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BAYONNE COGENERATION PROJECT
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TERM LOAN AGREEMENT
Dated as of November 1, 1987
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COGEN TECHNOLOGIES NJ VENTURE,
Borrower
and
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA,
Lender
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TABLE OF CONTENTS
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Page
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Section 1. Definitions.............................. 1
Section 2. Term Loan................................ 1
2.1 Term Loan Commitment......................... 1
2.2 Interest on Term Notes....................... 2
Section 3. Method of Borrowing; Use of Proceeds..... 2
3.1 Method of Borrowings......................... 2
3.2 Use of Proceeds of Term Loan................. 2
Section 4. Payments; Prepayments; Fees.............. 2
4.1 Payments Due on Non-Business Days............ 2
4.2 Required Repayments of the Term Notes........ 3
4.3 Extraordinary Prepayment of the
Term Notes................................. 3
4.4 Optional Prepayment of Term Notes............ 3
4.5 Premium with Respect to Certain
Prepayments of Term Notes.................. 4
4.6 Partial Prepayments.......................... 4
4.7 Notice of Prepayments........................ 4
4.8 Non-Usage Fee................................ 4
4.9 Delayed Takedown Fee......................... 5
Section 5. Conditions Precedent..................... 5
5.1 Conditions to Closing Date................... 5
5.2 Conditions to Term Loan...................... 8
Section 6. Representations and Warranties........... 16
6.1 Liabilities.................................. 16
6.2 Existence and Business....................... 16
6.3 Compliance with Law.......................... 16
6.4 Power and Authorization; Enforceable
Obligations................................ 16
6.5 Governmental Actions......................... 17
6.6 No Legal Bar................................. 17
6.7 No Litigation................................ 18
6.8 No Default or Event of Loss ................. 18
6.9 Interests in Contracts....................... 18
6.10 Interests in Property; Liens................. 18
6.11 No Burdensome Restrictions................... 19
6.12 Taxes........................................ 19
(i)
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6.13 Public Utility Status....................... 19
6.14 Federal Regulations......................... 20
6.15 ERISA....................................... 20
6.16 Investment Company Act...................... 20
6.17 Security Documents.......................... 20
6.18 Full Disclosure............................. 21
6.19 Power Purchase Agreements and Other
Assigned Contracts........................ 21
6.20 Principal Place of Business, Etc............ 22
6.21 Compliance with Building Codes,
Zoning Laws, Etc.......................... 22
6.22 Roads....................................... 22
6.23 Availability of Utilities................... 22
6.24 Sufficiency of Project Documents............ 22
6.25 FERC Exhibits............................... 23
6.26 Broker's or Finder's Commissions............ 23
6.27 Securities Acts............................. 23
6.28 Compliance with Environmental Laws.......... 23
6.29 Representations as to Partners.............. 24
Section 7. Representation of the Lender............... 26
7.1 Representation of the Lender................. 26
Section 8. Affirmative Covenants...................... 27
8.1 Financial Statements........................ 27
8.2 Certificates; Other Information............. 28
8.3 Payment of Obligations...................... 29
8.4 Conduct of Business and Maintenance
of Existence............................. 29
8.5 Maintenance of Property;
Restoration of Facility................... 30
8.6 Assigned Contracts.......................... 30
8.7 Inspection of Property; Books and
Records; Discussions...................... 30
8.8 Notices..................................... 31
8.9 Assignments of Additional Contracts;
Maintenance of Liens of the Security
Documents; Future Mortgages............... 33
8.10 Operating Budget............................ 33
8.11 Plans and Specifications.................... 35
8.12 Initial Date of Delivery.................... 35
8.13 Correction of Work.......................... 35
8.14 Defend Title................................ 35
8.15 Independent Engineer........................ 35
8.16 Debt Service Reserve Account................ 35
8.17 Regulatory Status........................... 35
8.18 Environmental Covenants..................... 36
(ii)
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Section 9. Negative Covenants.................. 37
9.1 Indebtedness............................ 37
9.2 Limitation on Liens..................... 37
9.3 Limitation on Contingent obligations.... 38
9.4 Restricted Payments..................... 38
9.5 Restriction on Investments.............. 39
9.6 Prohibition of Fundamental Changes...... 39
9.7 Limitation on Leases.................... 39
9.8 No Plan................................. 39
9.9 Prohibition on Disposition of Assets.... 40
9.10 Amendments, Etc. of Contracts........... 40
9.11 Transactions with Affiliates
and Others............................ 40
9.12 FERC Exhibits........................... 41
Section 10. Events of Default.................. 41
10.1 Events of Default....................... 41
10.2 Non-Recourse Nature of Liability
to Partners........................... 47
Section 11. Insurance.......................... 47
11.1 Insurance............................... 47
11.2 Insurance Against Loss or
Damage to the Facility................ 47
11.3 Comprehensive General Liability
Insurance............................. 50
11.4 Adjustment of Losses.................... 51
11.5 Application of Payments Relating
to Partial Loss or Damage............. 51
11.6 Evidence of Insurance................... 53
Il.7 Report.................................. 53
11.8 Additional Insurance by the Lender or
the Borrower.......................... 53
Section 12. MISCELLANEOUS...................... 54
12.l Home Office Payment..................... 54
12.2 Registration, Transfer and Exchange of
Term Notes; Lost Term Notes........... 54
12.3 Survival of Representations
and Warranties........................ 55
12.4 Amendment and Waivers................... 55
12.5 Notices................................. 55
12.6 Payment of Expenses and Taxes........... 56
12.7 Successors and Assigns.................. 57
12.8 Additional Financing.................... 57
12.9 Notices to Subsequent Holders........... 59
12.l0 Lender Sole Beneficiary................ 59
(iii)
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12.11 Counterparts 59
12.12 Descriptive Headings 59A
12.13 Satisfaction Requirement 59A
12.14 Severability 59A
12.15 GOVERNING LAW 59A
12.16 No Third Party Beneficiaries 59A
12.17 CONSENT TO JURISDICTION 59A
ANNEXES
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Annex A Definitions
Annex B Address, Account and Other
Information Regarding Lender
Annex C Prepayment Schedule
SCHEDULES
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Schedule 1 Liabilities
Schedule 2 Governmental Actions -- received as of Closing
Date
Schedule 3 Governmental Actions -- to be obtained after the
Closing Date but before the Borrowing Date
Schedule 4 Governmental Actions -- to be obtained after the
Borrowing Date
Schedule 5 UCC and Other Security-Related Filings
Schedule 6 Budget and Project Schedule
Schedule 7 Addresses of Partners
Schedule 8 Existing Liens
EXHIBITS
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Exhibit A Form of Term Notes
Exhibit B Forms of Opinions
Exhibit C-1 Form of Consent of General Electric Company to the Assignment of
the System Supply Agreement and the Operation & Maintenance
Contract.
Exhibit C-2 Form of Consent of Jersey Central Power & Light
Company to the Assignment of the Electric Power
Purchase Agreement.
Exhibit C-3 Form of Consent of IMTT-Bayonne to the Assignment of the IMTT Power
Purchase Agreement and the Steam Facilities Lease.
Exhibit C-4 Form of Consent of Bayonne Industries, Inc. and IMTT-Bayonne to the
Assignment of the Site Lease and the Purchase and Sale Agreement.
Exhibit C-5 Form of Consent of Public Service to the Assignment of the Service
and Interconnection Agreement and the Gas Purchase Agreement.
(iv)
Exhibit C-6 Form of Consent of Bayonne Industries, Inc. to the Assignment of
the Option Agreement.
Exhibit C-7 Consent of Exxon to the Assignment of the Steam Purchase Agreement
and alternative form thereof
Exhibit D Form of Mortgage
Exhibit E Form of Security Agreement
Exhibit F Form of Disbursement Agreement
(v)
TERM LOAN AGREEMENT dated as of November 1, 1987 (the "Agreement")
between COGEN TECHNOLOGIES NJ VENTURE, a general partnership organized under the
laws of the State of New Jersey (the "Borrower"), and THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA (the "Lender").
W I T N E S S E T H :
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WHEREAS, the Borrower desires that the Lender provide financing for
the Project (as hereinafter defined); and
WHEREAS, the Lender is willing to provide such financing subject to
and upon the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements hereinafter contained and other valuable consideration,
the sufficiency of which is hereby acknowledged, the parties hereto hereby agree
as follows:
Section 1. Definitions. Each capitalized term used herein and not
otherwise defined herein shall have the meaning specified therefor in Annex A
hereto attached.
Section 2. Term Loan.
2.1 Term Loan Commitment. Subject to and upon the terms and
conditions herein set forth, the Lender agrees to lend to the Borrower on the
Borrowing Date an amount in United States Dollars not to exceed the lesser of
(a) $90,000,000 and (b) 75% of Project Cost (the "Term Loan") in the manner
described in Section 3 hereof. The Term Loan shall be evidenced by a note or
notes (each a "Term Note" and collectively the "Term Notes"). The Term Notes
shall (a) be dated the Borrowing Date, (b) mature on the 80th Interest Payment
Date to occur after the Borrowing Date, (c) bear interest on the unpaid
principal balance thereof from the date thereof until the principal thereof
shall be repaid at the rate per annum specified in Section 2.2, (d) be
substantially in the form of Exhibit A hereto attached, with the blanks
appropriately completed in conformity herewith
and (e) be issued in fully registered form in denominations of $100,000 or more.
2.2 Interest on Term Notes. The Term Notes shall bear interest,
computed on the basis of a year of 360 days and the actual number of days
elapsed, on the unpaid principal amount thereof from the date thereof until the
principal amount thereof shall become due and payable at a fixed rate per
annum equal to 10.85%, payable on the first day of December, March, June and
September of each year, commencing on the first such date to occur following
the date of issuance of the Term Notes. If any principal or premium or interest
in respect of any Term Note shall not be paid when due, interest thereon, to the
extent permitted by law, shall be payable from the due date until paid at a rate
per annum which shall be 2% per annum in excess of the greater of (a) the
interest rate applicable such Term Note and (b) the rate of interest publicly
announced by ▇▇▇▇▇▇ Guaranty Trust Company of New York from time to time in New
York City as its prime rate for preferred borrowers (the "Stipulated Interest
Rate").
Section 3. Method of Borrowing; Use of Proceeds.
3.1 Method of Borrowings. The Borrower shall give the Lender at least
10 Business Days' prior written, telex, telecopier or telegraphic notice
("Notice of Borrowing") of its intention to borrow under Section 2.1 hereof,
specifying the proposed date (which shall be a Business Day) of the Term Loan
and the total amount thereof. Provided that there has been satisfactory
fulfillment of all requisite conditions precedent to the disbursement of the
proceeds of such Term Loan, the Lender shall make available such proceeds on the
date specified in the Notice of Borrowing by paying such proceeds to General
Electric Power Funding Corporation.
3.2 Use of Proceeds of Term Loan. The proceeds of the Term Loan shall
be used only to repay amounts owing by the Borrower under the Construction Loan
Agreement.
Section 4. Payments; Prepayments; Fees.
4.1 Payments Due on Non-Business Days. Payments with respect to any
Term Note due on any day other than a Business Day shall be due on the next
succeeding Business Day, with interest continuing to accrue until paid on the
amount of such payment to the extent permitted by law.
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4.2 Required Repayments of the Term Notes. The outstanding principal
amount of the Term Notes shall be repaid on the dates and in amounts determined
by reference to Annex C hereto attached as adjusted in accordance with the
provisions of Section 4.6. Such principal amounts of the Term Notes, together
with interest thereon to the repayment dates, shall become due on such repayment
dates.
4.3 Extraordinary Prepayment of the Term Notes. (a) If an Event of
Loss shall occur, the Borrower shall prepay in full the unpaid principal amount
of all outstanding Term Notes, together with accrued interest thereon to the
date of prepayment on the first Interest Payment Date occurring after such Event
of Loss. Any insurance or condemnation proceeds received in connection with an
Event of Loss shall be used in connection with the prepayment of the Term
Notes pursuant to this Section 4.3(a).
(b) If (a) any Partial Loss or Damage shall occur and (b) the
provisions of Section 11.5(b) regarding repair and restoration of the Project
shall not have been satisfied within 60 days of such event of Partial Loss or
Damage, then the Borrower shall prepay Term Notes in a principal amount equal
to an amount such that after such prepayment the Expected Coverage Ratio for
each subsequent year taking into account the condition of the Project shall be
at least equal to 1.5 together with accrued interest thereon to the date of
prepayment on the first Interest Payment Date occurring after the earlier of (a)
the date occurring 60 days after such event and (b) the date that it is
determined that the conditions set forth in Section 11.5(b) shall not be
satisfied.
(c) No prepayment of a Term Note pursuant to this Section 4.3 shall
relieve the Borrower of its obligation to make any of the repayments required
pursuant to Section 4.2 until such time as the principal amount of such Term
Note has been paid in full.
4.4 Optional Prepayment of Term Notes. The Term Notes shall be subject
to prepayment, in whole or in part in multiples of $100,000, together with
interest thereon to the date of prepayment plus premium, as provided in Section
4.5, on any Interest Payment Date on or after the 55th Interest Payment Date at
the option of the Borrower. No prepayment of a Term Note pursuant to this
Section 4.4 shall relieve the Borrower of its obligation to make any of the
repayments required pursuant to Section 4.2 until such time as the principal
amount of such Term Note has been paid in full.
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4.5 Premium with Respect to Certain Prepayments of Term Notes. In
addition to any other amount payable in connection therewith, the Borrower shall
pay a premium with respect to the principal amount of any Term Note being
prepaid pursuant to Section 4.4. The premium shall be equal to the product of
the Premium Rate and the principal amount being repaid of such Term Note. In no
event shall any premium be payable as a result of a prepayment pursuant to
Section 4.3.
4.6 Partial Prepayments. The amount of Term Notes required to be
prepaid at any time pursuant to the provisions of Section 4.3(b) shall be equal
to the least such amount necessary to comply with the provisions of (a) such
Section 4.3(b) and (b) the immediately succeeding sentence. Upon any partial
prepayment of Term Notes pursuant to the provisions of Section 4.3(b) the
prepayment amount shall be applied so as to reduce each subsequent repayment
required with respect to such Term Notes pursuant to Section 4.2 by an equal
percentage. Upon any other partial prepayment of Term Notes, the prepayment
amount shall be applied to repay Term Notes in inverse order of maturity (taking
into account mandatory repayments pursuant to Section 4.2). Upon any partial
prepayment of Term Notes, the amount of the prepayment shall be allocated
ratably (according to outstanding principal amounts) to all Term Notes of the
same maturity at the time outstanding being prepaid.
4.7 Notice of Prepayments. The Borrower shall give not less than 30
days' prior written notice to the Lender of each prepayment pursuant to Section
4.4, specifying the relevant prepayment date and the principal amount of Term
Notes to be prepaid on such date. Upon the delivery of such notice, the
principal amount of such Term Notes specified therein plus premium (if any, as
provided in Section 4.5), together with interest thereon to the prepayment date,
shall become due and payable on such prepayment date. Such notice shall be
irrevocable.
4.8 Non-Usage Fee. If on the Borrowing Date, or the date on which it
is determined that the Borrower will not borrow the Term Loan hereunder (the
"Cancellation Date"), as the case may be, any portion of the Fixed Amount is not
used to purchase the Term Note (the "Nondisbursed Portion"), then the Borrower
shall reimburse the Lender immediately upon demand in immediately available
funds in an amount (the "Non-Usage Fee") equal to the price increase (as
described in the next sentence) (the "Price Movement") divided by 100 and
multiplied by the amount of the
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Nondisbursed Portion (in excess of $1,000,000, if the Borrowing Date shall
occur). The Price Movement (expressed in decimals) shall be calculated by
subtracting (1) the closing price as of the Exercise Date of United States
Treasury Notes having a maturity comparable to 13.5 years (determined by
reference to the "weekly average yields" with respect to such United States
Treasury Notes as published by the Board of Governors of the Federal Reserve
(presently contained in Federal Reserve Statistical Release H.15 (519)) from (2)
the closing price of such United States Treasury Notes (similarly determined) on
the Borrowing Date, or the Cancellation Date, as the case may be. (Each closing
price shall be based on a United States Treasury Note having a par value of
$100.00 and shall be rounded to the second decimal place.) The Borrower will be
required to make a payment to the Lender under this Section 4.8 as a Non-Usage
Fee only if the figure specified in clause (2) exceeds the closing price
specified in clause (1). In no event shall the Lender be required to make
payment to the Borrower under this Section 4.8. If the payment due under this
Section 4.8 shall not be paid when due, to the extent permitted by law, interest
thereon shall be due at a rate per annum equal to the Stipulated Interest Rate.
4.9 Delayed Takedown Fee. If the Term Note has not been issued prior
to November 23, 1988, then the Borrower shall pay to the Lender monthly on the
first Business Day of each month following such date in immediately available
funds a fee (the "Delayed Takedown Fee") in respect of the Fixed Amount. The
Delayed Takedown Fee shall be in an amount equal to one-twelfth of the product
of (A) the Fixed Amount, and (B) the excess, if any, of (i) 10.85%, over (ii)
the one month London Interbank Offer Rate as reported by the Telerate System at
10:00 a.m. on such payment date, plus 1/2 of 1%. In no case shall the Delayed
Takedown Fee be less than zero. If the payment or payments due under this
Section 4.9 shall not be paid when due, to the extent permitted by law, interest
thereon shall be due at a rate per annum equal to the Stipulated Interest Rate.
Section 5. Conditions Precedent.
5.1 Conditions to Closing Date. The obligation of the Lender to
execute and deliver this Agreement is subject to the satisfaction of the
following conditions:
(a) This Agreement. There shall have been duly executed and delivered
by the Borrower this Agreement.
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(b) System Supply Agreement. There shall have been delivered by the
Borrower to the Lender a true and complete copy, as in effect on the Closing
Date, of the System Supply Agreement, certified as such by the Borrower on the
Closing Date.
(c) Operation & Maintenance Contract. There shall have been delivered by
the Borrower to the Lender a true and complete copy, as in effect on the Closing
Date, of the Operation & Maintenance Contract, certified as such by the Borrower
on the Closing Date.
(d) Joint Venture Agreement; Assigned Contracts. (1) There shall have been
delivered by the Borrower to the Lender a true and complete copy of the Joint
Venture Agreement, certified as such by the Borrower on the Closing Date.
(2) There shall have been delivered by the Borrower to the Lender a true
and complete copy, as in effect on the Closing Date, of each of the Assigned
Contracts certified by the Borrower as such on the Closing Date.
(e) Engineering Report. The Lender shall have received a favorable written
report(s) of the Independent Engineer in form and substance satisfactory to the
Lender (i) as to Facility design, the Project Schedule, the Budget and the
anticipated operating costs for the Facility, (ii) as to the ability of the
Contractor to perform its obligations under the System Supply Agreement, (iii)
to the effect that, assuming that the Facility is constructed in a good and
workmanlike manner in accordance with the Project Schedule, the Facility will
perform upon Completion so as to meet the Minimum Performance Requirements and
(iv) as to such other information as the Lender may reasonably request.
(f) Budget. The Borrower shall have furnished to the Lender a budget
setting forth all Project Costs anticipated to be incurred (the "Budget"), which
shall be in form and substance satisfactory to the Lender and set forth in
Schedule 6 hereto attached.
(g) Project Schedule. The Borrower shall have furnished to the Lender
a balanced statement of sources and uses of proceeds, together with any other
funds necessary to complete the Project, broken down as to separate construction
phases and anticipated expenditure
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dates (the "Project Schedule"), which shall be in form and substance
satisfactory to the Lender and set forth in Schedule 6 hereto attached.
(h) Legal Opinions. There shall have been delivered and addressed to the
Lender the following opinions of counsel each dated the Closing Date:
(i) an opinion of Fulbright & ▇▇▇▇▇▇▇▇, special counsel for the
Borrower, substantially in the form of, and concerning such matters
(including matters of New York law) as set forth in, Exhibit B-1 hereto
attached;
(ii) an opinion of Milbank, Tweed, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, special New York
counsel for the Borrower, substantially in the form of Exhibit B-2
hereto attached;
(iii) an opinion of ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇, special New Jersey
counsel for the Borrower, substantially in the form of Exhibit B-3 hereto
attached;
(iv) an opinion of White & Case, special counsel to the Lender, in form
and substance satisfactory to the Lender;
(v) an opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ & Linken,
special New Jersey counsel to the Lender, in form and substance
satisfactory to the Lender; and
(vi) such other opinions of counsel as the Lender may reasonably
request.
(i) No Default or Event of Loss. There shall exist no Default or Event of
Default. No Event of Loss shall have occurred.
(j) Representations and Warranties. All representations and warranties of
the Borrower contained herein or in any Project Document to which it is a party,
or which are contained in any certificate, document or financial or other
statement furnished by it or on its behalf at any time hereunder or thereunder
or in connection herewith or therewith, shall be true and correct in all
material respects.
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(k) All Proceedings to be Satisfactory. As of the Closing Date all
corporate, partnership and other proceedings and all instruments in
connection with the transactions contemplated by this Agreement and the
other Project Documents shall be satisfactory in form and substance to the
Lender. The Lender shall have received such counterpart originals or such
copies certified by proper corporate, partnership or governmental
authorities of all documents, including records of corporate or partnership
proceedings and copies of any government approval required in connection
with any transaction herein contemplated, which the Lender may reasonably
have requested in connection herewith.
(1) Financial Statements; Adverse Events. There shall have been
delivered to the Lender a pro forma balance sheet of the Borrower as of the
Closing Date. In the good faith opinion of the Lender, no material adverse
change in the financial condition or business or operations of the Borrower
shall have occurred since the date as of which such financial statements
report and no event shall have occurred which might reasonably be expected
to have a material adverse effect on the ability of the Borrower to perform
its obligations under any of the Project Documents to which it is a party.
(m) The Partner Conditions Precedent. (1) Each of the Partners shall
have certified as true and complete on the Closing Date the Joint Venture
Agreement delivered to the Lender pursuant to Section 5.1(c).
(2) No representation or warranty of any Partner contained in any
Project Document to which it is a party, is not true and correct in all
material respects as of the Closing Date if such failure to be true and
correct reasonably might be expected as of the Closing Date to have a
material adverse effect on the ability of the Borrower to perform its
obligations under any of the Project Documents.
5.2 Conditions to Term Loan. The obligation of the Lender to make the
Term Loan to the Borrower is subject to the satisfaction of the following
conditions at the time of the making of and immediately after giving effect to
such Term Loan:
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(a) The Term Notes. There shall have been delivered to the Lender the Term
Note or Term Notes, duly authorized and executed by the Borrower.
(b) Certain Security Documents. There shall have been duly executed and
delivered by the Borrower and delivered to the Lender the Mortgage, the Security
Agreement and the Disbursement Agreement.
(c) Consents. There shall have been duly executed and delivered to the
Lender with respect to each of the contracts listed in the table immediately set
forth below a Consent duly executed by the party or parties listed opposite the
title of such contract (and an assignment of such contract to the Borrower if
the Borrower was not originally a party thereto):
Contract Consent of
-------- ----------
Operation & Maintenance Contractor
Contract
System Supply Agreement Contractor
Electric Power Purchase JCP&L
Agreement
Steam Purchase Agreement EXXON
IMTT Power Purchase IMTT
Agreement
Site Lease Bayonne and IMTT
Service and Interconnection Public Service
Agreement
Gas Purchase Agreement Public Service
Steam Facilities Lease IMTT
Purchase and Sale Agreement Bayonne and IMTT
Option Agreement Bayonne
(d) There shall have been delivered by the Borrower to the Lender a true
and complete copy, as in effect on the Borrowing Date, of each of the Assigned
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Contracts certified by the Borrower as such on the Borrowing Date.
(e) New Jersey Approval of Electric Power Purchase Agreement. The Lender
shall have received evidence satisfactory to it that the Electric Power Purchase
Agreement has been approved by the New Jersey Public Utilities Commission.
(f) Survey. There shall have been delivered to the Lender a survey of the
property described in the Mortgage and Site Lease, satisfactory in form and
substance to the Lender, prepared not more than three months prior to the
Borrowing Date and certified to the Lender by a surveyor satisfactory to the
Lender.
(g) Mortgage Title Insurance. The Lender shall have received a policy of
mortgage title insurance on American Land Title Association standard loan
policy, revised coverage, most recent form (or other form acceptable to the
Lender), with respect to the Site, which policy shall be issued by a title
company or companies reasonably acceptable to the Lender and shall insure that
the Mortgage constitutes a valid, first lien on the leasehold estate of the
Borrower in the Site and on all improvements thereon, subject only to Permitted
Exceptions. Such policy shall include mechanics' lien coverage and any and all
endorsements thereto as shall be reasonably required by the Lender. Such policy
shall be satisfactory in form and substance to the Lender and shall insure the
Lender against loss in an amount not less than the sum of the aggregate unpaid
Term Notes (from time to time outstanding).
(h) Perfection of Liens and Security Interests. All filings, recordings and
other actions that are necessary or desirable in order to establish, protect,
preserve and perfect the Lender's lien on and/or security interest in the
Collateral intended to be created by the Security Documents required to be
delivered pursuant to Sections 5.2(b) and (c), including, without limitation,
the filing of financing statements, the recordation of the Mortgage and the
execution and delivery of such Security Documents, shall have been duly made or
taken. All fees, taxes and other charges relating to such filings and recordings
shall have been paid by the Borrower. The Lender shall have received
authenticated copies or other evidence of all consents,
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recordings and filings obtained or made in order to create and perfect such
liens and security interests.
(i) Evidence of Priority. The Lender shall have received the results of a
search, reflecting a record satisfactory to the Lender, conducted in the UCC
filing records in each of the jurisdictions in which the Lender's UCC-1
financing statements are to be filed in respect of the Collateral covered by the
Security Documents.
(j) Capital Contribution. Each of the Partners shall have made its
respective capital contribution to the Borrower required as of the Borrowing
Date pursuant to the Joint Venture Agreement.
(k) Qualifying Facility. A true and complete copy of the Order of the
Federal Energy Regulatory Commission to the effect that the Facility is a
"qualifying facility" under Part 292 of the rules and regulations of the Federal
Energy Regulatory Commission shall have been delivered to the Lender, certified
as such by the Borrower on the Borrowing Date.
(1) Budget. The Borrower shall have adopted an Operating Budget for its
first Operating Year pursuant to Section 8.10 hereof and such Operating Budget
shall have been approved.
(m) Evidence of Insurance. The Lender shall have received evidence,
satisfactory to it, of the existence of the insurance specified in Section 11
hereof and of the designation of the Lender as an additional insured, mortgagee,
loss payee or obligee, as the case may be, with respect thereto.
(n) Financial Statements; Adverse Events. There shall have been delivered
to the Lender a pro forma balance sheet of the Borrower as of the Borrowing Date
assuming receipt by the Borrower of the Term Loan proceeds and incurrence of all
expenses contemplated to be incurred by the Borrower in connection with the
transactions contemplated by this Agreement. In the good faith opinion of the
Lender, no material adverse change in the financial condition or business or
operations of the Borrower shall have occurred since the Closing Date, and no
event shall have occurred which might reasonably be expected to have a material
adverse effect on the ability of the Borrower to perform its
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obligations under any of the Project Documents to which it is a party.
(o) Projections. The Borrower shall have furnished to the Lender
projections satisfactory to the Lender of operating expenses and cash flow for
the Project over the term of the Term Notes.
(p) Permitted Investment. No change shall have occurred after the Closing
Date in any applicable law or regulation or in the interpretation thereof by
any governmental or regulatory authority which would cause the purchase of the
Term Notes by the Lender on the Borrowing Date not to qualify as a legal
investment under the laws of each jurisdiction to which the Lender is subject,
without recourse to any provision of such laws that permits the making of an
investment without restriction as to the character of the particular investment
being made.
(q) Opinions of Counsel. There shall have been delivered and addressed to
the Lender the following opinions of counsel each dated the Borrowing Date:
(i) an opinion of Fulbright & ▇▇▇▇▇▇▇▇, special counsel for the
Borrower, substantially in the form of, and concerning such matters
(including matters of New York law) as set forth in, Exhibit B-4 hereto
attached;
(ii) an opinion of Milbank, Tweed, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, special New York
counsel for the Borrower, substantially in the form of Exhibit B-5 hereto
attached;
(iii) an opinion of ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇, special New Jersey
counsel for the Borrower, substantially in the form of Exhibit B-6 hereto
attached;
(iv) an opinion of Van Ness, Feldman, Sutcliffe & ▇▇▇▇▇▇, special FERC
counsel to the Borrower, substantially in the form of Exhibit B-7 hereto
attached;
(v) an opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq., counsel to the Disbursement
Trustee, substantially in the form of Exhibit B-8 hereto attached;
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(vi) an opinion of White & Case, special counsel to the Lender, in form
and substance satisfactory to the Lender;
(vii) an opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ & Linken,
special New Jersey counsel to the Lender, in form and substance
satisfactory to the Lender; and
(viii) such other opinions of counsel as the Lender may reasonably
request.
(r) No Default or Event of Loss. There shall exist no Default or Event of
Default. No Event of Loss shall have occurred.
(s) Representations and Warranties. All representations and warranties of
the Borrower contained herein or in any Project Document to which it is a party,
or which are contained in any certificate, document or financial or other
statement furnished by it or on its behalf at any time hereunder or thereunder
or in connection herewith or therewith, shall be true and correct in all
material respects with the same force and effect as though such representations
and warranties had been made on and as of such time.
(t) Government Approvals, Permits, etc. (i) Except for the Governmental
Actions specified in Schedule 4 all Governmental Actions which are necessary in
connection with the Project Documents shall have been duly obtained or made and
shall be in full force and effect on the Borrowing Date, including (without
limitation): all Governmental Actions relating to the construction of the
Facility, compliance with applicable environmental laws and regulations, the
ownership of the Facility by the Borrower, the use, occupancy and operation of
the Project by the Borrower, the mortgaging of, and the grant of a security
interest in, all the Borrower's right, title and interest in and to the Project
by the Borrower under the Security Documents, the performance (to the best
knowledge of the Borrower) by each Buyer and Public Service of its respective
obligations under the Power Purchase Agreements and the Service and
Interconnection Agreement and the execution, delivery and performance by the
respective parties thereto of the Project Documents.
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(ii) Except for the Governmental Actions specified in Schedule 4 each
Governmental Action shall be final and shall not be the subject of any pending
or threatened judicial or administrative proceedings.
(iii) Except for the Governmental Actions specified in Schedule 4 a copy of
each Governmental Action necessary for the use and occupancy of the Facility
that the Borrower to the best of its knowledge is aware of, certified to be true
and correct by the Borrower, shall have been delivered to the Lender at least
three Business Days prior to the Borrowing Date.
(iv) With respect to those Government Actions specified in Schedule 4, there
shall be no reason to believe that such Governmental Actions shall not be
obtainable when necessary in proper form in the ordinary course upon due
application therefor.
(u) No Change in Law. No change shall have occurred after the Closing Date
of this Agreement in any applicable law or regulation or in the interpretation
thereof by any governmental or regulatory authority which would make the
Lender's participation in the transactions contemplated hereby illegal or which
would subject the Lender to any unreimbursed tax (other than taxes imposed upon
or measured by the income of the Lender), penalty or other liability.
(v) No Public Utility. The statements set forth in Section 6.13 shall, in
the reasonable opinion of the Lender and its counsel, be true and correct.
(w) All Proceedings to be Satisfactory. As of the Borrowing Date, all
corporate, partnership and other proceedings and all instruments in connection
with the transactions contemplated by this Agreement and the other Project
Documents shall be satisfactory in form and substance to the Lender. The Lender
shall have received such counterpart originals or such copies certified by
proper corporate, partnership or governmental authorities of all documents,
including records of corporate or partnership proceedings and copies of any
government approval required in connection with any transaction herein
contemplated, which the Lender may reasonably have requested in connection
herewith.
(x) No Material Adverse Change (Borrower). Since the Closing Date, no event
shall have occurred which
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causes or constitutes a material adverse change in the current or reasonably
foreseeable business, operations or financial condition of the Borrower.
(y) Facility Capability. Performance Adequacy has been achieved and
Completion (subject to a reasonable "punch list") has been achieved, each in the
opinion of the Lender and (as evidenced in a certificate delivered by the
Independent Engineer to the Lender) the Independent Engineer.
(z) Partner Conditions Precedent. (i) No representation or warranty of any
Partner contained in any Project Document to which it is a party, is not true
and correct in all material respects as of the Borrowing Date with the same
force and effect as though such representation or warranty had been made on and
as of such time if such failure to be true and correct reasonably might be
expected as of the Borrowing Date to have a material adverse effect on the
ability of the Borrower to perform its obligations under any of the Project
Documents.
(ii) No material adverse change in the financial condition or business or
operations of any Partner shall have occurred since the Closing Date which
reasonably might be expected to have a material adverse effect on the ability of
the Borrower to perform its obligations under any of the Project Documents.
(aa) Storage Tanks. Borrower shall, at the Borrowing Date, furnish evidence
satisfactory to Lender that the two (2) tanks used for the storage of petroleum
product in conjunction with the boiler plant meet or exceed all environmental,
construction and safety standards applicable thereto.
(bb) Electric Power Purchase Agreement Amendment. The Amendment to the
Electric Power Purchase Agreement, dated October 29, 1985, shall have been filed
with the New Jersey Board of Public Utilities, together with a letter of
explanation, satisfactory to the Lender and its counsel.
(cc) FERC Order. The FERC Order approving the Service and Interconnection
Agreement shall have been delivered to the Lender.
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Section 6. Representations and Warranties. In order to induce the
Lender to enter into this Agreement and to make the Term Loan, the Borrower
represents and warrants to, and agrees with, the Lender that:
6.1 Liabilities. All liabilities, direct and contingent, of the
Borrower as at the Closing Date are disclosed in the pro forma balance sheet of
the Borrower delivered pursuant to Section 5.1(l), the notes thereto or Schedule
1 hereto attached.
6.2 Existence and Business. The Borrower is a partnership duly
organized and validly existing under the laws of the State of New Jersey. No
filing, recording, publishing or other act is necessary to establish the legal
existence of the Borrower. The Borrower has engaged in no business other than
the development of the Project and the negotiation, execution, delivery and
performance of the Project Documents to which it is a party, and has no
obligations or liabilities other than those incidental to its organization,
those incurred in connection with its execution and delivery of the Project
Documents to which it is a party, those incurred in connection with the Project
and those incurred pursuant to the provisions of such Project Documents. The
Borrower is and will be engaged solely in the business of constructing, owning
and operating the Project and any expansion thereto.
6.3 Compliance with Law. The Borrower is in compliance with all
Requirements of Law except to the extent that the failure to comply therewith
(i) would not reasonably be expected, in the aggregate, to have a material
adverse effect on the business, operations, properties or financial or other
condition of the Borrower and (ii) would not materially adversely affect the
ability of the Borrower to perform its obligations under this Agreement, the
Term Notes and the other Project Documents to which it is or is to become a
party.
6.4 Power and Authorization; Enforceable Obligations. The Borrower has
full power and authority and the legal right to: construct, own and operate the
Project, to conduct its business as now conducted and as proposed to be
conducted by it, to execute, deliver and perform this Agreement, the Term Notes
and the other Project Documents to which it is or is to become a party, to grant
the mortgages and security interests provided for in the Security Documents, and
to borrow hereunder. The Borrower has taken all necessary partnership and legal
action to authorize the
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borrowing on the terms and conditions of this Agreement, the Term Notes and the
other Project Documents to which it is a party, and to grant the mortgages and
security interests provided for in the Security Documents. Each of this
Agreement and the other Project Documents to which the Borrower is a party, has
been duly executed and delivered by the Borrower and constitutes the legal,
valid and binding obligation of the Borrower, enforceable against the Borrower
in accordance with its terms. On the Borrowing Date, each of the Term Notes
shall have been duly executed and delivered by the Borrower and shall constitute
the legal, valid and binding obligation of the Borrower, enforceable against the
Borrower in accordance with its terms.
6.5 Governmental Actions. All Governmental Actions, required in
connection with the execution, delivery and performance by any party to the
Project Documents, or the construction, ownership or operation of the Project in
accordance with the applicable provisions of the Project Documents and in
compliance with all applicable environmental laws and regulations are set forth
in Schedule 2 or Schedule 3 or Schedule 4 hereto attached, other than Permits
which, if not obtained, would not adversely affect the construction, use,
ownership or operation of the Project in accordance with the applicable
provisions of the Project Documents, the Budget and the Project Schedule. Each
of the Governmental Actions listed in Schedule 2 (in the case of the Closing
Date) and in Schedules 2 and 3 (in the case of the Borrowing Date) will have
been duly obtained or made, will be in full force and effect, will not be the
subject of any pending or threatened judicial or administrative proceedings, and
if the applicable statute, rule or regulation provides for a fixed period for
judicial or administrative appeal or review thereof, such period shall have
expired.
6.6 No Legal Bar. The execution, delivery and performance of this
Agreement, the Term Notes and the other Project Documents, the borrowings
hereunder, the use of the proceeds thereof and the construction, ownership and
operation of the Project will not violate any Requirement of Law or any
Contractual Obligation of the Borrower and will not result in, or require, the
creation or imposition of any Lien on any of its properties or revenues pursuant
to any Requirement of Law or Contractual Obligation of the Borrower except for
the Liens created by the Security Documents and except as otherwise contemplated
herein. No approvals and consents of any trustee or any holder of any
indebtedness, obligations or securities of the Borrower to the best
-17-
knowledge of the Borrower, of any other Person (other than a Governmental
Authority) are required in connection with the execution, delivery and
performance by the Borrower of any Project Document to which it is, or is to
become a party, except such as have been duly obtained and are in full force and
effect or, with respect to such approvals and consents which are not required
prior to the Closing Date, will be duly obtained and will be in full force and
effect as of the Borrowing Date (other than those approvals and consents set
forth in Schedule 4).
6.7 No Litigation. No litigation, investigation or proceeding of or
before any arbitrator or Governmental Authority is pending or, to the best of
its knowledge, threatened, by or against the Borrower or against any of its
properties or revenues (a) with respect to this Agreement, the Term Notes or the
other Project Documents or any of the transactions contemplated hereby or
thereby which has a reasonable likelihood of having a material adverse effect
upon such transactions, (b) which has a reasonable likelihood of having a
material adverse effect on the business, operations, property or financial or
other condition of the Borrower or (c) which has a reasonable likelihood of
materially adversely affecting the ability of the Borrower to perform its
obligations under this Agreement, the Term Notes or any of the other Project
Documents to which it is or is to become a party.
6.8 No Default or Event of Loss. The Borrower is not in default under
or with respect to any Contractual Obligation in any respect which could be
materially adverse to the business, operations, property or financial or other
condition of the Borrower, or which could materially adversely affect the
ability of the Borrower to perform its obligations under this Agreement, the
Term Notes or any of the other Project Documents to which it is or is to become
a party. No Default or Event of Default has occurred and is continuing; no Event
of Loss has occurred.
6.9 Interests in Contracts. All contracts, Permits, entitlements and
other property relating to the Project are held by the Borrower free and clear
of any Lien (other than Permitted Liens).
6.10 Interests in Property; Liens. The Borrower has good and
indefeasible leasehold estate in the Site for a period of 20 years from the
commencement thereof subject only to the Permitted Exceptions, and has good and
valid title to the Facility (to the extent the Facility is at any
-18-
time in existence), in each case free and clear of all Liens other than
Permitted Liens.
6.11 No Burdensome Restrictions. No Contractual Obligation of the
Borrower and no Requirement of Law materially adversely affects (or insofar as
the Borrower may reasonably foresee is likely to materially adversely affect)
the business, operations, property or financial or other condition of the
Borrower or its ability to perform its obligations under the Project Documents
to which it is a party and to take the actions contemplated hereunder and
thereunder to be taken by it.
6.12 Taxes. The Borrower has filed or caused to be filed all tax
returns which are required to be filed by it, and has paid all taxes owed by it
as shown to be due and payable on said returns or on any assessments made
against it or any of its property and all other taxes, fees or other charges
imposed on it or any of its property by any Governmental Authority (other than
those the amount or validity of which is currently being contested in good faith
by appropriate proceedings and with respect to which adequate reserves in
conformity with GAAP have been provided on the books of the Borrower); and no
tax liens have been filed and no claims are being asserted with respect to any
such taxes, fees or other charges.
6.13 Public Utility Status. (a) The Borrower will not, solely by
reason of (i) the ownership of the Project and the operation thereof by the
Borrower, or (ii) any other transaction contemplated by this Agreement or any of
the other Project Documents, be subject to regulation as an "electric utility",
"electric corporation", "electrical company", "public utility", "public utility
holding company" or similar entity under any existing law, rule or regulation of
any Governmental Authority, except as set forth in 18 C.F.R. (S) 292.601 or 18
C.F.R. (S) 292.602.
(b) Neither the Lender nor any of its Affiliates, will, solely by
reason of (i) the ownership of the Project or the operation thereof by the
Borrower, (ii) the making of the Term Loan hereunder, (iii) the securing of the
Term Loan by Liens on the Project and the Assigned Contracts or (iv) any other
transaction contemplated by this Agreement or any of the other Project
Documents, be subject to regulation as an "electric utility", "electric
corporation", "electrical company", "public utility", "public utility holding
company" or similar entity under any existing law, rule or regulation of any
Governmental Authority. None of the Lender or any of
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its Affiliates, will, solely by reason of its ownership or operation of the
Project upon the exercise of the Lender's remedies under the Security Documents,
be subject to regulation as an "electric utility", "electric corporation",
"electrical company", "public utility" or a "public utility holding company"
under any existing law, rule or regulation of any Governmental Authority, except
as set forth in 18 C.F.R. (S) 292.601 or 18 C.F.R. (S) 292.602 and assuming that
the Lender or such Affiliates are entitled to hold such ownership interest
without such interest being considered to be an equity interest held by an
electric utility, electric utility holding company, or any combination thereof
within the meaning of 18 C.F.R. (S) 292.602.
(c) The Facility is a Qualifying Facility and is exempt from all
regulation under the Public Utility Holding Company Act of 1935, as amended.
(d) The Borrower satisfies the ownership criteria for a cogeneration
facility set forth in 18 C.F.R. (S) 292.206 and a cogeneration facility under
the New Jersey Small Power Production Facilities Act.
6.14 Federal Regulations. The Borrower is not engaged and will not
engage in the business of extending credit for the purpose of "purchasing" or
"buying" or "carrying" any "margin stock" within the respective meanings of each
of the quoted terms under Regulations G, T, U or X of the Board of Governors of
the Federal Reserve System as now and from time to time hereafter in effect. No
part of the proceeds of the Term Loan will be used for "purchasing" or "buying"
or "carrying" any "margin stock" as so defined or for any purpose which
violates, or which would be inconsistent with, the provisions of such
Regulations.
6.15 ERISA. The Borrower will not maintain any Plan. The execution,
delivery and performance by the Borrower of this Agreement and the Term Notes
will not involve any prohibited transaction within the meaning of ERISA or
Section 4975 of the Code.
6.16 Investment Company Act. The Borrower is not an "investment
company" or a company "controlled" by an "investment company", within the
meaning of the Investment Company Act of 1940, as amended.
6.17 Security Documents. Upon execution and delivery of the Security
Documents, the provisions of the Security Documents will be effective to create
(in favor of
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the Lender) legal, valid and enforceable mortgage liens on or security interests
in all of the Collateral. When the recording and filings described on Schedule 5
hereto attached have been effected in the public offices listed on Schedule 5,
such liens and security interests will constitute perfected liens on and
perfected security interests in all right, title, estate and interest of the
Borrower in the Collateral prior and superior to all existing Liens, except for
Permitted Liens. The recordings and filings shown on Schedule 5 constitute all
of the actions necessary or advisable in order to establish, protect and perfect
the interest of the Lender in the Collateral, other than possession of
Collateral by the Lender with respect to any Collateral as to which perfection
of security interests may be effected only by possession, execution and delivery
of the Consents by the respective contractors under the Assigned Contracts.
6.18 Full Disclosure. Neither this Agreement nor any certificate,
written statement or other document furnished to the Lender, or to any appraiser
or engineer submitting a report to the Lender, by or on behalf of the Borrower,
in connection with the transactions contemplated by this Agreement and the other
Project Documents or the design, description, testing or operation of the
Project, contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained herein or
therein not misleading. There is no fact known to the Borrower which the
Borrower has not disclosed in writing to the Lender which materially adversely
affects or, so far as the Borrower can now reasonably foresee, will materially
adversely affect the properties, business, prospects or financial or other
condition of the Borrower or the ability of the Borrower to perform its
obligations hereunder and under the Assigned Contracts and the other Project
Documents.
6.19 Power Purchase Agreements and Other Assigned Contracts. Each of
the Power Purchase Agreements has been duly executed and delivered by the
parties thereto and constitutes the legal, valid and binding obligation of such
parties, enforceable against such parties in accordance with its terms. Each of
the other Assigned Contracts has been duly executed and delivered by the parties
thereto and constitutes the legal, valid and binding obligation of such parties,
enforceable against such parties in accordance with its terms. As of the
Borrowing Date the Borrower will have duly performed and complied with all
agreements and conditions to be performed and complied with by it under the
Assigned Contracts at or before such date. Each of the
-21-
Assigned Contracts is in full force and effect and has not been amended, except
for amendments disclosed to the Lender and not prohibited by the Project
Documents. There exists no default or event of default or breach in the
performance of any material covenant, agreement, obligation or condition to be
performed by the Borrower under any Assigned Contract, and no notice of default
has been given under any Assigned Contract.
6.20 Principal Place of Business, Etc. The chief executive office and
principal place of business of the Borrower, and the office where the Borrower
keeps its records concerning the Project and all contracts relating thereto, is
located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ or such other
office as the Borrower shall notify the Lender at least 15 days prior to
relocation.
6.21 Compliance with Building Codes, Zoning Laws, Etc. The
construction, ownership and operation of the Project will be in all material
respects in compliance with all applicable zoning, environmental protection, use
and building codes, laws, regulations and ordinances. The Facility is to be
constructed as contemplated in the FERC Exhibits. There are no violations of any
Requirements of Law or Governmental Actions, the penalty for violating which
could materially adversely affect the Project, the financial condition of the
Borrower or the ability of any party to perform its obligations under any
Project Document.
6.22 Roads. All roads necessary for the construction and full
utilization of the Project for its intended purposes have either been completed
or the necessary rights of way therefor have been acquired by the Borrower or
appropriate Governmental Authorities.
6.23 Availability of Utilities. All utility services necessary for the
operation of the Project for its intended purposes will be available at or
within the boundaries of the Site when needed.
6.24 Sufficiency of Project Documents. The Borrower possesses all
rights and interests in property (including without limitation the Site and
rights of ingress to and egress from the site) and all rights under contracts
(including without limitation the System Supply Agreement) necessary for the
development, construction, installation, completion, operation and maintenance
of the Facility on the Site in accordance with all Requirements of Law and in
-22-
accordance with the Minimum Performance Requirements. There are no equipment,
materials or services necessary for the development, construction,
installation, completion, operation and maintenance of the Facility on the Site
other than equipment, materials or services that can reasonably be expected to
be available at the Site on commercially reasonable terms consistent with the
Budget.
6.25 FERC Exhibits. The Facility is being constructed, and at
completion will have been constructed in accordance with the FERC Exhibits.
6.26 Broker's or Finder's Commissions. No broker's or finder's fee or
commission or similar fee will be payable by the Borrower with respect to the
Term Loan to be made hereunder or the other transactions contemplated hereby
other than a fee payable by the Borrower to ▇▇▇▇▇▇ Peabody & Co.
6.27 Securities Acts. Neither the Borrower nor any other Person has,
directly or indirectly, offered the Term Notes or any similar securities of the
Borrower for sale to, or solicited any offers to buy the Term Notes or any
similar security of the Borrower from, or otherwise approached or negotiated
with respect thereto with, any Person or Persons other than the Lender. Neither
the Borrower nor any other Person has, directly or indirectly, taken or will
take any action which would subject the issuance or sale of the Term Notes to
the provisions of Section 5 of the Securities Act of 1933, as amended, or to the
registration provisions of any securities or blue sky law of any applicable
jurisdiction.
6.28 Compliance with Environmental Laws. (a) Borrower has no
knowledge, after due and diligent inquiry and investigation, of any Hazardous
Substances or Wastes being present on the Site, or in the subsurface soil or
groundwater below the Site, with the exception of hydrocarbons.
(b) No lien pursuant to Environmental Laws has been attached to any
revenues or any real or personal property owned or leased by the Borrower and
located in the State of New Jersey.
(c) The Borrower has not received a summons, citation, directive,
letter or other communication, written or oral, from the New Jersey Department
of Environmental Protection concerning any allegations of "Discharge" (as
-23-
such term is defined in N.J.S.A. 58:10-23b(h)) of "Hazardous Substances", as
such term is defined in the Spill Act. To the best of Borrower's knowledge
(other than with respect to such hydrocarbons), there are no existing
conditions which could result in any such notices, complaints, citations,
orders, liens or penalties.
(d) Borrower represents that to its best knowledge and belief it is in
compliance with all federal, state and local laws, rules and regulations
relating to emissions into the air, discharges onto lands and waters, storage
and disposal of hazardous or toxic wastes or substances or otherwise relating to
the environment (collectively, "Environmental Laws").
(e) Borrower will have obtained all necessary environmental Permits
needed for construction and operation of the Project as of the Borrowing Date.
(f) The Project will be a "Major Facility" as such term is defined in
N.J.S.A. 58:10-23.11(b)(1) since 250,000 gallons of #2 oil will be stored on
Site.
(g) The Borrower's use or proposed use of the Project or business
conducted thereon will not involve "treatment," "storage," or "disposal" of such
hazardous substances, each as defined in the Resource, Conservation and Recovery
Act ("RCRA"), 42 U.S.C. (S) 6901, et seg. other than (a) oil to be utilized as
a backup fuel in the event that natural gas is unavailable, and (b) chemicals to
be used in the cogeneration process.
6.29 Representations as to Partners. (a) Liabilities. Since October 5,
1987, there has been no change in the properties, business, operations or
financial condition of any Partner that has a reasonable likelihood of
materially adversely affecting such Partner's ability to perform its obligations
under any Project Document to which it is a party.
(b) Existence and Business. Each of the Partners is a corporation duly
organized, validly existing and in good standing under the laws of its
respective state of incorporation, and each is duly qualified to do business as
a foreign corporation and in good standing in each jurisdiction in which the
failure to qualify would have a material adverse effect on its business taken as
a whole.
-24-
(c) Power and Authorization. Each of the Partners has full corporate
power and authority, and the legal right to own its properties and to conduct
its business as now conducted by it and proposed to be conducted by it, to
execute, deliver and perform the Project Documents to which it is or is to
become a party, to take all action as may be necessary to complete the
transactions contemplated hereunder and thereunder and to act as the general
partners of the Borrower. Each of the Partners has taken all necessary corporate
action to authorize the execution, delivery and performance of the Project
Documents to which it is or is to become a party.
(d) Compliance with Law. Each of the Partners is in compliance with
all Requirements of Law except to the extent that the failure to comply
therewith (i) would not reasonably be expected, in the aggregate, to have a
material adverse effect on the business, operations, properties or financial or
other condition of the Borrower and (ii) would not materially adversely affect
the ability of the Borrower to perform its obligations under this Agreement, the
Term Notes and the other Project Documents to which it is or is to become a
party.
(e) No Legal Bar. The execution, delivery and performance of this
Agreement, the Term Notes and the other Project Documents, the borrowings
hereunder, the use of the proceeds thereof and the construction, ownership and
operation of the Project will not violate any Contractual Obligation of a
Partner and will not result in, or require, the creation or imposition of any
Lien on any of their respective interests in the Borrower pursuant to any
Requirement of Law or Contractual Obligation of a Partner. No approvals and
consents of any trustee or any holder of any indebtedness, obligations or
securities of a Partner are required in connection with the execution, delivery
and performance by a Partner of any Project Document to which it is, or is to
become a party, except such as have been duly obtained and are in full force and
effect.
(f) No Litigation. No litigation, investigation or proceeding of or
before any arbitrator or Governmental Authority is pending or, to the best
knowledge of the Borrower, threatened, by or against a Partner or against any of
their respective properties or revenues (a) with respect to this Agreement, the
Term Notes or the other Project Documents or any of the transactions
contemplated hereby or thereby which has a reasonable likelihood of having a
material adverse effect upon such transactions, (b) which has a
-25-
reasonable likelihood of having a material adverse effect on the business,
operations, property or financial or other condition of the Borrower or (c)
which has a reasonable likelihood of materially adversely affecting the ability
of a Partner to perform its obligations under any of the Project Documents to
which it is or is to become a party.
(g) No Default or Event of Loss. No Partner is in default under or
with respect to any Contractual Obligation in any respect which could be
materially adverse to the business, operations, property or financial or other
condition of such Partner, or which could materially adversely affect the
ability of the Borrower to perform its obligations under any of the Project
Documents to which it is or is to become a party.
(h) No Burdensome Restrictions. No Contractual Obligation of a Partner
and no Requirement of Law materially adversely affects (or insofar as the
Borrower may reasonably foresee is likely to materially adversely affect) the
business, operations, property or financial or other condition of any Partner or
its ability to perform its obligations under the Project Documents to which it
is a party and to take the actions contemplated hereunder and thereunder to be
taken by it.
(i) Full Disclosure. Neither this Agreement nor any certificate,
written statement or other document furnished to the Lender, or to any appraiser
or engineer submitting a report to the Lender, by or on behalf of a Partner in
connection with the transactions contemplated by this Agreement and the other
Project Documents or the design, description, testing or operation of the
Project, contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained herein or
therein not misleading. There is no fact known to the Borrower which the
Borrower has not disclosed in writing to the Lender which materially adversely
affects or, so far as the Borrower can now reasonably foresee, will materially
adversely affect the properties, business, prospects or financial or other
condition of any Partner or the ability of any Partner to perform its respective
obligations under the Project Documents.
Section 7. Representation of the Lender.
7.1 Representation of the Lender. The Lender represents to the
Borrower that it is acquiring the Term Notes to be acquired by it hereunder for
the purpose of
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investment and not with a view to or for sale in connection with any
distribution thereof, provided, however, that the disposition of its property
shall at all times be and remain within the Lender's control.
Section 8. Affirmative Covenants. So long as any Term Note remains
outstanding and unpaid or any other amount is owing to the Lender hereunder or
under the Security Documents, the Borrower hereby agrees as follows:
8.1 Financial Statements. The Borrower shall furnish to the Lender:
(a) as soon as practicable and in any event within 120 days after the
end of each fiscal year of the Borrower, a copy of the balance sheet of
the Borrower as at the end of such year and the related statement of
income, partners' capital and changes in financial position of the Borrower,
setting forth in each case in comparative form the figures for the previous
year, certified without qualification arising out of the scope of the audit
by a nationally recognized firm of independent public accountants
reasonably satisfactory to the Lender; and
(b) as soon as practicable and in any event within 45 days after the
end of each quarterly period of each fiscal year of the Borrower, the
unaudited balance sheet of the Borrower as at the end of such quarterly
period, the related unaudited statements of income, partners' capital and
changes in financial position of the Borrower and a statement as to the
amount of energy sold during each month of such quarterly period and the
price received therefor and the amount expended (other than from
insurance proceeds, warranty claims or similar reimbursement sources)
during such quarter for major, non-routine maintenance and repairs or
renewals and replacements, setting forth in each case in comparative form
the fiqures for the comparable period for the previous year, certified as
to accuracy by an Authorized Representative (subject to normal year-end
audit adjustments);
all financial statements delivered pursuant to this Section 8.1 shall be
complete and correct in all material respects (subject, in the case of interim
statements, to normal year-end audit adjustments) and shall be prepared in
reasonable detail and in accordance with GAAP applied consistently throughout
the periods reflected therein.
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8.2 Certificates; Other Information. The Borrower shall furnish to the
Lender and, with respect to the information set forth in Section 8.2(c), (d),
(e) and (f), the Independent Engineer and, with respect to the information set
forth in Section 8.2(k), the Disbursement Trustee:
(a) concurrently with the delivery of the financial statements
referred to in Section 8.1(a), a certificate of the independent public
accountants which certified such financial statements of the Borrower
stating that in making the examination necessary for the audit thereof no
knowledge was obtained of any Default or Event of Default, except as
specified in such certificate;
(b) concurrently with the delivery of the financial statements
referred to in Sections 8.1(a) and 8.1(b), a certificate of an Authorized
Representative of the Borrower familiar with such financial matters that
during the period covered by such financial statements the Borrower has
observed and performed all of its covenants and other agreements, and
satisfied every condition, contained in this Agreement and the other Project
Documents to be observed, performed or satisfied by it, and that such
officer has obtained no knowledge of any Default or Event of Default at any
time during such period or on the date of such certificate, except as
specified in such certificate;
(c) at least 30 days prior to the date when it expects Completion to
occur, notice of such anticipated Completion date;
(d) every 60 days prior to Completion, a report describing in
reasonable detail the progress of the construction of the Project, all
developments bearing materially on Project Cost or time of Completion and
other items of material importance relating to the Project since the date of
the last such report delivered pursuant to this Section 8.2(d);
(e) prior to Completion, promptly after delivery to the Borrower, or
preparation by the Borrower, copies of all material change orders and other
material revisions to the Plans and Specifications or the Project;
(f) promptly after delivery to the Borrower, copies of all notices,
reports or certificates furnished
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to the Borrower pursuant to any Project Document;
(g) promptly after receipt thereof, a copy of each report delivered to
the Borrower by the independent public accountants which certify the
Borrower's financial statements in connection with any annual or interim
audit of its books, including any letters or reports addressed to the
Borrower or any of its officers by such accountants concerning the Project;
(h) as of the 25th day of each month, a statement of actual revenues
and actual expenses for the immediately preceding month;
(i) at least 15 days prior to the end of each fiscal year of the
Borrower, a budget of anticipated revenues and expenses for the Borrower for
the forthcoming fiscal year;
(j) promptly, such additional financial and other information with
respect to the Borrower or the Project as the Lender may from time to time
reasonably request; and
(k) within 20 days after the end of each calendar quarter (commencing
with the second full calendar quarter to occur after the Borrowing Date), a
calculation of the Coverage Ratio over the preceding 12 months or, if 12
months have not elapsed since the Borrowing Date, the period since the
Borrowing Date (provided, that the Borrower shall exclude one calendar month
of operation of the Project from the period used for the first two
calculations of the Coverage Ratio hereunder), certified as to accuracy by
an Authorized Representative.
8.3 Payment of Obligations. The Borrower will pay, discharge or
otherwise satisfy at or before maturity or before they become delinquent, as the
case may be, all of its obligations of whatever nature, except for any
obligations which are being contested in good faith and by appropriate
proceedings if such contest does not involve any risk of the sale, forfeiture or
loss of any of the Collateral.
8.4 Conduct of Business and Maintenance of Existence. The Borrower at
all times will (a) engage solely in the business of designing, constructing,
owning and operating the Facility, (b) preserve, renew and keep in full force
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and effect its existence as a general partnership under the laws of the State of
New Jersey (except that the Borrower may become a corporation or limited
partnership with the consent of the Lender (such consent not to be unreasonably
withheld)), (c) take all action necessary to maintain the Facility as a
Qualified Facility and (d) take all action necessary to maintain in full force
and effect all Governmental Actions in effect on the Closing Date and to obtain
in timely fashion and maintain in full force and effect the Governmental
Actions listed in Schedules 3 and 4 and all other Governmental Actions required
at any time after the Closing Date in connection with the ownership or operation
of the Facility. The Borrower will comply with all Contractual Obligations,
Governmental Actions and Requirements of Law relating to the Project or any
other property of the Borrower to the extent necessary to permit the Borrower
to continue to operate the Project in the manner contemplated by this Agreement.
8.5 Maintenance of Property; Restoration of Facility. The Borrower, at
its expense, will keep the Facility in good working order and condition and will
make all repairs, replacements, renewals, additions and betterments thereto, and
take all such other actions, which are necessary for the Facility to operate
efficiently so as to continue to satisfy the standards of Performance Adequacy,
any applicable requirements of insurance policies, accepted industry standards
for similar properties, all applicable laws and all applicable manufacturers'
warranties and suggested maintenance procedures. All repairs, replacements and
renewals with respect to the Project shall be comparable or superior in quality
and class to the original work.
8.6 Assigned Contracts. The Borrower will maintain or cause to be
maintained in full force and effect, without amendment or modification (except
as permitted by Section 9.10), and observe and perform in all material respects
all of its covenants and obligations under, comply in all material respects with
all conditions under, and diligently enforce in all material respects all of its
rights under and in accordance with the terms of, each Assigned Contract.
8.7 Inspection of Property; Books and Records; Discussions. The
Borrower will keep proper books of record and account in which full, true and
correct entries in conformity with GAAP and all Requirements of Law shall be
made of all dealings and transactions in relation to its business and
activities, and will permit representatives of the
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Lender during normal business hours and after reasonable notice to visit and
inspect any of its properties and examine and make abstracts from any of its
books and records, as often as reasonably may be desired, and to discuss the
business, operations, properties and financial and other condition of the
Borrower with officers and employees of the Borrower and with its independent
public accountants.
The Lender shall have the right, at the Lender's expense (unless such
expense is to be reimbursed by the Borrower in accordance with the provisions of
Section 12.6), from time to time at reasonable intervals during the term of this
Agreement, to have the Project inspected by the Independent Engineer. If the
Borrower obtains an inspection report on the Project or any portion thereof at
its own request, it will promptly provide a copy of such report to the Lender.
The Borrower agrees to correct or cause to be corrected any substantial defect
in the Project which the Borrower discovers or which is disclosed by any
inspection provided for in this Section 8.8 upon learning of same, or to
promptly give the Lender a reasonably detailed explanation in writing specifying
the reasons that such correction is not required within a reasonable time.
8.8 Notices. The Borrower will, promptly upon obtaining knowledge of
any of the following occurrences (or, in the case of any occurrence involving
any Partner, Buyer or Public Service, upon the managing Partner of the Borrower
obtaining knowledge thereof), give notice thereof to the Lender:
(a) the occurrence of any Default or Event of Default, specifically
stating that a Default or an Event of Default, as the case may be, has
occurred and describing such Default or Event of Default;
(b) the occurrence or assertion of any material default or event of
default under any of the Assigned Contracts or the occurrence of an Event
of Loss;
(c) any (i) default or event of default under any Contractual
Obligation (other than the Assigned Contracts) on the part of the Borrower,
any Partner or the Buyers or Public Service or (ii) litigation,
investigation or proceeding which may exist at any time between the
Borrower, any Partner, the Buyers or Public Service and any Governmental
Authority, which in either case would have a material adverse effect on the
business, operations, property or financial or other condition of
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the Borrower, any Partner, the Buyers or Public Service;
(d) any litigation or proceeding affecting the Borrower or any Partner
in which the amount involved is $100,000 or more or in which injunctive or
similar relief is sought;
(e) any litigation or proceeding affecting the Buyers or Public
Service which if adversely determined would have a material adverse effect
on the business, operations, property or financial or other condition of the
Buyers, Public Service or any Partner;
(f) any material adverse change in the business, operations, property,
prospects or financial or other condition of the Borrower, any Partner, the
Buyers or Public Service and of any actual or prospective change of law,
rule or regulation which has or would have such a material adverse effect;
(g) any physical loss or damage to the Collateral in excess of
$250,000;
(h) the assertion of any Lien (other than Permitted Liens) against
the Collateral or the occurrence of any event that would have a material
adverse effect on the aggregate value of the Collateral or the liens and
security interests created under the Security Agreement;
(i) any Force Majeure Event or other reason for delay in the Project
Schedule;
(j) any assertion by any Governmental Authority or other Person that
any Work does not comply with Requirements of Law;
(k) any event or condition that would change any matter represented to
in Section 6.13; and
(1) any proposed Additional Contract.
Each notice pursuant to this Section shall be accompanied by a statement of an
Authorized Representative of the Borrower setting forth details of the
occurrence referred to therein and stating what action the Borrower, the
relevant Partner, Buyer or Public Service, as the case may be, proposes to take
with respect thereto and, with respect to a notice
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given pursuant to clause (1), shall be accompanied by a copy of the proposed
Additional Contract or, if the proposed Additional Contract has not yet been
prepared, shall include a description of the proposed terms and conditions of
such Additional Contract.
8.9 Assignments of Additional Contracts; Maintenance of Liens of the
Security Documents; Future Mortgages. The Borrower will:
(a) on the Borrowing Date (with respect to any Additional Contract in
existence thereon) and concurrently with the execution of any Additional
Contract (with respect to any Additional Contract executed after the Closing
Date), execute and deliver to the Lender an assignment (in form and
substance satisfactory to the Lender) with respect to such Additional
Contract and cause the other party or parties to such Additional Contract to
execute and deliver to the Lender a Consent with respect thereto;
(b) promptly upon the request of the Lender, and at the Borrower's
expense, execute and deliver, or cause the execution and delivery of, and
thereafter register, file or record in each appropriate governmental
office, any document or instrument supplemental to or confirmatory of the
Security Documents, and take such other action, deemed by the Lender to be
necessary or desirable for the creation or perfection of the liens and
security interests purported to be created by the Security Documents; and
(c) if the Borrower shall at any time acquire any real property or
leasehold or other interests therein or with respect thereto not covered
by the Mortgage, promptly upon such acquisition execute, deliver and record
a supplement to the Mortgage in the form provided or referred to therein
covering such real property or leasehold or other interests (which
instrument shall be satisfactory in form and substance to the Lender), and
in connection therewith deliver to the Lender such opinions of counsel and
certificates as shall be reasonably required by the Lender.
8.10 Operating Budget. (a) The Borrower shall, not less than 30 days
before the Borrowing Date, adopt an operating plan and a budget of debt service,
proposed partnership distributions, maintenance, repair and operation expenses
for the period from the Borrowing Date to the conclusion
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of the initial Operating Year; and no less than 30 days in advance of the
beginning of each Operating Year thereafter it will similarly adopt an operating
plan and a budget of debt service, proposed partnership distributions,
maintenance, repair and operation expenses (including reasonable allowances for
contingencies) for the ensuing Operating Year. Copies of the proposed budget for
each Operating Year shall be furnished at least 30 days before final adoption
thereof to the Lender for its approval (such approval not to be unreasonably
withheld). A proposed budget so furnished to the Lender shall be deemed to have
been approved by the Lender if the Lender does not inform the Borrower of any
objections with respect thereto within 20 days of the receipt thereof. The
approved budget, as amended by approved amendments pursuant to Section 8.10(b)
hereof, is referred to herein as the "Operating Budget". The Operating Budget
shall be prepared on the basis of requirements for each month within the
relevant Operating Year, showing the debt service, proposed partnership
distributions, maintenance, repair and operation expenses for such month. If for
any reason the Borrower shall not have adopted an annual Operating Budget before
the beginning of any Operating Year, the Operating Budget for the preceding
Operating Year shall, until the adoption of an Operating Budget for the new
Operating Year, be deemed to be in force and be effective as the Operating
Budget for such Operating Year.
(b) The Borrower may at any time adopt an amended annual Operating
Budget for the remainder of the then current Operating Year and, when so
adopted, such amended Operating Budget shall be deemed to be and shall be
effective as the Operating Budget for such Operating Year. A copy of any such
amended Operating Budget which is proposed shall be furnished at least 10 days
before final adoption thereof to the Lender for its approval (not to be
unreasonably withheld).
(c) The Borrower covenants that it will not expend any amount or incur
any obligation for any item or classification of maintenance, repair and
operation expenses during any Operating Year which exceeds the amount provided
for such item and classification in the Operating Budget for such Operating Year
unless such expenditures could not reasonably be anticipated and failure to make
such expenditure would have created an abnormal risk of personal injury to
employees or significant damage to the Facility and, in any event, the Borrower
covenants that it will advise the Lender
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of such excess expenditures and prepare an amended Operating Budget to reflect
such changes as soon as practicable.
8.11 Plans and Specifications. The Borrower will at all times maintain
at the Facility or its principal office an accurate and complete set of "as
built" Plans and Specifications for the Facility, which shall be amended and
supplemented from time to time to reflect on a current basis all improvements,
additions and modifications to the Facility.
8.12 Initial Date of Delivery. The Borrower will cause the Completion
of the Proj ect to occur on or before October 12, 1988; provided, however, that
if no Default or Event of Default shall have occurred and be continuing, the
Lender shall not unreasonably withhold its consent to any reasonable request by
the Borrower to extend such date, provided that in no event shall such date be
extended beyond April 12, 1990.
8.13 Correction of Work. Upon demand of the Lender, the Borrower shall
correct, or cause to be corrected, any material structural defect in the Project
or any material departure from the Plans and Specifications, without cost to the
Lender.
8.14 Defend Title. The Borrower will at all times at its own cost and
expense warrant and defend the title to the Project against the claims and
demands of all Persons whomsoever, except with respect to Permitted Liens and
Permitted Exceptions.
8.15 Independent Engineer. The Lender shall be permitted to employ the
Independent Engineer to advise it with respect to the Project. The Borrower
shall reimburse the Lender for all reasonable costs incurred with respect to the
Independent Engineer's services.
8.16 Debt Service Reserve Account. The Borrower shall fund and
maintain the Debt Service Reserve Account pursuant to the terms of the
Disbursement Agreement.
8.17 Regulatory Status. (a) On the Closing Date and thereafter at all
times, the Facility will be a Qualifying Facility and will be exempt from all
regulation under the Public Utility Holding Company Act of 1935, as amended.
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(b) The Borrower will, on the Closing Date and thereafter at all
times, meet the ownership criteria for a cogeneration facility set forth in 18
CFR (S) 292.206.
8.18. Environmental Covenants. (a) Borrower shall at all times comply
with Environmental Laws as they apply to the Project, and if a violation thereof
shall occur, Borrower shall expeditiously cure such violation.
(b) If Borrower shall receive (i) notice from the New Jersey
Department of Environmental Protection pursuant to the New Jersey Spill
Compensation and Control Act, N.J.S.A. 58:10-23.11 et seg., as amended (the
"Spill Act") of any discharge on the Site which is to be remedied or (ii) any
complaint, citation, order, lien or penalty relating to alleged violations of or
non-compliance with Environmental Laws on or about the Site, Borrower
shall provide notice of same to Lender within seven (7) days after receipt of
any such notice.
(c) In the event that there shall be filed a notice of lien against
the Site by the New Jersey Department of Environmental Protection, pursuant to
and in accordance with the provisions of the Spill Act, the Borrower shall
within 30 days from the date that Borrower is given notice that the notice of
lien has been filed with respect to the Site, or within such shorter period of
time in the event that the State of New Jersey has commenced steps to cause the
Site to be sold pursuant to the lien, either (i) pay the claim and remove the
lien from the Site, or (ii) furnish (a) a bond satisfactory to the title insurer
and Lender in the amount of the claim out of which the lien arises, (b) a cash
deposit in the amount of the claim out of which the lien arises, or (c) other
security reasonably satisfactory to Lender in an amount sufficient, to discharge
the claim out of which the lien arises.
(d) Borrower shall comply with all requirements and affirmative
obligations imposed on a "Major Facility" as set forth in N.J.S.A 10-23.11b(1)
as long as it operates the Facility.
(e) In the event Borrower constructs and/or operates any underground
tanks as defined in New Jersey P.L. 1986 c.102 (an Act regulating the
underground storage of hazardous substances), Borrower will comply with all
requirements and affirmative obligations imposed under said legislation with
respect to such tanks.
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(f) Borrower will take all actions necessary to prevent any tanks or
other facilities utilized to store any hazardous substances or wastes, including
but not limited to fuel oil, from leaking, spilling or otherwise discharging
such hazardous substances or wastes into the environment.
(g) Borrower shall provide to Lender, as soon as same is available, a
true copy of the certification regarding the hydrostatic testing of the 250,000
gallon storage tank being constructed at the Site, which certification shall
attest to and otherwise evidence that said tank meets or exceeds all
environmental, construction, and safety standards applicable thereto.
Section 9. Negative Covenants. So long as any Term Note remains
outstanding and unpaid or any other amount is owing to the Lender hereunder
or under the Security Documents, the Borrower hereby agrees as follows:
9.1 Indebtedness. The Borrower will not create, incur, assume or
suffer to exist any Indebtedness except Indebtedness in respect of (a) the Term
Notes, (b) Indebtedness (including for purposes of this Section 9.1, Contingent
Obligations) not in excess of $500,000 outstanding at any one time, (c)
Indebtedness in an amount not to exceed $5,000,000 for working capital purposes,
(d) Indebtedness provided by the Lender (or such other Person, if any, as is
permitted under Section 12.8) for the purpose of financing up to 100% of the
cost of expansion of the Facility to incorporate a fourth turbine, (e)
Indebtedness incurred for purposes of financing the acquisition from IMTT of the
steam boilers in an amount not exceeding $2,600,000, and (f) Indebtedness with
respect to the Borrower's reimbursement obligations related to the issuance of a
letter of credit having a stated amount not greater than $4,600,000 to guarantee
the obligations of Borrower pursuant to paragraph 7 of the Gas Purchase
Agreement.
9.2 Limitation on Liens. The Borrower will not create, incur, assume
or suffer to exist any Lien upon any of its property, assets or revenues,
whether now owned or hereafter acquired, except: (a) Liens in favor of the
Lender created by the Security Documents; (b) Liens for taxes not yet due, or
which are being contested in good faith and by appropriate proceedings if (i)
adequate reserves with respect thereto are maintained on the books of the
Borrower in accordance with GAAP and (ii) such contest does not involve any risk
of the sale, forfeiture or loss of any of the Collateral; (c) carriers',
warehousemen's, mechanics',
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materialmen's, repairmen's or other like Liens arising in the ordinary course of
business which secure payment of sums which are not overdue for a period of more
than 45 days, or are bonded, or which are being contested in good faith and by
appropriate proceedings if (i) adequate reserves with respect thereto are
maintained on the books of the Borrower in accordance with GAAP and (ii) such
contest does not involve any risk of the sale, forfeiture or loss of any of the
Collateral; (d) pledges or liens in connection with workmen's compensation,
unemployment insurance and other social security legislation; (e) deposits to
secure the performance of statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature incurred in the
ordinary course of business; (f) Permitted Exceptions; (g) rights-of-way,
restrictions and other similar encumbrances incurred in the ordinary course of
business which, in the aggregate, are not substantial in amount, and which do
not in any case materially detract from the value of the property subject
thereto or interfere with the ordinary conduct of the business of the Borrower;
(h) precautionary UCC filings with respect to property subject to leases
permitted pursuant to Section 9.7; (1) Liens in favor of the Lender on a pari
passu basis with the Liens specified in clause (a) above for purposes of
securing Indebtedness provided by the Lender specified in Section 9.1(d) hereof;
(j) pre-existing Liens encumbering the Borrower's property and set forth in
Schedule 7 hereto; (k) Liens representing purchase money security interest in
the steam boilers acquired from IMTT and securing the Indebtedness specified in
Section 9.1(e); (1) the Liens on the steam boilers acquired from IMTT arising
under the Option Agreement; and (m) Liens superior (in form and substance
satisfactory to the Lender) to the Liens specified in clause (a) above, on
revenues received under the Power Purchase Agreements securing the Indebtedness
specified in Section 9.1(c).
9.3 Limitation on Contingent Obligations. The Borrower will not agree
to, or assume, guarantee, endorse or otherwise in any way be or become
responsible or liable for, directly or indirectly, any Contingent Obligation,
except those created by the Security Documents or the other Project Documents or
permitted pursuant to Section 9.1(b) and 9.1(f).
9.4 Restricted Payments. The Borrower will not declare, make or commit
to make, or set aside any sum or property for the purpose of making, any
Restricted Payment except for (a) repayments of non-interest bearing advances
made by a Partner to the Borrower in connection with the
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Project to the extent permitted under the Disbursement Agreement, (b) general
distributions to the Partners as partners in accordance with the Operating
Budget, (c) repayment of Indebtedness not otherwise prohibited by this
Agreement, (d) a management fee payable to CTNJI under the terms of the Joint
Venture Agreement equal to 1 1/2% of gross revenues from the Project received by
the Borrower each month, (e) payments made pursuant to the Project Documents
(other than the Joint Venture Agreement), or (f) payments made in the ordinary
course of the Borrower's trade or business; provided, however, that no
Restricted Payment can be made if a Default or an Event of Default has occurred
and is continuing other than (a) payments to CTNJI to reimburse it for its
certified expenses in managing the Borrower incurred at any time after 30 days
after the occurrence of such Default or Event of Default, (b) payments to the
Contractor pursuant to the Operation & Maintenance Contract and (c) payments
to Public Service under the Gas Purchase Agreement or the Service and
Interconnection Agreement.
9.5 Restriction on Investments. The Borrower will not make any
Investment other than Permitted Investments.
9.6 Prohibition of Fundamental Changes. The Borrower will not enter
into any transaction of merger or consolidation, or change its form of
organization or its business, or liquidate or dissolve itself (or suffer any
liquidation or dissolution), provided that with the prior written consent of the
Lender (such consent not to be unreasonably withheld) the Borrower shall have
the right to transform itself into a corporation or a limited partnership.
9.7 Limitation on Leases. Except for the Site Lease and the Steam
Facilities Lease the Borrower will not enter into any agreement, or be or become
liable as lessee under any agreement, for the lease, hire or use of any real or
personal property without the prior written consent of the Lender, except for
operating leases of personal property entered into in the ordinary course of
business under which the Borrower's aggregate payment obligations do not exceed
$250,000 in any fiscal year and which are not for the purpose of acquiring fixed
or capital assets unless included in the Operating Budget.
9.8 No Plan. The Borrower will not adopt any Plan.
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9.9 Prohibition on Disposition of Assets. The Borrower will not sell,
lease (as lessor, except pursuant to the Steam Facilities Lease), approve the
transfer, abandon or otherwise dispose of any of its property or assets except
to the extent that such property is worn out, operationally unsatisfactory or no
longer usable in connection with the operation of the Facility and (a) the
Borrower either promptly replaces such property in a manner so as not to affect
adversely the operations or value of the Facility or (in connection with a sale
or lease of such property which does not materially adversely affect the
operations or value of the Facility) receives consideration in connection with
such transaction having a fair market value equal to or greater than the fair
market value of the property being sold, leased, transferred or otherwise
disposed or (b) the item of property to be sold, leased, transferred or
otherwise disposed has a fair market value of less than $50,000.
9.10 Amendments, Etc. of Contracts. The Borrower will not, without the
prior written consent of the Lender, enter into or consent to or permit (i) the
cancellation or termination of any Project Document (except upon expiration of
the stated term thereof or in a situation not resulting from the Borrower's
inaction or action), (ii) the assignment of the rights or obligations of any
party to any Project Document except as contemplated by this Agreement or such
Project Document, (iii) any material amendment, supplement or material
modification of, or waiver with respect to any of the provisions of, any Project
Document (provided that the Lender's prior written consent need not be
obtained in connection with an amendment of the Joint Venture Agreement unless
such amendment reasonably might be expected to have a material adverse effect on
the ability of the Borrower to perform its obligations under any of the Project
Documents or reduce the anticipated Coverage Ratio) or (iv) any material
modification or supplement of the Plans and Specifications.
9.11 Transactions with Affiliates and Others. Notwithstanding any
other provision of this Agreement, the Borrower will not (a) directly or
indirectly, purchase, acquire, exchange or lease any property from, or sell,
transfer or lease any property to, or borrow any money from, or enter into any
management or similar fee agreement with, any Affiliate or any officer, director
or employee of the Borrower or any Partner or (b) enter into any other
transaction or arrangement or make any payment (except as permitted by Section
9.4) to or otherwise deal with, in the ordinary
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course of business or otherwise, any Affiliate, except in either case (a) or (b)
for transactions contemplated by the Project Documents in existence on the
Closing Date (including the management fee arrangement with CTNJI referenced in
Section 9.4(d)) and other transactions provided (i) such transactions shall be
on reasonable terms no less favorable to the Borrower than it would obtain in a
comparable arm's length transaction with a Person not an Affiliate and (ii) in
the case of any transaction or related series of transactions involving more
than $75,000, the Borrower receives the Lender's prior written approval.
9.12 FERC Exhibits. The Borrower will not make any substantial
alteration or addition to the Facility that does not conform to the FERC
Exhibits or make any substantial use of lands in connection with the operation
of the Project that, in either case, results in the Project ceasing to be a
Qualified Facility.
Section 10. Events of Default.
10.1 Events of Default. If any of the following events shall occur and
be continuing for any reason whatsoever (and whether such occurrence shall be
voluntary or involuntary or come about or be effected by operation of law or
otherwise):
(a) the Borrower defaults in the payment of principal or premium on
any Term Note when the same shall become due, either by the terms thereof
or otherwise, as herein provided and such nonpayment shall continue for a
period of 5 days or more; or
(b) the Borrower defaults in the payment of interest on any Term Note
or any other amount payable hereunder or under any Security Document when
the same shall become due, either by the terms thereof or otherwise as
herein or therein provided, and such nonpayment shall continue for a period
of 5 days or more; or
(c) any representation or warranty made by the Borrower in this
Agreement or in any other Project Document or which is contained in any
certificate, document or financial or other statement furnished at any time
under or in connection with this Agreement or any other Project Document
shall prove to have been incorrect in any material respect on or as of the
date made; provided, however, that if such representation or warranty can
be made true and correct in all material
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respects and all consequences thereof can be cured in all material respects,
such event shall not be an Event of Default unless such representation or
warranty shall continue to be false or misleading in any material respect or any
consequence thereof shall not be cured in all material respects to the
satisfaction of the Lender within 30 days after written notice from the Lender
to the Borrower; or
(d) the representations in Section 6.13(b) shall cease to be true and
correct at any time; or
(e) the Borrower shall default in the observance or performance of any
covenant or agreement contained in Sections 8.4 (to the extent such default
results in the Project being shut down for in excess of 10 days), 8.8(a), 8.12,
8.16 or 9 (other than Sections 9.2 and 9.11); or
(f) the Electric Power Purchase Agreement or the Service and
Interconnection Agreement shall be terminated for any reason prior to the
scheduled termination provided for under the provisions thereof or JCP&L or
Public Service shall default in any material respect in the observance or
performance of any covenant or agreement contained in the Electric Power
Purchase Agreement or the Service and Interconnection Agreement and such default
shall continue unremedied for a period of 30 days after knowledge thereof by
JCP&L or Public Service, or the obligations of JCP&L, or Public Service
thereunder shall be terminated for any reason (including a termination by JCP&L
or Public Service of the Electric Power Purchase Agreement or the Service and
Interconnection Agreement), unless within 60 days of such default or
termination the Borrower provides to the Lender additional security to
supplement the Collateral, in form and substance satisfactory to the Lender (as
determined in the sole discretion of the Lender); or
(g) the Borrower shall default in the observance or performance of any
covenant or agreement contained in this Agreement (to the extent not covered in
another paragraph of this Section 10.1), or the Borrower shall default in any
material respect in the observance or performance of any covenant or agreement
contained in the Joint Venture Agreement, and, in each such case, in the event
such covenant or agreement does not itself contain a grace period, such default
shall continue
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unremedied for a period of 30 days after knowledge thereof by the Borrower, and
provided that such grace period shall be extended for up to 60 additional days
if such default is curable and the Borrower is diligently attempting to cure; or
(h) the Borrower shall (i) default in any payment of principal of or
interest on any indebtedness for borrowed money (other than any Term Note or
indebtedness having an outstanding principal amount of less than $100,000) or
(ii) default in the observance or performance of any other agreement or
condition relating to any such indebtedness or contained in any instrument or
agreement evidencing, securing or relating thereto, or any, other event shall
occur or condition exist, and as a result of such default, event or condition,
the holder or holders of such indebtedness (or a trustee on behalf of such
holder or holders) is permitted to cause such indebtedness to become due prior
to its stated maturity or to realize upon any collateral given as security
therefor; or
(i) the Borrower, Public Service or a Buyer makes a general assignment for
the benefit of creditors or is generally not paying its debts as such debts
become due; or
(j) any order, judgment or decree is entered under any bankruptcy,
reorganization, compromise, arrangement, insolvency, readjustment of debt,
dissolution, liquidation or similar law (collectively referred to as the
"Bankruptcy Law") or any jurisdiction adjudicates the Borrower, Public Service
or a Buyer bankrupt or insolvent; or
(k) the Borrower, Public Service or a Buyer petitions or applies to any
tribunal for, or consents to, the appointment of, or taking possession by, a
trustee, receiver, custodian, liquidator or similar official, of the Borrower,
Public Service or a Buyer, or of any substantial part of the assets of the
Borrower, Public Service or a Buyer, or commences a voluntary case under the
Bankruptcy Law of the United States or any proceedings relating to the Borrower,
Public Service or a Buyer under the Bankruptcy Law of any other jurisdiction,
whether now or hereafter in effect; or
(1) any such petition or application is filed, or any such proceedings are
commenced, against the Borrow-
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er, Public service or a Buyer and the Borrower, Public Service or a Buyer by any
act indicates its approval thereof, consent thereto or acquiescence therein, or
an order for relief is entered in an involuntary case under the Bankruptcy Law
of the United States, as now or hereafter constituted, or an order, judgment or
decree is entered appointing any such trustee, receiver, custodian, liquidator
or similar official, or approving the petition in any such proceedings, and such
order, judgment or decree remains unstayed and in effect for more than 60 days;
or
(m) any order, judgment or decree is entered in any proceedings against the
Borrower, Public Service or a Buyer decreeing the dissolution of the Borrower,
Public Service or a Buyer and such order, judgment or decree remains unstayed
and in effect for more than 60 days; or
(n) any order, judgment or decree is entered in any proceedings against the
Borrower, Public Service or a Buyer decreeing a split-up of the Borrower, Public
service or a Buyer or which requires the divestiture of any substantial part of
the assets of the Borrower, Public Service or a Buyer, and such order, judgment
or decree remains unstayed and in effect for more than 60 days; or
(o) any Security Document shall cease, for any reason, to be in full force
and effect (except upon the termination thereof in accordance with its terms),
or the Borrower shall so assert in writing, or any Security Document shall fail
to create a valid and perfected lien and security interest on or in any
Collateral purported to be covered thereby having the priorities (subject only
to Permitted Exceptions) set forth therein; or
(p) the Site Lease shall be terminated for any reason, except upon
expiration of the stated term thereof; or
(q) the Steam Purchase Agreement or the IMTT Power Purchase Agreement shall
be terminated for any reason prior to the scheduled termination provided for
under the provisions thereof unless such terminated agreement shall be replaced
within 60 days after any such termination by another steam purchase agreement,
in form and substance satisfactory to the Lender, with
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a steam purchaser satisfactory to the Lender or unless the Borrower establishes
within 60 days after any such termination, to the satisfaction of the Lender,
that the failure of the Borrower to replace such terminated agreement with
another steam purchase agreement will neither cause the Facility to cease being
a Qualifying Facility nor materially adversely affect the business, operations
or financial condition of the Borrower; or
(r) the Operation & Maintenance Contract shall be terminated for any reason
prior to the scheduled termination provided for under the provisions thereof
unless such terminated agreement shall be replaced within 60 days with another
operations and maintenance agreement, in form and substance satisfactory to the
Lender, with an operator satisfactory to the Lender; or
(s) the Joint Venture Agreement shall at any time or for any reason cease
to be in full force and effect, or shall be declared null and void, in whole or
in part except as a result of the Borrower becoming a corporation or a limited
partnership with the consent of the Lender (such consent not to be unreasonably
withheld), or the Borrower shall be dissolved; or
(t) title to any part of the Collateral material to the operation of the
Project shall at any time not be satisfactory to the Lender by reason of any
defect other than Permitted Liens and Permitted Exceptions, and such defect
shall not be corrected within 45 days after notice thereof to the Borrower; or
(u) CTNJI shall cease to be the Managing Venturer of the Borrower, unless
CTNJI shall be replaced as Managing Venturer by a Person which is (a) a Partner
as of the Closing Date and, at the time of such replacement, has a net worth in
excess of $1,000,000 and continues to be a subsidiary of Enron Corp. (in the
case of Enron Cogeneration Five Company), Public Service Enterprise Group
Incorporated (in the case of CEA Bayonne, Inc.), Transco Energy Company (in the
case of Transco Cogeneration Company) or General Electric Company (in the case
of PSVO Bayonne, Inc.) or (b) approved by the Lender (such approval not to be
unreasonably withheld) prior to such replacement; or
(v) a final judgment in an amount in excess of $100,000 is rendered
against the Borrower and, within 30 days after entry thereof, such judgment is
not dis-
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charged or execution thereof stayed pending appeal, or, within 60 days
after the expiration of any such stay, such judgment is not discharged; or
(w) any Partner shall take or fail to take any action, or any event
shall occur with respect to any Partner, which action, inaction or event
has or, in the reasonable judgment of the Lender, could have a material
adverse effect on the business, operations or financial condition of the
Borrower;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i), (j), (k) or (1) of this Section 10.1 with respect to the
Borrower, the outstanding principal amount of the Term Notes (with accrued
interest thereon) and all other amounts owing under this Agreement and the
Security Documents shall immediately become due and payable without
presentment, demand, protest or other notice of any kind (all of which are
hereby expressly waived by the Borrower) and without any action by the Lender,
and (B) if such event is an Event of Default specified in clause (i), (j), (k),
(1), (m) or (n) of this Section 10.1 with respect to a Buyer (other than JCP&L)
then the Lender shall have the right to take the action described in clause (C)
below if in the reasonable determination of the Lender the Facility would cease
to be a Qualifying Facility if the Power Purchase Agreement to which such Buyer
is a party should terminate, provided that Lender shall give the Borrower 60
days notice to Borrower of its intent to declare an Event of Default with
respect to the event relating to such Buyer unless the Borrower enters into an
additional steam purchase contract which in the reasonable determination of the
Lender would preserve the status of the Facility as a Qualifying Facility and
(C) if such event is any other Event of Default specified in this Section 10.1,
the Lender may, by notice to the Borrower, declare the outstanding principal
amount of the Term Notes (with accrued interest thereon) and all other amounts
owing under this Agreement and the Security Documents to be due and payable
forthwith, whereupon the same shall immediately become due and payable, without
presentment, demand, protest or (except as expressly required by this Section
10.1) notice of any kind (all of which are hereby expressly waived by the
Borrower). Any acceleration of the Term Notes as a result of the occurrence of
any Event of Default (other than an Event of Default specified in clause (i),
(j), (k), (1), (m) or (n) of this Section 10.1) shall be deemed a prepayment
pursuant to Section 4.4 requiring the payment of the premiums described in
Section 4.5 (provided, that if such payment occurs prior to the 55th
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Interest Payment Date the applicable premium shall be equal to the greater of
(1) the Yield-Maintenance Premium, if any, and (2) the interest rate borne by
the Term Notes) and the proceeds received pursuant to any such acceleration
shall be applied to all amounts due hereunder or with respect to any Term Note
ratably (according to the outstanding amounts owed to the holders of the Term
Notes).
10.2 Non-Recourse Nature of Liability to Partners. Notwithstanding
anything to the contrary contained in this Agreement or in any of the Project
Documents, no recourse under or upon any obligation contained in this Agreement
shall be had against the Partners or any partner, stockholder, director, officer
or employee thereof, and the Lender expressly waives and releases all right to
assert liability under this Agreement, any Term Note or any other Project
Document against, or to satisfy any claim arising hereunder or thereunder
against, any such Person out of any assets of any such Person other than the
interest of any such Person in the Collateral; provided, however, that nothing
in this Section 10.2 shall be deemed to release a Partner from liability for its
fraudulent actions or from any of its obligations or liabilities under any
agreement, document, instrument or certificate executed by such Partner in its
individual capacity in connection with the transactions contemplated by this
Agreement and the other Project Documents.
Section 11. Insurance
Section 11.1 Insurance. Without limiting any of the other obligations
or liabilities of the Borrower hereunder, the Borrower will at all times
following the Borrowing Date carry and maintain at its own expense at least the
minimum insurance coverage with respect to the Facility set forth in this
Section 11 and any other insurance that may be reasonably required by the Lender
from time to time, in each case with insurers of recognized responsibility in
such amounts and in such form as shall be satisfactory to the Lender. Such
insurance may be carried under blanket policies maintained by the Borrower so
long as such policies otherwise comply with the terms and provisions of this
Section 11.
Section 11.2 Insurance Against Loss or Damage to the Facility. The
Borrower shall maintain all-risk property insurance covering physical loss or
damage to the Facility. At all times after the Borrowing Date, the amount of
such insurance shall be at least equal to the outstanding amount
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of principal on the Term Notes as of the next succeeding Interest Payment Date
plus an amount equal to any principal and interest due and payable with respect
to the Term Notes on such Interest Payment Date (provided, that the insurance
shall at all times be in an amount at least sufficient to prevent the Borrower
from being deemed a coinsurer of the Facility), and such insurance shall
include, without limitation, the following:
(a) flood, windstorm, tornado and earthquake insurance, customarily
included under all risk policies available with respect to facilities
similar in construction, location and occupancy to the Facility, with
sublimits of no less than $5,000,000 each for flood and earthquake;
(b) "boiler and machinery" property damage insurance with respect to
damage to the machinery, plants, equipment, storage facilities or similar
apparatus included in the Facility from risks normally insured against
under machinery policies in an amount equal to the replacement value of
such machinery, plant, equipment, storage facilities or similar apparatus;
and
(c) business interruption insurance to provide coverage against loss
resulting from interruption of business and consequent reduction in gross
revenues caused by damage to the Facility and extra expense incurred to
continue the normal operation of business following such damage in an
amount at least equal to one year's gross operating revenues, minus non-
continuing expenses, including (to the extent commercially available)
coverage against loss resulting from interruption of business arising
because of damage to boilers and machinery.
Such insurance may include deductible amounts for the account of the
Borrower not to exceed the following:
(a) all-risk property coverage . . . $250,000;
(b) boiler and machinery . . . $250,000
except $250,000 per occurrence with respect to the gas turbines; $250,000
with respect to the steam turbine and $1.00 per KVA for the transformers;
(c) business interruption coverage . . . 60 days; and
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(d) flood damage . . . $100,000.
Any insurance carried in accordance with this Section 11.2 shall
provide or be endorsed to provide that:
(a) the Lender, as its interest may appear, is included as named
insured, with the understanding that any obligation imposed upon the
insured (including, without limitation, the liability to pay premiums)
shall be the sole obligation of the Borrower and not that of any other
insured;
(b) losses, if any, in excess of $250,000 in respect of the Facility
shall be payable to the Disbursement Trustee for deposit in the Insurance
Account and other losses shall be payable to the Borrower;
(c) the interest of the Lender shall not be invalidated by any action
or inaction of the Borrower or any other Person and shall insure the Lender
regardless of any breach or violation by the Borrower or any other Person
of any warranties, declaration or conditions contained in such policies;
(d) the insurer thereunder waives all rights of subrogation against
the Lender, any right of setoff and counterclaim and any other right to
deduction whether by attachment or otherwise;
(e) such insurance shall be primary without right of contribution of
any other insurance carried by or on behalf of the Lender with respect to
its interests in the Facility; and
(f) if such insurance is canceled for any reason whatsoever
(including, without limitation, nonpayment of premium) or any substantial
change is made in the coverage that affects the interests of the Lender,
such cancellation or change shall not be effective as to the Lender for ten
(10) days for nonpayment of premiums and otherwise for forty-five (45)
days, in both cases after receipt by the Lender of written notice sent by
registered mail from such insurer of such cancellation or change;
provided that upon payment in full of the Term Notes and any other amounts due
and owing hereunder, the Lender shall no longer be entitled to any benefits
under any insurance policy maintained pursuant to this Section 11.2.
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Section 11.3 Comprehensive General Liability Insurance. The Borrower
shall maintain comprehensive personal injury and property damage insurance
(including, without limitation, comprehensive automobile liability, product
liability and completed operations) covering claims arising out of the
ownership, operation, maintenance, condition or use of the Facility. In no event
shall such insurance be written for limits less than $1,000,000 per occurrence
and $1,000,000 in the aggregate for combined bodily injury, personal injury and
property damage. Additionally, the Borrower shall maintain employer's liability
coverage with limits of $3,000,000 containing no exclusion for occupational
disease (unless commercially unavailable) and workers' compensation coverage as
required by applicable statutes.
Any insurance carried in accordance with this Section 11.3 shall
provide or shall be endorsed to provide:
(a) the Lender, as its interests may appear, is included as an
additional insured with the understanding that any obligation imposed upon
the insured (including, without limitation, the liability to pay premiums)
shall be the sole obligation of the Borrower and not that of any other
insured;
(b) if commercially available, the interest of such an additional
insured shall not be invalidated by an action or inaction of the Borrower
or any other Person and shall insure the Lender regardless of any breach or
violation by the Borrower or any other Person than the Lender, of any
warranties, declaration or conditions contained in such policies;
(c) such insurance shall be primary without right of contribution of
any other insurance carried by or on behalf of such additional insured with
respect to its interests as such in the Facility;
(d) if such insurance is cancelled for any reason whatsoever
(including, without limitation, nonpayment of premium) or any substantial
change is made in the coverage that affects the interest of the Lender,
such cancellation or change shall not be effective as to the Lender for ten
(10) days for nonpayment of premiums and otherwise for forty-five (45)
days, in both cases after receipt by the Lender of written notice sent by
registered mail from such insurer of such cancellation or change; and
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(e) inasmuch as the policy is written to cover more than one insured,
all terms, conditions, insuring agreements and endorsements, with the
exception of limits of liability, shall operate in the same manner as if
there were a separate policy covering each insured;
provided that upon payment in full of the Term Notes and any other amounts due
and owing hereunder, the Lender shall no longer be entitled to any benefits
under any insurance policy maintained pursuant to this Section 11.3.
Section 11.4 Adjustment of Losses. The loss, if any, under any
insurance covering the Facility required to be carried by Section 11.2 shall be
adjusted with the insurance companies or otherwise collected, including, without
limitation the filing of appropriate proceedings, by the Lender. All such
policies shall provide that the loss, if any, under such insurance shall be
adjusted and paid as provided herein.
Section 11.5. Application of Payments Relating to Partial Loss or
Damage. (a) Upon the occurrence of a Partial Loss or Damage, the Borrower shall
give the Lender written notice thereof as soon as possible and all amounts in
excess of $250,000 payable or paid to any Person in connection therewith shall
be paid over to the Disbursement Trustee and held by the Disbursement Trustee in
the Insurance Account and applied pursuant to the provisions of Section 4.3(b)
unless the Borrower shall satisfy the conditions of clause (b) below within 60
days of the occurrence of such event, in which case the proceeds shall be
released to the Borrower as specified below.
(b) The Borrower shall not be obligated to prepay the Term Notes
pursuant to Section 4.3(b) if the following conditions shall be satisfied within
60 days of the occurrence of such Partial Loss or Damage:
(1) the Borrower shall notify the Lender within 30 days of the
occurrence of the event of Partial Loss or Damage of the Borrower's
intention to repair and/or restore the Project to its original condition,
wear and tear excepted, pursuant to this Section 11.5(b);
(2) no Default or Event of Default shall have occurred and be
continuing;
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(3) the Lender shall have received a written application of the
Borrower accompanied by a sworn statement of the managing general partner of
the Borrower showing in reasonable detail the nature (including scope and
timing) of such repairs or restoration, the actual cash expenditures made to
date for such repairs or restoration and expected total cash expenditures
required to complete the work;
(4) the Lender shall have received a written certificate from the
Independent Engineer confirming (x) the accuracy of the application of
Borrower specified in clause (3) above; (y) that such proposed repair and
restoration shall restore the Facility to its original condition (ordinary
wear and tear excepted); and (z) setting forth the estimated cost to
complete such repairs or restoration;
(5) the Lender shall have reasonably determined that the Expected
Coverage Ratio for each subsequent year after completion of the restoration
or repair shall be at least equal to 1.5;
(6) any deficiency between the amounts then held by the Disbursement
Trustee in the Insurance Account as a result of such Partial Loss or Damage
and the cost specified by the Independent Engineer in its certificate
delivered to the Lender pursuant to clause (4) above (plus all payments due
hereunder or on the Term Notes during the period of repair or restoration)
shall be notified to the Borrower by the Lender and the Borrower or any
other Person shall have deposited with the Disbursement Trustee to be held
in the Insurance Account an amount equal to the deficiency within 60 days
of such notification.
(c) If the conditions specified in clause (b) shall have been
satisfied, the Lender shall request the Disbursement Trustee to apply the
amounts then available to it in the following of priority:
first, to payments due hereunder and on the Term Notes,
second, directly in payment for repairs or restoration of the
property, if such repairs have not already been paid for by the Borrower,
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third, if such repairs or restoration have already been paid for by
the Borrower, to reimburse the Borrower for such payment, and
fourth, the balance remaining, if any, shall be paid to the Borrower.
(d) All payments received or payable on account of an Event of Loss
shall be dealt with in accordance with Section 4.3(a) hereof.
Section 11.6. Evidence of Insurance. On or before the Borrowing Date
and each anniversary of the Borrowing Date, the Borrower shall arrange for
furnishing the Lender with approved certification of all required insurance.
Such certification shall be executed by each insurer or by an authorized
representative of each insurer where it is not practical for such insurer to
execute the certificate itself. Such certification shall identify the
underwriters, the type of insurance, the insurance limits (including applicable
deductibles) and the policy term, shall specifically list the special provisions
enumerated for such insurance required by this Section 11, and, with respect to
insurance required under Section 11.2, shall be accompanied by a report of the
managing general partner of the Borrower stating the full replacement value of
the Facility as of the effective date of such policy or renewal thereof. Upon
request, the Borrower will furnish the Lender with copies of all insurance
policies, binders and cover notes or other evidence of such insurance relating
to the Facility.
Section 11.7. Report. Concurrently with the furnishing of the
certification referred to in Section 11.6, the Borrower will furnish the Lender
with a report of an independent insurance broker setting forth the insurance
obtained by the Borrower in accordance with this Section 11 and stating that, in
the opinion of such broker, such insurance complies with the requirements of
this Section 11 and is in full force and effect, and that the Borrower is not
delinquent in the payment of any premiums then due thereon. The Lender may at
its sole option obtain such insurance if not produced by the Borrower and, in
such event, the Borrower shall reimburse the Lender, upon demand for the cost
thereof (together with interest thereon at the Stipulated Interest Rate from the
date the Lender expends such funds to the date of such repayment).
Section 11.8. Additional Insurance by the Lender or the Borrower.
Nothing in this Section 11 shall prohibit
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the Lender or the Borrower as their respective interests may appear from
maintaining for its own account, at the expense of the Person purchasing such
insurance, additional insurance on or with respect to the Facility or any part
thereof, or the operation thereof with coverage exceeding that otherwise
required under this Section 11 unless such insurance would conflict with or
limit the insurance otherwise required under this Section 11.
Section 12. Miscellaneous.
12.1 Home Office Payment. The Borrower agrees to make payments of
principal of and premium and interest on the Term Notes not later than 1:00
p.m., New York time, on the date such payment is due, in lawful money of the
United States by wire transfer of immediately available funds to the Lender
at the account shown on Annex B, or such other account in the United
States (other than in Texas) as the Lender may designate in writing,
notwithstanding any contrary provision contained herein or in the Term Notes
with respect to the place of payment. Each such wire transfer shall set forth
the name of the Borrower, the full title (including the stated interest rate, if
any, and final maturity date) of the Term Note or Term Notes with respect to
which payment is being made, any special references designated in Annex B and
the due date and desired application (as to principal, premium and interest) of
the payment being made. The Lender agrees that, before disposing of any Term
Note, it will make a notation thereon of all principal payments previously made
thereon and of the date to which interest thereon has been paid, and will notify
the Borrower of the name and address of the transferee of such Term Note. The
Borrower agrees to afford the benefits of this Section 12.1 to any institutional
investor or bank of recognized standing which is the direct or indirect
transferee of any Term Note obtained by the Lender hereunder and which has made
the same agreement relating to such Term Note as the Lender has made in this
Section 12.1.
12.2 Registration, Transfer and Exchange of Term Notes; Lost Term
Notes. Upon surrender for registration of transfer of any Term Note at the
principal office of the Borrower, the Borrower shall, at its expense, execute
and deliver one or more new Term Notes of like tenor and of a like aggregate
principal amount. At the option of the holder of any Term Notes such Term Notes
may be exchanged for other Term Notes of any authorized denominations, of a like
tenor, maturity date and aggregate principal amount, upon surrender of the Term
Notes to be exchanged at the
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office of the Borrower. Whenever any Term Note is so surrendered for exchange,
the Borrower shall execute and deliver, at its expense, the Term Notes which
the holder thereof making the exchange is entitled to receive. Every Term Note
presented or surrendered for registration of transfer shall be duly endorsed,
or be accompanied by a written instrument of transfer duly executed, by the
holder of such Term Note or by his attorney duly authorized in writing. Any
Term Note or Term Notes issued in exchange for any other Term Note or Term
Notes or upon transfer thereof shall carry the rights to unpaid interest and
interest to accrue which were carried by the Term Note or Term Notes so
exchanged or transferred, so that neither gain nor loss of interest shall
result from any such transfer or exchange. Upon receipt of written notice from
the Lender or other evidence reasonably satisfactory to the Borrower of the
loss, theft, destruction or mutilation of any Term Note held by the Lender and,
in the case of any such loss, theft or destruction, upon receipt of an
indemnity agreement of the Lender reasonably satisfactory to the Borrower
(which need not be secured), or in the case of any such mutilation, upon
surrender and cancellation of such Term Note, the Borrower will make and
deliver a new Term Note, of like tenor, in lieu of such lost, stolen, destroyed
or mutilated Term Note.
12.3 Survival of Representations and Warranties. All representations
and warranties contained herein or made in writing by the Borrower in
connection herewith shall survive the execution and delivery of this Agreement
and of the Term Notes and payment of any Term Note, regardless of any
investigation made by the Lender or on its behalf.
12.4 Amendments and Waivers. This Agreement may be amended, and the
Borrower may take any action herein prohibited, or omit to perform any act
herein required to be performed by it, if the Borrower shall obtain the written
consent to such amendment, action or omission to act given by the Lender. No
course of dealing between the Borrower and the holder of any Term Note nor any
delay in exercising any rights hereunder or under any Term Note shall operate
as a waiver of any rights of any holder of such Term Note. As used herein and
in the Term Notes, the term "this Agreement" and references thereto shall mean
this Agreement as it may, from time to time, be amended or supplemented.
12.5 Notices. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing and shall be
either delivered in person or mailed by registered or certified mail, return
receipt requested, postage prepaid, addressed as follows or to such other
address as any party may hereafter designate in writing to the other parties
hereto:
-▇▇-
▇▇▇ ▇▇▇▇▇▇▇▇: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇ Venture
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
The Lender: as set forth on Annex B
Every notice, request and demand hereunder to the Borrower or the Lender shall
be deemed to have been duly given or made when delivered to it, or if mailed,
when actually received by it (as evidenced by the postal receipt there for),
except that a notice of default pursuant to Section 10 shall be deemed to have
been duly received by the Borrower when delivered, if in person or by telegram,
or when received if sent by mail or private courier service. The Lender shall
endeavor to give copies of any notices delivered hereunder to the Borrower to
the Partners at the addresses listed on Schedule 7 hereto, provided that the
failure of the Lender to provide such copies shall not affect in any manner the
effectiveness of notice given hereunder to the Borrower and the Lender shall
incur no liability under any circumstances to any Person for failing to provide
a copy of such notice to any Partner.
12.6 Payment of Expenses and Taxes. Whether or not the Term Loan is
made or any of the other transactions contemplated by this Agreement is
consummated, the Borrower agrees (a) to pay or reimburse the Lender for the
reasonable fees and disbursements of White & Case, special counsel to the Lender
and of special New Jersey counsel for the Lender, and the reasonable fees and
expenses of the Independent Engineer incurred in connection with the
negotiation, preparation and execution of, and any amendment, supplement or
modification to, this Agreement, the Project Documents and the Term Notes and
any other documents prepared in connection herewith, and the consummation of the
transactions contemplated hereby and thereby including, without limitation, all
such costs incurred subsequent to the Closing Date; (b) to pay or reimburse the
Lender for all costs and expenses, including, without limitation, fees and
disbursements of counsel, incurred in connection with the enforcement or
preservation of any rights under this Agreement, the Term Notes and the Project
Documents; (c) to pay the premium for any policy of title insurance issued to
the Lender in connection with the Mortgage, including, without limitation, any
endorsements thereto and continuations thereof; (d) to pay, indemnify, and hold
the Lender harmless from, any and all title and conveyancing charges, mortgage
taxes, escrow fees, and any and all recording and filing fees and any and all
liabilities with respect to, or resulting from any delay in paying, stamp,
excise and other taxes, if any (other than
-56-
income or franchise taxes), that may be payable or determined to be payable in
connection with the execution and delivery of, or the consummation of any of the
transactions contemplated by, or any amendment, supplement or modification of,
or any waiver or consent under or in respect of, this Agreement, the Term Notes
or any other Project Document; and (e) to pay, indemnify, and hold the Lender
harmless from and against any and all other liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever with respect to the execution, delivery,
enforcement, performance and administration (excluding payroll costs, overhead
costs and payroll taxes incurred by the Lender) of this Agreement, the Term
Notes and the other Project Documents (all the foregoing being called,
collectively, the "indemnified liabilities"), provided that the Borrower shall
have no obligation hereunder with respect to indemnified liabilities arising
from the gross negligence or willful misconduct of, or any income or franchise
taxes payable by, the Lender. The Borrower also agrees to pay, and save the
Lender harmless against liability for, all income taxes, together with any
interest or penalties in connection therewith, owing by the Lender as a result
of any reimbursement or payment by the Borrower pursuant to this Section 12.6,
after taking into account any deductions or credits available (current or
future) in connection with the loss, expense or other matter for which such
reimbursement or payment was made; provided that the Borrower shall have no
obligation to indemnify the Lender for any income taxes incurred by the Lender
with respect to payments received by the Lender from the Borrower relating to
payments due to the Independent Engineer and the Lender's counsel. The
agreements in this Section shall survive repayment of the Term Notes and the
termination of this Agreement and the Project Documents.
12.7 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the Borrower and the Lender and their respective
successors and assigns, except that the Borrower may not assign or transfer any
of its rights under this Agreement without the prior written consent of the
Lender.
12.8 Additional Financing. Notwithstanding any other provision to the
contrary in this Agreement, the Term Notes, Mortgage, Security Agreement,
Disbursement Agreement or any other document, Borrower shall have the right to
seek outside financing (whether in the form of debt, equity, lease, joint
venture or otherwise) to finance the cost of the expansion of the Facility
(beyond the 165 megawatts of generating capacity currently under construction)
to include one or more additional turbines and other related protec-
-57-
tive, interconnection and transmission equipment ("the Additional Assets").
Such financing may contemplate that the proposed obligations would be secured,
in whole or in part, by (i) a first and exclusive lien on the Additional Assets,
and/or (ii) the assignment of any Additional Contracts providing for the sale or
transmission of electricity or steam generated solely by the Additional Assets,
which Additional Contracts are separate and independent from the Power Purchase
Agreements and other similar contracts then in existence relating to the
purchase of electricity or steam from the Facility as then in existence
("Additional Asset Contracts"), and/or (iii) the assignment of a first lien
security interest in the cash flow from the sale of such electricity and steam
(the "Additional Cash Flow") (collectively, the "Additional Financing
Security"); provided, that the Liens on the Additional Financing Security shall
not in any manner, in the reasonable opinion of the Lender, impair the Liens on
the Collateral (other than the Additional Financing security) arising under the
Security Documents nor shall the holders of the obligations secured by the
Additional Financing Security share or have any rights with respect to the
Collateral (other than the Additional Financing security) or any portion
thereof. Each of the Lender and the Borrower agrees to negotiate in good faith
for the Lender to provide to the Borrower at competitive terms and rates the
portion of such financing, if any, which shall be in the form of debt secured by
such additional assets or the cash flow generated therefrom (an "Additional
Loan"). Borrower shall be entitled to solicit offers from other parties,
including without limitation, the Partners, to provide the Additional Loan, but
agrees to negotiate in good faith to obtain the Additional Loan from the Lender
for a period of 30 days after the Lender's receipt of written notice from
Borrower to the Lender that the Borrower desires to obtain the Additional Loan.
If Lender and Borrower fail to agree in writing as to the terms of the
Additional Loan within such 30 day period (it being understood that the final
loan documents need not be executed within such 30 day period), Borrower shall
thereafter be free to effectuate the Additional Loan with any other party (the
"Additional Lender").
To the extent the Additional Assets are financed other than with funds
provided by Lender, the parties intend that notwithstanding anything to the
contrary in this or any other document, the Additional Assets and Additional
Asset Contracts be available to secure the Additional Loan unencumbered by
Lender in any respect. In such event, Lender agrees to release any right, title
or interest it may have (i) in such Additional Assets (such that they do not
constitute Collateral) and (ii) in the Additional Asset Contracts (such that
they do not constitute Assigned Contracts or Collateral). Lender further agrees
to cause to be assigned to
-58-
the Additional Lender all amounts paid or payable under the Additional Asset
Contracts in respect of steam or electricity generated by the Additional Assets.
Lender agrees to execute any further documents, amendments, waivers or releases
which may from time to time be reasonably requested by Borrower or the
Additional Lender to put into effect the provisions of this Section 12.8,
resulting in circumstances equivalent to those which would exist if such
Additional Financing security did not constitute and had never constituted
Collateral or Assigned Contracts and such Additional Financing Security had at
all times been fully available to secure additional financing.
12.9 Notices to Subsequent Holders. If any Term Note shall have been
transferred to another holder, and such holder shall have designated in writing
the address to which communications with respect to such Term Note shall be
mailed, all notices, certificates, requests, statements and other documents
required or permitted to be delivered to the Lender by any provision hereof
shall also be delivered to each such holder.
12.10 Lender Sole Beneficiary. All conditions to the obligation of the
Lender to make the Term Loan hereunder are imposed solely and exclusively for
the benefit of the Lender and its assigns, and no other Person shall have
standing to require satisfaction of such conditions in accordance with their
terms and no Person shall, under any circumstances, be deemed to be a
beneficiary of such conditions, any or all of which may be freely waived in
whole or in part by the Lender at any time if in its sole discretion it deems it
advisable to do so. Inspections and approvals of the Plans, the Project, and the
workmanship and materials used therein impose no responsibility or liability of
any nature whatsoever on the Lender, and no Person shall, under any
circumstances, be entitled to rely upon such inspections and approvals by the
Lender for any reason. The Lender is obligated hereunder to make the Term Loans
solely to the extent required by this Agreement. The Lender has no implied
obligations under this Agreement and shall have only those obligations expressly
set forth herein.
12.11 Counterparts. This Agreement may be executed by one or more of
the parties to this Agreement on any
-59-
number of separate counterparts and all of said counterparts taken together
shall be deemed to constitute one and the same instrument.
12.12 Descriptive Headings. The table of contents and the descriptive
headings of the several Sections of this Agreement are inserted for convenience
only and do not constitute a part of this Agreement.
12.13 Satisfaction Requirement. If any agreement, certificate or
other writing, or any action taken or to be taken, is by the terms of this
Agreement required to be satisfactory to the Lender, the determination of such
satisfaction shall be made by the Lender in its sole and exclusive judgment
exercised in good faith except as otherwise provided in this Agreement.
12.14 Severability. If any provision of this Agreement or any Term
Note shall be held or deemed to be or shall, in fact, be illegal, inoperative
or unenforceable, the same shall not affect any other provision or provisions
herein contained or render the same invalid, inoperative or unenforceable to any
extent whatever.
12.15 GOVERNING LAW. THIS AGREEMENT, THE TERM NOTES AND THE RIGHTS
AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT AND THE TERM NOTES SHALL BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK.
12.16 No Third Party Beneficiaries. This Agreement is solely for the
benefit of the Borrower and the Lender and their respective successors and
assigns (except as otherwise expressly provided herein) and nothing contained
herein shall be deemed to confer upon any other Person any right to insist on or
to enforce the performance or observance of any of the obligations contained
herein. All conditions to the obligations of the Lender to make the Term Loan
hereunder are imposed solely and exclusively for the benefit of the Lender and
its successors and assigns and no other Person shall have standing to require
satisfaction of such conditions in accordance with their terms and no other
Person shall under any circumstances be deemed to be beneficiary of such
conditions.
12.17 CONSENT TO JURISDICTION. THE BORROWER HEREBY IRREVOCABLY AGREES
THAT ANY LEGAL ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR THE TERM NOTES MAY BE BROUGHT IN ▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇
-▇▇▇-
YORK, THE STATE OF NEW JERSEY, OR THE UNITED STATES OF AMERICA FOR THE STATE OF
NEW JERSEY OR FOR THE SOUTHERN DISTRICT OF NEW YORK, AS THE LENDER OR THE HOLDER
OF THE TERM NOTES MAY ELECT. BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE
BORROWER HEREBY IRREVOCABLY ACCEPTS AND SUBMITS GENERALLY AND UNCONDITIONALLY,
FOR ITSELF AND WITH RESPECT TO ITS PROPERTY, TO THE JURISDICTION OF ANY SUCH
COURT IN ANY SUCH ACTION OR PROCEEDING, AND HEREBY WAIVES, IN THE CASE OF ANY
SUCH ACTION OR PROCEEDING BROUGHT IN THE COURTS OF THE STATE OF NEW YORK, THE
STATE OF NEW JERSEY, OR OF THE UNITED STATES OF AMERICA FOR THE STATE OF NEW
JERSEY OR FOR THE SOUTHERN DISTRICT OF NEW YORK, DEFENSES BASED ON
JURISDICTION, VENUE, FORUM NON CONVENIENS AND, IN CONNECTION WITH OR BASED UPON
ANY ACTION OR PROCEEDING INITIATED BY THE BORROWER, LIS ALIBI PENDENS, AND
HEREBY IRREVOCABLY DESIGNATES, APPOINTS AND EMPOWERS CT CORPORATION SYSTEM,
INC., WHOSE PRESENT NEW YORK ADDRESS IS CT CORPORATION SYSTEM, ▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, AND THE CORPORATION TRUST COMPANY, WHOSE PRESENT NEW
JERSEY ADDRESS IS THE CORPORATION TRUST COMPANY, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, AS ITS AUTHORIZED AGENTS TO RECEIVE, FOR AND ON
BEHALF OF THE BORROWER AND ITS PROPERTY, SERVICE OF PROCESS IN THE STATES OF NEW
YORK AND NEW JERSEY, RESPECTIVELY, WHEN AND AS SUCH LEGAL ACTIONS OR PROCEEDINGS
MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK, THE STATE OF NEW JERSEY,
OR OF THE UNITED STATES OF AMERICA FOR THE STATE OF NEW JERSEY OR FOR THE
SOUTHERN DISTRICT OF NEW YORK, AND SUCH SERVICE OF PROCESS SHALL BE DEEMED
COMPLETED UPON THE DATE OF DELIVERY THEREOF TO SUCH AGENTS WHETHER OR NOT SUCH
AGENTS GIVE NOTICE THEREOF TO THE BORROWER, OR UPON THE EARLIEST OF ANY OTHER
DATE PERMITTED BY APPLICABLE LAW. IT IS UNDERSTOOD THAT A COPY OF SAID PROCESS
SERVED ON SUCH AGENTS WILL BE PROMPTLY FORWARDED TO THE BORROWER AT ITS ADDRESS
SET FORTH BELOW, BUT THE FAILURE OF THE BORROWER TO RECEIVE SUCH COPY SHALL NOT
AFFECT IN ANY WAY THE SERVICE OF SAID PROCESS ON SAID AGENTS AS THE AGENTS OF
THE BORROWER. THE BORROWER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF
ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING
OF THE COPIES THEREOF BY CERTIFIED AIR MAIL, POSTAGE PREPAID, TO THE BORROWER AT
ITS ADDRESS SET FORTH BELOW, SUCH SERVICE TO BECOME EFFECTIVE UPON THE EARLIER
OF (i) THE DATE 5 DAYS AFTER SUCH MAILING OR (ii) ANY EARLIER DATE PERMITTED BY
APPLICABLE LAW. THE BORROWER AGREES THAT IT WILL AT ALL TIMES CONTINUOUSLY
MAINTAIN AN AGENT TO RECEIVE SERVICE OF PROCESS IN THE STATE OF NEW YORK AND THE
STATE OF NEW JERSEY ON BEHALF OF ITSELF AND ITS PROPERTIES WITH RESPECT TO THIS
AGREEMENT OR THE TERM NOTES AND IN THE EVENT THAT, FOR ANY REASON, EITHER OF THE
AGENTS NAMED ABOVE OR ITS SUCCESSOR SHALL NO LONGER
-59B-
SERVE AS AGENT OF THE BORROWER TO RECEIVE SERVICE OF PROCESS IN THE STATE OF NEW
YORK OR THE STATE OF NEW JERSEY ON ITS BEHALF, AS THE CASE MAY BE, THE BORROWER
SHALL PROMPTLY APPOINT A SUCCESSOR SO TO SERVE AND SHALL ADVISE THE LENDER
THEREOF. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE LENDER TO COMMENCE LEGAL
PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE BORROWER IN ANY OTHER JURISDICTION
OR TO SERVE PROCESS IN ANY OTHER JURISDICTION OR TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY APPLICABLE LAW. THE BORROWER FURTHER AGREES THAT FINAL
JUDGMENT AGAINST IT ANY SUCH ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE TERM NOTES SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN
ANY OTHER JURISDICTION WITHIN THE UNITED STATES OF AMERICA BY SUIT ON THE
JUDGMENT, A CERTIFIED OR EXEMPLIFIED COPY OF WHICH SHALL BE CONCLUSIVE EVIDENCE
OF THE FACT AND OF THE AMOUNT OF ITS INDEBTEDNESS.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their proper and duly authorized officers or
representatives as of the day and year first above written.
-59C-
ANNEX A
-------
DEFINITIONS
-----------
In addition to the terms defined in the Term Loan Agreement, the
following terms have the following meanings (such definitions to be equally
applicable to both singular and plural forms of the terms defined) as used in
the Agreement, the Term Notes and the Security Documents:
"Additional Assets": as defined in Section 12.8 of the Term Loan
Agreement.
"Additional Asset Contracts": as defined in Section 12.8 of the Term
Loan Agreement.
"Additional Cash Flow": as defined in Section 12.8 of the Term Loan
Agreement.
"Additional Contract": any contract or undertaking to which the
Borrower is a party or of which it is a beneficiary providing for (i) the sale
or exchange by the Borrower of any of the Facility's electrical or steam output
or (ii) relating in any way to the operation of the Facility or the use and
occupancy of the Site, other than employment contracts and contracts involving
less than $50,000, entered into after the Closing Date.
"Additional Financing Security": as defined in Section 12.8 of the
Term Loan Agreement.
"Additional Lender": as defined in Section 12.8 of the Term Loan
Agreement.
"Additional Loan": as defined in Section 12.8 of the Term Loan
Agreement.
"Affiliate": of any designated Person, any Person which, directly or
indirectly, controls or is controlled by or is under common control with such
designated Person and, without limiting the generality of the foregoing, shall
include (i) any Person which beneficially owns or holds 10% or more of any class
of voting securities of such designated Person or 10% or more of the equity
interest in such designated Person and (ii) any Person of which such designated
Person beneficially owns or holds 10% or more of any class of voting securities
or in which such designated Person beneficially owns or holds 10% or more of the
equity interest; for the purposes of this definition,
Annex A
page 2
"control" (including, with correlative meanings, the terms "controlled by" and
"under common control with"), as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities or by contract or otherwise.
"Assigned Contracts": the collective reference to the Electric Power
Purchase Agreement, the Steam Purchase Agreement, the IMTT Power Purchase
Agreement, the System Supply Agreement, the Operation & Maintenance Contract,
the Site Lease, the Gas Purchase Agreement, the Steam Facilities Lease, the
Purchase and Sale Agreement, the Option Agreement, the Service and
Interconnection Agreement and, from and after the date any Additional
Contract is entered into by the Borrower, such Additional Contract, and any
amendment, supplement or modification to any thereof after the Closing Date.
"Authorized Representative": with respect to a Partner, the president
or any vice president of such Partner or, with respect to financial matters, the
chief financial officer of such Partner, and with respect to the Borrower, an
Authorized Representative of a Partner.
"Bayonne": Bayonne Industries Inc., a New Jersey corporation.
"Borrower": Cogen Technologies NJ Venture, a New Jersey general
partnership of the Partners.
"Borrowing Date": the date on which the Term Loan is made.
"Budget": as defined in Section 5.1(f) of the Term Loan Agreement.
"Business Day": a day other than a Saturday, a Sunday or any other
day on which commercial banks in New York City are required or authorized by law
to be closed.
"Buyers": the parties designated as such under the Power Purchase
Agreements.
"Called Principal": with respect to any Term Note, the principal of
such Term Note that is immediately
Annex A
page 3
due and payable pursuant to Section 10.1 of the Term Loan Agreement.
"Cancellation Date": as def ined in Section 4.8 of the Term Loan
Agreement.
"Capital Lease": any lease of property, real or personal, which, in
accordance with GAAP, would be required to be capitalized on a balance sheet of
the lessee or, if not so capitalized, for which the amounts of the asset and
liability (had such lease been capitalized) would at such time be so required to
be disclosed in a note to such a balance sheet.
"Closing Date": the date on which the Term Loan Agreement is executed
and delivered by the Borrower.
"Code": The Internal Revenue Code of 1986, as amended.
"Collateral": the collective reference to all real and personal
property, tangible and intangible, and the proceeds thereof, subjected from time
to time to the Liens intended to be created by any Security Document.
"Commonly Controlled Entity": an entity, whether or not incorporated,
which is under common control with the Borrower within the meaning of Section
414(b) or (c) of the Code.
"Completion": completion of the Work.
"Consents": the collective reference to the Consents, each
substantially in the forms set forth as parts of Exhibits C-1 to C-7 to the Term
Loan Agreement, to be executed and delivered by the parties (other than the
Borrower) to each Assigned Contract consenting to the assignment by the Borrower
to the Lender of the Borrower's rights under such Assigned Contract.
"Construction Loan Agreement": the Construction Loan Agreement dated
as of September 8, 1986 between the Borrower and General Electric Power Funding
Corporation, a New York corporation.
"Contingent Obligation": as to any Person, any obligation of such
Person guaranteeing or in effect guaranteeing any Indebtedness, leases,
dividends or other obliga-
Annex A
page 4
tions ("primary obligations") of any other Person (the "primary obligor") in any
manner, whether directly or indirectly, including, without limitation, any
obligation of such Person, whether or not contingent, (a) to purchase any such
primary obligation or any property constituting direct or indirect security
therefor, (b) to advance or supply funds (i) for the purchase or payment of any
such primary obligation or (ii) to maintain working capital or equity capital of
the primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor, (c) to purchase property, securities or services primarily for
the purpose of assuring the owner of any such primary obligation of the ability
of the primary obligor to make payment of such primary obligation or (d)
otherwise to assure or hold harmless the owner of such primary obligation
against loss in respect thereof; provided, however, that the term "Contingent
Obligation" shall not include endorsements of instruments for deposit or
collection in the ordinary course of business. The amount of any Contingent
Obligation shall be deemed to be an amount equal to the stated or determinable
amount of the primary obligation in respect of which such Contingent Obligation
is made or, if not stated or determinable, the maximum reasonably anticipated
liability in respect thereof as determined by the independent public accountants
for the Borrower or a Partner.
"Contractor": General Electric Company, a corporation organized under
the laws of the State of New York.
"Contractual Obligation": as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or undertaking to
which such Person is a party or by which it or any of its property is bound.
"Coverage Ratio": for any consecutive 12 months, the quotient obtained
by dividing (a) the sum of the Net Revenue for such period plus the amount, if
any, on deposit in the Debt Service Reserve Account as of the last day of such
period, by (b) the aggregate payments on account of principal of and interest on
the Term Note payable during such period.
"CTNJI": Cogen Technologies NJ, Inc., a corporation organized under
the laws of the State of Delaware.
"Debt Service Reserve Account": as defined in the Disbursement
Agreement.
Annex A
page 5
"Default": any of the events specified in Section 10.1 of the Term
Loan Agreement, whether or not any requirement for the giving of notice, the
lapse of time, or both, or for the happening of any other condition, has been
satisfied.
"Disbursement Agreement": the agreement substantially in the form of
Exhibit F to the Term Loan Agreement, as amended, supplemented or modified from
time to time after the Closing Date.
"Disbursement Trustee": as defined in the Disbursement Agreement.
"Discounted Value": with respect to the Called Principal of any Term
Note, the amount calculated by discounting all Remaining Scheduled Payments with
respect to such Called Principal from their respective scheduled due dates to
the Settlement Date with respect to such Called Principal, in accordance with
accepted financial practice and at a discount factor (applied on a quarterly
basis) equal to the Reinvestment Yield with respect to such Called Principal.
"Electric Power Purchase Agreement": the Agreement for Purchase of
Electric Power between CTNJI and JCP&L dated as of October 29, 1985, as assigned
to the Borrower pursuant to the Assignment Agreement, dated as of September 8,
1986, as amended, supplemented or otherwise modified from time to time.
"Environmental Laws": as defined in Section 6.28 of the Term Loan
Agreement.
"ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Event of Default": any of the events specified in Section 10.1 of
the Term Loan Agreement, provided that any requirement for the giving of notice,
the lapse of time, or both, or for the happening of any other condition, has
been satisfied.
"Event of Loss": any of the following events or conditions:
(i) all or substantially all of the Facility shall become lost,
stolen, destroyed, damaged beyond
Annex A
page 6
repair or permanently rendered unfit for commercial operation, as a
consequence of any event whatsoever (including governmental regulation),
including without limitation anything affecting the Site; or
(ii) any damage to or loss of all or any portion of the Facility
occurring through any cause whatsoever, including without limitation
anything affecting the Site, which results in the receipt of insurance
proceeds with respect to the Facility on the basis of an actual or
constructive total loss; or
(iii) the condemnation, confiscation or seizure of, or other requisition
of title to, or use of, all or substantially all of the Facility or the
Site or such portion of the Facility and/or the Site as shall render the
Facility unable to continue to satisfy the standards for Performance
Adequacy (including the taking of title to, or use of, all or substantially
all or such portion as aforesaid of the Facility and/or the Site under
power of eminent domain or by forfeiture pursuant to any proceeding
commenced under any provision of law providing for escheat), provided that,
in the case of a requisition of use by a governmental authority, such
requisition shall be for a period of at least six months.
"Exercise Date": October 23, 1987.
"Expected Coverage Ratio": for any calendar year, the quotient
obtained by dividing (a) the Expected Net Revenue for such calendar year by (b)
the aggregate payments on account of the principal of and interest on the Term
Notes to be made during such calendar year, assuming that no prepayments are
made pursuant to Section 4.3(a), 4.3(b) or 4.4 of the Term Loan Agreement.
"Expected Net Revenue": for any calendar year, the excess of (a) the
gross revenue expected to be received by the Borrower pursuant to the Power
Purchase Agreements for such calendar year over (b) the expected costs of
operating and maintaining the Facility for such calendar year (including costs
of fuel, property taxes, insurance, labor and maintenance and repairs), all as
determined by the Lender in consultation with the Independent Engineer.
"EXXON": Exxon Company, U.S.A., a division of Exxon Corporation, a New
Jersey corporation.
Annex A
page 7
"Facility": the approximately 165 megawatt gas fired combined cycle
cogeneration facility to be constructed on the Site, as described in the System
Supply Agreement, including the related interconnection and other equipment to
be installed by the Borrower.
"FERC Exhibits": the maps, plans, specifications and statements
described and designated as exhibits to the application submitted to the Federal
Energy Regulatory Commission with respect to the certification of the Project as
a Qualifying Facility.
"Fixed Amount": $90,000,000.
"Force Majeure Event": any act or event caused by "force majeure" as
described in any Project Document.
"GAAP": generally accepted accounting principles in the United
States of America in effect from time to time.
"Gas Purchase Agreement": the letter agreement, dated October 10,
1986, between the Borrower and Public Service, as amended, supplemented or
modified from time to time.
"Governmental Actions": all Permits and other authorizations,
consents, approvals, waivers, exemptions, variances, franchises, permissions,
permits and licenses of, and filings and declarations with, any Governmental
Authority, including, without limitation, the Federal Energy Regulatory
Commission, the New Jersey Public Utilities Commission and the State of New
Jersey Department of Environmental Protection.
"Governmental Authority": any nation or government, any state or other
political subdivision thereof, and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to
government.
"Hazardous Substances or Wastes": "hazardous substances" as defined in
the Spill Act or "hazardous substances" or "hazardous wastes" as such terms are
defined in N.J.A.C. 7:1-3.3, other than petroleum products.
Annex A
page 8
"IMTT": IMTT Bayonne, a Delaware partnership.
"IMTT Power Purchase Agreement": the Agreement between CTNJI and IMTT
for the Sale of Steam and Electricity for a Cogeneration Plant, dated June 13,
1985, as amended by an Amendment thereto, dated June 13, 1985 as assigned by
CTNJI to the Borrower pursuant to the Assignment and Assumption Agreement, dated
as of September 8, 1986, as amended, supplemented or modified from time to time.
"Indebtedness": as to any Person, at a particular time, (a)
indebtedness for borrowed money or for the deferred purchase price of property
(other than trade and other accounts payable in the ordinary course of business
in accordance with customary trade terms), including obligations under Capital
Leases, in respect of which such Person is liable, directly, contingently or
otherwise, as obligor, guarantor or otherwise or in respect of which such Person
otherwise assures a creditor against loss and (b) voluntarily incurred
indebtedness secured by a Lien (other than inchoate Liens arising in the
ordinary course of such Person's business) on any property owned by such Person,
whether or not such Person is liable for the payment thereof.
"Independent Engineer": ▇▇▇▇▇ & Row Company, or such other providers
of consulting engineering services as the Lender may designate by written notice
to the Borrower.
"Insurance Account": as defined in the Disbursement Agreement.
"Interest Payment Date": any March 1, June 1, September 1 and December
1 of each year (or the next succeeding Business Day thereafter if such date is
not a Business Day).
"Investment": as to any Person, all investments, computed in
accordance with GAAP, made by purchase of stock, bonds, notes, debentures or
other securities, capital contribution, loan, advance, guarantee of any
Indebtedness of such Person or creation or assumption of any other contingent
liability in respect of any Indebtedness of such Person, or otherwise.
"JCP&L": Jersey Central Power & Light Company, a corporation
organized under the laws of the State of New Jersey.
Annex A
page 9
"Joint Venture Agreement": the Amended and Restated Joint Venture
Agreement of the Borrower among the Partners, dated August 28, 1986, as amended,
supplemented or modified from time to time.
"Lender": The Prudential Insurance Company of America.
"Lien": any mortgage, pledge, hypothecation, assignment, encumbrance,
lien (statutory or other), or preference, priority or other security agreement
or preferential arrangement of any kind or nature whatsoever (including, without
limitation, any conditional sale or other title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing, and the filing of any statement under the Uniform Commercial Code
or comparable law of any jurisdiction).
"Mortgage": the mortgage and security agreement substantially in the
form of Exhibit D to the Term Loan Agreement, as amended, modified or
supplemented from time to time after the Closing Date.
"Mortgage Supplement": as defined in Section 2.1 of the Mortgage.
"Net Revenue": for any consecutive 12 months, the excess of (a) the
gross revenue received by the Borrower pursuant to the Power Purchase Agreements
(or any additional contract to which Borrower is a party for the sale of any of
the Facility's electrical or steam output (other than any Additional Asset
Contracts)) for such period over (b) the costs incurred of operating and
maintaining the Facility (other than such costs relating to any expansion of the
Facility as permitted under Section 12.8 of the Term Loan Agreement) for such
period (including all interest payments made on the indebtedness described in
Section 9.1(c) of the Term Loan Agreement and all costs of fuel, property taxes,
insurance, labor and maintenance and repairs).
"Nondisbursed Portion": as defined in Section 4.8 of the Term Loan
Agreement.
"Non-Usage Feel": as defined in Section 4.8 of the Term Loan
Agreement.
"Notice of Borrowing": as defined in Section 3.1 of the Term Loan
Agreement.
Annex A
page 10
"Operating Budget": as defined in Section 8.11 of the Term Loan
Agreement.
"Operating Year": each consecutive period of 12 months except that the
first operating Year shall commence on the Borrowing Date and terminate on
December 31 of the same year, with each subsequent Operating Year commencing on
the day following the last day of the preceding Operating Year.
"Operation & Maintenance Contract": the Operation & Maintenance
Contract between the Borrower and the Contractor dated September 8, 1986, as
amended, supplemented or modified from time to time.
"Option Agreement": the Option Agreement, dated as of May 22, 1986,
between Bayonne Industries, Inc. and CTNJI, as assigned to the Borrower by CTNJI
pursuant to Assignment and Assumption Agreement, dated September 8, 1986, as
amended, supplemented or modified from time to time.
"Partial Loss or Damage": any loss, confiscation, theft or seizure of,
or requisition of title to or use of, damage to or loss of use of the
Facility or any part thereof which does not constitute an Event of Loss.
"Partner": each of CTNJI, Enron Cogeneration Five Company, a Delaware
corporation, CEA Bayonne, Inc., a New Jersey corporation, PSVO Bayonne, Inc., a
Delaware corporation and Transco Cogeneration Company, a Delaware corporation.
"PBGC": the Pension Benefit Guaranty Corporation established
pursuant to Section 4002 of ERISA, or any successor entity thereto.
"Performance Adequacy": as defined in the System Supply Agreement.
"Permits": all applicable authorizations, consents, certificates,
licenses, approvals, waivers, exemptions, variances, franchises, permissions and
permits of any Governmental Authority required in connection with the purchase,
acquisition, design, construction, installation, ownership or operation of the
Project and/or in connection with any of the transactions contemplated by the
Project Documents.
Annex A
page 11
"Permitted Exceptions": Liens on, !and limitations on and defects in
title to, the Site, as disclosed in the Title Insurance Policy.
"Permitted Investments": investments in the instruments and securities
specified in the term "Permitted Investments" as defined in the Disbursement
Agreement and advances customarily required in the ordinary course of business
to agents and suppliers of the Borrower as advance payment of insurance
premiums, taxes and utility charges, fuel, supplies, operating deposits or other
like payments or expenses.
"Permitted Liens": the Liens permitted under Section 9.2 of the Term
Loan Agreement.
"Person": an individual, partnership, corporation, business trust,
joint stock company, trust, unincorporated association, joint venture,
Governmental Authority or other entity of whatever nature.
"Plan": any pension plan which is covered by Title IV of ERISA and in
respect of which the Borrower, or a Commonly Controlled Entity is an "employer"
as defined in Section 3(5) of ERISA.
"Plans and Specifications": the plans and specifications for the
Project as set forth in the System Supply Agreement.
"Power Purchase Agreements": the Electric Power Purchase Agreement,
the IMTT Power Purchase Agreement and the Steam Purchase Agreement,
collectively.
"Premium Rate": as of any Interest Payment Date occurring after the
54th Interest Payment Date, a percentage beginning at the interest rate borne by
the Term Notes and decreasing ratably to zero as of the final Interest Payment
Date.
"Project": the Facility and the Site.
"Project Cost": all costs, expenses and other obligations paid or
incurred, including, without limitation, all interest, taxes and other carrying
costs, and all reserves required to be established, in connection with the
development, financing, design, engineering, acquisition, construction,
inspection, testing and completion of the
Annex A
page 12
Project and an amount of working capital not to exceed $5,000,000.
"Project Documents": the collective reference to the Agreement, the
Term Notes, the Security Documents, the Assigned Contracts and the Joint Venture
Agreement.
"Project Schedule": as defined in Section 5.1(g) of the Term Loan
Agreement.
"Public Service": Public Service Electric & Gas Company, a New Jersey
corporation.
"Purchase and Sale Agreement": the Purchase and Sale Agreement, dated
as of May 22, 1986, between Bayonne and IMTT, as sellers and CTNJI, as
buyer, as assigned by CTNJI to the Borrower pursuant to the Assignment and
Assumption Agreement, dated as of September 8, 1986, as amended, supplemented or
modified from time to time.
"Qualifying Facility": a cogeneration facility meeting all the
requirements for a "qualifying facility" set forth in Part 292 of the rules and
regulations of the Federal Energy Regulatory Commission (or any successor agency
to its duties and responsibilities) under the Public Utility Regulatory Policies
Act of 1978, as amended.
"Reinvestment Yield": with respect to the Called Principal of any
Term Note, the yield to maturity implied by the Treasury Constant Maturity
Series yields reported (for the latest day for which such yields shall have been
so reported as of the Business Day next preceding the Settlement Date with
respect to such Called Principal) in Federal Reserve Statistical Release H.15
(519) (or any comparable successor publication) for actively traded U.S.
Treasury securities having a constant maturity equal to the remaining weighted
average life to final maturity (calculated in accordance with accepted financial
practice) of such Called Principal as of such Settlement Date. Such implied
yield shall be determined (a) by calculating the remaining weighted average life
to final maturity of such Called Principal rounded to the nearest quarter-year
and, (b) if necessary, by interpolating linearly between Treasury Constant
Maturity Series yields.
"Remaining Scheduled Payments": with respect to the Called Principal
of any Term Note, all payments of such Called Principal and interest thereon
that would be due on
Annex A
page 13
or after the Settlement Date with respect to such Called Principal if no payment
of such Called Principal were made prior to its scheduled due date.
"Requirement of Law": as to any Person, the Certificate of
Incorporation and By-Laws or partnership agreement or other organizational or
governing documents of such Person, and as to any Person or the Project, any
law, treaty, rule or regulation, or determination of an arbitrator or a court or
other Governmental Authority, in each case applicable to or binding upon (a)
such Person or any of its properties or (b) the Project.
"Restricted Payment": as to any Person, any payment or distribution by
such Person to a Partner, to any Affiliate of a Partner or to any other Person
claiming under right therefrom, including, without limitation, any repayment by
such Person of Indebtedness to a Partner, to any Affiliate of a Partner or to
any other Person claiming under right therefrom.
"Security Agreement": the agreement substantially in the form of
Exhibit E to the Term Loan Agreement, as amended, supplemented or modified from
time to time.
"Security Documents": the collective reference to the Mortgage, the
Security Agreement, the Disbursement Agreement, the Consents, and any other
agreement or instrument which secures payment of the indebtedness evidenced by
the Term Notes or payment or performance of any other covenant or obligation or
liability of the Borrower to the Lender under the Agreement or under any other
agreement or instrument referred to herein.
"Service and Interconnection Agreement": the Revised Transmission
Service and Interconnection Agreement between the Borrower and Public Service
dated April 27, 1987, as further amended, supplemented or modified from time to
time.
"Settlement Date": with respect to the Called Principal of any Term
Note, the date on which such Called Principal is immediately due and payable
pursuant to Section 10.1 of the Term Loan Agreement.
"Site": the parcel or parcels of land leased by the Borrower under the
Site Lease or over which the Borrower has an easement pursuant to the Site
Lease.
Annex A
page 14
"Site Lease": collectively, the Lease Agreement, dated as of October
18, 1986, between Bayonne and IMTT, as lessor, and the Borrower as Lessee, as
amended, supplemented or modified from time to time, and the Easement, dated as
of October 20, 1986, from Bayonne and IMTT to the Borrower, as amended,
supplemented or modified from time to time.
"Spill Act": as defined in Section 8.18 of the Term Loan Agreement.
"Steam Facilities Lease": the Steam Producing Facilities Lease
Agreement, dated as of May 22, 1986, between the CTNJI and IMTT as assigned by
CTNJI to the Borrower pursuant to the Assignment and Assumption Agreement, dated
as of September 8, 1986, as amended, supplemented or modified from time to time.
"Steam Purchase Agreement": the Agreement between the Borrower and
EXXON dated February 17, 1987, as amended, supplemented or modified from time to
time.
"Stipulated Interest Rate": as defined in Section 2.2 of the Term Loan
Agreement.
"System Supply Agreement": the System Supply Agreement dated September
8, 1986 between the Contractor and the Borrower, as amended by Amendments Nos. 1
through 7, as further amended, supplemented or modified from time to time.
"Term Loan": as def ined in Section 2. 1 of the Term Loan Agreement.
"Term Loan Agreement": the Term Loan Agreement, dated as of November
1, 1987, between the Borrower and the Lender.
"Term Notes": as defined in Section 2.1 of the Term Loan Agreement.
"Title Insurance Policy": the title insurance policy delivered
pursuant to, and meeting the requirements of, Section 5.2(g) of the Term Loan
Agreement.
"Yield-Maintenance Premium": with respect to any Term Note, a premium
equal to the excess, if any, of the Discounted Value of the Called Principal of
such Term Note over the sum of such Called Principal plus interest accrued
thereon as of (including interest due on) the Settlement
Annex A
page 15
Date with respect to such Called Principal. The Yield Maintenance Premium shall
in no event be less than zero.
"Work": as defined in the System Supply Agreement.
As used in the Term Loan Agreement, any Term Note or any Security
Document and in any certificate or other document made or delivered pursuant to
any thereof, accounting terms relating to the Borrower not defined in this Annex
A, and accounting terms partly defined in this Annex A to the extent not
defined, shall have the respective meanings given to them under GAAP.
The words "hereof," "herein" and "hereunder" and words of similar
import when used in an agreement shall refer to such agreement as a whole and
not to any particular provision of such agreement, and section, schedule and
exhibit references in any agreement are to such agreement unless otherwise
specified.
ANNEX B
-------
ADDRESS, ACCOUNT AND OTHER
INFORMATION REGARDING LENDER
Name and Address
----------------
THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA ...................
In the case of all payments on account of the Term Notes:
By bank wire transfer in immediately available funds
to its account #▇▇▇-▇▇-▇▇▇ in:
▇▇▇▇▇▇ Guaranty Trust
Company of New York
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Term Notes to be registered in the name of:
The Prudential Insurance Company of America
In the case of all other communications:
c/o PruCapital Management, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Regional Vice President --
Special Industries (East)
ANNEX C
-------
PREPAYMENT SCHEDULE
Interest Payment Date
to occur after the Principal
Borrowing Date Repayment
---------------------- ---------
1 $ 325,122.19
2 333,941.13
3 342,999.28
4 352,303.14
5 361,859.36
6 371,674.80
7 381,756.47
8 392,111.62
9 402,747.65
10 413,672.18
11 424,893.03
12 436,418.26
13 448,256.10
14 460,415.05
15 472,903.81
16 485,731.32
17 498,906.79
18 512,439.63
19 526,339.56
20 540,616.52
21 555,280.74
22 570,342.73
22 585,813.28
24 601,703.46
25 618,024.67
26 634,788.59
27 652,007.23
28 669,962.93
29 687,858.35
30 706,516.50
31 725,680.76
32 745,364.85
33 765,582.88
34 786,349.31
35 807,679.04
36 829,587.33
37 852,089.89
38 875,202.83
39 898,942.70
40 923,326.52
41 948,371.75
Annex C
page 2
Interest Payment Date
to occur after the Principal
Borrowing Date Repayment
--------------------- ---------
42 974,096.34
43 1,000,518.70
44 1,027,657.77
45 1,055,532.99
46 1,084,164.32
47 1,113,572.28
48 1,142,777.93
49 1,174,802.90
50 1,206,669.43
51 1,239,400.34
52 1,273,019.07
53 1,307,549.72
54 1,343,011.00
55 1,379,446.34
56 1,416,863.82
57 1,455,296.25
58 1,494,771.16
59 1,535,316.83
60 1,576,962.30
61 1,619,737.40
62 1,663,672.78
63 1,708,799.90
64 1,755,151.10
65 1,802,759.57
66 1,851,659.43
67 1,901,885.69
68 1,953,474.34
69 2,006,462.33
70 2,060,887.62
71 2,116,789.20
72 2,174,207.10
73 2,233,182.47
74 2,293,757.55
75 2,355,975.72
76 2,419,881.56
77 2,485,520.85
78 2,552,940.60
79 2,622,189.11
80 2,693,315.96
COGEN TECHNOLOGIES NJ VENTURE
By COGEN TECHNOLOGIES NJ, INC.,
Managing Venturer
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
By ENRON COGENERATION FIVE
COMPANY, Venturer
By /s/ ▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇ ▇▇▇▇▇▇▇▇
Title: Managing Committee Representative
By CEA BAYONNE, INC., Venturer
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
By PSVO BAYONNE, INC., Venturer
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Attorney In Fact For H. Jakoc,
Managing Committee Representative
By TRANSCO COGENERTION COMPANY,
Venturer
By /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Attorney In Fact For ▇▇▇▇▇ ▇. ▇▇▇▇▇,
Managing Committee Representative
THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA
By PRUCAPITAL MANAGEMENT, INC.,
agent
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President, Corp. Finance