EXHIBIT 10.3.17
***PORTIONS OF THIS EXHIBIT MARKED BY BRACKETS ("[***]") OR OTHERWISE INDICATED
HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT. THE OMITTED
PORTIONS HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.***
SCHEDULE
TO THE
MASTER AGREEMENT
(MULTICURRENCY-CROSS BORDER)
DATED AS OF JULY 1, 2001
BETWEEN
DYNEGY POWER MARKETING, INC.
A CORPORATION ORGANIZED
UNDER THE LAWS OF THE STATE
OF TEXAS
("PARTY A")
AND
SITHE/INDEPENDENCE POWER PARTNERS, L.P.
A LIMITED PARTNERSHIP ORGANIZED
UNDER THE LAWS OF THE STATE
OF DELAWARE
("PARTY B")
PART 1. TERMINATION PROVISIONS.
Sections 2(a)(iii)(2), 2(e), 5 and 6 of the Master Agreement shall not
apply and shall be replaced by the Default provision set forth at Section
5(h) of this Schedule
PART 2. TAX REPRESENTATIONS.
Section 3 of the Master Agreement shall not apply and shall be replaced by
Section 5(a) of this Schedule. Sections 2(d), 4(d) and 4(e) of the Master
Agreement shall not apply.
***CONFIDENTIAL TREATMENT REQUESTED***
1
PART 3. AGREEMENT TO DELIVER DOCUMENTS.
For the purpose of Section 4(a)(i) and (ii), each party agrees to deliver the
following documents, as applicable:
======================================================================================================================
PARTY REQUIRED TO COVERED BY
DELIVER DOCUMENT FORM/DOCUMENT/CERTIFICATE DATE BY WHICH TO BE DELIVERED SECTION 3(d)
----------------------------------------------------------------------------------------------------------------------
a) Party A and Any document required or reasonably Promptly after the earlier of (i) Yes
Party B requested to allow the other party to make reasonable demand by either
payments under the Agreement without any party; or (ii) learning that such
deduction or withholding for or on account form or document is required.
of any Tax or with such deduction or
withholding at a reduced rate.
======================================================================================================================
PART 4. MISCELLANEOUS.
(a) ADDRESSES FOR NOTICES. For the purpose of Section 12(a):
Address for notices or communications to Party A:
Address: Dynegy Power Marketing, Inc.
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Street Address: 1000 Louisiana, Suite 5800
(courier delivery) ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
A copy of any notice sent to Party A must also be sent to the above
address to:
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Vice President, Legal
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
***CONFIDENTIAL TREATMENT REQUESTED***
2
Address for notices or communications to Party B:
Address: Sithe/Independence Power Partners, L.P.
▇.▇. ▇▇▇ ▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: General Manager
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
A copy of any notice sent to Party B must also be sent to:
Address: Sithe/Independence Power Partners, L.P.
c/o Sithe Energies, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Attention: General Counsel
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
***CONFIDENTIAL TREATMENT REQUESTED***
3
(b) CALCULATION AGENT. The Calculation Agent is Party A, unless otherwise
specified in a Confirmation in relation to the relevant Transaction.
(c) CHOICE OF LAW. This Agreement shall be governed by and construed in
accordance with the law of the State of
New York as to all matters (without
giving effect to conflict of law principles). Each of Party A and Party B hereby
irrevocably waives, to the fullest extent permitted by law, any and all right to
trial by jury in any legal proceedings arising out of or relating to this
Agreement.
(d) NETTING OF PAYMENTS. Section 2(c) of the
Master Agreement shall not
apply and shall be replaced by Section 5(f) of this Schedule.
(e) "AFFILIATE" means, with respect to any entity, any other entity that,
directly or indirectly, through one or more intermediaries, controls, or is
controlled by, or is under common control with, such entity. For this purpose,
"control" means the direct or indirect ownership of fifty percent (50%) or more
of the outstanding capital stock or other equity interests having ordinary
voting power.
(f) PROCESS AGENT. For purposes of Section 13(c) of this Agreement:
Party A appoints as its Process Agent: Not Applicable
Party B appoints as its Process Agent: Not Applicable
(g) OFFICES. The provisions of Section 10(a) will not apply to this
Agreement.
(h) MULTIBRANCH PARTY. For the purpose of Section 10(c) of this
Agreement:
Party A is not a Multibranch Party. Party B is not a
Multibranch Party.
(i) CREDIT SUPPORT RESERVE.
(i) Party B shall, upon the execution of this Agreement, establish
for the benefit of Party A, a credit support reserve which
shall be maintained throughout the term of this Agreement (the
"Credit Support Reserve"). During each year of the term of
this Agreement, Party B shall ensure that the Credit Support
Reserve have available credit support in the amounts specified
below, as such amounts shall be reduced from time to time in
accordance with Section 4(i)(v) (the "Credit Support Amount").
Party B shall provide such Credit Support Reserve either in
cash, in the form of letter(s) of credit and/or as one or more
guaranty(ies). Each such letter of credit must be issued by a
financial institution that is and remains rated "A-" or better
by Standard & Poor's Rating Group (a division of The
▇▇▇▇▇▇-▇▇▇▇ Companies, Inc.) ("S&P") or "A3" or better by
▇▇▇▇▇'▇ Investors Service, Inc. ("Moody's") in a form
reasonably acceptable to Party A. Each such guaranty shall be
with a guarantor with a credit rating at the time of execution
of such guaranty for its unsecured, long-term debt obligations
or corporate credit of BBB or better from S&P or Baa2 or
better from Moody's and substantially in the form of the
guaranty attached hereto as Exhibit C. The Credit Support
Reserve shall initially be in the form of (1) a guaranty of
Enron Corp. in the amount of $[***] (the "Enron Guaranty"),
(2) a guaranty of Exelon Generation Company, L.L.C. in the
amount of $[***] (the "Exelon Guaranty"), (3) a letter of
credit posted by Enron Corp. in the amount of $[***] (the
"Enron LC," and together with the Enron Guaranty, the "Enron
Credit Support") and (4) a letter of credit posted by Sithe
Energies, Inc. in the amount of $[***] (the "Sithe Energies
LC," and together with the Exelon Guaranty, the "Exelon/SEI
Credit Support") or in such other combination or forms as
shall be reasonably acceptable to Party A. For so long as the
Credit Support Reserve is in the form of the Enron Credit
Support and the Exelon/SEI Credit Support (as described
above), any amounts drawn from the Credit Support
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4
Reserve pursuant to this Section 4(i) shall be allocated
between and drawn from the Enron Credit Support and the
Exelon/SEI Credit Support as follows: forty percent (40%) from
the Enron Credit Support and sixty percent (60%) from the
Exelon/SEI Credit Support. Whether an amount is to be drawn
from the Enron Credit Support or the Exelon/SEI Credit
Supoort, such amount shall first be drawn on any letters of
credit then available. Whether in the form of cash, letter(s)
of credit or guaranty(ies), the Credit Support Reserve amounts
shall be reduced from time to time in accordance with Section
4(i)(v).
(ii) The Credit Support Amount required during the term of this
Agreement shall correspond to the following schedule, as such
amounts shall be reduced from time to time in accordance with
Section 4(i)(v). For purposes of this schedule, "Year 1"
refers to the period from the date of this Agreement through
December 31, 2001 and each subsequent "Year" refers to the
next calendar year.
YEAR CREDIT SUPPORT AMOUNT
---- ---------------------
1 through 10 $[***]
11 $[***]
12 $[***]
13 through end of term $[***]
(iii) The Credit Support Amount and the maintenance of the Credit
Support Reserve shall be subject to the following terms and
conditions. Following the tenth year of the term of this
Agreement and for each subsequent year, Party B shall be
entitled to a reduction in the amount of the Credit Support
Reserve equal to the positive difference between the amount
required to be maintained in the Credit Support Reserve for
the year reaching termination and the amount required to be
maintained in the Credit Support Reserve for the next upcoming
year. To the extent that the Credit Support Amount is
maintained in a cash account, interest on such Credit Support
Amount shall be payable quarterly to Party B.
(iv) Party A and Party B acknowledge that the Credit Support
Reserve will be applied exclusively to pay Party A certain
Floating Price Amounts under Confirmation #1A dated as of July
1, 2001 during Blue Periods (as defined below). For purposes
of the foregoing, a "Blue Period" shall mean a period during
which Party B is unable to effectuate a physical hedge against
all or any portion of its financial obligation as the Floating
Price Payor during a Calculation Period. Party B shall advise
Party A of the existence of a Blue Period at such time as
Party A delivers a Calculation Period Notice, or at any time
thereafter that Party B becomes aware of its inability to
effectuate a physical hedge against all or any portion of its
financial obligation as the Floating Price Payor during a
Calculation Period. Party B shall also provide Party A with
notice of the end of any Blue Period or such period that would
otherwise have constituted a Blue Period had Party A provided
a Calculation Period Notice. The existence of a Blue Period
shall in no way affect Party B's obligations to make
settlement as the Floating Price Payor under the Transaction.
On each Settlement Date following a calendar month during
which a Blue Period has occurred, the Parties shall calculate
the positive difference, if any, between (a) the portion of
the Floating Price payable during the Blue Periods occurring
during such calendar month minus (b) the sum of (A) the
portion of the Fixed Price payable during the Blue Periods
occurring during such calendar month plus (B) the Execution
Amount payable with respect to such calendar month (the "Cash
Shortfall"). If there is a Cash Shortfall, on the immediately
succeeding Payment Date, Party A shall be entitled to draw
upon the Credit Support Reserve in an amount equal to the
lesser of the Cash Shortfall and the amount then available
under the Credit Support Reserve. On each Payment
***CONFIDENTIAL TREATMENT REQUESTED***
5
Date, if the amount of the Cash Shortfall, if any, exceeds the
amount then available under the Credit Support Reserve, any
excess Cash Shortfall shall be carried over to the immediately
succeeding Payment Date with interest calculated from such
Payment Date until the next Payment Date, at a rate per annum
equal to the prime rate reported in The Wall Street Journal's
"Money Rates" column (or any similar column published in The
Wall Street Journal in replacement thereof) for the
immediately preceding business day; provided that for any
twelve-month period, Party B's aggregate liability for Cash
Shortfalls (including interest) occurring during such
twelve-month period shall not exceed the sum of (1) the amount
of the Credit Support Reserve at the beginning of such
twelve-month period, plus (2) the Execution Amounts payable
during such twelve-month period. At the end of the term of
Confirmation #1A, Party B shall be entitled to cancel or
terminate each letter of credit and each guaranty and retain
any cash amounts, in each case in respect of the Credit
Support Reserve.
(v) If at any time, Party A draws upon amounts under the Credit
Support Reserve, the Credit Support Reserve and the Credit
Support Amount for that year and for all subsequent years of
the term shall be reduced by such amount. If at any time
during the term of this Agreement, Party A is paid amounts
from the Credit Support Reserve, or Party B is required to pay
Party A Cash Shortfalls utilizing funds or credit support
available in the Credit Support Reserve, Party B,
notwithstanding such payments or any other provision contained
herein, shall have no obligation, and is expressly relieved
from any obligation, to provide additional credit support that
would have the effect of replenishing the amounts contained in
the Credit Support Reserve. Under no circumstances shall Party
B's aggregate liability to Party A under this Agreement for
the term of the Agreement exceed the sum of (a) $[***]
(reduced by any amounts returned to Party B in years 11
through the end of the term pursuant to Section 4(i)(iii)),
plus (b) the sum of the Execution Amounts during the term of
the Agreement retained by Party A pursuant to Section
4(i)(iv). If at any time during the term of this Agreement,
the amount of the Credit Support Reserve has been reduced to
zero, then under no circumstances thereafter shall Party B's
aggregate liability for Cash Shortfalls (including interest)
occurring during any twelve-month period exceed the sum of the
Execution Amounts payable during such twelve-month period.
(vi) Party A expressly waives any rights it may have to seek or
receive any Cash Shortfall in excess of the aggregate and
annual liability limits set forth in Section 4(i)(v). Party A
expressly waives any rights it may have to seek or receive any
Cash Shortfall that may exist following the termination of
Confirmation #1A. In addition, the Parties expressly
acknowledge and agree that the sole remedy with respect to any
Cash Shortfall which may occur or exist is set forth in this
Section 4(i) and any failure of Party B to otherwise pay or
cause to be paid any Cash Shortfall shall not constitute an
event of default under this Agreement.
(j) CREDIT SUPPORT PROVIDER. Any requirements related to Credit Support
Providers under the
Master Agreement shall not apply except as set forth in
Section 4(i).
(k) PRIOR SWAPS. Party A and Party B may have entered into (either
directly, or as successor-in-interest to) certain swaps and similar agreements
("Existing Transactions") prior to the execution of this Agreement, which they
hereby agree shall not constitute Transactions under this Agreement.
PART 5. OTHER PROVISIONS.
***CONFIDENTIAL TREATMENT REQUESTED***
6
(a) REPRESENTATIONS. Section 3 is hereby replaced in its entirety with the
following:
(i) PARTY A'S REPRESENTATIONS
Party A hereby represents and warrants as follows:
(1) It is a corporation duly organized and validly existing
and in good standing under the laws of Texas and is duly
qualified to do business and in good standing in the
State of
New York.
(2) It has all requisite power and authority to carry on the
business to be conducted by it and to enter into this
Agreement and the transactions contemplated hereby, and
perform and carry out all covenants and obligations on
its part to be performed under and pursuant to this
Agreement.
(3) The execution, delivery and performance of this
Agreement have been duly authorized by all necessary
action on its part and do not require any other actions
or proceedings or any shareholder approval or consent of
any trustee or holder of any indebtedness of Party A.
(4) This Agreement has been duly executed and delivered on
behalf of Party A by the appropriate officers of Party A
and constitutes the legal, valid and binding obligation
of Party A, enforceable against Party A in accordance
with its terms, subject to applicable bankruptcy,
insolvency, moratorium and other similar laws applicable
to creditors' rights generally, and except as the
enforceability thereof may be limited by general
principles of equity (regardless of whether considered
in a proceeding in equity or at law).
(5) (i) It is entering into this Agreement including,
without limitation, any Credit Support Document to which
it is a party and each Transaction, in conjunction with
its line of business (including financial intermediation
services) or the financing of its business; and (ii)
with respect to Options (other than weather-related
options), it is a producer, processor, commercial user
of, or merchant handling, the commodity subject to the
Transaction or the products or byproducts thereof, and
is entering into each Option Transaction solely for
purposes related to its business as such; and (iii) with
respect to any weather-related Transactions, it is
exposed in the conduct of its business to the risk of
variations in weather and is entering into such
Transactions to manage or offset such risks.
(6) It constitutes an "eligible swap participant" as such
term is defined in Rule 35.1(b)(2) of the Commodity
Futures Trading Commission, 17 C.F.R.ss.35.1(b)(2)
(1993).
(7) The economic terms of this Agreement, any Credit Support
Document to which it is a party, and each Transaction
have been individually tailored and negotiated by it;
the creditworthiness of the other party was a material
consideration in its entering into or determining the
terms of this Agreement, such Credit Support Document,
and such Transaction; and the transferability of this
Agreement, such Credit Support Document, and such
Transaction is restricted as provided herein and
therein.
***CONFIDENTIAL TREATMENT REQUESTED***
7
(8) In connection with the negotiation of, the entering
into, and the confirming of the execution of, this
Agreement, any Credit Support Document to which it is a
party, and each Transaction: (i) it is acting as
principal (and not as agent or in any other capacity,
fiduciary or otherwise); (ii) the other party is not
acting as a fiduciary or financial or investment advisor
for it; (iii) it is not relying upon any representations
(whether written or oral) of the other party other than
the representations expressly set forth in this
Agreement and in such Credit Support Document; (iv) the
other party has not given to it (directly or indirectly
through any other person) any advice, counsel,
assurance, guarantee, or representation whatsoever as to
the expected or projected success, profitability,
return, performance, result, effect, consequence, or
benefit (either legal, regulatory, tax, financial,
accounting, or otherwise) of this Agreement, such Credit
Support Document, or such Transaction; (v) it has
consulted with its own legal, regulatory, tax, business,
investment, financial, and accounting advisors to the
extent it has deemed necessary, and it has made its own
investment, hedging, and trading decisions based upon
its own judgment and upon any advice from such advisors
as it has deemed necessary, and not upon any view
expressed by the other party; (vi) all trading decisions
have been the result of arm's length negotiations
between the parties; and (vii) it is entering into this
Agreement, such Credit Support Document, and such
Transaction with a full understanding of all of the
risks hereof and thereof (economic and otherwise), and
it is capable of assuming and willing to assume
(financially and otherwise) those risks.
(ii) PARTY B'S REPRESENTATIONS
Party B hereby represents and warrants as follows:
(1) It is a limited partnership duly organized and validly
existing and in good standing under the laws of Delaware
and is duly qualified to do business and in good
standing in the State of
New York.
(2) It has all requisite power and authority to carry on the
business to be conducted by it and to enter into this
Agreement and the transactions contemplated hereby, and
perform and carry out all covenants and obligations on
its part to be performed under and pursuant to this
Agreement.
(3) The execution, delivery and performance of this
Agreement have been duly authorized by all necessary
action on its part and do not require any other actions
or proceedings or any partnership approval or consent of
any trustee or holder of any indebtedness of Party B.
(4) This Agreement has been duly executed and delivered on
behalf of Party B by the appropriate officers of the
general partner of Party B and constitutes the legal,
valid and binding obligation of Party B, enforceable
against Party B in accordance with its terms, subject to
applicable bankruptcy, insolvency, moratorium and other
similar laws applicable to creditors' rights generally
and except as the enforceability thereof may be limited
by general principles of equity (regardless of whether
considered in a proceeding in equity or at law).
(5) (i) It is entering into this Agreement including,
without limitation, any Credit Support Document to which
it is a party and each Transaction, in conjunction with
its line of business (including financial intermediation
***CONFIDENTIAL TREATMENT REQUESTED***
8
services)or the financing of its business; and (ii) with
respect to Options (other than weather-related options),
it is a producer, processor, commercial user of, or
merchant handling, the commodity subject to the
Transaction or the products or byproducts thereof, and
is entering into each Option Transaction solely for
purposes related to its business as such; and (iii) with
respect to any weather-related Transactions, it is
exposed in the conduct of its business to the risk of
variations in weather and is entering into such
Transactions to manage or offset such risks.
(6) It constitutes an "eligible swap participant" as such
term is defined in Rule 35.1(b)(2) of the Commodity
Futures Trading Commission, 17 C.F.R.ss.35.1(b)(2)
(1993).
(7) The economic terms of this Agreement, any Credit Support
Document to which it is a party, and each Transaction
have been individually tailored and negotiated by it;
the creditworthiness of the other party was a material
consideration in its entering into or determining the
terms of this Agreement, such Credit Support Document,
and such Transaction; and the transferability of this
Agreement, such Credit Support Document, and such
Transaction is restricted as provided herein and
therein.
(8) In connection with the negotiation of, the entering
into, and the confirming of the execution of, this
Agreement, any Credit Support Document to which it is a
party, and each Transaction: (i) it is acting as
principal (and not as agent or in any other capacity,
fiduciary or otherwise); (ii) the other party is not
acting as a fiduciary or financial or investment advisor
for it; (iii) it is not relying upon any representations
(whether written or oral) of the other party other than
the representations expressly set forth in this
Agreement and in such Credit Support Document; (iv) the
other party has not given to it (directly or indirectly
through any other person) any advice, counsel,
assurance, guarantee, or representation whatsoever as to
the expected or projected success, profitability,
return, performance, result, effect, consequence, or
benefit (either legal, regulatory, tax, financial,
accounting, or otherwise) of this Agreement, such Credit
Support Document, or such Transaction; (v) it has
consulted with its own legal, regulatory, tax, business,
investment, financial, and accounting advisors to the
extent it has deemed necessary, and it has made its own
investment, hedging, and trading decisions based upon
its own judgment and upon any advice from such advisors
as it has deemed necessary, and not upon any view
expressed by the other party; (vi) all trading decisions
have been the result of arm's length negotiations
between the parties; and (vii) it is entering into this
Agreement, such Credit Support Document, and such
Transaction with a full understanding of all of the
risks hereof and thereof (economic and otherwise), and
it is capable of assuming and willing to assume
(financially and otherwise) those risks.
(b) DEFINITIONS. This Agreement, each Confirmation, and each Transaction
are subject to the 1991 ISDA Definitions as amended, supplemented, updated,
restated (including the 1993 ISDA Commodity Derivatives Definitions and the 2000
Supplement) (the "Definitions"), each as published by the International Swaps
and Derivatives Association, Inc. ("ISDA"), and will be governed in all respects
by the Definitions (except that references to "Swap Transactions" in the
Definitions will be deemed to be references to "Transactions"). The Definitions,
as so modified, are incorporated by reference in, and made part of, this
Agreement and each Confirmation as if set forth in full in this Agreement and
such Confirmations. In the event of any inconsistency between the provisions of
this Agreement and the Definitions, this Agreement will prevail. In the event of
any inconsistency between the provisions of any
***CONFIDENTIAL TREATMENT REQUESTED***
9
Confirmation and this Agreement or the Definitions, such Confirmation will
prevail for the purpose of the relevant Transaction.
(c) ACCOUNTS. If a Confirmation does not state the account to which United
States Dollar payments are to be made, they shall be made as follows:
PARTY A PARTY B
------- -------
Pay: Bank One, NA-Chicago The Bank of
New York;
Corporate Trust/GLA 111-565
For the Account of: Dynegy Power Marketing, Inc. Sithe Independence PWR
Project Revenue Fund
Account #/CHIPS UID: 552-7651 229289
Fed. ABA #: ▇▇▇▇▇▇▇▇▇ 021000018
(d) PROCEDURES FOR ENTERING INTO TRANSACTIONS. On or promptly following
the date on which the parties reach agreement on the terms of a Transaction as
contemplated by the first sentence of Section 9(e)(ii), Party A will send to
Party B a Confirmation. Party B will promptly thereafter confirm the accuracy of
(in the manner required by Section 9(e)(ii)), or request the correction of, such
Confirmation (in the latter case, indicating how it believes the terms of such
Confirmation should be correctly stated and such other terms which should be
added to or deleted from such Confirmation to make it correct. If any dispute
shall arise as to whether an error exists in a Confirmation, the parties shall
resolve the dispute in good faith.
(e) CONSENT TO RECORDINGS. Each party consents to the monitoring or
recording, at any time and from time to time, by the other party of any and all
communications between employees of the parties, waives any further notice of
such monitoring or recording.
(f) SETOFF. The Parties hereby agree that they shall discharge mutual
debts and payment obligations due and owing to each other under this Agreement
through netting each calendar month on the Payment Date, in which case all
amounts owed by each Party to the other Party under this Agreement during the
monthly billing period, including, interest, and payments or credits, shall be
netted so that only the excess amount remaining due shall be paid by the Party
who owes it. Except as provided in the preceding sentence, the amounts due Party
A from Party B and the amounts due Party B from Party A shall constitute
separate and independent obligations and may not be offset or net against each
other or offset or net against any other amounts due between the Parties
(whether under this Agreement or otherwise).
(g) LIMITATION OF LIABILITY. Neither Party, nor their respective officers,
directors, partners, agents, employees or Affiliates, shall be liable to the
other Party or its Affiliates, officers, directors, trustees, partners, agents,
employees, successors or assigns, for claims for incidental, special, indirect,
consequential or punitive damages of any nature connected with or resulting from
performance or breach of this Agreement, including, without limitation, claims
in the nature of lost revenues, income or profits (other than payments
specifically provided for and properly due under this Agreement) or losses,
damages or liabilities under any financing, lending or construction contracts,
agreements or other arrangements, irrespective of whether such claims are based
upon warranty, negligence, strict liability, contract, operation of law or
otherwise.
(h) DEFAULT. The occurrence of any one or more of the following events
shall constitute an Event of Default under this Agreement:
(i) A material breach of any material term or condition of
this Agreement, including, but not limited, to (i) any
material breach of a representation, warranty or
***CONFIDENTIAL TREATMENT REQUESTED***
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covenant made in this Agreement, and (ii) failure of
either Party to make a required payment to the other
Party of amounts due hereunder.
(ii) A failure of Guarantor to provide Performance Assurance
as defined in the Guaranty Agreement dated as of the
date hereof by Guarantor (as amended, supplemented or
modified and in effect from time to time, the "Guaranty
Agreement") or a guaranty or other credit assurance
acceptable to Party B, within the time required pursuant
to Section 6 of the Guaranty Agreement.
(iii) A receiver or liquidator or trustee of either Party or
of any of its property shall be appointed by a court of
competent jurisdiction, and such receiver, liquidator or
trustee shall not have been discharged within one
hundred twenty (120) Days, or by decree of such a court,
a Party shall be adjudicated bankrupt or insolvent or
any substantial part of its property shall have been
sequestered, and such decree shall have continued
undischarged and unstayed for a period of one hundred
twenty (120) Days after the entry thereof; or a petition
to declare bankruptcy or to reorganize a Party pursuant
to any of the provisions of the Federal Bankruptcy Code,
as now in effect or as it may hereafter be amended, or
pursuant to any other similar state statute as now or
hereafter in effect, shall be filed against a Party and
shall not be dismissed within one hundred twenty (120)
Days after such filing.
(iv) A Party shall file a voluntary petition in bankruptcy
under any provision of any federal or state bankruptcy
law or shall consent to the filing of any bankruptcy or
reorganization petition against it under any similar
law; or, without limiting the generality of the
foregoing, a Party shall file a petition or answer or
consent seeking relief or assisting in seeking relief in
a bankruptcy under any provision of any federal or state
bankruptcy law or shall consent to the filing of any
bankruptcy or reorganization petition against it under
any similar law, or, without limiting the generality of
the foregoing, a Party shall file a petition or answer
or consent seeking relief or assisting in seeking relief
in a proceeding under any of the provisions of the
Federal Bankruptcy Code, as now in effect or as it may
hereafter be amended, or pursuant to any other similar
state statute as now or hereafter in effect, or an
answer admitting the material allegations of a petition
filed against it in such a proceeding; or a Party shall
make an assignment for the benefit of its creditors; or
a Party shall admit in writing its inability to pay its
debts generally as they become due; or a Party shall
consent to the appointment of a receiver, trustee or
liquidator of it or of all or part of its property.
(v) The occurrence and continuation of a default, event of
default or other similar condition or event in respect
of such Party (or an Affiliate of such Party) under the
Energy Management Agreement dated as of July 1, 2001 by
and among the Parties and Dynegy Marketing and Trade.
Upon the occurrence of any such Event of Default other than those
described in Section 5(h)(ii),(iii) and (iv), the Party not in default shall
give written notice of the Event of Default to the defaulting Party. Such notice
of default shall set forth, in reasonable detail, the nature of the default and,
where known and applicable, the steps necessary to cure such default. Following
receipt of such notice, the defaulting Party shall have:
(1) ten (10) Days in the case of the failure of the defaulting Party to
make a required payment to the other Party of amounts due hereunder;
or
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11
(2) thirty (30) Days in the case of any other Event of Default described
in Sections 5(h)(i) and 5(h)(v):
to cure such default or, in the case of an Event of Default under (2), to
commence in good faith and continue to diligently pursue all such steps as shall
be reasonably necessary and appropriate to cure such default in the event such
default cannot reasonably be completely cured within such thirty (30) Day
period.
Notwithstanding the foregoing, after the occurrence of any such Event of
Default and the expiration of all applicable cure periods with respect thereto
without such default being cured, the non-defaulting Party shall be entitled (i)
to suspend performance under this Agreement or to terminate this Agreement, (ii)
to commence an action to require the defaulting Party to remedy such default and
specifically perform its duties and obligations hereunder in accordance with the
terms and conditions hereof and (iii) to exercise such other rights and remedies
as it may have at equity or at law, but subject to any limitation on damages
otherwise provided for under this Agreement.
(i) CONDITIONS PRECEDENT. The obligations of Party B to consummate the
transactions contemplated by this Agreement shall be subject to fulfillment of
the following conditions, unless waived in writing by Party B:
(i) Party A shall have delivered a duly executed
Acknowledgement and Consent in the form of Exhibit A or
such other form as Party B may approve;
(ii) Dynegy Holdings Inc. ("Guarantor") shall have delivered
a duly executed Guaranty Agreement in the form of
Exhibit B or such other form as Party B may approve;
(iii) Guarantor shall have delivered a duly executed
Acknowledgement and Consent in the form of Exhibit 2 to
Exhibit B or such other form as Party B may approve; and
(j) INDEMNIFICATION
(i) Party A shall indemnify, defend and hold harmless Party
B and its Affiliates and their officers, directors,
trustees, employees and agents from and against any and
all claims, demands, suits, losses, damages,
liabilities, costs and expenses (including reasonable
attorney's fees and costs of investigation) for damage
to tangible property of third parties and injury to or
death of persons (other than Party B's employees or
Party A's employees) to the extent caused by, arising
out of or related to the gross negligence or willful
misconduct of Party A in connection with or resulting
from Party A's performance or breach of this Agreement.
(ii) Party B shall indemnify, defend and hold harmless Party
A and its Affiliates and their officers, trustees,
directors, employees and agents from and against any and
all claims, demands, suits, losses, damages,
liabilities, costs and expenses (including reasonable
attorney's fees and costs of investigation) for damage
to the tangible property of third parties and injury to
or death of persons (other than Party A's employees and
Party B's employees) to the extent caused by, arising
out of or relating to the gross negligence or willful
misconduct of Party B in connection with or resulting
from Party B's performance or breach of this Agreement.
(iii) A Party which becomes entitled to indemnification under
this Agreement (the "Indemnified Party") shall give
written notice to the other Party (the "Indemnifying
Party") of the occurrence of the events which give rise
to such right of indemnification within 30 Days of the
Indemnified Party becoming aware of the occurrence
thereof. Such notice shall describe the claim, the basis
thereof and
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12
shall indicate an estimate of the amount of the claim.
To the extent that the Indemnifying Party is prejudiced
by any failure of the Indemnified Party to provide such
notice, such notice shall be a condition precedent to
the liability of the Indemnifying Party under this
Section 5(j).
(iv) At the Indemnified Party's request, the Indemnifying
Party shall, at its cost and expense, defend (with
counsel reasonably acceptable to the Indemnified Party)
any suit asserting a claim against the Indemnified Party
with respect to which the Indemnified Party is entitled
to indemnification hereunder, and shall pay all costs
and expenses incurred by the Indemnified Party to
enforce its right to indemnification. The Indemnified
Party may, at its own expense, retain separate counsel
and participate in the defense of any such suit. Neither
Party may settle or compromise a claim or suit without
the consent of the Indemnifying Party, which consent
shall not be unreasonably withheld or delayed.
(v) The indemnification obligations of each party under this
Section 5(j) shall not be limited in any way by any
limitation on insurance, by the amount or types of
damages, or by any compensation or benefits payable by
the parties under Worker's Compensation Acts, disability
benefit acts or other employee acts or otherwise. The
provisions of this Section 5(j) shall survive
termination, cancellation, suspension, completion or
expiration of this Agreement.
(k) ASSIGNMENT. Section 7 of the
Master Agreement shall not apply and
shall be replaced by this Section 5(k).
(i) This Agreement and all of the provisions hereof
(including any Confirmations or Transactions hereunder)
shall be binding upon, and inure to the benefit of, the
Parties hereto and their respective successors and
permitted assigns, but neither this Agreement (including
any Confirmations or Transactions hereunder) nor any of
the rights, interests or obligations hereunder shall be
assigned, except to an Affiliate or successor, by either
Party hereto, whether by operation of law or otherwise,
without the prior written consent of the other Party,
which consent may not be unreasonably withheld or
delayed. No assignment of all or any portion of the
rights, interests or obligations permitted pursuant to
the immediately preceding sentence shall relieve or
discharge the assignor from any of its obligations under
this Agreement (including any Confirmations or
Transactions hereunder) without the prior written
consent of the non-assigning Party, which consent shall
not be unreasonably withheld or delayed. Any assignment
of this Agreement (including any Confirmations or
Transactions hereunder) in violation of the foregoing
shall be, at the option of the non-assigning Party,
void.
(ii) Notwithstanding the foregoing provisions of Section
5(k)(i), (1) Party A may assign all or any portion of
its rights and obligations hereunder (including any
rights and obligations under Confirmations or
Transactions hereunder) to any of its Affiliates, (2)
Party B may assign all or any portion of its rights and
obligations hereunder (including any rights and
obligations under Confirmations or Transactions
hereunder) to any of its Affiliates (including, without
limitation, Sithe Power Marketing, L.P., a Delaware
limited partnership), and (3) Party B may assign,
transfer, pledge or otherwise dispose of its rights and
interests hereunder (including any rights and
obligations under Confirmations or Transactions
hereunder) to a trustee or lending institution for the
purposes of financing or refinancing any of its assets,
including upon or pursuant to the exercise of remedies
with respect to such financing or refinancing, or by way
of assignments, transfers, pledges or other dispositions
in lieu thereof, provided, however, that no such
assignment of all or any portion of the rights,
interests or obligations of a party pursuant to this
Section 5(k)(ii) shall relieve or discharge the assignor
from
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13
any of its obligations under this Agreement unless the
non-assigning Party consents to such release or
discharge in accordance with Section 5(k)(i). With
respect to clause (3) of this Section 5(k)(ii), Party A
agrees to execute and deliver such documents as may be
reasonably necessary to accomplish any such assignment,
transfer, pledge or other disposition of rights
hereunder, so long as Party A's rights under this
Agreement are not thereby altered, amended, diminished
or otherwise impaired.
(l) MISCELLANEOUS
(i) Section 13 of the
Master Agreement shall not apply and
shall be replaced by this Section 5(l)(i).
Each of the Parties hereby irrevocably and
unconditionally:
(1) submits for itself and its property in any legal
action or proceeding relating to this Agreement,
or for recognition and enforcement of any judgment
in respect thereof, to the non-exclusive general
jurisdiction of the Courts of the State of
New
York, the courts of the United States for the
Southern District of
New York and appellate courts
from any thereof;
(2) agrees that service of process in any such action
or proceeding may be effected by mailing a copy
thereof by registered or certified mail (or any
substantially similar form of mail), postage
prepaid, to the other Party at its address set
forth in Section 4 of this Schedule, or at such
other address of which the other Party shall have
been notified pursuant thereto; and
(3) agrees that nothing herein shall affect the right
to effect service of process in any other manner
permitted by Law.
(iii) Except as otherwise provided in this Agreement, any
failure of a Party to comply with any obligation,
covenant, agreement or condition herein may be waived by
the Party entitled to the benefits thereof only by a
written instrument signed by the Party granting such
waiver, but such waiver shall not operate as a waiver
of, or estoppel with respect to, any subsequent failure
of the first Party to comply with such obligation,
covenant, agreement or condition.
(iv) Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any
other jurisdiction.
***CONFIDENTIAL TREATMENT REQUESTED***
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IN WITNESS WHEREOF, the parties have executed this Schedule by their duly
authorized officers as of the date first written above.
DYNEGY POWER MARKETING, INC. SITHE/INDEPENDENCE POWER PARTNERS, L.P.
(PARTY A) (PARTY B)
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇ By: SITHE/INDEPENDENCE, INC.,
--------------------------
ITS GENERAL PARTNER
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇ Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Vice President Title: Senior Vice President
Date: July 1, 2001 Date: July 1, 2001
***CONFIDENTIAL TREATMENT REQUESTED***
15
EXHIBIT A
ACKNOWLEDGMENT AND CONSENT
Acknowledgment and Consent (this "CONSENT") dated as of July 1, 2001
between Dynegy Power Marketing, Inc., a Texas corporation (together with its
successors and assigns, the "COMPANY") and Sithe/Independence Power Partners,
L.P., a Delaware limited partnership (together with its successors and assigns,
the "PARTNERSHIP"), to and for the benefit of Manufacturers and Traders Trust
Company, a
New York banking corporation, in its capacity as collateral agent
(together with successors and assigns in that capacity, the "COLLATERAL AGENT").
SECTION 1. CONSENT TO ASSIGNMENTS, ETC.
The Company hereby (a) acknowledges that it has been advised of that
certain Security Agreement and Assignment of Contracts dated as of January 1,
1993 (as amended, supplemented or modified and in effect from time to time, the
"SECURITY AGREEMENT") between the Collateral Agent and the Partnership, (b)
consents, subject to the provisions of this Consent, to the collateral
assignment by the Partnership of the
MASTER AGREEMENT, dated as of July 1, 2001,
the SCHEDULE TO THE
MASTER AGREEMENT dated as of July 1, 2001 attached thereto,
and CONFIRMATION #1A thereunder dated as of July 1, 2001 between the Company and
the Partnership (as amended, supplemented or modified and in effect from time to
time, collectively, the "ASSIGNED CONTRACT") as collateral for the Partnership's
obligations to the Secured Parties (as defined in the Security Agreement), and
any subsequent assignments by the Collateral Agent, on behalf of the Secured
Parties, (c) acknowledges the right of the Collateral Agent, following an Event
of Default (as defined in the Security Agreement) by the Partnership, to make
all demands, give all notices, take all actions and exercise all rights of the
Partnership under the Assigned Contract as the Partnership could have taken
absent the Event of Default, and (d) acknowledges and agrees that the Collateral
Agent succeeding to the rights and obligations of the Partnership under the
Assigned Contract shall not, in and of itself, constitute or cause a default by
the Partnership under the Assigned Contract.
SECTION 2. PAYMENT OF ASSIGNED SUMS
All payments (if any) to be made by the Company to the Partnership under
the Assigned Contract shall be made by wire transfer to the account specified in
Section 5(e) of the Assigned Contract.
SECTION 3. REPRESENTATIONS OF COMPANY
(a) The Company represents and warrants that as of the date hereof:
(i) AUTHORIZATION. The execution, delivery and performance by the
Company of this Consent has been duly authorized by all necessary
action on the part of the Company and does not require any approval
or consent of any [shareholder] of the Company or any holder (or any
trustee for any holder) of any indebtedness or other obligation of
the Company, except as has been heretofore obtained.
(ii) EXECUTION; DELIVERY; BINDING AGREEMENT. This Consent has been duly
executed and delivered on behalf of the Company by the appropriate
[officers] [representatives] of the Company and constitutes the
legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, subject to
applicable bankruptcy, insolvency, moratorium and other similar laws
applicable to creditors' rights generally and except as the
enforceability thereof may be limited by general principles of
equity (regardless of whether considered in a proceeding in equity
or at law).
(iii) NO DEFAULT OR AMENDMENT. As of the date hereof, neither the Company
nor, to the knowledge of the Company, the Partnership is in default
under the Assigned Contract. The Company has no existing claims,
counterclaims, offsets or defenses against the
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1
Partnership in respect of the Assigned Contract except for routine
claims for payment under the Assigned Contract.
SECTION 4. RIGHTS OF SECURED PARTIES
The Company agrees that, subject to the provisions of this Consent, the
Secured Parties shall have the following rights with respect to the Assigned
Contract:
(a) Notwithstanding anything to the contrary contained in the Assigned
Contract, the Assigned Contract shall not be terminated or cancelled by action
of the Company and shall not be deemed abandoned or surrendered without prior
notice in writing to the Collateral Agent specifying the Partnership's default
(hereinafter called a "NOTICE"). Any such Notice shall contain a copy of the
notice of default sent to the Partnership and shall be delivered to the
Collateral Agent when the Company delivers a notice of default to the
Partnership under the Assigned Contract. The Collateral Agent shall have the
right (but not the obligation) to cure the defaults listed in any Notice within
the same period of time provided in the Assigned Contract for the Partnership to
cure such default; PROVIDED, HOWEVER, if the nature of any non-monetary default
on the part of the Partnership under the Assigned Contract is such that it
cannot be cured by the Collateral Agent without the Collateral Agent having
taken possession of the Project (as defined in the Security Agreement), then the
Collateral Agent's time for commencing such cure shall be extended for such
reasonable period of time as is necessary for the Collateral Agent to lawfully
obtain possession of the Project; PROVIDED, FURTHER, that the Collateral Agent
shall at all times be seeking by all reasonable and lawful means to obtain such
possession. Once the defaults listed in any Notice are timely cured by the
Collateral Agent, there shall no longer be deemed to be any default under the
Assigned Contract in respect of such defaults so cured. The curing of any
defaults under the Assigned Contract shall not in and of itself be construed as
an assumption by the Collateral Agent or any of the Secured Parties of any of
the obligations, covenants or agreements of the Partnership under the Assigned
Contract.
(b) If a notice of election is delivered to the Company as provided in
Section 5 below, the Company will accept performance of the Partnership's
obligations (as specified in such notice of election) under the Assigned
Contracts by the Collateral Agent, or its nominee(s) acting for the Secured
Parties, as the case may be, in lieu of the Partnership's performance of such
obligations.
(c) Upon any transfer of the Partnership's rights under the Assigned
Contract pursuant to the exercise of the Collateral Agent's rights under this
Consent, the Collateral Agent or any third party to which such rights are
transferred by the Collateral Agent (hereinafter, a "THIRD PARTY TRANSFEREE")
shall, upon the Company's reasonable satisfaction with the Collateral Agent's or
such Third Party Transferee's financial condition and subject to all applicable
laws, rules and regulations, succeed to all of the Partnership's right, title
and interest under and in connection with the Assigned Contract and shall be
obligated to perform all of the terms and conditions of the Assigned Contract,
except that the Collateral Agent or any Third Party Transferee shall not be
required to perform or cause to be performed any of the Partnership's
obligations under the Assigned Contract (except for the Partnership's obligation
for the payment of all amounts due and payable to the Company under the terms of
the Assigned Contract including any interest applicable thereon) that remain
unperformed at the time that the Collateral Agent or such Third Party Transferee
is transferred such Assigned Contract other than continuing non-monetary
defaults under the Assigned Contract which are capable of performance by the
Collateral Agent or the Third Party Transferee or be liable for any prior act or
omission of the Partnership, and upon the transfer by the Collateral Agent of
its rights and interests and the rights and interests of the Partnership under
the Assigned Contracts to a Third Party Transferee, the Collateral Agent and the
Partnership shall be relieved of all obligations under the Assigned Contract
arising after such transfer.
(d) In the event that (i) the Assigned Contract is rejected by a
trustee or any person exercising the powers of a trustee in any bankruptcy or
insolvency proceeding applicable to the Partnership or (ii) the Assigned
Contract is terminated as a result of any bankruptcy or insolvency proceeding
applicable to the Partnership, the Company shall, subject to all applicable
laws, rules and regulations, execute and deliver to the Collateral Agent and its
designees, successors and assigns a new
***CONFIDENTIAL TREATMENT REQUESTED***
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contract; PROVIDED that the Company shall be required to execute a new contract
with the Collateral Agent only if the Collateral Agent or its designees,
successors or assigns shall within ten (10) business days of entering into such
new contract, cure all defaults for failure to pay all amounts due and payable
to the Company under the Assigned Contract, including any interest applicable
thereon. The new contract shall, subject to all applicable laws, rules and
regulations, contain the same covenants, agreements, terms, provisions and
limitations as the Assigned Contract (except for any requirements with respect
to past performance which have been fulfilled by the Partnership or the
Collateral Agent or its designees, successors and assigns hereunder).
SECTION 5. LIABILITY OF SECURED PARTIES
The Collateral Agent, on behalf of the Secured Parties, and its successors
and assigns, shall have no right or power to enforce the Assigned Contract, and
assumes no duty or obligation thereunder unless and until the Collateral Agent
shall have notified the Company that it has elected to exercise its rights and
remedies under the Security Agreement and to substitute itself in the position
of the Partnership under the Assigned Contracts and has agreed in a written
instrument executed by the Collateral Agent to be bound by all terms and
conditions of the Assigned Contract applicable to the Partnership.
SECTION 6. FURTHER ASSURANCES
The Company hereby agrees to execute and deliver all such instruments and
take all such actions as may be reasonably necessary to effectuate fully the
purposes of this Consent, provided, however, that such further assurances shall
not expand the liability, or obligations arising under this Consent or dilute
any rights or remedies otherwise accruing to Company under this Consent.
SECTION 7. NOTICES
All notices and other communications hereunder shall be in writing, shall
refer on their face to the Assigned Contract (although failure to so refer shall
not render any such notice or communication ineffective), shall be sent by first
class mail, facsimile, by hand or overnight courier service and shall be
directed:
(a) if to the Company, in accordance with the Assigned Contract;
(b) if to the Collateral Agent, addressed to:
Manufacturers and Traders Trust Company
▇▇▇ ▇&▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Department
(c) if to the Partnership, in accordance with the Assigned Contract; and
(d) to such other address as any party may designate by notice to the
other party hereto given pursuant hereto.
SECTION 8. MISCELLANEOUS
(a) GOVERNING LAW. This Consent shall be governed by and construed in
accordance with the law of the State of
New York as to all matters (without
giving effect to conflict of law principles). Each of the Company and the
Partnership hereby irrevocably waives, to the fullest extent permitted by law,
any and all right to trial by jury in any legal proceedings arising out of or
relating to this Consent.
(b) SUBMISSION TO JURISDICTION. Each of the Parties hereby irrevocably
and unconditionally:
(i) submits for itself and its property in any legal action or
proceeding relating to this Consent, or for recognition and
enforcement of any judgment in respect thereof, to the non-
***CONFIDENTIAL TREATMENT REQUESTED***
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exclusive general jurisdiction of the Courts of the State of
New
York, the courts of the United States for the Southern District of
New York and appellate courts from any thereof;
(ii) agrees that service of process in any such action or proceeding may
be effected by mailing a copy thereof by registered or certified
mail (or any substantially similar form of mail), postage prepaid,
to the other Party at its address set forth in Section 7, or at such
other address of which the other Party shall have been notified
pursuant thereto; and
(iii) agrees that nothing herein shall affect the right to effect service
of process in any other manner permitted by law.
(c) HEADINGS. The descriptive headings of the Articles and Sections of
this Consent are inserted for convenience only and are not intended to affect
the meaning, interpretation or construction of this Consent.
(d) WAIVER. Except as otherwise provided in this Consent, any failure of a
party to comply with any obligation, covenant, agreement or condition herein may
be waived by the party entitled to the benefits thereof only by a written
instrument signed by the party granting such waiver, but such waiver shall not
operate as a waiver of, or estoppel with respect to, any subsequent failure of
the first party to comply with such obligation, covenant, agreement or
condition.
(e) SEVERABILITY. Any provision of this Consent which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
(f) SUCCESSORS AND ASSIGNS. This Consent shall be binding upon and inure
to the benefit of the Company, the Collateral Agent, the Partnership and their
respective permitted successors and assigns.
(g) COUNTERPARTS. This Consent may be executed in counterparts, all of
which shall constitute one and the same Consent and each of which shall be
deemed to be an original.
***CONFIDENTIAL TREATMENT REQUESTED***
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IN WITNESS WHEREOF, the parties hereto have executed this Consent as of the day
and year first above written.
DYNEGY POWER MARKETING, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
SITHE/INDEPENDENCE POWER PARTNERS, L.P.
By: SITHE/INDEPENDENCE, INC.,
its General Partner
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
***CONFIDENTIAL TREATMENT REQUESTED***
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EXHIBIT B
GUARANTY AGREEMENT
Base Guaranty Agreement (this "Guaranty") dated as of July 1, 2001 is made
and entered into by Dynegy Holdings Inc., a Delaware corporation ("Guarantor"),
to and for the benefit of Sithe/Independence Power Partners, L.P., a Delaware
limited partnership ("Party B"), and its successors and permitted assigns.
WITNESSETH:
WHEREAS, Party B and Dynegy Power Marketing, Inc., a Texas corporation
(together with its successors and permitted assigns, "Party A"), have entered
into a MASTER AGREEMENT dated as of July 1, 2001, the SCHEDULE TO THE MASTER
AGREEMENT dated as of July 1, 2001 attached thereto and Confirmation #1A
thereunder dated as of July 1, 2001 (as amended, supplemented or modified from
time to time, collectively, the "Agreement"), a copy of which is attached hereto
as Exhibit 1;
WHEREAS, Party A is an indirect, wholly owned subsidiary of Guarantor, and
Guarantor will derive substantial benefit from the performance by Party B of its
obligations under the Agreement;
WHEREAS, it is a condition precedent to Party B's obligations under the
Agreement that this Guaranty be duly executed and delivered to Party B; and
WHEREAS, Guarantor is willing to enter into this Guaranty.
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties, covenants and agreements contained herein, and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, and intending to be legally bound, Guarantor hereby
covenants and agrees as follows:
1. GUARANTY. Subject to the terms hereof, Guarantor hereby irrevocably,
absolutely, and unconditionally guarantees to Party B and its successors and
permitted assigns the due, punctual and full performance and payment of each and
every obligation of Party A under the Agreement (each such obligation
hereinafter referred to, individually, as a "Guaranteed Obligation" and,
collectively, as the "GUARANTEED OBLIGATIONS") and agrees that, if for any
reason whatsoever Party A shall fail or be unable duly, punctually and fully to
perform or pay any such Guaranteed Obligation, Guarantor shall forthwith, upon
demand as provided in Section 4 hereof, perform or pay such Guaranteed
Obligation, or cause such Guaranteed Obligation to be performed or paid, without
regard to any exercise or nonexercise by Party B, its successors or permitted
assigns of any right, power or privilege under or in respect of the Agreement or
the Guaranteed Obligations. In connection with the foregoing, Party B
acknowledges that performance of the obligations of Party A under the Agreement,
to the extent that such performance is for an obligation other than the payment
of money, shall be accomplished by Guarantor causing such performance to occur
through a third party or otherwise by the payment of money. This Guaranty shall
be direct, immediate and primary and shall be a guaranty of performance and
payment and not of collection, and is not conditioned or contingent upon any
attempt to collect from Party A or upon any other event, contingency or
circumstance whatsoever, except as expressly provided otherwise herein.
2. OBLIGATIONS UNCONDITIONAL. Guarantor covenants to and agrees with Party
B and its successors and permitted assigns that, to the fullest extent permitted
by law, its obligations under this Guaranty are irrevocable, absolute and
unconditional, shall remain in full force and effect, and shall not be impaired
or affected by, or be subject to, any reduction, termination or other impairment
by set-off, deduction, counterclaim, recoupment, interruption or otherwise, and
Guarantor shall have no right to terminate this Guaranty or to be released,
relieved or discharged, in whole or in part, from its performance or payment
obligations referred to in this Guaranty for any reason whatsoever (other than
the performance and payment in full of the Guaranteed Obligations), including
(a) any amendment, supplement or modification to, waiver of, consent to or
departure from, or failure to exercise any right, remedy, power or
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privilege under or in respect of, the Agreement, the Guaranteed Obligations or
any other agreement or instrument relating thereto, (b) any insolvency,
bankruptcy, reorganization, dissolution or liquidation of, or any similar
occurrence with respect to, or cessation of existence of, or change of ownership
of Party A, or any rejection of any of the Guaranteed Obligations in connection
with any Proceeding (as defined in Section 3 below) or any disallowance of all
or any portion of any claim by Party B, its successors or permitted assigns in
connection with any Proceeding, (c) any lack of genuineness, legality, validity,
regularity, enforceability or value of the Agreement, any of the Guaranteed
Obligations, or any other agreement or instrument relating thereto, (d) the
failure to create, preserve, validate, perfect or protect any security interest
granted to, or in favor of, any person, (e) any substitution, modification,
exchange, release, settlement or compromise of any security or collateral for or
guaranty of any of the Guaranteed Obligations or failure to apply such security
or collateral or failure to enforce such guaranty or (f) any other event or
circumstance whatsoever that might otherwise constitute a legal or equitable
discharge of a surety or guarantor (other than the payment in full of the
Guaranteed Obligations, and any defenses that may be available to Party B under
the Agreement), it being the intent of Guarantor that its obligations under this
Guaranty shall be irrevocable, unconditional and absolute under any and all
circumstances, except as expressly provided herein. This Guaranty and the
obligations of Guarantor hereunder shall continue to be effective or be
automatically reinstated, as the case may be, if at any time any payment by or
on behalf of Party A is rescinded or must otherwise be restored by Party B, its
successors or permitted assigns for any reason, including, but not limited to,
as a result of any Proceeding with respect to Party A or any other person, as
though such payment had not been made.
3. INTEREST. The Guaranteed Obligations shall include, without limitation,
interest accruing as part of the Guaranteed Obligations by the terms thereof
following the commencement by or against Party A of any case or proceeding under
any law relating to bankruptcy, insolvency, reorganization, winding-up,
liquidation, dissolution or composition or adjustment of debt (hereinafter, a
"PROCEEDING").
4. DEMAND. If Party A shall fail or be unable duly, punctually and fully
to perform or pay any Guaranteed Obligation, Party B, its successors or
permitted assigns may at any time prior to the full performance or payment of
such Guaranteed Obligation deliver notice of such failure or inability of Party
A to perform or pay to Guarantor in writing, which notice shall reasonably
specify the nature of such failure or inability to perform or pay, as the case
may be and, in the case of a failure or inability to pay, the amount thereof
(each such written notice hereinafter a "DEMAND"). Guarantor shall, upon receipt
of a Demand, forthwith perform or pay such Guaranteed Obligation, or cause such
Guaranteed Obligation to be performed or paid in full. Promptly on request,
Guarantor shall reimburse Party B, its successors and permitted assigns for all
costs and expenses (including reasonable attorneys' fees) incurred in enforcing
Party B's, its successors' or permitted assigns' rights under this Guaranty, but
only to the extent that Party B is successful in enforcing Party B's rights
under this Guaranty.
5. REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants to
Party B and its successors and permitted assigns that as of the date hereof:
(a) it is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, it has the corporate power and
authority to execute, deliver and carry out the terms and provisions of this
Guaranty;
(b) no authorization, approval, consent or order of, or registration or
filing with, any court or other governmental body having jurisdiction over
Guarantor is required on the part of Guarantor for the execution and delivery of
this Guaranty;
(c) this Guaranty has been duly executed and delivered by Guarantor and
constitutes a valid and legally binding agreement of Guarantor enforceable
against Guarantor in accordance with its terms, subject, however, to applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally and except as the enforceability thereof may be
limited by general principles of equity (regardless of whether considered in a
proceeding in equity or at law);
***CONFIDENTIAL TREATMENT REQUESTED***
7
(d) the execution, delivery and performance of this Guaranty have been
duly authorized by all necessary corporate action and do not require any other
actions or proceedings or any stockholder approval or consent of any trustee or
holder of any indebtedness of Guarantor;
(e) the execution, delivery and performance of this Guaranty and
compliance by Guarantor with the terms hereof (i) will not violate any
governmental approval or law applicable to it or any of its property, (ii) will
not violate any provision of its certificate of incorporation, bylaws or other
governing documents, and (iii) will not violate or constitute a default under
any agreement or instrument to which it is a party or by which it or any of its
property may be bound, or result in the creation or imposition of any lien upon
any of its property, which violation, default or lien would have a material
adverse effect on its ability to perform its obligations under this Guaranty;
(f) except as disclosed in Guarantor's latest Form 10-K and any Form 10-Qs
or Form 8-Ks subsequently filed with the Securities and Exchange Commission,
there are no actions, suits, investigations or proceedings against Guarantor by
or before any court, arbitrator, administrative or regulatory agency, or other
governmental authority pending, or to its knowledge, threatened against or
affecting it, its properties, or its assets that, if adversely determined, would
reasonably be expected to have a material and adverse effect on its ability to
perform its obligations under this Guaranty; and
(g) it directly or indirectly owns all of the issued and outstanding
shares of each class of capital stock of Party A.
6. DOWNGRADE EVENT. If at any time any two of the credit ratings then
assigned to Guarantor's unsecured, senior long-term debt obligations falls below
"Investment Grade" from the Standard & Poor's Rating Group (a division of
▇▇▇▇▇▇-▇▇▇▇, Inc.) or its successor ("S&P"),"Investment Grade" from ▇▇▇▇▇'▇
Investor Services, Inc. or its successor ("▇▇▇▇▇'▇") or "Investment Grade" from
Fitch IBCA, Inc. or its successor ("Fitch") (or if Guarantor is not rated by any
of S&P, ▇▇▇▇▇'▇ or Fitch), then Party B may require Guarantor to provide
collateral in the form of either a substitute guaranty on terms and conditions
substantially similar to this Guaranty (from a substitute guarantor whose
unsecured, senior long-term debt obligations are rated at least "Investment
Grade" from two of S&P, ▇▇▇▇▇'▇ and Fitch) or other security reasonably
acceptable to Party B and Party A ("Performance Assurance") in an amount
determined by Party B in a commercially reasonable manner. The failure of
Guarantor to provide such Performance Assurance or a guaranty or other credit
assurance acceptable to Party B within twenty (20) business days of receipt of
notice shall constitute an Event of Default under the Agreement and Party B will
be entitled to the remedies set forth in the Agreement.
7. AMENDMENT OF GUARANTY. No term or provision of this Guaranty shall be
amended, modified, altered, waived, supplemented or terminated except in a
writing signed by Guarantor and Party B or Party B's successors and permitted
assigns.
8. WAIVERS. To the fullest extent permitted by law, and except for the
Demand required pursuant to Section 4 hereof, Guarantor hereby waives (a) all
set-offs, counterclaims, presentments, demands for performance, notices of
nonperformance, protests, notice of any of the matters referred to in Section 2,
notices of protests, notices of dishonor, notice of any waivers or indulgences
or extensions, and notices of every kind that may be required to be given by any
statute or rule of law and notice of acceptance of this Guaranty, (b) diligence,
presentment, and demand of payment, filing of claims with a court in connection
with any Proceeding, protest or notice with respect to the Guaranteed
Obligations and all demands whatsoever; and (c) any requirement that any action
or proceeding be brought against Party A or any other person, or any requirement
that any person exhaust any right, power or remedy or proceed against any other
person, prior to any action against Guarantor under the terms hereof. No delay
on the part of Party B, its successors or permitted assigns in the exercise of,
or failure to exercise, any right or remedy shall operate as a waiver thereof, a
waiver of any other rights or remedies, or a release of Guarantor from any
obligations hereunder, and no single or partial exercise by Party B, its
successors or permitted assigns of any right or remedy shall preclude any
further exercise thereof or the exercise of any other right or remedy.
***CONFIDENTIAL TREATMENT REQUESTED***
8
9. WAIVER OF SUBROGATION. Guarantor hereby agrees that it will not
exercise, and hereby irrevocably, absolutely and unconditionally waives, any
rights of subrogation, contribution, reimbursement, indemnification or other
rights of payment or recovery for any payments made by it hereunder until all
Guaranteed Obligations have been fully paid and performed.
10. NOTICE. Any Demand, notice, request, instruction, correspondence or
other document to be given hereunder (herein collectively called "Notice") shall
be in writing and delivered personally or mailed by certified mail, postage
prepaid and return receipt requested, or by telecopy, as follows:
To Party B:
Sithe/Independence Power Partners, L.P.
▇.▇. ▇▇▇ ▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: General Manager
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Sithe Energies, Inc.
28th Floor
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
To Guarantor:
Dynegy Holdings Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Assistant Treasurer
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Notice given by personal delivery or mail shall be effective upon actual
receipt. Notice given by telecopy shall be effective upon actual receipt if
received during the recipient's normal business hours, or at the beginning of
the recipient's next business day after receipt if not received during the
recipient's normal business hours. All Notices by telecopy shall be confirmed
promptly after transmission in writing by certified mail or personal delivery.
Any party may change any address to which Notice is to be given to it by giving
notice as provided above of such change of address.
11. ASSIGNMENT. Guarantor shall have no right, power or authority to
delegate, assign or transfer all or any of its rights or obligations hereunder.
Party B may assign all or any of its rights hereunder to any assignee of its
rights under the Agreement as permitted thereby; provided, further, that Party B
may pledge or assign its interest hereunder to the lenders of financial parties
referred to in Section 5(k)(ii) of the Schedule to the Agreement ("Financial
Parties") in connection with any assignment of the Agreement to the Financial
Parties as contemplated by Section 5(k)(ii) of the Schedule to the Agreement. In
connection with any such assignment to any Financial Party, Guarantor agrees to
execute and deliver the agreement attached hereto as Exhibit 2.
12. MISCELLANEOUS. THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, EXCLUDING CONFLICT-OF-LAWS
RULES. EACH OF GUARANTOR AND PARTY B HEREBY IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDINGS ARISING OUT OF OR RELATING TO THIS GUARANTY OR ANY OF THE OTHER
***CONFIDENTIAL TREATMENT REQUESTED***
9
AGREEMENTS REFERRED TO HEREIN OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY. Each of the Parties hereby irrevocably and unconditionally: (i) submits
for itself in any legal action or proceeding relating to this Guaranty, or for
recognition and enforcement of any judgment in respect thereof, to the
non-exclusive general jurisdiction of the Courts of the State of New York, the
courts of the United States for the Southern District of New York and appellate
courts from any thereof; (ii) agrees that service of process in any such action
or proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage prepaid, to
the other Party at its address set forth in Section 10, or at such other address
of which the other Party shall have been notified pursuant thereto; and (iii)
agrees that nothing herein shall affect the right to effect service of process
in any other manner permitted by law. This Guaranty is a continuing guaranty,
shall apply to all Guaranteed Obligations whenever arising, shall be binding
upon Guarantor and its successors and shall inure to the benefit of and be
enforceable by Party B and its successors and permitted assigns. This Guaranty
embodies the entire agreement of Guarantor and Party B and supersedes all prior
agreements and understandings relating to the subject matter hereof. The
headings in this Guaranty are for the purposes of reference only, and shall not
affect the meaning hereof. If any provision of this Guaranty shall for any
reason be held invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provision
of this Guaranty, and this Guaranty shall be construed as if such invalid,
illegal or unenforceable provision had never been contained herein, but only to
the extent of its invalidity, illegality or unenforceability. This Guaranty may
be executed in any number of counterparts, each of which shall be an original,
but all of which together shall constitute one instrument.
***CONFIDENTIAL TREATMENT REQUESTED***
10
IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be executed
and delivered by its duly authorized officer as of the day and year first above
written.
DYNEGY HOLDINGS INC.
By:
----------------------------------
Title:
-------------------------------
ACCEPTED:
SITHE/INDEPENDENCE POWER PARTNERS, L.P.
By: SITHE/INDEPENDENCE, INC.,
its General Partner
By:
----------------------------------
Title:
-------------------------------
***CONFIDENTIAL TREATMENT REQUESTED***
11
EXHIBIT 2
ACKNOWLEDGMENT AND CONSENT
Acknowledgment and Consent (this "CONSENT") dated as of July 1, 2001
between Dynegy Holdings Inc. a Texas corporation (together with its successors
and assigns, the "COMPANY") and Sithe/Independence Power Partners, L.P., a
Delaware limited partnership (together with its successors and assigns, the
"PARTNERSHIP"), to and for the benefit of Manufacturers and Traders Trust
Company, a New York banking corporation, in its capacity as collateral agent
(together with successors and assigns in that capacity, the "COLLATERAL AGENT").
SECTION 1. CONSENT TO ASSIGNMENTS, ETC.
The Company hereby (a) acknowledges that it has been advised of that
certain Security Agreement and Assignment of Contracts dated as of January 1,
1993 (as amended, supplemented or modified and in effect from time to time, the
"SECURITY AGREEMENT") between the Collateral Agent and the Partnership, (b)
consents, subject to the provisions of this Consent, to the collateral
assignment by the Partnership of the Guaranty Agreement dated as of July 1, 2001
between the Company and the Partnership (as amended, supplemented or modified
and in effect from time to time, the "ASSIGNED CONTRACT") as collateral for the
Partnership's obligations to the Secured Parties (as defined in the Security
Agreement), and any subsequent assignments by the Collateral Agent, on behalf of
the Secured Parties, (c) acknowledges the right of the Collateral Agent,
following an Event of Default (as defined in the Security Agreement) by the
Partnership, to make all demands, give all notices, take all actions and
exercise all rights of the Partnership under the Assigned Contract as the
Partnership could have taken absent the Event of Default, and (d) acknowledges
and agrees that the Collateral Agent succeeding to the rights and obligations of
the Partnership under the Assigned Contract shall not, in and of itself,
constitute or cause a default by the Partnership under the Assigned Contract.
SECTION 2. PAYMENT OF ASSIGNED SUMS
All payments (if any) to be made by the Company to the Partnership under
the Assigned Contract shall be made by wire transfer to the account specified in
Section 24.07 of the Assigned Contract.
SECTION 3. REPRESENTATIONS OF COMPANY
(a) The Company represents and warrants that as of the date
hereof:
(i) AUTHORIZATION. The execution, delivery and performance by the
Company of this Consent has been duly authorized by all
necessary action on the part of the Company and does not
require any approval or consent of any shareholder of the
Company or any holder (or any trustee for any holder) of any
indebtedness or other obligation of the Company, except as has
been heretofore obtained.
(ii) EXECUTION; DELIVERY; BINDING AGREEMENT. This Consent has been
duly executed and delivered on behalf of the Company by the
appropriate officers of the Company and constitutes the legal,
valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, subject to
applicable bankruptcy, insolvency, moratorium and other
similar laws applicable to creditors' rights generally and
except as the enforceability thereof may be limited by general
principles of equity (regardless of whether considered in a
proceeding in equity or at law).
(iii) NO DEFAULT OR AMENDMENT. As of the date hereof, neither the
Company nor, to the knowledge of the Company, the Partnership
is in default under the Assigned Contract. The Company has no
existing claims, counterclaims, offsets or defenses against
the Partnership in respect of the Assigned Contract except for
routine claims for payment under the Assigned Contract.
***CONFIDENTIAL TREATMENT REQUESTED***
12
SECTION 4. RIGHTS OF SECURED PARTIES
The Company agrees that, subject to the provisions of this Consent, the
Secured Parties shall have the following rights with respect to the Assigned
Contract:
(a) Notwithstanding anything to the contrary contained in the Assigned
Contract, the Assigned Contract shall not be terminated or cancelled by action
of the Company and shall not be deemed abandoned or surrendered without prior
notice in writing to the Collateral Agent specifying the Partnership's default
(hereinafter called a "NOTICE"). Any such Notice shall contain a copy of the
notice of default sent to the Partnership and shall be delivered to the
Collateral Agent when the Company delivers a notice of default to the
Partnership under the Assigned Contract. The Collateral Agent shall have the
right (but not the obligation) to cure the defaults listed in any Notice within
the same period of time provided in the Assigned Contract for the Partnership to
cure such default; PROVIDED, HOWEVER, if the nature of any non-monetary default
on the part of the Partnership under the Assigned Contract is such that it
cannot be cured by the Collateral Agent without the Collateral Agent having
taken possession of the Project (as defined in the Security Agreement), then the
Collateral Agent's time for commencing such cure shall be extended for such
reasonable period of time as is necessary for the Collateral Agent to lawfully
obtain possession of the Project; PROVIDED, FURTHER, that the Collateral Agent
shall at all times be seeking by all reasonable and lawful means to obtain such
possession. Once the defaults listed in any Notice are timely cured by the
Collateral Agent, there shall no longer be deemed to be any default under the
Assigned Contract in respect of such defaults so cured. The curing of any
defaults under the Assigned Contract shall not in and of itself be construed as
an assumption by the Collateral Agent or any of the Secured Parties of any of
the obligations, covenants or agreements of the Partnership under the Assigned
Contract.
(b) If a notice of election is delivered to the Company as provided in
Section 5 below, the Company will accept performance of the Partnership's
obligations (as specified in such notice of election) under the Assigned
Contracts by the Collateral Agent, or its nominee(s) acting for the Secured
Parties, as the case may be, in lieu of the Partnership's performance of such
obligations.
(c) Upon any transfer of the Partnership's rights under the Assigned
Contract pursuant to the exercise of the Collateral Agent's rights under this
Consent, the Collateral Agent or any third party to which such rights are
transferred by the Collateral Agent (hereinafter, a "THIRD PARTY TRANSFEREE")
shall, upon the Company's reasonable satisfaction with the Collateral Agent's or
such Third Party Transferee's financial condition and subject to all applicable
laws, rules and regulations, succeed to all of the Partnership's right, title
and interest under and in connection with the Assigned Contract and shall be
obligated to perform all of the terms and conditions of the Assigned Contract,
except that the Collateral Agent or any Third Party Transferee shall not be
required to perform or cause to be performed any of the Partnership's
obligations under the Assigned Contract (except for the Partnership's obligation
for the payment of all amounts due and payable to the Company under the terms of
the Assigned Contract including any interest applicable thereon) that remain
unperformed at the time that the Collateral Agent or such Third Party Transferee
is transferred such Assigned Contract other than continuing non-monetary
defaults under the Assigned Contract which are capable of performance by the
Collateral Agent or the Third Party Transferee or be liable for any prior act or
omission of the Partnership, and upon the transfer by the Collateral Agent of
its rights and interests and the rights and interests of the Partnership under
the Assigned Contracts to a Third Party Transferee, the Collateral Agent and the
Partnership shall be relieved of all obligations under the Assigned Contract
arising after such transfer.
(d) In the event that (i) the Assigned Contract is rejected by a trustee
or any person exercising the powers of a trustee in any bankruptcy or insolvency
proceeding applicable to the Partnership or (ii) the Assigned Contract is
terminated as a result of any bankruptcy or insolvency proceeding applicable to
the Partnership, the Company shall, subject to all applicable laws, rules and
regulations, execute and deliver to the Collateral Agent and its designees,
successors and assigns a new contract; PROVIDED that the Company shall be
required to execute a new contract with the Collateral Agent only if the
Collateral Agent or its designees, successors or assigns shall within ten (10)
business days of
***CONFIDENTIAL TREATMENT REQUESTED***
13
entering into such new contract, cure all defaults for failure to pay all
amounts due and payable to the Company under the Assigned Contract, including
any interest applicable thereon. The new contract shall, subject to all
applicable laws, rules and regulations, contain the same covenants, agreements,
terms, provisions and limitations as the Assigned Contract (except for any
requirements with respect to past performance which have been fulfilled by the
Partnership or the Collateral Agent or its designees, successors and assigns
hereunder).
SECTION 5. LIABILITY OF SECURED PARTIES
The Collateral Agent, on behalf of the Secured Parties, and its successors
and assigns, shall have no right or power to enforce the Assigned Contract, and
assumes no duty or obligation thereunder unless and until the Collateral Agent
shall have notified the Company that it has elected to exercise its rights and
remedies under the Security Agreement and to substitute itself in the position
of the Partnership under the Assigned Contracts and has agreed in a written
instrument executed by the Collateral Agent to be bound by all terms and
conditions of the Assigned Contract applicable to the Partnership.
SECTION 6. FURTHER ASSURANCES
The Company hereby agrees to execute and deliver all such instruments and
take all such actions as may be reasonably necessary to effectuate fully the
purposes of this Consent, provided, however, that such further assurances shall
not expand the liability, or obligations arising under this Consent or dilute
any rights or remedies otherwise accruing to Company under this Consent.
SECTION 7. NOTICES
All notices and other communications hereunder shall be in writing, shall
refer on their face to the Assigned Contract (although failure to so refer shall
not render any such notice or communication ineffective), shall be sent by first
class mail, facsimile, by hand or overnight courier service and shall be
directed:
(a) if to the Company, in accordance with the Assigned Contract;
(b) if to the Collateral Agent, addressed to:
Manufacturers and Traders Trust Company
▇▇▇ ▇&▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Department
(c) if to the Partnership, in accordance with the Assigned
Contract; and
(d) to such other address as any party may designate by notice to
the other party hereto given pursuant hereto.
SECTION 8. MISCELLANEOUS
(a) GOVERNING LAW. This Consent shall be governed by and construed in
accordance with the law of the State of New York as to all matters (without
giving effect to conflict of law principles). Each of the Company and the
Partnership hereby irrevocably waives, to the fullest extent permitted by law,
any and all right to trial by jury in any legal proceedings arising out of or
relating to this Consent.
(b) SUBMISSION TO JURISDICTION. Each of the Parties hereby irrevocably and
unconditionally:
(i) submits for itself and its property in any legal action or
proceeding relating to this Consent, or for recognition and
enforcement of any judgment in respect thereof, to the
non-exclusive general jurisdiction of the Courts of the State
of New York,
***CONFIDENTIAL TREATMENT REQUESTED***
▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ for the Southern District of
New York and appellate courts from any thereof;
(ii) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by
registered or certified mail (or any substantially similar
form of mail), postage prepaid, to the other Party at its
address set forth in Section 7, or at such other address of
which the other Party shall have been notified pursuant
thereto; and
(iii) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law.
(c) HEADINGS. The descriptive headings of the Articles and Sections of
this Consent are inserted for convenience only and are not intended to affect
the meaning, interpretation or construction of this Consent.
(d) WAIVER. Except as otherwise provided in this Consent, any failure of a
party to comply with any obligation, covenant, agreement or condition herein may
be waived by the party entitled to the benefits thereof only by a written
instrument signed by the party granting such waiver, but such waiver shall not
operate as a waiver of, or estoppel with respect to, any subsequent failure of
the first party to comply with such obligation, covenant, agreement or
condition.
(e) SEVERABILITY. Any provision of this Consent which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
(f) SUCCESSORS AND ASSIGNS. This Consent shall be binding upon and inure
to the benefit of the Company, the Collateral Agent, the Partnership and their
respective permitted successors and assigns.
(g) COUNTERPARTS. This Consent may be executed in counterparts, all of
which shall constitute one and the same Consent and each of which shall be
deemed to be an original.
***CONFIDENTIAL TREATMENT REQUESTED***
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IN WITNESS WHEREOF, the parties hereto have executed this Consent as of
the day and year first above written.
DYNEGY HOLDINGS INC.
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
SITHE/INDEPENDENCE POWER PARTNERS, L.P.
By: SITHE/INDEPENDENCE, INC.,
its General Partner
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
***CONFIDENTIAL TREATMENT REQUESTED***
16
EXHIBIT C
GUARANTY AGREEMENT
Base Guaranty Agreement (this "Guaranty") dated as of __________, 2001 is
made and entered into by __________________, a ____________________
("Guarantor"), to and for the benefit of Dynegy Power Marketing, Inc., a Texas
corporation ("Party A"), and its successors and permitted assigns.
WITNESSETH:
WHEREAS, Party A and Sithe/Independence Power Partners, L.P a __________
(together with its successors and permitted assigns, "Party B"), have entered
into a MASTER AGREEMENT dated as of July 1, 2001, the SCHEDULE TO THE MASTER
AGREEMENT dated as of July 1, 2001 attached thereto, and CONFIRMATION #1A
thereunder dated as of July 1, 2001 (as amended, supplemented or modified from
time to time, collectively, the "Agreement"), a copy of which is attached hereto
as Exhibit 1;
WHEREAS, Party B is [an indirect, wholly owned subsidiary] of Guarantor,
and Guarantor will derive substantial benefit from the performance by Party A of
its obligations under the Agreement;
WHEREAS, it is a requirement under the Agreement that this Guaranty be
duly executed and delivered to Party A; and
WHEREAS, Guarantor is willing to enter into this Guaranty.
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties, covenants and agreements contained herein, and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, and intending to be legally bound, Guarantor hereby
covenants and agrees as follows:
1. GUARANTY. Subject to the terms hereof, Guarantor hereby irrevocably,
absolutely, and unconditionally guarantees to Party A and its successors and
permitted assigns the due, punctual and full performance and payment of each and
every obligation of Party B under Section 4(i) of the Agreement (each such
obligation hereinafter referred to, individually, as a "Guaranteed Obligation"
and, collectively, as the "GUARANTEED OBLIGATIONS") and agrees that, if for any
reason whatsoever Party B shall fail or be unable duly, punctually and fully to
perform or pay any such Guaranteed Obligation, Guarantor shall forthwith, upon
demand as provided in Section 4 hereof, perform or pay such Guaranteed
Obligation, or cause such Guaranteed Obligation to be performed or paid, without
regard to any exercise or nonexercise by Party A, its successors or permitted
assigns of any right, power or privilege under or in respect of the Agreement or
the Guaranteed Obligations. In connection with the foregoing, Party A
acknowledges that performance of the obligations of Party B under the Agreement,
to the extent that such performance is for an obligation other than the payment
of money, shall be accomplished by Guarantor causing such performance to occur
through a third party or otherwise by the payment of money. This Guaranty shall
be direct, immediate and primary and shall be a guaranty of performance and
payment and not of collection, and is not conditioned or contingent upon any
attempt to collect from Party B or upon any other event, contingency or
circumstance whatsoever, except as expressly provided otherwise herein.
2. OBLIGATIONS UNCONDITIONAL. Guarantor covenants to and agrees with Party
A and its successors and permitted assigns that, to the fullest extent permitted
by law, its obligations under this Guaranty are irrevocable, absolute and
unconditional, shall remain in full force and effect, and shall not be impaired
or affected by, or be subject to, any reduction, termination or other impairment
by set-off, deduction, counterclaim, recoupment, interruption or otherwise, and
Guarantor shall have no right to terminate this Guaranty or to be released,
relieved or discharged, in whole or in part, from its performance or payment
obligations referred to in this Guaranty for any reason whatsoever (other than
the performance and payment in full of the Guaranteed Obligations), including
(a) any amendment, supplement or modification to, waiver of, consent to or
departure from, or failure to exercise any right, remedy, power or privilege
under or in respect of, the Agreement, the Guaranteed Obligations or any other
agreement or
***CONFIDENTIAL TREATMENT REQUESTED***
17
instrument relating thereto, (b) any insolvency, bankruptcy, reorganization,
dissolution or liquidation of, or any similar occurrence with respect to, or
cessation of existence of, or change of ownership of Party B, or any rejection
of any of the Guaranteed Obligations in connection with any Proceeding (as
defined in Section 3 below) or any disallowance of all or any portion of any
claim by Party A, its successors or permitted assigns in connection with any
Proceeding, (c) any lack of genuineness, legality, validity, regularity,
enforceability or value of the Agreement, any of the Guaranteed Obligations, or
any other agreement or instrument relating thereto, (d) the failure to create,
preserve, validate, perfect or protect any security interest granted to, or in
favor of, any person, (e) any substitution, modification, exchange, release,
settlement or compromise of any security or collateral for or guaranty of any of
the Guaranteed Obligations or failure to apply such security or collateral or
failure to enforce such guaranty or (f) any other event or circumstance
whatsoever that might otherwise constitute a legal or equitable discharge of a
surety or guarantor (other than the payment in full of the Guaranteed
Obligations, and any defenses that may be available to Party A under the
Agreement), it being the intent of Guarantor that its obligations under this
Guaranty shall be irrevocable, unconditional and absolute under any and all
circumstances, except as expressly provided herein. This Guaranty and the
obligations of Guarantor hereunder shall continue to be effective or be
automatically reinstated, as the case may be, if at any time any payment by or
on behalf of Party B is rescinded or must otherwise be restored by Party A, its
successors or permitted assigns for any reason, including, but not limited to,
as a result of any Proceeding with respect to Party B or any other person, as
though such payment had not been made.
3. INTEREST. The Guaranteed Obligations shall include, without limitation,
interest accruing as part of the Guaranteed Obligations by the terms thereof
following the commencement by or against Party B of any case or proceeding under
any law relating to bankruptcy, insolvency, reorganization, winding-up,
liquidation, dissolution or composition or adjustment of debt (hereinafter, a
"PROCEEDING").
4. DEMAND. If Party B shall fail or be unable duly, punctually and fully
to perform or pay any Guaranteed Obligation, Party A, its successors or
permitted assigns may at any time prior to the full performance or payment of
such Guaranteed Obligation deliver notice of such failure or inability of Party
B to perform or pay to Guarantor in writing, which notice shall reasonably
specify the nature of such failure or inability to perform or pay, as the case
may be and, in the case of a failure or inability to pay, the amount thereof
(each such written notice hereinafter a "DEMAND"). Guarantor shall, upon receipt
of a Demand, forthwith perform or pay such Guaranteed Obligation, or cause such
Guaranteed Obligation to be performed or paid in full. Promptly on request,
Guarantor shall reimburse Party A, its successors and permitted assigns for all
costs and expenses (including reasonable attorneys' fees) incurred in enforcing
Party A's, its successors' or permitted assigns' rights under this Guaranty, but
only to the extent that Party A is successful in enforcing Party A's rights
under this Guaranty.
5. REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants to
Party A and its successors and permitted assigns that as of the date hereof:
(a) it is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, it has the corporate power and
authority to execute, deliver and carry out the terms and provisions of this
Guaranty;
(b) no authorization, approval, consent or order of, or registration or
filing with, any court or other governmental body having jurisdiction over
Guarantor is required on the part of Guarantor for the execution and delivery of
this Guaranty;
(c) this Guaranty has been duly executed and delivered by Guarantor and
constitutes a valid and legally binding agreement of Guarantor enforceable
against Guarantor in accordance with its terms, subject, however, to applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally and except as the enforceability thereof may be
limited by general principles of equity (regardless of whether considered in a
proceeding in equity or at law);
***CONFIDENTIAL TREATMENT REQUESTED***
18
(d) the execution, delivery and performance of this Guaranty have been
duly authorized by all necessary corporate action and do not require any other
actions or proceedings or any stockholder approval or consent of any trustee or
holder of any indebtedness of Guarantor;
(e) the execution, delivery and performance of this Guaranty and
compliance by Guarantor with the terms hereof (i) will not violate any
governmental approval or law applicable to it or any of its property, (ii) will
not violate any provision of its certificate of incorporation, bylaws or other
governing documents, and (iii) will not violate or constitute a default under
any agreement or instrument to which it is a party or by which it or any of its
property may be bound, or result in the creation or imposition of any lien upon
any of its property, which violation, default or lien would have a material
adverse effect on its ability to perform its obligations under this Guaranty;
(f) except as disclosed in Guarantor's latest Form 10-K and any Form 10-Qs
or Form 8-Ks subsequently filed with the Securities and Exchange Commission,
there are no actions, suits, investigations or proceedings against Guarantor by
or before any court, arbitrator, administrative or regulatory agency, or other
governmental authority pending, or to its knowledge, threatened against or
affecting it, its properties, or its assets that, if adversely determined, would
reasonably be expected to have a material and adverse effect on its ability to
perform its obligations under this Guaranty; and
(g) it directly or indirectly owns ______________________ of Party B.
6. DOWNGRADE EVENT. If at any time any two of the credit ratings then
assigned to Guarantor's unsecured, senior long-term debt obligations falls below
"Investment Grade" from the Standard & Poor's Rating Group (a division of
▇▇▇▇▇▇-▇▇▇▇, Inc.) or its successor ("S&P"),"Investment Grade" from ▇▇▇▇▇'▇
Investor Services, Inc. or its successor ("▇▇▇▇▇'▇") or "Investment Grade" from
Fitch IBCA, Inc. or its successor ("FITCH") (or if Guarantor is not rated by any
of S&P, ▇▇▇▇▇'▇ or Fitch), then Party A may require Guarantor to provide
collateral in the form of either a substitute guaranty on terms and conditions
substantially similar to this Guaranty or other security reasonably acceptable
to Party A and Party B ("Performance Assurance") in an amount determined by
Party A in a commercially reasonable manner. The failure of Guarantor to provide
such Performance Assurance or a guaranty or other credit assurance acceptable to
Party A within twenty (20) business days of receipt of notice shall constitute
an Event of Default under the Agreement and Party A will be entitled to the
remedies set forth in the Agreement.
7. AMENDMENT OF GUARANTY. No term or provision of this Guaranty shall be
amended, modified, altered, waived, supplemented or terminated except in a
writing signed by Guarantor and Party A or Party A's successors and permitted
assigns.
8. WAIVERS. To the fullest extent permitted by law, and except for the
Demand required pursuant to Section 4 hereof, Guarantor hereby waives (a) all
set-offs, counterclaims, presentments, demands for performance, notices of
nonperformance, protests, notice of any of the matters referred to in Section 2,
notices of protests, notices of dishonor, notice of any waivers or indulgences
or extensions, and notices of every kind that may be required to be given by any
statute or rule of law and notice of acceptance of this Guaranty, (b) diligence,
presentment, and demand of payment, filing of claims with a court in connection
with any Proceeding, protest or notice with respect to the Guaranteed
Obligations and all demands whatsoever; and (c) any requirement that any action
or proceeding be brought against Party B or any other person, or any requirement
that any person exhaust any right, power or remedy or proceed against any other
person, prior to any action against Guarantor under the terms hereof. No delay
on the part of Party A, its successors or permitted assigns in the exercise of,
or failure to exercise, any right or remedy shall operate as a waiver thereof, a
waiver of any other rights or remedies, or a release of Guarantor from any
obligations hereunder, and no single or partial exercise by Party A, its
successors or permitted assigns of any right or remedy shall preclude any
further exercise thereof or the exercise of any other right or remedy.
9. WAIVER OF SUBROGATION. Guarantor hereby agrees that it will not
exercise, and hereby irrevocably, absolutely and unconditionally waives, any
rights of subrogation, contribution, reimbursement,
***CONFIDENTIAL TREATMENT REQUESTED***
19
indemnification or other rights of payment or recovery for any payments made by
it hereunder until all Guaranteed Obligations have been fully paid and
performed.
10. NOTICE. Any Demand, notice, request, instruction, correspondence or
other document to be given hereunder (herein collectively called "Notice") shall
be in writing and delivered personally or mailed by certified mail, postage
prepaid and return receipt requested, or by telecopy, as follows:
To Party A:
To Guarantor:
Notice given by personal delivery or mail shall be effective upon actual
receipt. Notice given by telecopy shall be effective upon actual receipt if
received during the recipient's normal business hours, or at the beginning of
the recipient's next business day after receipt if not received during the
recipient's normal business hours. All Notices by telecopy shall be confirmed
promptly after transmission in writing by certified mail or personal delivery.
Any party may change any address to which Notice is to be given to it by giving
notice as provided above of such change of address.
11. ASSIGNMENT. Guarantor shall have no right, power or authority to
delegate, assign or transfer all or any of its rights or obligations hereunder.
Party A may assign all or any of its rights hereunder to any assignee of its
rights under the Agreement as permitted thereby.
12. MISCELLANEOUS. THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, EXCLUDING CONFLICT-OF-LAWS
RULES. EACH OF GUARANTOR AND PARTY B HEREBY IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDINGS ARISING OUT OF OR RELATING TO THIS GUARANTY OR ANY OF THE OTHER
AGREEMENTS REFERRED TO HEREIN OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY. Each of the Parties hereby irrevocably and unconditionally: (i) submits
for itself in any legal action or proceeding relating to this Guaranty, or for
recognition and enforcement of any judgment in respect thereof, to the
non-exclusive general jurisdiction of the Courts of the State of New York, the
courts of the United States for the Southern District of New York and appellate
courts from any thereof; (ii) agrees that service of process in any such action
or proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage prepaid, to
the other Party at its address set forth in Section 10, or at such other address
of which the other Party shall have been notified pursuant thereto; and (iii)
agrees that nothing herein shall affect the right to effect service of process
in any other manner permitted by law. This Guaranty is a continuing guaranty,
shall apply to all Guaranteed Obligations whenever arising, shall be binding
upon Guarantor and its successors and shall inure to the benefit of and be
enforceable by Party A and its successors and permitted assigns. This Guaranty
embodies the entire agreement of Guarantor and Party A and supersedes all prior
agreements and understandings relating to the subject matter hereof. The
headings in this Guaranty are for the purposes of reference only, and shall not
affect the meaning hereof. If any provision of this Guaranty shall for any
reason be held invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provision
of this Guaranty, and this Guaranty shall be construed as if such invalid,
illegal or unenforceable provision had never been contained herein, but only to
the extent of its invalidity, illegality or unenforceability. This Guaranty may
be executed in any number of counterparts, each of which shall be an original,
but all of which together shall constitute one instrument.
***CONFIDENTIAL TREATMENT REQUESTED***
20
IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be executed and
delivered by its duly authorized officer as of the day and year first above
written.
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By:
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Title:
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ACCEPTED:
DYNEGY POWER MARKETING, INC.
By:
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Title:
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