lender shall
obtain any payment or other recovery (whether voluntary,
involuntary, by application of setoff or otherwise) on account of
any Loan (other than pursuant to the terms of Sections 4.3, 4.4
and 4.5) in excess of its pro rata share of payments then or
therewith obtained by all Lenders, such Lender shall purchase
from the other Lenders such participations in Loans made by them
as shall be necessary to cause such purchasing Lender to share
the excess payment or other recovery ratably with each of them;
provided, however, that if all or any portion of the excess
payment or other recovery is thereafter recovered from such
purchasing Lender, the purchase shall be rescinded and each
Lender which has sold a participation to the purchasing Lender
shall repay to the purchasing Lender the purchase price to the
ratable extent of such recovery together with an amount equal to
such selling Lender's ratable share (according to the proportion
of
(a) the amount of such selling Lender's required
repayment to the purchasing Lender
to
(b) the total amount so recovered from the purchasing
Lender)
of any interest or other amount paid or payable by the purchasing
Lender in respect of the total amount so recovered. The Borrower
agrees that any Lender so purchasing a participation from another
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Lender pursuant to this Section may, to the fullest extent
permitted by law, exercise all its rights of payment with respect
to such participation as fully as if such Lender were the direct
creditor of the Borrower in the amount of such participation. If
under any applicable bankruptcy, insolvency or other similar law,
any Lender receives a secured claim in lieu of a setoff to which
this Section applies, such Lender shall, to the extent
practicable, exercise its rights in respect of such secured claim
in a manner consistent with the rights of the Lenders entitled
under this Section to share in the benefits of any recovery on
such secured claim.
SECTION 4.9. Actions of Affected Lenders. Each Lender
agrees to use reasonable efforts (including reasonable efforts to
change the booking office for its Loans) to avoid or minimize any
illegality pursuant to Section 4.1 or any amounts which might
otherwise be payable pursuant to Sections 4.3 or 4.5; provided,
however, that such efforts shall not cause the imposition on such
Lender of any additional costs or legal or regulatory burdens
deemed by such Lender to be material. In the event that such
reasonable efforts are insufficient to avoid all such illegality
or all amounts that might be payable pursuant to Sections 4.3 or
4.5, then the Borrower may request such Lender (the "Affected
Lender") to transfer its Commitments hereunder to any other
Lender (which itself is not then an Affected Lender) or financial
institution designated by the Borrower; provided, however, that
such transfer shall not cause the imposition on such Affected
Lender of additional costs or legal or regulatory burdens deemed
by such Affected Lender to be material.
SECTION 4.10. Use of Proceeds. The Borrower shall apply
the proceeds of each Borrowing in accordance with the tenth
recital; without limiting the foregoing, no proceeds of any Loan
will be used to acquire any equity security of a class which is
registered pursuant to Section 12 of the Securities Exchange Act
of 1934 or any "margin stock", as defined in F.R.S. Board
Regulation U.
ARTICLE V
CONDITIONS TO BORROWING
SECTION 5.1. Initial Borrowing. The obligations of the
Lenders to fund the initial Borrowing shall be subject to the
prior or concurrent satisfaction of each of the conditions
precedent set forth in this Section 5.1.
SECTION 5.1.1. Stock Purchase Consummated. The conditions
set forth in Section 6.1 of the Purchase Agreement to the
obligations of the Borrower to consummate the Stock Purchase
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shall have been satisfied in full (without amendment or waiver
of, or other forbearance to exercise any rights with respect to,
any of the terms or provisions thereof by the Borrower, except as
approved in writing by the Agent), and the Stock Purchase shall
have been consummated in accordance with Article VI of the
Purchase Agreement for an aggregate base purchase price
(excluding related fees and expenses and any post-closing
adjustments under the Purchase Agreement) not greater than
$35,450,000.
SECTION 5.1.2. Debt Acquisitions Consummated. The Debt
Acquisitions shall have been consummated for a purchase price of
not greater than $52,999,300 (plus accrued interest) for the
Cogenron Debt Acquisition and of not greater than $102,622,665
(plus accrued interest) for the Clear Lake Debt Acquisition, and
transaction fees and expenses for the Transaction shall not have
exceeded $3,500,000; and all Liens securing payment of any such
Indebtedness have been assigned to the Borrower and the Borrower
shall have received all Uniform Commercial Code Form UCC-2
assignment statements or other instruments as may be suitable or
appropriate in connection therewith.
SECTION 5.1.3. Consents. Cogenron, Clear Lake and, except
as set forth in Item 5.1.3 of the Disclosure Schedule, each other
party to any Project Loan Document (other than any lender or
agent thereunder) shall have consented to the assignment of such
Project Loan Documents to the Borrower and there shall be no
prohibition on the Borrower further assigning such Project Loan
Documents to the Agent. Except as set forth in Item 5.1.3 of the
Disclosure Schedule, there shall be no prohibition of any
assignment of any Project Document to the Borrower (or further
assignment from the Borrower to the Agent) as collateral for the
obligations under the Project Loan Documents.
SECTION 5.1.4. Government Approvals. All governmental
approvals necessary in connection with the Transaction, the
financing contemplated by this Agreement, and the continuing
operations of the Borrower and its Subsidiaries shall have been
obtained and be in full force and effect, and all applicable
waiting periods shall have expired without any action being taken
or threatened by any competent authority which would restrain,
prevent or otherwise impose adverse conditions on the Transaction
or the financing contemplated by this Agreement.
SECTION 5.1.5. Project Swap Agreements. Arrangements
satisfactory to the Agent shall have been made with respect to
the Project Swap Agreements.
SECTION 5.1.6. Calpine Equity Contribution. The Calpine
Equity Contribution shall have been consummated and the Borrower
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shall have received Net Available Proceeds therefrom of at least
$35,425,000.
SECTION 5.1.7. Calpine Subordinated Indebtedness. The
Borrower shall have received at least $32,575,000 of cash
proceeds from issuance of the Calpine Subordinated Indebtedness;
provided, however, that such amount shall be increased on a
dollar for dollar basis to the extent that the Purchase Price (as
defined in the Purchase Agreement) is increased pursuant to
Section 2.3(B) of the Purchase Agreement.
SECTION 5.1.8. Resolutions, etc. The Agent shall have
received from each Obligor a certificate, dated the date of the
initial Borrowing, of its Secretary or Assistant Secretary as to
(a) resolutions of its Board of Directors then in
full force and effect authorizing the execution, delivery
and performance of this Agreement, the Notes and each other
Loan Document to be executed by it; and
(b) the incumbency and signatures of those of its
officers authorized to act with respect to this Agreement,
the Notes and each other Loan Document executed by it,
upon which certificate each Lender may conclusively rely until it
shall have received a further certificate of the Secretary of
such Obligor canceling or amending such prior certificate.
SECTION 5.1.9. Delivery of Notes. The Agent shall have
received, for the account of each Lender, its Note duly executed
and delivered by the Borrower.
SECTION 5.1.10. Pledge Agreement. The Agent shall have
received executed counterparts of the Pledge Agreement, dated as
of the date hereof, duly executed by the Borrower, together with
the certificates evidencing all of the issued and outstanding
shares of capital stock pledged pursuant to the Pledge Agreement,
which certificates shall in each case be accompanied by undated
stock powers duly executed in blank.
SECTION 5.1.11. Deposit and Disbursement Agreement. The
Agent shall have received the Deposit and Disbursement Agreement,
dated the date hereof, duly executed by the Borrower.
SECTION 5.1.12. Security Agreements. The Agent shall have
received executed counterparts of the Security Agreements, dated
as of the date hereof, duly executed by the Borrower, together
with
(a) acknowledgment copies of properly filed Uniform
Commercial Code financing statements (Form UCC-1), dated a
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date reasonably near to the date of the initial Borrowing,
or such other evidence of filing as may be acceptable to
the Agent, naming the Borrower as the debtor and the Agent
as the secured party, or other similar instruments or
documents, filed under the Uniform Commercial Code of all
jurisdictions as may be necessary or, in the opinion of the
Agent, desirable to perfect the security interest of the
Agent pursuant to the Security Agreements;
(b) executed copies of proper Uniform Commercial Code
Form UCC-3 termination statements, if any, necessary to
release all Liens and other rights of any Person in any
collateral described in the Security Agreements previously
granted by any Person; and
(c) certified copies of Uniform Commercial Code
Requests for Information or Copies (Form UCC-11), or a
similar search report certified by a party acceptable to
the Agent, dated a date reasonably near to the date of the
initial Borrowing, listing all effective financing
statements which name the Borrower (under its present name
and any previous names) as the debtor and which are filed
in the jurisdictions in which filings were made pursuant to
clause (a) above, together with copies of such financing
statements (none of which (other than those described in
clause (a), if such Form UCC-11 or search report, as the
case may be, is current enough to list such financing
statements described in clause (a)) shall cover any
collateral described in the Security Agreements).
SECTION 5.1.13. Subordination Agreement. The Agent shall
have received the Subordination Agreement, in form and substance
satisfactory to the Agent, from Calpine in respect of the Calpine
Subordinated Indebtedness.
SECTION 5.1.14. Opinions of Counsel. The Agent shall
have received opinions, dated the date of the initial Borrowing
and addressed to the Agent and all Lenders, from ▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
▇▇., ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇, counsel to the Obligors, substantially in the form of
Exhibit J hereto.
SECTION 5.1.15. Purchase Documents. The Agent shall have
received a copy of the Purchase Documents and any supplements or
amendments thereto, certified by the Borrower as of the Effective
Date as being true, complete and correct and in full force and
effect.
SECTION 5.1.16. Project Documents and Project Loan
Documents. The Agent shall have received copies of each Project
Document and Project Loan Documents and any supplements or
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amendments thereto, certified by the Borrower as of the Effective
Date as being true, complete and correct and in full force and
effect.
SECTION 5.1.17. Projections. The Agent shall have
received the Financial Projections, in form and substance
satisfactory to the Agent, from the Borrower.
SECTION 5.1.18. Insurance Certificates. The Agent shall
have received copies of certificates of insurance signed by a
broker of nationally recognized standing certifying that all
insurance policies required under Section 7.1.4 are in full force
and effect and comply in all material respects with the
requirements of such section.
SECTION 5.1.19. Independent Engineer's Report. The Agent
shall have received the report of the Independent Engineer with
respect to the performance and operation of the Projects, in form
and substance satisfactory to the Agent.
SECTION 5.1.20. Financial Statements. The Agent shall
have received and approved the financial statements described in
Section 6.5 hereof. In addition, the Agent shall have received a
pro-forma opening consolidated balance sheet of the Borrower as
of the Effective Date, giving effect to the Transaction, which
balance sheet shall be satisfactory in all respects to the Agent.
SECTION 5.1.21. Loan Purchase Agreement. The Agent shall
have received the Loan Purchase Agreement, dated the date hereof,
duly executed by Calpine and the Borrower.
SECTION 5.1.22. Indemnification Agreement. The Agent
shall have received the Indemnification Agreement, dated the date
hereof, duly executed by Calpine.
SECTION 5.1.23. Due Diligence. The Agent shall have
satisfactorily completed its legal and financial due diligence
review of the assets, properties, facilities, business and
operations of EDCC, Cogenron and Clear Lake and the assets,
properties and facilities constituting the Projects.
SECTION 5.1.24. Closing Fees, Expenses, etc. The Agent
shall have received for its own account, or for the account of
each Lender, as the case may be, all fees, costs and expenses due
and payable pursuant to Sections 10.3 if then invoiced and any
amounts then owing pursuant to any fee letters among the parties.
SECTION 5.2. All Borrowings. The obligation of each
Lender to fund any Loan on the occasion of any Borrowing
(including the initial Borrowing) shall be subject to the
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satisfaction of each of the conditions precedent set forth in
this Section 5.2.
SECTION 5.2.1. Compliance with Warranties, No Default,
etc. Both before and after giving effect to any Borrowing (but,
if any Default of the nature referred to in Section 8.1.5 shall
have occurred with respect to any other Indebtedness, without
giving effect to the application, directly or indirectly, of the
proceeds thereof) the following statements shall be true and
correct
(a) the representations and warranties set forth in
Article VI (excluding, however, those contained in Section
6.7) shall be true and correct with the same effect as if
then made (unless stated to relate solely to an early date,
in which case such representations and warranties shall be
true and correct as of such earlier date);
(b) except as disclosed by the Borrower to the Agent
and the Lenders pursuant to Section 6.7
(i) no labor controversy, litigation,
arbitration or governmental investigation or
proceeding shall be pending or, to the knowledge of
the Borrower, threatened against the Borrower or any
of its Subsidiaries which has or may reasonably be
expected to have a Material Adverse Effect or which
purports to materially and adversely affect the
legality, validity or enforceability of this
Agreement, the Notes or any other Loan Document, or of
the Purchase Documents; and
(ii) no development shall have occurred in any
labor controversy, litigation, arbitration or
governmental investigation or proceeding disclosed
pursuant to Section 6.7 which has or may reasonably be
expected to have a Material Adverse Effect; and
(c) no Default shall have then occurred and be
continuing, and neither the Borrower nor any of its
Subsidiaries are in violation of any law or governmental
regulation or court order or decree which would reasonably
be expected to result in a Material Adverse Effect.
SECTION 5.2.2. Borrowing Request. The Agent shall have
received a Borrowing Request for such Borrowing. Each of the
delivery of a Borrowing Request and the acceptance by the
Borrower of the proceeds of such Borrowing shall constitute a
representation and warranty by the Borrower that on the date of
such Borrowing (both immediately before and after giving effect
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to such Borrowing and the application of the proceeds thereof)
the statements made in Section 5.2.1 are true and correct.
SECTION 5.2.3. Satisfactory Legal Form. All documents
executed or submitted pursuant hereto by or on behalf of the
Borrower or any of its Subsidiaries or any other Obligor shall be
satisfactory in form and substance to the Agent and its counsel;
the Agent and its counsel shall have received all information,
approvals, opinions, documents or instruments as the Agent or its
counsel may reasonably request.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders and the Agent to enter into
this Agreement and to make Loans hereunder, the Borrower
represents and warrants unto the Agent and each Lender as set
forth in this Article VI.
SECTION 6.1. Organization, etc. The Borrower and each of
its Subsidiaries is a corporation or partnership validly
organized and existing and in good standing under the laws of the
State of its formation, is duly qualified to do business and is
in good standing as a foreign corporation or partnership in each
jurisdiction where the nature of its business requires such
qualification, and has full power and authority and holds all
requisite governmental licenses, permits and other approvals to
enter into and perform its Obligations under this Agreement, the
Notes and each other Loan Document to which it is a party and to
own and hold under lease its property and to conduct its business
substantially as currently conducted by it.
SECTION 6.2. Due Authorization, Non-Contravention, etc.
The execution, delivery and performance by the Borrower of this
Agreement, the Notes and each other Loan Document executed or to
be executed by it, and the execution, delivery and performance by
each other Obligor of each Loan Document executed or to be
executed by it and the Borrower's and each such other Obligor's
participation in the consummation of the Transaction are within
the Borrower's and each such Obligor's corporate powers, have
been duly authorized by all necessary corporate action, and do
not
(a) contravene the Borrower's or any such Obligor's
Organic Documents;
(b) contravene any contractual restriction, law or
governmental regulation or court decree or order binding on
or affecting the Borrower or any such Obligor; or
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(c) result in, or require the creation or imposition
of, any Lien on any of any Obligor's properties, other than
Liens permitted under Section 7.2.3(a).
SECTION 6.3. Government Approval, Regulation, etc. No
authorization or approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body or
other Person is required for the due execution, delivery or
performance by the Borrower or any other Obligor of this
Agreement, the Notes or any other Loan Document to which it is a
party, or for the Borrower's and each such other Obligor's
participation in the consummation of the Transaction, except for
the filings required under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvement Act of ▇▇▇▇ (▇▇▇ "▇▇▇ ▇▇▇"), and the consents and
approvals listed in Schedules 4.1.3 and 4.1.7 attached to the
Purchase Agreement, all of which have been duly obtained or made
and are in full force and effect. Neither the Borrower nor any
of its Subsidiaries is an "investment company" within the
meaning of the Investment Company Act of 1940, as amended, or is
subject to regulation as a "holding company", or a "subsidiary
company" of a "holding company", or an "affiliate" of a "holding
company" or of a "subsidiary company" of a "holding company",
within the meaning of the Public Utility Holding Company Act of
1935, as amended.
SECTION 6.4. Validity, etc. This Agreement constitutes,
and the Notes and each other Loan Document executed by the
Borrower will, on the due execution and delivery thereof,
constitute, the legal, valid and binding obligations of the
Borrower enforceable in accordance with their respective terms,
except as enforceability may be subject to or limited by
(i) bankruptcy, insolvency, reorganization, arrangement,
moratorium or other similar laws affecting the rights of
creditors or (ii) general principles of equity, including the
possible unavailability of specific performance or injunctive
relief; and each Loan Document executed pursuant hereto by each
other Obligor will, on the due execution and delivery thereof by
such Obligor, be the legal, valid and binding obligation of such
Obligor enforceable in accordance with its terms, except as
enforceability may be subject to or limited by (i) bankruptcy,
insolvency, reorganization, arrangement, moratorium or other
similar laws affecting the rights of creditors or (ii) general
principles of equity, including the possible unavailability of
specific performance or injunctive relief.
SECTION 6.5. Financial Information. The (i) balance sheet
of the Borrower, (ii) consolidated balance sheet of EDCC and each
of its Subsidiaries, (iii) balance sheet of Clear Lake, and (iv)
balance sheet of Cogenron, each as at December 31, 1996 (except
for the balance sheet of Borrower, which shall be prepared on a
proforma basis as of the Effective Date), and the related
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statements of earnings and cash flow (for all such entities
except the Borrower), copies of which have been furnished to the
Agent and each Lender, have been prepared in accordance with GAAP
consistently applied, and present fairly the consolidated
financial condition of the Persons covered thereby as at the
dates thereof and the results of their operations for the periods
then ended. On and as of the Effective Date, the Borrower has no
Indebtedness, other than (i) indebtedness incurred hereunder and
(ii) Calpine Subordinated Indebtedness.
SECTION 6.6. No Material Adverse Change. Since the date
of the financial statements described in Section 6.5 through the
Effective Date, there has been no material adverse change in the
financial condition, operations, assets, business, properties or
prospects of the Borrower and its Subsidiaries, except as
reflected in the Financial Projections.
SECTION 6.7. Litigation, Labor Controversies, etc. There
is no pending or, to the knowledge of the Borrower, threatened
litigation, action, proceeding, or labor controversy affecting
the Borrower or any of its Subsidiaries, or any of their
respective properties, businesses, assets or revenues, which may
materially adversely affect the financial condition, operations,
assets, business, properties or prospects of the Borrower or any
Subsidiary or which purports to affect the legality, validity or
enforceability of this Agreement, the Notes or any other Loan
Document, except as disclosed in Item 6.7 ("Litigation") of the
Disclosure Schedule.
SECTION 6.8. Subsidiaries. The Borrower has no
Subsidiaries, except EDCC, EC1, Cogenron, EC3, Clear Lake and
EC5. EDCC has no Subsidiaries other than ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇,
Clear Lake and EC5. EC5 has a 7.06% equity investment in Cogen
Venture.
SECTION 6.9. Ownership of Properties. The Borrower and
each of its Subsidiaries owns good and marketable title to all of
its properties and assets, real and personal, tangible and
intangible, of any nature whatsoever (including patents,
trademarks, trade names, service marks and copyrights), free and
clear of all Liens, charges or claims (including infringement
claims with respect to patents, trademarks, copyrights and the
like) except as permitted pursuant to Section 7.2.3.
SECTION 6.10. Taxes. The Borrower and each of its
Subsidiaries has filed all tax returns and reports required by
law to have been filed by it and has paid all taxes and
governmental charges thereby shown to be owing, except any such
taxes or charges which are being diligently contested in good
faith by appropriate proceedings and for which adequate reserves
in accordance with GAAP shall have been set aside on its books.
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SECTION 6.11. Pension and Welfare Plans. The Borrower has
never maintained a Pension Plan or a Welfare Plan.
SECTION 6.12. Environmental Warranties. Except as set
forth in Item 6.12 ("Environmental Matters") of the Disclosure
Schedule:
(a) all facilities and property (including underlying
groundwater) owned or leased by the Borrower or any of its
Subsidiaries have been, and continue to be, owned or leased
by the Borrower and its Subsidiaries in material compliance
with all Environmental Laws;
(b) there are no pending or threatened
(i) claims, complaints, notices or requests for
information received by the Borrower or any of its
Subsidiaries with respect to any alleged violation of
any Environmental Law which have not been resolved or
settled, or
(ii) complaints, notices or inquiries to the
Borrower or any of its Subsidiaries regarding
potential liability under any Environmental Law which
have not been resolved or settled;
(c) there have been no unremediated Releases of
Hazardous Materials at, on or under any property now owned
or leased by the Borrower or any of its Subsidiaries that,
singly or in the aggregate, have, or may reasonably be
expected to have, a Material Adverse Effect;
(d) the Borrower and its Subsidiaries have been
issued and are in material compliance with all permits,
certificates, approvals, licenses and other authorizations
relating to environmental matters and necessary for their
businesses;
(e) no property now owned or leased by the Borrower
or any of its Subsidiaries is listed or proposed for
listing (with respect to owned property only) on the
National Priorities List pursuant to CERCLA, on the CERCLIS
or on any similar state list of sites requiring
investigation or clean-up;
(f) there are no underground storage tanks, active
or abandoned, including petroleum storage tanks, on or
under any property now owned or leased by the Borrower or
any of its Subsidiaries that, singly or in the aggregate,
have, or may reasonably be expected to have, a Material
Adverse Effect;
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(g) neither Borrower nor any Subsidiary of the
Borrower has directly transported or directly arranged for
the transportation of any Hazardous Material except in
compliance with applicable Environmental Laws;
(h) there are no polychlorinated biphenyls or friable
asbestos present at any property now owned or leased by the
Borrower or any Subsidiary of the Borrower that, singly or
in the aggregate, have, or may reasonably be expected to
have, a Material Adverse Effect; and
(i) no conditions exist at, on or under any property
now owned or leased by the Borrower which, with the passage
of time, or the giving of notice or both, would give rise
to liability under any Environmental Law which has or may
reasonably be expected to have a Material Adverse Effect.
For avoidance of doubt, properties acquired as a result of the
Transaction shall be considered "now owned".
SECTION 6.13. Regulations G, U and X. The Borrower is not
engaged in the business of extending credit for the purpose of
purchasing or carrying margin stock, and no proceeds of any Loans
will be used for a purpose which violates, or would be
inconsistent with, F.R.S. Board Regulation G, U or X. Terms for
which meanings are provided in F.R.S. Board Regulation G, U or X
or any regulations substituted therefor, as from time to time in
effect, are used in this Section with such meanings.
SECTION 6.14. Accuracy of Information. All factual
information heretofore or contemporaneously furnished by or on
behalf of the Borrower in writing to the Agent or any Lender for
purposes of or in connection with this Agreement or any
transaction contemplated hereby (including copies of the Purchase
Documents and the Project Documents, true and complete copies of
which were furnished to the Agent and each Lender in connection
with their execution and delivery hereof, but excluding any
information contained in the Financial Projections), true and
complete copies of which were furnished to the Agent and each
Lender in connection with its execution and delivery hereof, is,
and all other such factual information hereafter furnished by or
on behalf of the Borrower to the Agent or any Lender will be,
true and accurate in every material respect on the date as of
which such information is dated or certified and as of the date
of execution and delivery of this Agreement by the Agent and such
Lender, and such information is not, or shall not be, as the case
may be, incomplete by omitting to state any material fact
necessary to make such information not misleading.
SECTION 6.15. Financial Projections. The Borrower
believes that the Financial Projections represent the Borrower's
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most likely estimate, as of the date of the Financial
Projections, of the projected results of operations of Clear Lake
and Cogenron for the periods covered thereby, and, as such, were
prepared by the Borrower in good faith, and, to the best of the
Borrower's knowledge, are based upon reasonable assumptions and
are complete in all material respects. The Borrower is not aware
of any facts or existing conditions that would require any
material change in the Financial Projections.
SECTION 6.16. Collateral Security Documents. Upon their
execution and delivery, the Collateral Security Documents will be
effective to create, in favor of the Agent on behalf of the
Lenders, legal, valid and enforceable Liens on and security
interests in the Collateral. Prior to or simultaneously with the
Closing Date, all necessary and appropriate recordings and
filings will have been duly effected in all appropriate public
offices so that each of the Collateral Security Documents will
constitute a valid and perfected first Lien on and first
perfected security interest in all right, title, estate and
interest of the Borrower in and to such portion of the Collateral
described in such Collateral Security Document. The recordings
and filings shown on Schedule 2 are all the recordings, filings
and other action necessary or appropriate in order to establish,
protect and perfect such first Lien on and security interest in
the Borrower's right, title and interest in the Collateral. The
descriptions of the Collateral set forth in the Collateral
Security Documents are true, complete, and accurate in all
respects and are adequate for the purpose of establishing,
preserving, perfecting and protecting such first Lien on and
security interest in Borrower's right, title and interest in the
Collateral.
SECTION 6.17. Principal Place of Business, etc. The
principal place of business and chief executive office of the
Borrower and the office where the Borrower keeps its records
concerning the Projects, the Collateral and all Basic Documents,
is located at ▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇.
SECTION 6.18. Representations and Warranties Incorporated
from Purchase Agreement. Each of the representations and
warranties given by each of Seller and the Borrower in the
Purchase Agreement is true and correct in all material respects
as of the Effective Date, and such representations and warranties
are hereby incorporated herein by this reference with the same
effect as though set forth in their entirety herein, subject to
the qualifications thereto set forth in the Purchase Agreement.
ARTICLE VII
-▇▇-
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ 7.1. Affirmative Covenants. The Borrower agrees
with the Agent and each Lender that, until all Commitments have
terminated and all Obligations have been paid and performed in
full, the Borrower will perform the obligations set forth in this
Section 7.1.
SECTION 7.1.1. Financial Information, Reports, Notices,
etc. The Borrower will furnish, or will cause to be furnished,
to each Lender and the Agent copies of the following financial
statements, reports, notices and information:
(a) as soon as available and in any event within 60
days after the end of each of the first three Fiscal
Quarters of each Fiscal Year of the Borrower, a balance
sheet of the Borrower and consolidated and consolidating
balance sheets of EDCC and its Subsidiaries (as to ▇▇▇, ▇▇▇
and EC5, only to the extent otherwise available) as of the
end of such Fiscal Quarter and a statement of earnings and
cash flow of the Borrower and consolidated and
consolidating statements of earnings and cash flow of EDCC
and its Subsidiaries (as to ▇▇▇, ▇▇▇ and EC5, only to the
extent otherwise available) for such Fiscal Quarter and for
the period commencing at the end of the previous Fiscal
Year and ending with the end of such Fiscal Quarter,
certified by the chief financial Authorized Officer of the
Borrower or EDCC, as applicable;
(b) as soon as available and in any event within 120
days after the end of each Fiscal Year of the Borrower, a
copy of the annual audit report for such Fiscal Year for
the Borrower and for EDCC and its Subsidiaries (as to ▇▇▇,
▇▇▇ and EC5, only to the extent otherwise available),
including therein a balance sheet of the Borrower and
consolidated and consolidating balance sheets of EDCC and
its Subsidiaries (as to ▇▇▇, ▇▇▇ and EC5, only to the
extent otherwise available) as of the end of such Fiscal
Year and a statement of earnings and cash flow of the
Borrower and consolidated and consolidating statements of
earnings and cash flow of EDCC and its Subsidiaries (as to
▇▇▇, ▇▇▇ and EC5, only to the extent otherwise available)
for such Fiscal Year, in each case certified (without any
Impermissible Qualification, except as approved by the
Agent in writing) in a manner acceptable to the Agent and
the Required Lenders by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Company or other
independent public accountants acceptable to the Agent and
the Required Lenders;
(c) as soon as available and in any event within 45
days after the end of each Fiscal Quarter, a certificate,
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executed by the chief financial Authorized Officer of the
Borrower, showing (in reasonable detail and with
appropriate calculations and computations in all respects
satisfactory to the Agent) compliance with the financial
covenants set forth in Section 7.2.4.;
(d) as soon as possible and in any event within three
days after the Borrower obtains knowledge of each Default,
a statement of an Authorized Officer of the Borrower
setting forth details of such Default and the action which
the Borrower has taken and proposes to take with respect
thereto;
(e) as soon as possible and in any event within three
days after (x) the Borrower obtains knowledge of any
adverse development with respect to any litigation, action,
proceeding, or labor controversy described in Section 6.7
or (y) the commencement of any labor controversy,
litigation, action, proceeding of the type described in
Section 6.7, notice thereof and copies of all documentation
relating thereto;
(f) promptly after the sending or filing thereof,
copies of all reports which the Borrower sends to any of
its securityholders, and all reports and registration
statements which the Borrower or any of its Subsidiaries
files with the Securities and Exchange Commission or any
national securities exchange;
(g) immediately upon becoming aware of the
institution of any steps by the Borrower or any other
Person to terminate any Pension Plan, or the failure to
make a required contribution to any Pension Plan if such
failure is sufficient to give rise to a Lien under section
302(f) of ERISA, or the taking of any action with respect
to a Pension Plan which could result in the requirement
that the Borrower furnish a bond or other security to the
PBGC or such Pension Plan, or the occurrence of any event
with respect to any Pension Plan which could result in the
incurrence by the Borrower of any material liability, fine
or penalty, or any material increase in the contingent
liability of the Borrower with respect to any post-
retirement Welfare Plan benefit, notice thereof and copies
of all documentation relating thereto;
(h) information and notices which the Borrower
receives in its capacity as agent or lender under the
Project Loan Documents; and
(i) such other information respecting the condition
or operations, financial or otherwise, of the Borrower or
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any of its Subsidiaries as any Lender through the Agent may
from time to time reasonably request and which the Borrower
is legally or contractually permitted to provide to such
Lender.
SECTION 7.1.2. Compliance with Laws, etc. The Borrower
will, and will cause each of its Subsidiaries to, comply in all
material respects with all applicable laws, rules, regulations
and orders, such compliance to include (without limitation):
(a) the maintenance and preservation of its corporate
existence and qualification as a foreign corporation; and
(b) the payment, before the same become delinquent,
of all taxes, assessments and governmental charges imposed
upon it or upon its property except to the extent being
diligently contested in good faith by appropriate
proceedings and for which adequate reserves in accordance
with GAAP shall have been set aside on its books.
SECTION 7.1.3. Maintenance of Properties. The Borrower
will, and will cause each of its Subsidiaries to, maintain,
preserve, protect and keep its properties in good repair, working
order and condition, and make necessary and proper repairs,
renewals and replacements so that its business carried on in
connection therewith may be properly conducted at all times
unless the Borrower determines in good faith that the continued
maintenance of any of its properties is no longer economically
desirable.
SECTION 7.1.4. Insurance. The Borrower will, and will
cause each of its Subsidiaries to, maintain or cause to be
maintained with responsible insurance companies insurance with
respect to its properties and business (including business
interruption insurance) against such casualties and contingencies
and of such types and in such amounts as is customary in the case
of similar businesses and will, upon request of the Agent,
furnish to each Lender at reasonable intervals a certificate of
an Authorized Officer of the Borrower setting forth the nature
and extent of all insurance maintained by the Borrower and its
Subsidiaries in accordance with this Section.
SECTION 7.1.5. Books and Records. The Borrower will, and
will cause each of its Subsidiaries to, keep books and records
which accurately reflect all of its business affairs and
transactions and permit the Agent and each Lender or any of their
respective representatives, at reasonable times and intervals, to
visit all of its offices, to discuss its financial matters with
its officers and independent public accountant (and the Borrower
hereby authorizes such independent public accountant to discuss
the Borrower's financial matters with each Lender or its
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representatives whether or not any representative of the Borrower
is present) and to examine (and, at the expense of the Borrower,
photocopy extracts from) any of its books or other corporate
records. The Borrower shall pay any fees of one such independent
public accountant incurred in connection with the Agent's or any
Lender's exercise of its rights pursuant to this Section;
provided, however, after the occurrence and during the
continuance of any Default, the Borrower shall pay for all fees
of such independent accountants incurred with each exercise by
the Agent of its rights pursuant to this Section.
SECTION 7.1.6. Environmental Covenant. The Borrower will,
and will cause each of its Subsidiaries to,
(a) use and operate all of its facilities and
properties in material compliance with all Environmental
Laws, keep all necessary permits, approvals, certificates,
licenses and other authorizations relating to environmental
matters in effect and remain in material compliance
therewith, and handle all Hazardous Materials in material
compliance with all applicable Environmental Laws;
(b) immediately notify the Agent and provide copies
upon receipt of all written claims, complaints, notices or
inquiries relating to the condition of its facilities and
properties or compliance with Environmental Laws, and shall
promptly cure and have dismissed with prejudice to the
satisfaction of the Agent any actions and proceedings
relating to compliance with Environmental Laws; and
(c) provide such information and certifications which
the Agent may reasonably request from time to time to
evidence compliance with this Section 7.1.6.
SECTION 7.1.7. Resist Regulatory Change. If the Borrower
becomes aware that any federal, state, or local entity having
jurisdiction over the Projects or its operations has issued any
order, judgment, regulation, or decision the effect of which is
to rescind, terminate, repeal, invalidate, suspend, enjoin,
amend, or modify any of the Project Documents or any Governmental
Approval or any part of either thereof, and there shall exist a
reasonable possibility that such regulatory change will have a
Material Adverse Effect, the Borrowers shall give the Agent
notice thereof and shall, or shall cause its Subsidiaries to,
diligently and in a timely fashion (i) make all filings,
(ii) pursue all remedies and appeals, and (iii) take such other
lawful action, in each case as shall be necessary or desirable
(a) to prevent such regulatory change from becoming final and
nonappealable or otherwise irrevocable, (b) to postpone the
effectiveness of such regulatory change, and (c) to cause such
regulatory change to be revoked or amended or modified so as to
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eliminate the reasonable possibility of such material adverse
effect.
SECTION 7.1.8. Take-Out Financing; Assignments. The
Borrower shall use all reasonable efforts to arrange for and
obtain debt or equity financing sufficient to repay all loans by
not later than the Stated Maturity Date, and upon obtaining such
financing, shall repay the Loans. The Borrower shall use all
reasonable efforts to obtain (i) assignments of all Project
Documents listed on Item 5.1.3 of the Disclosure Schedule as
collateral for the obligations under the Project Loan Documents,
(ii) consents to such assignment from the parties to such Project
Documents (other than Clear Lake and Cogenron) in a customary
form for project financing transactions and (iii) amendments to
or separate agreements relating to any Project Documents or
Project Loan Documents requiring Calpine to maintain ownership of
the Borrower which modify such ownership requirement in a manner
which will enable the Agent and the Lenders to foreclose their
security interest in the stock of the Borrower under the Pledge
Agreement.
SECTION 7.2. Negative Covenants. The Borrower agrees with
the Agent and each Lender that, until all Commitments have
terminated and all Obligations have been paid and performed in
full, the Borrower will perform the obligations set forth in this
Section 7.2.
SECTION 7.2.1. Business Activities. The Borrower will
not, and will not permit any of its Subsidiaries to, engage in
any business activity other than acting as equity investor in
EDCC and project lender to Cogenron and Clear Lake, investing
(directly or indirectly) in Cogenron or Clear Lake and owning the
Projects, and such activities as may be incidental thereto.
SECTION 7.2.2. Indebtedness. The Borrower will not, and
will not permit any of its Subsidiaries to, create, incur, assume
or suffer to exist or otherwise become or be liable in respect of
any Indebtedness, other than, without duplication, the following:
(a) Indebtedness in respect of the Loans and other
Obligations;
(b) unsecured Indebtedness incurred in the ordinary
course of business (including open accounts extended by
suppliers on normal trade terms in connection with
purchases of goods and services, but excluding Indebtedness
incurred through the borrowing of money or Contingent
Liabilities);
(c) Calpine Subordinated Indebtedness in a principal
amount not to exceed $40,000,000 plus any amounts which the
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Borrower provides to EDCC under the Equity Support
Agreements;
(d) Indebtedness of Cogenron to the Borrower in a
principal amount not to exceed $52,999,300;
(e) Indebtedness of Clear Lake to the Borrower in a
principal amount not to exceed $102,622,665;
(f) Clear Lake Subordinated Indebtedness in a
principal amount not to exceed $30,000,000; and
(g) Indebtedness of the Borrower to a Subsidiary
(other than EC5) of the Borrower, of a Subsidiary (other
than EC5) of the Borrower to the Borrower, or of a
Subsidiary (other than EC5) of the Borrower to another
Subsidiary (other than EC5) of the Borrower, in each case
subordinated to the Obligations on terms and condition
reasonably satisfactory to the Agent.
SECTION 7.2.3. Liens. The Borrower will not, and will not
permit any of its Subsidiaries to, create, incur, assume or
suffer to exist any Lien upon any of its property, revenues or
assets, whether now owned or hereafter acquired, except:
(a) Liens securing payment of the Obligations, granted
pursuant to any Loan Document;
(b) Liens securing payment of Indebtedness of the
type permitted and described in clauses (d) and (e) of
Section 7.2.2;
(c) Liens for taxes, assessments or other
governmental charges or levies not at the time delinquent
or thereafter payable without penalty or being diligently
contested in good faith by appropriate proceedings and for
which adequate reserves in accordance with GAAP shall have
been set aside on its books;
(d) Liens of carriers, warehousemen, mechanics,
materialmen and landlords incurred in the ordinary course
of business for sums not overdue or being diligently
contested in good faith by appropriate proceedings and for
which adequate reserves in accordance with GAAP shall have
been set aside on its books;
(e) Liens incurred in the ordinary course of business
in connection with workmen's compensation, unemployment
insurance or other forms of governmental insurance or
benefits, or to secure performance of tenders, statutory
obligations, leases and contracts (other than for borrowed
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money) entered into in the ordinary course of business or
to secure obligations on surety or appeal bonds;
(f) judgment Liens in existence less than 15 days
after the entry thereof or with respect to which execution
has been stayed or the payment of which is covered in full
(subject to a customary deductible) by insurance maintained
with responsible insurance companies;
(g) Zoning restrictions, easements, rights of way,
title irregularities and other similar encumbrances which
alone or in the aggregate do not materially detract from
the value of the property subject thereto;
(h) Banker's Liens and similar Liens (including set-
off rights) in respect of bank deposits; and
(i) Landlord's Liens and similar Liens with respect
to rental payments for real property which are not
delinquent and with respect to which foreclosure,
distraint, sale or other similar proceedings shall not have
been commenced.
SECTION 7.2.4. Financial Condition. The Borrower will not
permit:
(a) Its Tangible Net Worth to be less than
(i) $65,000,000 plus (ii) 50% of the consolidated net
income of the Borrower and its Subsidiaries (without giving
effect to any losses) for each Fiscal Quarter ending after
March 31, 1997 plus (iii) 100% of the Net Available
Proceeds from any Equity Issuance by the Borrower after
March 31, 1997.
(b) Its Senior Debt to Cash Flow Ratio to be greater
than 4.5 to 1.00 as of the end of any Fiscal Quarter
beginning with the Fiscal Quarter ending on September 30,
1996.
(c) Its Interest Coverage Ratio as of the end of any
Fiscal Quarter beginning with the Fiscal Quarter ending on
September 30, 1996 to be less than 2.00 to 1.00.
SECTION 7.2.5. Investments. The Borrower will not, and
will not permit any of its Subsidiaries to, make, incur, assume
or suffer to exist any Investment in any other Person, except:
(a) Investments existing on the Effective Date and
identified in Item 7.2.5(a) ("Ongoing Investments") of the
Disclosure Schedule;
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(b) Cash Equivalent Investments;
(c) without duplication, Investments permitted as
Indebtedness pursuant to Section 7.2.2;
(d) Investments by the Borrower or any of its
Subsidiaries (other than EC5) in any of the Borrower's
Subsidiaries (other than EC5).
SECTION 7.2.6. Restricted Payments, etc. On and at all
times after the Effective Date:
(a) except as provided in Section 3.1(b), the Borrower
will not declare, pay or make any dividend or distribution
(in cash, property or obligations) on any shares of any
class of capital stock (now or hereafter outstanding) of
the Borrower or on any warrants, options or other rights
with respect to any shares of any class of capital stock
(now or hereafter outstanding) of the Borrower (other than
dividends or distributions payable in its common stock or
warrants to purchase its common stock or splitups or
reclassifications of its stock into additional or other
shares of its common stock) or apply, or permit any of its
Subsidiaries to apply, any of its funds, property or assets
to the purchase, redemption, sinking fund or other
retirement of, or agree or permit any of its Subsidiaries
to purchase or redeem, any shares of any class of capital
stock (now or hereafter outstanding) of the Borrower, or
warrants, options or other rights with respect to any
shares of any class of capital stock (now or hereafter
outstanding) of the Borrower;
(b) the Borrower will not, and will not permit any of
its Subsidiaries to
(i) make any payment or prepayment of principal
of the Calpine Subordinated Indebtedness (except as
provided in Section 3.1(b)) or the Clear Lake
Subordinated Indebtedness, or which would violate the
subordination provisions of the Calpine Subordinated
Indebtedness or the Clear Lake Subordinated
Indebtedness; or
(ii) make any payment of interest on the Calpine
Subordinated Indebtedness (except as provided in
Section 3.1(b)) or the Clear Lake Subordinated
Indebtedness; provided, however, that the Borrower
may, so long as no Default or Event of Default exists,
make such payments on the stated, scheduled date for
such payment set forth in the Subordination Agreement
by depositing an amount equal to the amount of such
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interest into an account pledged to the Agent pursuant
to the Deposit and Disbursement Agreement (it being
understood that no such funds shall be released to
Calpine until all Obligations have been fully and
finally discharged); or
(iii) redeem, purchase or defease, any Calpine
Subordinated Indebtedness or Clear Lake Subordinated
Indebtedness; and
(c) the Borrower will not, and will not permit any
Subsidiary to, make any deposit for any of the foregoing
purposes.
SECTION 7.2.7. Rental Obligations. Except for the leases
described in Item 7.2.7 of the Disclosure Schedule, the Borrower
will not, and will not permit any of its Subsidiaries to, enter
into at any time any arrangement which does not create a
Capitalized Lease Liability and which involves the leasing by the
Borrower or any of its Subsidiaries from any lessor of any real
or personal property (or any interest therein), except
arrangements which, together with all other such arrangements
which shall then be in effect, will not require the payment of an
aggregate amount of rentals by the Borrower and its Subsidiaries
in excess of (excluding escalations resulting from a rise in the
consumer price or similar index) $500,000 for any Fiscal Year.
SECTION 7.2.8. Take or Pay Contracts. Except for any
existing arrangements under the Project Documents, the Borrower
will not, and will not permit any of its Subsidiaries to, enter
into or be a party to any arrangement for the purchase of
materials, supplies, other property or services if such
arrangement by its express terms requires that payment be made by
the Borrower or such Subsidiary regardless of whether such
materials, supplies, other property or services are delivered or
furnished to it.
SECTION 7.2.9. Consolidation, Merger, etc. The Borrower
will not, and will not permit any of its Subsidiaries to,
liquidate or dissolve, consolidate with, or merge into or with,
any other corporation, or purchase or otherwise acquire all or
substantially all of the assets of any Person (or of any division
thereof). The Borrower will not, and will not permit any of its
Subsidiaries to, create any Subsidiary, except with the prior
written consent of the Agent.
SECTION 7.2.10. Asset Dispositions, etc. The Borrower
will not, and will not permit any of its Subsidiaries to, sell,
transfer, lease, contribute or otherwise convey, or grant
options, warrants or other rights with respect to, all or any
substantial part of its assets (including accounts receivable and
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capital stock of Subsidiaries) to any Person, except for (i)
those matters described in Item 7.2.10 of the Disclosure Schedule
and (ii) sales in the ordinary course of business and sales of
assets or equipment which is obsolete, worn out or no longer
useful in the operation of the Projects, unless the net book
value of such assets, together with the net book value of all
other assets sold, transferred, leased, contributed or conveyed
otherwise than in the ordinary course of business by the Borrower
or any of its Subsidiaries pursuant to this clause since the
Effective Date, does not exceed $100,000.
SECTION 7.2.11. Modification of Certain Agreements.
Except as set forth in Item 7.2.11 to the Disclosure Schedule,
the Borrower will not, and will not permit any of its
Subsidiaries to, consent (to the extent it has any right to give
or withhold consent) to any release of collateral (including any
reserve accounts) securing indebtedness under the Project Loan
Documents, consent to any amendment, supplement, replacement,
waiver or other modification, or any cancellation or termination
(other than upon full performance of the obligations of the
parties thereto), of any of the terms or provisions contained in,
or applicable to, (i) the Purchase Documents; (ii) the Debt
Assignment Documents; (iii) the Project Loan Documents; (iv) the
Project Swap Agreements; (v) the Project Documents; (vi) the
Subordination Agreement (Clear Lake); (vii) the Shareholders
Agreement; (viii) the Equity Support Agreements; or (ix) the
Standstill Agreements, without the prior written consent of the
Agent. Notwithstanding the foregoing, (w) the Borrower and its
Subsidiaries may release Seller and its Affiliates from their
obligations under the Project Documents and the Project Loan
Documents provided that Calpine (with respect to obligations of
Enron Corp.) and the Borrower (with respect to obligations of the
Seller) are substituted therefor, (x) the Borrower may waive
immaterial defaults under the Project Documents and the Project
Loan Documents, (y) Clear Lake and Cogenron may amend (or
terminate and replace) the Project Documents so long as such
amended (or replacement) Project Documents (I) during the
presently existing term of such Project Documents have terms and
conditions no less favorable to Clear Lake, Cogenron, the
Borrower, the Agent and the Lenders than those in effect on the
Effective Date (after giving effect to any amendments or
terminations to be effective as of such date as described in Item
7.2.11 of the Disclosure Schedule) and (II) thereafter have terms
and conditions which are reasonably likely to produce net cash
flow of Cogenron or Clear Lake, as applicable, which is at least
equal to ninety percent (90%) of that shown in the Financial
Projections, and (z) the Borrower, Clear Lake, Cogenron and the
other parties to the Project Loan Documents may amend (or
terminate and replace) the Project Loan Documents so long as such
amended (or replacement) documents do not (I) extend the date
fixed for the payment of principal of or interest on any loan or
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fee thereunder, (II) reduce the amount of any such payment of
principal, (III) reduce the rate at which interest is payable
thereon or any fee is payable thereunder, (IV) alter the
obligations to prepay loans thereunder, (V) release any
collateral, guarantees or support agreements or (VI) adversely
affect the perfection or priority of any security interest in any
collateral or the rights of the Borrower as "Lender" or "Agent"
under the Clear Lake Credit Agreement or as "Bank" or "Agent"
under the Cogenron Credit Agreement to foreclose on any
collateral. Except as provided in Section 7.1.8, the Borrower
and its Subsidiaries will not enter into any additional material
Project Loan Document or (except as described above)Project
Document without the prior written consent of the Agent and the
Lenders.
To measure the effect of any amended or replacement Project
Documents, the Borrower shall, within a reasonable time prior to
entering into any such amended or replacement Project Document,
prepare and deliver to the Agent pro forma financial projections
showing the effect on an aggregate basis of such amended or
replacement Project Document, together with the then existing
Project Documents and any amended or replacement Project
Documents which have been entered into or are to be entered into
prior to the amendment or replacement then under consideration.
The Borrower will not, and will not permit any of its
Subsidiaries to, take any action in violation of this Section
7.2.11 notwithstanding its ability to otherwise do so under the
Standstill Agreements.
SECTION 7.2.12. Transactions with Affiliates. The
Borrower will not, and will not permit any of its Subsidiaries
to, enter into, or cause, suffer or permit to exist any
arrangement or contract with any of its other Affiliates unless
such arrangement or contract is fair and equitable to the
Borrower or such Subsidiary and is an arrangement or contract of
the kind which would be entered into by a prudent Person in the
position of the Borrower or such Subsidiary with a Person which
is not one of its Affiliates. Without limiting the generality of
the foregoing or of Section 7.2.11, the Agent and the Lenders
hereby consent to (i) the performance of operation and
maintenance activities by Affiliates of the Borrower on
substantially the same terms and conditions as contained in the
Operations and Maintenance Agreements, each dated as of August 1,
1995, for the Projects, including any modifications thereto or
replacement agreements described in Item 7.2.11 of the Disclosure
Schedule, (ii) to the performance of administrative services by
Dominion or its Affiliates for EDCC, Clear Lake, Cogenron and EC5
on substantially the same terms and conditions as contained in
the Administrative Services Agreement dated as of August 1, 1995
by and among Enron Capital & Trade Resources Corp., EDCC, Clear
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Lake, Cogenron and EC5, including any modifications or
replacement agreements thereto described in Item 7.2.11 of the
Disclosure Schedule and (iii) to the purchase and sale of gas by
EDCC, Cogenron and Clear Lake under gas sales agreements between
EDCC and DEI Texas, Inc., between Clear Lake and EDCC, and
between Cogenron and DEI Texas.
SECTION 7.2.13. Negative Pledges, Restrictive Agreements,
etc. The Borrower will not, and will not permit any of its
Subsidiaries to, enter into any agreement (excluding this
Agreement, any other Loan Document and, with respect to
subparagraphs (a) and (b) below, any agreement governing any
Indebtedness permitted either by clause (d) and (e) of Section
7.2.2 as in effect on the Effective Date), prohibiting
(a) the creation or assumption of any Lien upon its
properties, revenues or assets, whether now owned or
hereafter acquired;
(b) the ability of any Subsidiary to make any
payments, directly or indirectly, to the Borrower by way of
dividends, advances, repayments of loans or advances,
reimbursements of management and other intercompany
charges, expenses and accruals or other returns on
investments, or any other agreement or arrangement which
restricts the ability of any such Subsidiary to make any
payment, directly or indirectly, to the Borrower; or
(c) the ability of the Borrower or any other Obligor
to amend or otherwise modify this Agreement or any other
Loan Document.
SECTION 7.2.14. Change of Name or Office or Fiscal Year.
The Borrower shall not change its name, or the location of its
chief executive office or principal place of business or the
office where it keeps its records concerning the Projects and all
Basic Documents from that existing on the date of this Agreement
and specified in Section 6.19, unless (a) such Borrower shall
have given the Agent at least thirty (30) days' prior written
notice, and (b) all action necessary or advisable in the Agent's
opinion to protect and perfect the Liens and security interests
with respect to the Collateral created by the Collateral Security
Documents shall have been taken. The Borrower shall not change
its Fiscal Year from the calendar year.
SECTION 7.2.15. Pension and Welfare Plans. Neither
Borrower nor any Subsidiary shall create any Pension Plan or
Welfare Plan or become liable for any obligations of any Pension
Plan or Welfare Plan.
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ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.1. Listing of Events of Default. Each of the
following events or occurrences described in this Section 8.1
shall constitute an "Event of Default".
SECTION 8.1.1. Non-Payment of Obligations. The Borrower
shall default in the payment or prepayment when due of any
principal of or interest on any Loan, or the Borrower shall
default (and such default shall continue unremedied for a period
of five days) in the payment when due of any other Obligation.
SECTION 8.1.2. Breach of Warranty. Any representation or
warranty of the Borrower or any other Obligor made or deemed to
be made hereunder or in any other Loan Document executed by it or
any other writing or certificate furnished by or on behalf of the
Borrower or any other Obligor to the Agent or any Lender for the
purposes of or in connection with this Agreement or any such
other Loan Document (including any certificates delivered
pursuant to Article V) is or shall be incorrect when made in any
material respect.
SECTION 8.1.3. Non-Performance of Certain Covenants and
Obligations. The Borrower shall default in the due performance
and observance of any of its obligations under Section 7.2
(except for Section 7.2.4(a)) and such default shall continue
unremedied for a period of 10 days after the earlier of (i)
knowledge thereof by the Borrower and (ii) notice thereof has
been given to the Borrowers by the Agent or any Lender.
SECTION 8.1.4. Non-Performance of Other Covenants and
Obligations. Any Obligor shall default in the due performance
and observance of any other agreement contained herein or in any
other Loan Document executed by it, and such default shall
continue unremedied for a period of 30 days after notice thereof
shall have been given to the Borrower by the Agent or any Lender
(or such longer period as the Required Lenders in their
reasonable discretion, may agree, provided that such Obligor has
commenced such cure within such 30 day period and thereafter
diligently pursues such cure to completion).
SECTION 8.1.5. Default on Other Indebtedness. A default
shall occur in the payment when due (subject to any applicable
grace period), whether by acceleration or otherwise, of any
Indebtedness (other than Indebtedness described in Section 8.1.1)
of the Borrower or any of its Subsidiaries having a principal
amount, individually or in the aggregate, in excess of $200,000,
or a default shall occur in the performance or observance of any
obligation or condition with respect to such Indebtedness if the
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effect of such default is to accelerate the maturity of any such
Indebtedness or such default shall continue unremedied for any
applicable period of time sufficient to permit the holder or
holders of such Indebtedness, or any trustee or agent for such
holders, to cause such Indebtedness to become due and payable
prior to its expressed maturity.
SECTION 8.1.6. Judgments. Any judgment or order for the
payment of money in excess of $500,000 which is not subject to
indemnification from Seller, Dominion or their respective
Affiliates (provided that any such Person has acknowledged its
indemnification liability and has the financial capability to pay
its indemnification liability) or which is not fully covered by
insurance (subject to customary deductible amounts) shall be
rendered against the Borrower or any of its Subsidiaries and
either
(a) enforcement proceedings shall have been commenced
by any creditor upon such judgment or order; or
(b) there shall be any period of 20 consecutive days
during which a stay of enforcement of such judgment or
order, by reason of a pending appeal or otherwise, shall
not be in effect.
SECTION 8.1.7. Control of the Borrower. Any Change in
Control shall occur.
SECTION 8.1.8. Bankruptcy, Insolvency, etc. The Borrower
or any of its Subsidiaries (other than EC5) or any other Obligor
shall
(a) become insolvent or generally fail to pay, or
admit in writing its inability or unwillingness to pay,
debts as they become due;
(b) apply for, consent to, or acquiesce in, the
appointment of a trustee, receiver, sequestrator or other
custodian for the Borrower or any of its Subsidiaries or
any other Obligor or any property of any thereof, or make a
general assignment for the benefit of creditors;
(c) in the absence of such application, consent or
acquiescence, permit or suffer to exist the appointment of
a trustee, receiver, sequestrator or other custodian for
the Borrower or any of its Subsidiaries or any other
Obligor or for a substantial part of the property of any
thereof, and such trustee, receiver, sequestrator or other
custodian shall not be discharged within 60 days, provided
that the Borrower, each Subsidiary and each other Obligor
hereby expressly authorizes the Agent and each Lender to
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appear in any court conducting any relevant proceeding
during such 60-day period to preserve, protect and defend
their rights under the Loan Documents;
(d) permit or suffer to exist the commencement of any
bankruptcy, reorganization, debt arrangement or other case
or proceeding under any bankruptcy or insolvency law, or
any dissolution, winding up or liquidation proceeding, in
respect of the Borrower or any of its Subsidiaries or any
other Obligor, and, if any such case or proceeding is not
commenced by the Borrower or such Subsidiary or such other
Obligor, such case or proceeding shall be consented to or
acquiesced in by the Borrower or such Subsidiary or such
other Obligor or shall result in the entry of an order for
relief or shall remain for 60 days undismissed, provided
that the Borrower, each Subsidiary and each other Obligor
hereby expressly authorizes the Agent and each Lender to
appear in any court conducting any such case or proceeding
during such 60-day period to preserve, protect and defend
their rights under the Loan Documents; or
(e) take any action authorizing, or in furtherance
of, any of the foregoing.
SECTION 8.1.9. Impairment of Security, etc. Any Loan
Document, or any Lien granted thereunder, shall (except in
accordance with its terms), in whole or in part, terminate, cease
to be effective or cease to be the legally valid, binding and
enforceable obligation of any Obligor party thereto; the
Borrower, any other Obligor or any other party shall, directly or
indirectly, contest in any manner such effectiveness, validity,
binding nature or enforceability; or any Lien securing any
Obligation shall, in whole or in part, cease to be a perfected
first priority Lien without the fault or omission of the Agent or
any Lender, subject only to those exceptions expressly permitted
by such Loan Document.
SECTION 8.1.10. Public Utility Regulation. The Borrower
or any of its Subsidiaries or the Agent or any Lender shall, as a
result of any transaction contemplated hereby, become subject to:
regulation as a public utility, electric utility company or
holding company under the Public Utility Holding Company Act of
1935, as amended; regulation as a public utility under the
Federal Power Act, as amended, except for such regulation by the
Federal Energy Regulatory commission as may occur under sections
of such Act specified in 18 C.F.R. Sec. 292.601(c); or financial,
organizational or rate regulation as an electric utility,
electric company, public service company, public utility, or any
other similar entity under any state law or regulation.
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SECTION 8.2. Action if Bankruptcy. If any Event of
Default described in clauses (a) through (d) of Section 8.1.8
shall occur with respect to the Borrower or any Subsidiary (other
than EC5) or any other Obligor, the Commitments (if not
theretofore terminated) shall automatically terminate and the
outstanding principal amount of all outstanding Loans and all
other Obligations shall automatically be and become immediately
due and payable, without notice or demand.
SECTION 8.3. Action if Other Event of Default. If any
Event of Default (other than any Event of Default described in
clauses (a) through (d) of Section 8.1.8 with respect to the
Borrower or any Subsidiary or any other Obligor) shall occur for
any reason, whether voluntary or involuntary, and be continuing,
the Agent, upon the direction of the Required Lenders, shall by
notice to the Borrower declare all or any portion of the
outstanding principal amount of the Loans and other Obligations
to be due and payable and/or the Commitments (if not theretofore
terminated) to be terminated, whereupon the full unpaid amount of
such Loans and other Obligations which shall be so declared due
and payable shall be and become immediately due and payable,
without further notice, demand or presentment, and/or, as the
case may be, the Commitments shall terminate.
SECTION 8.4. Restrictions on Off-Sets. The Borrower will
not, and will not permit any of its Subsidiaries to, take any
action or fail to take any action or allow to occur any reduction
in the amounts owing under the Clear Lake Credit Agreement or the
Cogenron Credit Agreement pursuant to the off-set provisions
under the Standstill Agreements at any time after the occurrence
of an Event of Default.
ARTICLE IX
THE AGENT
SECTION 9.1. Actions. Each Lender hereby appoints
Scotiabank as its Agent under and for purposes of this Agreement,
the Notes and each other Loan Document. Each Lender authorizes
the Agent to act on behalf of such Lender under this Agreement,
the Notes and each other Loan Document and, in the absence of
other written instructions from the Required Lenders received
from time to time by the Agent (with respect to which the Agent
agrees that it will comply, except as otherwise provided in this
Section or as otherwise advised by counsel), to exercise such
powers hereunder and thereunder as are specifically delegated to
or required of the Agent by the terms hereof and thereof,
together with such powers as may be reasonably incidental
thereto. Each Lender hereby indemnifies (which indemnity shall
survive any termination of this Agreement) the Agent, pro rata
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according to such Lender's Percentage, from and against any and
all liabilities, obligations, losses, damages, claims, costs or
expenses of any kind or nature whatsoever which may at any time
be imposed on, incurred by, or asserted against, the Agent in any
way relating to or arising out of this Agreement, the Notes and
any other Loan Document, including reasonable attorneys' fees,
and as to which the Agent is not reimbursed by the Borrower;
provided, however, that no Lender shall be liable for the payment
of any portion of such liabilities, obligations, losses, damages,
claims, costs or expenses which are determined by a court of
competent jurisdiction in a final proceeding to have resulted
solely from the Agent's gross negligence or wilful misconduct.
The Agent shall not be required to take any action hereunder,
under the Notes or under any other Loan Document, or to prosecute
or defend any suit in respect of this Agreement, the Notes or any
other Loan Document, unless it is indemnified hereunder to its
satisfaction. If any indemnity in favor of the Agent shall be or
become, in the Agent's determination, inadequate, the Agent may
call for additional indemnification from the Lenders and cease to
do the acts indemnified against hereunder until such additional
indemnity is given.
SECTION 9.2. Funding Reliance, etc. Unless the Agent
shall have been notified by telephone, confirmed in writing, by
any Lender by 5:00 p.m., San Francisco time, on the day prior to
a Borrowing that such Lender will not make available the amount
which would constitute its Percentage of such Borrowing on the
date specified therefor, the Agent may assume that such Lender
has made such amount available to the Agent and, in reliance upon
such assumption, make available to the Borrower a corresponding
amount. If and to the extent that such Lender shall not have
made such amount available to the Agent, such Lender and the
Borrower severally agree to repay the Agent forthwith on demand
such corresponding amount together with interest thereon, for
each day from the date the Agent made such amount available to
the Borrower to the date such amount is repaid to the Agent, at
the interest rate applicable at the time to Loans comprising such
Borrowing.
SECTION 9.3. Exculpation. Neither the Agent nor any of
its directors, officers, employees or agents shall be liable to
any Lender for any action taken or omitted to be taken by it
under this Agreement or any other Loan Document, or in connection
herewith or therewith, except for its own wilful misconduct or
gross negligence, nor responsible for any recitals or warranties
herein or therein, nor for the effectiveness, enforceability,
validity or due execution of this Agreement or any other Loan
Document, nor for the creation, perfection or priority of any
Liens purported to be created by any of the Loan Documents, or
the validity, genuineness, enforceability, existence, value or
sufficiency of any collateral security, nor to make any inquiry
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respecting the performance by the Borrower of its obligations
hereunder or under any other Loan Document. Any such inquiry
which may be made by the Agent shall not obligate it to make any
further inquiry or to take any action. The Agent shall be
entitled to rely upon advice of counsel concerning legal matters
and upon any notice, consent, certificate, statement or writing
which the Agent believes to be genuine and to have been presented
by a proper Person.
SECTION 9.4. Successor. The Agent may resign as such at
any time upon at least 30 days' prior notice to the Borrower and
all Lenders. If the Agent at any time shall resign, the Required
Lenders may appoint another Lender as a successor Agent which
shall thereupon become the Agent hereunder. If no successor
Agent shall have been so appointed by the Required Lenders, and
shall have accepted such appointment, within 30 days after the
retiring Agent's giving notice of resignation, then the retiring
Agent may, on behalf of the Lenders, appoint a successor Agent,
which shall be one of the Lenders or a commercial banking
institution organized under the laws of the U.S. (or any State
thereof) or a U.S. branch or agency of a commercial banking
institution, and having a combined capital and surplus of at
least $500,000,000. Upon the acceptance of any appointment as
Agent hereunder by a successor Agent, such successor Agent shall
be entitled to receive from the retiring Agent such documents of
transfer and assignment as such successor Agent may reasonably
request, and shall thereupon succeed to and become vested with
all rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and
obligations under this Agreement. After any retiring Agent's
resignation hereunder as the Agent, the provisions of
(a) this Article IX shall inure to its benefit as to
any actions taken or omitted to be taken by it while it was
the Agent under this Agreement; and
(b) Section 10.3 (with respect to expenses incurred
prior to resignation) and Section 10.4 shall continue to
inure to its benefit.
SECTION 9.5. Loans by Scotiabank. Scotiabank shall have
the same rights and powers with respect to (x) the Loans made by
it or any of its Affiliates, and (y) the Notes held by it or any
of its Affiliates as any other Lender and may exercise the same
as if it were not the Agent. Scotiabank and its Affiliates may
accept deposits from, lend money to, and generally engage in any
kind of business with the Borrower or any Subsidiary or Affiliate
of the Borrower as if Scotiabank were not the Agent hereunder.
SECTION 9.6. Credit Decisions. Each Lender acknowledges
that it has, independently of the Agent and each other Lender,
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and based on such Lender's review of the financial information of
the Borrower, this Agreement, the other Loan Documents (the terms
and provisions of which being satisfactory to such Lender) and
such other documents, information and investigations as such
Lender has deemed appropriate, made its own credit decision to
extend its Commitment. Each Lender also acknowledges that it
will, independently of the Agent and each other Lender, and based
on such other documents, information and investigations as it
shall deem appropriate at any time, continue to make its own
credit decisions as to exercising or not exercising from time to
time any rights and privileges available to it under this
Agreement or any other Loan Document.
SECTION 9.7. Copies, etc. The Agent shall give prompt
notice to each Lender of each notice or request required or
permitted to be given to the Agent by the Borrower pursuant to
the terms of this Agreement (unless concurrently delivered to the
Lenders by the Borrower). The Agent will distribute to each
Lender each document or instrument received for its account and
copies of all other communications received by the Agent from the
Borrower for distribution to the Lenders by the Agent in
accordance with the terms of this Agreement.
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.1. Waivers, Amendments, etc. The provisions of
this Agreement and of each other Loan Document may from time to
time be amended, modified or waived, if such amendment,
modification or waiver is in writing and consented to by the
Borrower and the Required Lenders; provided, however, that no
such amendment, modification or waiver which would:
(a) modify any requirement hereunder that any
particular action be taken by all the Lenders or by the
Required Lenders shall be effective unless consented to by
each Lender;
(b) modify this Section 10.1, change the definition
of "Required Lenders", increase the Commitment Amount or
the Percentage of any Lender, reduce any fees described in
Article III, release any Collateral, except as otherwise
specifically provided in Section 7.2.10, shall be made
without the consent of each Lender and each holder of a
Note;
(c) extend the due date for, or reduce the amount of,
any scheduled repayment or prepayment of principal of or
interest on any Loan (or reduce the principal amount of or
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rate of interest on any Loan) shall be made without the
consent of each Lender; or
(d) affect adversely the interests, rights or
obligations of the Agent qua the Agent shall be made
without consent of the Agent.
No failure or delay on the part of the Agent, any Lender or the
holder of any Note in exercising any power or right under this
Agreement or any other Loan Document shall operate as a waiver
thereof, nor shall any single or partial exercise of any such
power or right preclude any other or further exercise thereof or
the exercise of any other power or right. No notice to or demand
on the Borrower in any case shall entitle it to any notice or
demand in similar or other circumstances. No waiver or approval
by the Agent, any Lender or the holder of any Note under this
Agreement or any other Loan Document shall, except as may be
otherwise stated in such waiver or approval, be applicable to
subsequent transactions. No waiver or approval hereunder shall
require any similar or dissimilar waiver or approval thereafter
to be granted hereunder.
SECTION 10.2. Notices. All notices and other
communications provided to any party hereto under this Agreement
or any other Loan Document shall be in writing or by facsimile
and addressed, delivered or transmitted to such party at its
address or facsimile number set forth below its signature hereto
or set forth in the Lender Assignment Agreement or at such other
address or facsimile number as may be designated by such party in
a notice to the other parties. Any notice, if mailed and
properly addressed with postage prepaid or if properly addressed
and sent by pre-paid courier service, shall be deemed given when
received; any notice, if transmitted by facsimile, shall be
deemed given when transmitted.
SECTION 10.3. Payment of Costs and Expenses. The Borrower
agrees to pay on demand all reasonable expenses of the Agent
(including the fees and out-of-pocket expenses of counsel to the
Agent and of local counsel, if any, who may be retained by
counsel to the Agent) in connection with
(a) the negotiation, preparation, execution and
delivery of this Agreement and of each other Loan Document,
including schedules and exhibits, and any amendments,
waivers, consents, supplements or other modifications to
this Agreement or any other Loan Document as may from time
to time hereafter be required, whether or not the
transactions contemplated hereby are consummated; and
(b) the filing, recording, refiling or rerecording of
the Pledge Agreement and the Security Agreements and/or any
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Uniform Commercial Code financing statements relating
thereto and all amendments, supplements and modifications
to any thereof and any and all other documents or
instruments of further assurance required to be filed or
recorded or refiled or rerecorded by the terms hereof or of
the Pledge Agreement or the Security Agreements; and
(c) the preparation and review of the form of any
document or instrument relevant to this Agreement or any
other Loan Document.
The Borrower further agrees to pay, and to save the Agent and the
Lenders harmless from all liability for, any stamp or other taxes
(other than income taxes) which may be payable in connection with
the execution or delivery of this Agreement, the borrowings
hereunder, or the issuance of the Notes or any other Loan
Documents. The Borrower also agrees to reimburse the Agent and
each Lender upon demand for all reasonable out-of-pocket expenses
(including attorneys' fees and legal expenses) incurred by the
Agent or such Lender in connection with (x) the negotiation of
any restructuring or "work-out", whether or not consummated, of
any Obligations and (y) the enforcement of any Obligations.
SECTION 10.4. Indemnification. In consideration of the
execution and delivery of this Agreement by each Lender and the
extension of the Commitments, the Borrower hereby indemnifies,
exonerates and holds the Agent and each Lender and each of their
respective officers, directors, employees and agents
(collectively, the "Indemnified Parties") free and harmless from
and against any and all actions, causes of action, suits, losses,
costs, liabilities and damages, and expenses incurred in
connection therewith (irrespective of whether any such
Indemnified Party is a party to the action for which
indemnification hereunder is sought), including reasonable
attorneys' fees and disbursements (collectively, the "Indemnified
Liabilities"), incurred by the Indemnified Parties or any of them
as a result of, or arising out of, or relating to
(a) any transaction financed or to be financed in
whole or in part, directly or indirectly, with the proceeds
of any Loan;
(b) the entering into and performance of this
Agreement and any other Loan Document by any of the
Indemnified Parties (including any action brought by or on
behalf of the Borrower as the result of any determination
by the Required Lenders pursuant to Article V not to fund
any Borrowing but not including any breach of this
Agreement or any other Loan Documents by Agent or any of
the Lenders);
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(c) any investigation, litigation or proceeding
related to any acquisition or proposed acquisition by the
Borrower or any of its Subsidiaries of all or any portion
of the stock or assets of any Person, whether or not the
Agent or such Lender is party thereto;
(d) any investigation, litigation or proceeding
related to any environmental cleanup, audit, compliance or
other matter relating to the protection of the environment
or the Release by the Borrower or any of its Subsidiaries
of any Hazardous Material; or
(e) the presence on or under, or the escape, seepage,
leakage, spillage, discharge, emission, discharging or
releases from, any real property owned or operated by the
Borrower or any Subsidiary thereof of any Hazardous
Material (including any losses, liabilities, damages,
injuries, costs, expenses or claims asserted or arising
under any Environmental Law), regardless of whether caused
by, or within the control of, the Borrower or such
Subsidiary,
except for any such Indemnified Liabilities arising for the
account of a particular Indemnified Party by reason of the
relevant Indemnified Party's gross negligence or wilful
misconduct. If and to the extent that the foregoing undertaking
may be unenforceable for any reason, the Borrower hereby agrees
to make the maximum contribution to the payment and satisfaction
of each of the Indemnified Liabilities which is permissible under
applicable law.
SECTION 10.5. Survival. The obligations of the Borrower
under Sections 4.3, 4.4, 4.5, 4.6, 10.3 and 10.4, and the
obligations of the Lenders under Section 9.1, shall in each case
survive any termination of this Agreement, the payment in full of
all Obligations and the termination of all Commitments. The
representations and warranties made by each Obligor in this
Agreement and in each other Loan Document shall survive the
execution and delivery of this Agreement and each such other Loan
Document.
SECTION 10.6. Severability. Any provision of this
Agreement or any other Loan Document which is prohibited or
unenforceable in any jurisdiction shall, as to such provision and
such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the
remaining provisions of this Agreement or such Loan Document or
affecting the validity or enforceability of such provision in any
other jurisdiction.
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SECTION 10.7. Headings. The various headings of this
Agreement and of each other Loan Document are inserted for
convenience only and shall not affect the meaning or
interpretation of this Agreement or such other Loan Document or
any provisions hereof or thereof.
SECTION 10.8. Execution in Counterparts, Effectiveness,
etc. This Agreement may be executed by the parties hereto in
several counterparts, each of which shall be executed by the
Borrower and the Agent and be deemed to be an original and all of
which shall constitute together but one and the same agreement.
This Agreement shall become effective when counterparts hereof
executed on behalf of the Borrower and each Lender (or notice
thereof satisfactory to the Agent) shall have been received by
the Agent and notice thereof shall have been given by the Agent
to the Borrower and each Lender.
SECTION 10.9. Governing Law; Entire Agreement. THIS
AGREEMENT, THE NOTES AND EACH OTHER LOAN DOCUMENT SHALL EACH BE
DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL
LAWS OF THE STATE OF NEW YORK. This Agreement, the Notes and the
other Loan Documents constitute the entire understanding among
the parties hereto with respect to the subject matter hereof and
supersede any prior agreements, written or oral, with respect
thereto.
SECTION 10.10. Successors and Assigns. This Agreement
shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and assigns;
provided, however, that:
(a) the Borrower may not assign or transfer its
rights or obligations hereunder without the prior written
consent of the Agent and all Lenders; and
(b) the rights of sale, assignment and transfer of
the Lenders are subject to Section 10.11.
SECTION 10.11. Sale and Transfer of Loans and Note;
Participations in Loans and Note. Each Lender may assign, or
sell participations in, its Loans and Commitment to one or more
other Persons in accordance with this Section 10.11.
SECTION 10.11.1. Assignments. Any Lender,
(a) with the written consents of the Borrower and the
Agent (which consents shall not be unreasonably delayed or
withheld and which consent, in the case of the Borrower,
shall be deemed to have been given in the absence of a
written notice delivered by the Borrower to the Agent, on
or before the tenth Business Day after receipt by the
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Borrower of such Lender's request for consent, stating, in
reasonable detail, the reasons why the Borrower proposes to
withhold such consent) may at any time assign and delegate
to one or more commercial banks or other financial
institutions; and
(b) with notice to the Borrower and the Agent, but
without the consent of the Borrower or the Agent, may
assign and delegate to any of its Affiliates or to any
other Lender
(each Person described in either of the foregoing clauses as
being the Person to whom such assignment and delegation is to be
made, being hereinafter referred to as an "Assignee Lender"), all
or any fraction of such Lender's total Loans and Commitment
(which assignment and delegation shall be of a constant, and not
a varying, percentage of all the assigning Lender's Loans and
Commitment) in a minimum aggregate amount of $10,000,000;
provided, however, that any such Assignee Lender will comply, if
applicable, with the provisions contained in the last sentence of
Section 4.6 and further, provided, however, that, the Borrower,
each other Obligor and the Agent shall be entitled to continue to
deal solely and directly with such Lender in connection with the
interests so assigned and delegated to an Assignee Lender until
(c) written notice of such assignment and delegation,
together with payment instructions, addresses and related
information with respect to such Assignee Lender, shall
have been given to the Borrower and the Agent by such
Lender and such Assignee Lender;
(d) such Assignee Lender shall have executed and
delivered to the Borrower and the Agent a Lender Assignment
Agreement, accepted by the Agent; and
(e) the processing fees described below shall have
been paid.
From and after the date that the Agent accepts such Lender
Assignment Agreement, (x) the Assignee Lender thereunder shall be
deemed automatically to have become a party hereto and to the
extent that rights and obligations hereunder have been assigned
and delegated to such Assignee Lender in connection with such
Lender Assignment Agreement, shall have the rights and
obligations of a Lender hereunder and under the other Loan
Documents, and (y) the assignor Lender, to the extent that rights
and obligations hereunder have been assigned and delegated by it
in connection with such Lender Assignment Agreement, shall be
released from its obligations hereunder and under the other Loan
Documents with respect to obligations arising after the date of
assignment. Within five Business Days after its receipt of
-66-
notice that the Agent has received an executed Lender Assignment
Agreement, the Borrower shall execute and deliver to the Agent
(for delivery to the relevant Assignee Lender) a new Note
evidencing such Assignee Lender's assigned Loans and Commitment
and, if the assignor Lender has retained Loans and its Commitment
hereunder, a replacement Note in the principal amount of the
Loans and Commitment retained by the assignor Lender hereunder
(such Note to be in exchange for, but not in payment of, that
Note then held by such assignor Lender). Each such Note shall be
dated the date of the predecessor Note. The assignor Lender
shall ▇▇▇▇ the predecessor Note "exchanged" and deliver it to the
Borrower. Accrued interest on that part of the predecessor Note
evidenced by the new Note, and accrued fees, shall be paid as
provided in the Lender Assignment Agreement. Accrued interest on
that part of the predecessor Note evidenced by the replacement
Note shall be paid to the assignor Lender. Accrued interest and
accrued fees shall be paid at the same time or times provided in
the predecessor Note and in this Agreement. Such assignor Lender
or such Assignee Lender must also pay a processing fee to the
Agent upon delivery of any Lender Assignment Agreement in the
amount of $3,000. Any attempted assignment and delegation not
made in accordance with this Section 10.11.1 shall be null and
void.
SECTION 10.11.2. Participations. Any Lender may at any
time sell to one or more commercial banks or other Persons (each
of such commercial banks and other Persons being herein called a
"Participant") participating interests in any of the Loans,
Commitment, or other interests of such Lender hereunder;
provided, however, that
(a) no participation contemplated in this
Section 10.11 shall relieve such Lender from its Commitment
or its other obligations hereunder or under any other Loan
Document;
(b) such Lender shall remain solely responsible for
the performance of its Commitment and such other
obligations;
(c) the Borrower and each other Obligor and the Agent
shall continue to deal solely and directly with such Lender
in connection with such Lender's rights and obligations
under this Agreement and each of the other Loan Documents;
(d) no Participant, unless such Participant is an
Affiliate of such Lender, or is itself a Lender, shall be
entitled to require such Lender to take or refrain from
taking any action hereunder or under any other Loan
Document, except that such Lender may agree with any
Participant that such Lender will not, without such
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Participant's consent, take any actions of the type
described in clause (b) or (c) of Section 10.1; and
(e) the Borrower shall not be required to pay any
amount under Section 4.6 that is greater than the amount
which it would have been required to pay had no
participating interest been sold.
The Borrower acknowledges and agrees that each Participant, for
purposes of Sections 4.3, 4.4, 4.5, 4.6, 4.8, 4.9, 10.3 and 10.4,
shall be considered a Lender.
SECTION 10.12. Other Transactions. Nothing contained
herein shall preclude the Agent or any other Lender from engaging
in any transaction, in addition to those contemplated by this
Agreement or any other Loan Document, with the Borrower or any of
its Affiliates in which the Borrower or such Affiliate is not
restricted hereby from engaging with any other Person.
SECTION 10.13. Forum Selection and Consent to Jurisdiction
and Agent for Service of Process.
(a) ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER,
OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT,
OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OF THE AGENT, THE LENDERS OR THE
BORROWER SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE
COURTS OF THE STATE OF NEW YORK OR IN THE UNITED STATES DISTRICT
COURT FOR THE SOUTHERN DISTRICT OF NEW YORK; PROVIDED, HOWEVER,
THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER
PROPERTY may BE BROUGHT, AT THE AGENT'S OPTION, IN THE COURTS OF
ANY JURISDICTION WHERE SUCH COLLATERAL OR OTHER PROPERTY may BE
FOUND. THE BORROWER HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO
THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND OF
THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW
YORK FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE
AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED
THEREBY IN CONNECTION WITH SUCH LITIGATION. THE BORROWER FURTHER
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY PERSONAL
SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK OR IN ANY MANNER
PROVIDED BY LAW. THE BORROWER HEREBY EXPRESSLY AND IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION
WHICH IT may HAVE OR HEREAFTER may HAVE TO THE LAYING OF VENUE OF
ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE
AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. TO THE EXTENT THAT THE BORROWER HAS OR
HEREAFTER may ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT
OF FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE,
ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR
OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, THE BORROWER
-68-
HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS
OBLIGATIONS UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
(b) Nothing contained in this section shall preclude
the Agent or the Lenders from bringing any legal suit, action or
proceeding against the Borrower in the courts of any jurisdiction
where the Borrower may be found or located. To the extent
permitted by the applicable laws of any such jurisdiction, the
Borrower hereby irrevocably submits to the jurisdiction of any
such court and expressly waives, in respect of any such suit,
action or proceeding, the jurisdiction of any courts which now or
hereafter, by reason of its present or future domiciles, or
otherwise, may be available to it.
SECTION 10.14. Waiver of Jury Trial. THE AGENT, THE
LENDERS AND THE BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHTS THEY may HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF,
UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE AGENT, THE LENDERS
OR THE BORROWER. THE BORROWER ACKNOWLEDGES AND AGREES THAT IT
HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION
(AND EACH OTHER PROVISION OF EACH OTHER LOAN DOCUMENT TO WHICH IT
IS A PARTY) AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR
THE AGENT AND THE LENDERS ENTERING INTO THIS AGREEMENT AND EACH
SUCH OTHER LOAN DOCUMENT.
SECTION 10.15. Confidentiality. The Lenders shall hold
all non-public information (which has been identified as such by
the Borrower) obtained pursuant to the requirements of this
Agreement in accordance with their customary procedures for
handling confidential information of this nature and in
accordance with safe and sound banking practices and in any event
may make disclosure to any of their examiners, their Affiliates,
outside auditors, counsel and other professional advisors in
connection with this Agreement or as reasonably required by any
bona fide transferee, participant or assignee or as required or
requested by any governmental agency or representative thereof or
pursuant to legal process; provided, however, that
(a) unless specifically prohibited by applicable law
or court order, each Lender shall notify the Borrower of
any request by any governmental agency or representative
thereof (other than any such request in connection with an
examination of the financial condition of such Lender by
such governmental agency) for disclosure of any such non-
public information prior to disclosure of such information;
(b) prior to any such disclosure pursuant to this
Section 10.15, each Lender shall require any such bona fide
-69-
transferee, participant and assignee receiving a disclosure
of non-public information to agree in writing
(i) to be bound by this Section 10.15;
(ii) to require such Person to require any other
Person to whom such Person discloses such non-public
information to be similarly bound by this
Section 10.15; and
(c) except as may be required by an order of a court
of competent jurisdiction and to the extent set forth
therein, no Lender shall be obligated or required to return
any materials furnished by the Borrower or any Subsidiary.
SECTION 10.16. Limitations on Recourse. The Agent and the
Lenders agree that (except as hereinafter set forth) their rights
in respect of the Loans, and any claim or liability under any
Loan Document asserted against the Borrower by the Agent or any
Lender shall be limited to satisfaction out of, and enforcement
against the Collateral, and that after the Agent and the Lenders
have exhausted the Collateral, the Borrower shall have no
liability to the Agent or any Lender for the payment of any sums
now or hereafter owing by the Borrower under any Loan Document.
It is expressly understood and agreed that nothing
contained in this Section 10.16 shall in any manner or any way
constitute (or be deemed to be) a release of any Obligation
secured by, or impair the enforceability of, the Liens and
security interests and possessory rights created by or arising
from this Agreement and the Collateral Security Documents or
restrict the remedies available to the Agent and the Lenders to
realize upon the Collateral. In addition, this Section 10.16
shall not affect or diminish any legal rights of (i) any Person
against any other Person arising from fraud, waste,
misappropriation or misapplication of any funds or (ii) of the
Agent and the Lenders against any Obligor (other than the
Borrower) for breach of any Loan Document.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto
duly authorized as of the day and year first above written.
CALPINE FINANCE COMPANY
By
Title:
Address: ▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
Attention: Asset Manager
THE BANK OF NOVA SCOTIA, as Agent
By
Title:
Address: ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
with a copy to:
The Bank of Nova Scotia
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Administrative Agent -
Loan Administration
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
-▇▇-
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇
___%
By
Title:
Address: ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
with a copy to:
The Bank of Nova Scotia
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Administrative Agent -
Loan Administration
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Domestic Office:
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
LIBOR Office:
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
-72-
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TABLE OF CONTENTS
SECTION PAGE
||
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS......................3
1.1. Defined Terms.........................................3
1.2. Use of Defined Terms.................................20
1.3. Cross-References.....................................21
1.4. Accounting and Financial Determinations..............21
ARTICLE II
COMMITMENTS, BORROWING PROCEDURES AND NOTES..........21
2.1. Commitments..........................................21
2.2. Borrowing Procedure..................................21
2.3. Continuation and Conversion Elections................22
2.4. Funding..............................................22
2.5. Notes................................................23
ARTICLE III
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES...........23
3.1. Repayments and Prepayments...........................23
3.2. Interest Provisions..................................24
3.2.1. Rates................................................24
3.2.2. Post-Maturity Rates..................................25
3.2.3. Payment Dates........................................26
ARTICLE IV
CERTAIN LIBO RATE AND OTHER PROVISIONS...............26
4.1. LIBO Rate Lending Unlawful...........................26
4.2. Deposits Unavailable.................................27
4.3. Increased LIBO Rate Loan Costs, etc..................27
4.4. Funding Losses.......................................27
4.5. Increased Capital Costs..............................28
4.6. Taxes................................................28
4.7. Payments, Computations, etc..........................30
4.8. Sharing of Payments..................................30
4.9. Actions of Affected Lenders..........................31
4.10. Use of Proceeds......................................31
ARTICLE V
CONDITIONS TO BORROWING..............................31
5.1. Initial Borrowing....................................32
5.1.1. Stock Purchase Consummated...........................32
5.1.2. Debt Acquisitions Consummated........................32
5.1.3. Consents.............................................32
5.1.4. Government Approvals.................................32
5.1.5. Project Swap Agreements..............................33
5.1.6. Calpine Equity Contribution..........................33
5.1.7. Calpine Subordinated Indebtedness....................33
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TABLE OF CONTENTS, continued
SECTION PAGE
5.1.8. Resolutions, etc.....................................33
5.1.9. Delivery of Notes....................................33
5.1.10. Pledge Agreement.....................................33
5.1.11. Deposit and Disbursement Agreement...................33
5.1.12. Security Agreements..................................34
5.1.13. Subordination Agreement..............................34
5.1.14. Opinions of Counsel..................................34
5.1.15. Purchase Documents...................................34
5.1.16. Project Documents....................................35
5.1.17. Projections..........................................35
5.1.18. Insurance Certificates...............................35
5.1.19. Independent Engineer's Report........................35
5.1.20. Financial Statements.................................35
5.1.21. Loan Purchase Agreement..............................35
5.1.22. Indemnification Agreement............................35
5.1.23. Due Diligence........................................35
5.1.24. Closing Fees, Expenses, etc..........................35
5.2. All Borrowings.......................................36
5.2.1. Compliance with Warranties, No Default, etc..........36
5.2.2. Borrowing Request....................................37
5.2.3. Satisfactory Legal Form..............................37
ARTICLE VI
REPRESENTATIONS AND WARRANTIES.......................37
6.1. Organization, etc....................................37
6.2. Due Authorization, Non-Contravention, etc............37
6.3. Government Approval, Regulation, etc.................38
6.4. Validity, etc........................................38
6.5. Financial Information................................39
6.6. No Material Adverse Change...........................39
6.7. Litigation, Labor Controversies, etc.................39
6.8. Subsidiaries.........................................39
6.9. Ownership of Properties..............................39
6.10. Taxes................................................40
6.11. Pension and Welfare Plans............................40
6.12. Environmental Warranties.............................40
6.13. Regulations G, U and X...............................41
6.14. Accuracy of Information..............................41
6.15. Financial Projections................................42
6.16. Collateral Security Documents........................42
6.17. Principal Place of Business, etc.....................42
6.18. Representations and Warranties Incorporated from
Purchase Agreement...................................43
ARTICLE VII
COVENANTS............................................................43
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TABLE OF CONTENTS, continued
SECTION PAGE
7.1. Affirmative Covenants................................43
7.1.1. Financial Information, Reports, Notices, etc.........43
7.1.2. Compliance with Laws, etc............................45
7.1.3. Maintenance of Properties............................45
7.1.4. Insurance............................................45
7.1.5. Books and Records....................................46
7.1.6. Environmental Covenant...............................46
7.1.7. Resist Regulatory Change.............................46
7.1.8. Take-Out Financing; Assignments......................47
7.2. Negative Covenants...................................47
7.2.1. Business Activities..................................47
7.2.2. Indebtedness.........................................47
7.2.3. Liens................................................48
7.2.4. Financial Condition..................................49
7.2.5. Investments..........................................50
7.2.6. Restricted Payments, etc.............................50
7.2.7. Rental Obligations...................................51
7.2.8. Take or Pay Contracts................................51
7.2.9. Consolidation, Merger, etc...........................51
7.2.10. Asset Dispositions, etc..............................52
7.2.11. Modification of Certain Agreements...................52
7.2.12. Transactions with Affiliates.........................53
7.2.13. Negative Pledges, Restrictive Agreements, etc........54
7.2.14. Change of Name or Office or Fiscal Year..............54
7.2.15. Pension and Welfare..................................55
ARTICLE VIII
EVENTS OF DEFAULT....................................55
8.1. Listing of Events of Default.........................55
8.1.1. Non-Payment of Obligations...........................55
8.1.2. Breach of Warranty...................................55
8.1.3. Non-Performance of Certain Covenants and
Obligations..........................................55
8.1.4. Non-Performance of Other Covenants and
Obligations..........................................55
8.1.5. Default on Other Indebtedness........................56
8.1.6. Judgments............................................56
8.1.7. Control of the Borrower..............................56
8.1.8. Bankruptcy, Insolvency, etc..........................56
8.1.9. Impairment of Security, etc..........................57
8.1.10. Public Utility Regulation............................57
8.2. Action if Bankruptcy.................................58
8.3. Action if Other Event of Default.....................58
Restrictions on Off-Sets.............................58
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TABLE OF CONTENTS, continued
SECTION PAGE
ARTICLE IX
THE AGENT............................................58
9.1. Actions..............................................58
9.2. Funding Reliance, etc................................59
9.3. Exculpation..........................................59
9.4. Successor............................................60
9.5. Loans by Scotiabank..................................61
9.6. Credit Decisions.....................................61
9.7. Copies, etc..........................................61
ARTICLE X
MISCELLANEOUS PROVISIONS.............................61
10.1. Waivers, Amendments, etc.............................61
10.2. Notices..............................................62
10.3. Payment of Costs and Expenses........................62
10.4. Indemnification......................................63
10.5. Survival.............................................64
10.6. Severability.........................................65
10.7. Headings.............................................65
10.8. Execution in Counterparts, Effectiveness, etc........65
10.9. Governing Law; Entire Agreement......................65
10.10. Successors and Assigns...............................65
10.11. Sale and Transfer of Loans and Note; Participations
in Loans and Note....................................65
10.11.1. Assignments..........................................66
10.11.2. Participations.......................................67
10.12. Other Transactions...................................68
10.13. Forum Selection and Consent to Jurisdiction and
Agent for Service of Process.........................68
10.14. Waiver of Jury Trial.................................69
10.15. Confidentiality......................................69
10.16. Limitations on Recourse..............................70
||
SCHEDULE 1 - Disclosure Schedule
SCHEDULE 2 - Filings for Collateral Documents
SCHEDULE 3 - Clear Lake Project Documents
SCHEDULE 4 - Cogenron Project Documents
SCHEDULE 5 - Clear Lake Project Loan Documents
SCHEDULE 6 - Cogenron Project Loan Documents
SCHEDULE 7 - Financial Projections
SCHEDULE 8 - Equity Support Agreements
EXHIBIT A - Form of Note
EXHIBIT B - Form of Borrowing Request
EXHIBIT C - Form of Continuation/Conversion Notice
EXHIBIT D - Form of Deposit and Disbursement Agreement
-iv-
TABLE OF CONTENTS, continued
SECTION PAGE
EXHIBIT E - Form of Security Agreement
EXHIBIT F - Form of Assignment and Security Agreement
EXHIBIT G - Form of Pledge Agreement
EXHIBIT H - Form of Subordination Agreement
EXHIBIT I - Form of Lender Assignment Agreement
EXHIBIT J - Form of Opinion of Counsel to the Borrower
EXHIBIT K - Form of Loan Purchase Agreement
EXHIBIT L - Form of Indemnity Agreement72
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