EXHIBIT 4.24
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COMMON AGREEMENT
among
XL CAPITAL ASSURANCE INC.
(XLCA)
▇▇▇▇▇▇▇ ▇▇▇▇▇ MITSUI MARINE DERIVATIVE PRODUCTS, L.P.
(Swap Counterparty)
THE BANK OF NEW YORK
(Trustee)
THE BANK OF NEW YORK
(Collateral Agent)
NRG PEAKER FINANCE COMPANY LLC
(Issuer)
and
EACH PROJECT COMPANY PARTY HERETO
(Project Companies)
DATED AS OF JUNE 18, 2002
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TABLE OF CONTENTS
Page
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RECITALS..........................................................................................................1
ARTICLE 1 DEFINITIONS AND RULES OF INTERPRETATION.................................................................2
1.1 Definitions....................................................................................2
1.2 Rules of Interpretation........................................................................3
1.3 Accounting Principles and Terms................................................................3
ARTICLE 2 AFFIRMATIVE COVENANTS OF ISSUER.........................................................................3
2.1 Use of Proceeds and Revenues...................................................................3
2.2 Notices........................................................................................3
2.3 Financial Statements...........................................................................4
2.4 Inspection of Books and Records................................................................5
2.5 Compliance with Laws...........................................................................5
2.6 Existence, Conduct of Business, Etc............................................................5
2.7 Calculation of Ratios and Other Compliance Calculations........................................5
2.8 Further Assurances.............................................................................6
2.9 Taxes..........................................................................................6
2.10 Notice of Redemption...........................................................................6
2.11 Swap Agreement.................................................................................6
ARTICLE 3 AFFIRMATIVE COVENANTS OF THE PROJECT COMPANIES..........................................................7
3.1 Use of Proceeds and Revenues...................................................................7
3.2 Reporting Requirements.........................................................................8
3.3 Inspection of Books and Records...............................................................10
3.4 Plans and Specifications; Completion Tests....................................................10
3.5 Compliance with Laws..........................................................................10
3.6 Maintenance of Existence and Business.........................................................10
3.7 Project Documents.............................................................................11
3.8 Permits.......................................................................................11
3.9 Further Assurances............................................................................11
3.10 Maintenance of Insurance......................................................................12
3.11 Taxes.........................................................................................12
3.12 Title; Maintenance of Properties..............................................................12
3.13 Market Based Rate Authority...................................................................12
3.14 Completion....................................................................................13
3.15 Operation and Maintenance.....................................................................13
3.16 Condemnation Event............................................................................13
3.17 Sterlington PPA Legal Opinion.................................................................14
3.18 Fuel and Power Marketing Plan.................................................................14
3.19 Unrestricted Subsidiary.......................................................................14
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ARTICLE 4 NEGATIVE COVENANTS OF ISSUER...........................................................................14
4.1 Contingent Liabilities........................................................................14
4.2 Limitations on Liens..........................................................................14
4.3 Indebtedness..................................................................................14
4.4 Sale of Assets................................................................................15
4.5 Distributions.................................................................................15
4.6 Investments...................................................................................18
4.7 Transactions With Affiliates..................................................................18
4.8 ERISA.........................................................................................18
4.9 Liquidation; Amendment of Organizational Documents............................................18
4.10 Accounts......................................................................................19
4.11 Name and Location; Fiscal Year................................................................19
4.12 Assignment....................................................................................19
4.13 No SEC Registration...........................................................................19
ARTICLE 5 NEGATIVE COVENANTS OF PROJECT COMPANIES................................................................19
5.1 Contingent Liabilities........................................................................19
5.2 Liens.........................................................................................20
5.3 Indebtedness..................................................................................20
5.4 Asset Dispositions............................................................................20
5.5 Business Activities...........................................................................20
5.6 Subsidiaries, etc.; Investments...............................................................20
5.7 Distributions.................................................................................21
5.8 Transactions With Affiliates..................................................................21
5.9 ERISA.........................................................................................21
5.10 Merger or Consolidation; Liquidation; Amendment of Organizational Documents...................21
5.11 Amendments to Project Documents...............................................................22
5.12 Accounts......................................................................................22
5.13 Name and Location; Fiscal Year................................................................23
5.14 Assignment....................................................................................23
5.15 Acquisition of Real Property..................................................................23
5.16 Additional Project Documents..................................................................24
5.17 Use of Project Site...........................................................................24
5.18 Hazardous Substances..........................................................................24
ARTICLE 6 GUARANTY ..............................................................................................24
6.1 Guaranty......................................................................................24
6.2 Guaranty Absolute.............................................................................25
6.3 Rights and Obligations Absolute and Unconditional.............................................25
6.4 Guaranty Continuing...........................................................................26
6.5 Waivers.......................................................................................26
6.6 Acknowledgments...............................................................................28
6.7 Subordination.................................................................................28
6.8 Subrogation...................................................................................28
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6.9 Bankruptcy....................................................................................28
6.10 Interest; Collection Expenses.................................................................29
6.11 Reinstatement of Guaranty.....................................................................29
6.12 Termination of Guaranty.......................................................................29
6.13 Survival......................................................................................29
6.14 Contribution Obligations among Project Companies..............................................29
ARTICLE 7 EVENTS OF DEFAULT; REMEDIES............................................................................30
7.1 Issuer Events of Default......................................................................30
7.2 Project Events of Default.....................................................................34
7.3 Fundamental Project Event of Default..........................................................39
7.4 Controlling Party Agreement...................................................................40
7.5 Remedies......................................................................................42
7.6 Notice to Trustee and Project Events of Default...............................................43
7.7 Application of Proceeds.......................................................................43
ARTICLE 8 SCOPE OF LIABILITY.....................................................................................44
ARTICLE 9 INDEMNIFICATION, AMENDMENTS and WAIVERS................................................................45
9.1 Indemnification...............................................................................45
9.2 Amendments and Waivers........................................................................47
ARTICLE 10 INDEPENDENT CONSULTANTS...............................................................................48
10.1 Removal and Fees..............................................................................48
10.2 Duties........................................................................................49
10.3 Certification of Dates........................................................................49
ARTICLE 11 THE COLLATERAL AGENT..................................................................................49
11.1 Appointment and Duties of the Collateral Agent................................................49
11.2 Rights of Collateral Agent....................................................................50
11.3 Lack of Reliance on the Agents................................................................52
11.4 Indemnification...............................................................................53
11.5 Resignation or Removal of the Collateral Agent................................................54
11.6 Release of Collateral.........................................................................54
11.7 Assignment of Rights, Not Assumption of Duties................................................54
11.8 Appointment of Co-Collateral Agent............................................................55
11.9 XLCA Confirmation Before Release of Certain Funds.............................................56
ARTICLE 12 MISCELLANEOUS.........................................................................................56
12.1 Addresses.....................................................................................56
12.2 Additional Security; Right to Set-Off.........................................................59
12.3 Delay and Waiver..............................................................................59
12.4 Costs, Expenses and Attorneys' Fees...........................................................60
12.5 Entire Agreement..............................................................................60
12.6 Governing Law.................................................................................60
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12.7 Severability..................................................................................60
12.8 Headings......................................................................................61
12.9 No Partnership, Etc...........................................................................61
12.10 Limitation on Liability.......................................................................61
12.11 Waiver of Jury Trial..........................................................................61
12.12 Consent to Jurisdiction.......................................................................61
12.13 Usury.........................................................................................62
12.14 Successors and Assigns........................................................................62
12.15 Counterparts..................................................................................62
12.16 Term and Termination..........................................................................63
12.17 Reinstatement.................................................................................63
12.18 Survival......................................................................................63
12.19 Partial Termination...........................................................................63
12.20 No XLCA Liability or Duties...................................................................63
12.21 Calculation of Net Annual Payment Pursuant to Swap Agreement..................................64
INDEX OF ANNEXES AND EXHIBITS
Annex A Definitions
Exhibit A Form of Debt Service Coverage Ratio Certificate
Exhibit B Form of Compliance Calculation Certificate
Exhibit C Insurance Requirements
Exhibit D Completion Tests
Exhibit E Form of Annual Operations Report
Exhibit F Form of Annual Insurance Certificate
Exhibit G Bayou Cove Deed of Transfer
Exhibit H General Subordination Provisions
Exhibit I Subordination Provisions for Subordinated Bonds
Exhibit J Stipulated O&M Expenses
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This COMMON AGREEMENT (as amended, amended and restated,
supplemented or otherwise modified from time to time, this "Agreement"), dated
as of June 18, 2002, is entered into among (1) XL Capital Assurance Inc., a New
York stock insurance company ("XLCA"), (2) ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mitsui Marine
Derivative Products, L.P., a Delaware limited partnership (the "Swap
Counterparty"), (3) The Bank of New York, a New York banking corporation, not in
its individual capacity but solely as trustee for the benefit of the holders of
the Bonds (the "Bondholders") (in such capacity, the "Trustee"), (4) The Bank of
New York, as collateral agent for the benefit of the Secured Parties (in such
capacity, the "Collateral Agent"), (5) NRG Peaker Finance Company LLC, a
Delaware limited liability company, as Issuer (the "Issuer"), and (6) each party
hereto identified as a Project Company on the signature pages hereto (each a
"Project Company" and, collectively, the "Project Companies").
RECITALS
WHEREAS:
A. The Projects comprise five natural gas-fired electric
generation facilities located in Louisiana and Illinois. The electric
generation facilities comprising the Projects are peaker facilities
designed to generate electricity during periods of peak demand for
electricity. As of the date hereof, the Big Cajun I Units 3&4 Project,
the Rockford I Project and the Sterlington Project are complete and
operate commercially. The Rockford II Project and the Bayou Cove
Project are guaranteed by NRG Energy pursuant to the Contingent
Guaranty Agreement to be completed and commercially operating by June
30, 2003.
B. Each Project is owned by an indirect wholly-owned
subsidiary of NRG Energy. The Issuer is an indirect wholly-owned
subsidiary of NRG Energy.
C. The Issuer will issue and sell its Series A Bonds in an
offering in reliance on Rule 144A and Regulation S under the Securities
Act and will use the proceeds from the sale of the Series A Bonds to
make loans to three of the five Project Companies pursuant to and in
accordance with the Project Loan Agreements. Such Project Companies
will use the proceeds of the sale of the Series A Bonds lent to them
pursuant to the Project Loan Agreements to (i) reimburse NRG Energy for
NRG Energy's costs of having constructed and/or acquired the Projects
(including interest incurred during construction), (ii) pay the
Premium, (iii) deposit $11,279,588 on the Closing Date into the
Collateralized Experience Account, and (iv) pay transaction fees and
costs in connection with the Transaction.
D. The Issuer will pay the principal of and interest on the
Series A Bonds in accordance with the terms of the Indenture.
E. The Issuer will enter into the Swap Agreement with the Swap
Counterparty pursuant to which the Issuer will make fixed rate interest
rate payments to the Swap Counterparty and the Swap Counterparty will
make floating rate interest payments to the Issuer.
F. Regularly scheduled payments of principal of and interest
on the Series A Bonds will be unconditionally and irrevocably
guaranteed by XLCA pursuant to, and subject to, the Policy and the
Insurance and Reimbursement Agreement in exchange for the payment of
the Premium by the Issuer to XLCA as set forth in the Premium Letter.
G. Regularly scheduled payments of Swap Payment Amounts will
be unconditionally and irrevocably guaranteed by XLCA pursuant to, and
subject to, the Swap Policy and the Insurance and Reimbursement
Agreement in exchange for the payment of the Swap Policy Premium by the
Issuer to XLCA as set forth in the Premium Letter.
H. Pursuant to and in accordance with the Contingent Guaranty
Agreement, NRG Energy will be obligated to make certain payments under
circumstances specified in the Contingent Guaranty Agreement.
I. Pursuant to and in accordance with the Insurance and
Reimbursement Agreement, the Issuer will be obligated to reimburse XLCA
in respect of payments (if any) made by XLCA pursuant to the Policy
and/or the Swap Policy and in respect of other amounts specified in the
Insurance and Reimbursement Agreement.
J. Pursuant to the Issuer Collateral Documents, the Issuer's
obligations owed to the Secured Parties will be secured by a first
priority lien for the benefit of the Secured Parties on the membership
interests in the Issuer and all of the property and assets of the
Issuer (including the Project Loan Notes).
K. Pursuant to the Guaranties, each of the Project Companies
will unconditionally and irrevocably guaranty the obligations and
indebtedness of the Issuer in respect of the Guaranteed Obligations,
which Guaranties will, pursuant to the Project Company Collateral
Documents, be secured by a first priority lien for the benefit of the
Secured Parties on the membership interests in each Project Company
(other than the Big Cajun Project Company and the Sterlington Project
Company) and on all or substantially all of the property and assets of
each Project Company.
L. The parties hereto wish to enter into this Agreement in
order to, among other things, set forth certain common provisions
regarding the various transactions recited above.
NOW, THEREFORE, in consideration of the agreements herein, the
parties hereto agree as follows:
ARTICLE 1
DEFINITIONS AND RULES OF INTERPRETATION
1.1 Definitions. Capitalized terms defined in the preamble of this
Agreement shall have the meanings given to them in the preamble of this
Agreement and, except as otherwise expressly provided in this Agreement,
capitalized terms used in the preamble, the recitals and in this Agreement shall
have the meanings given in Annex A hereto.
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1.2 Rules of Interpretation. Except as otherwise expressly provided in
this Agreement, the rules of interpretation set forth in Annex A hereto shall
apply to this Agreement.
1.3 Accounting Principles and Terms. Except as otherwise provided in
this Agreement, (a) all computations and determinations as to financial matters,
and all financial statements to be delivered under this Agreement, shall be made
or prepared in accordance with GAAP (including principles of consolidation where
appropriate but excluding footnote disclosure on interim financial statements)
and on a consistent basis (except to the extent approved or required by the
independent public accountants certifying such statements and disclosed
therein), and (b) all accounting terms used in this Agreement shall have the
meanings respectively ascribed to such terms by GAAP.
ARTICLE 2
AFFIRMATIVE COVENANTS OF ISSUER
The Issuer covenants and agrees that it shall perform the
covenants set forth in this Article 2 (unless waived in accordance with Section
9.2 of this Agreement).
2.1 Use of Proceeds and Revenues.
(a) Proceeds. Unless otherwise expressly provided herein or in
the Depositary Agreement, the Issuer shall use all the proceeds from the sale of
the Series A Bonds to lend to each of the Bayou Cove Project Company, the
Rockford I Project Company and the Rockford II Project Company such Project
Company's Project Loan Amount pursuant to the Project Loan Agreement to which
such Project Company is a party.
(b) Revenues. Unless otherwise expressly provided herein or in
the Depositary Agreement, the Issuer shall deposit, or cause to be deposited,
all Project Revenues paid to or otherwise received by the Issuer in the
applicable Account in accordance with the terms of the Depositary Agreement.
2.2 Notices. The Issuer shall promptly, upon acquiring notice or giving
notice, as the case may be, or obtaining knowledge thereof, give written notice
(together with copies of any underlying notices or other documentation) to the
Collateral Agent, the Trustee, the Swap Counterparty and XLCA (if XLCA is the
Controlling Party) (it being acknowledged that XLCA shall have no obligation to
provide any such written notice received by it to any other Person) of:
(a) Any action, suit, arbitration or litigation pending or
threatened against the Issuer and (i) involving claims against the Issuer in
excess of $5,000,000 in the aggregate, or (ii) involving any injunctive,
declaratory or other equitable relief that, if determined adversely to the
Issuer, could reasonably be expected to have an Issuer Material Adverse Effect,
such notice to include, if reasonably requested by the Controlling Party, copies
of all material papers filed in such litigation involving the Issuer, and, if
reasonably requested by the Controlling Party, such notice to be given monthly
if any such papers have been filed since the last notice given;
(b) Any dispute or disputes which may exist between the Issuer
and any Governmental Authority and which involve (i) claims against the Issuer
which exceed
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$5,000,000 in the aggregate, or (ii) injunctive or declaratory relief that, if
adversely determined, could reasonably be expected to have an Issuer Material
Adverse Effect;
(c) Any Issuer Event of Default or Issuer Inchoate Default,
together with a description of any action being taken or proposed to be taken
with respect thereto;
(d) Any matter which has had or, in the Issuer's reasonable
judgment, could reasonably be expected to have, an Issuer Material Adverse
Effect;
(e) Any change in ratings given to the Issuer by ▇▇▇▇▇'▇ or
S&P, including the placement of the Issuer on "credit watch negative" or a
similar status, and, to the extent the Issuer, any Project Company or NRG Energy
has been notified in writing by any Rating Agency, any change in the Shadow
Ratings; and
(f) Any other documentation or other information reasonably
requested by XLCA (if XLCA is the Controlling Party).
Notwithstanding the foregoing, the Issuer shall not be
required to give notice of any matter described in this Section 2.2 that is
described in any Form 10-K, 10-Q or 8-K or other form or document filed by the
Issuer or any of its Affiliates with the Securities and Exchange Commission and
available on the Securities and Exchange Commission's Electronic Data Gathering,
Analysis and Retrieval (▇▇▇▇▇) system.
2.3 Financial Statements. The Issuer shall deliver or cause to be
delivered to the Collateral Agent, the Trustee, the Swap Counterparty and XLCA
(if XLCA is the Controlling Party) (it being acknowledged that XLCA shall have
no obligation to provide any financial statements or other information provided
to it under this Section 2.3 to any other Person):
(a) as soon as available and in any event within 120 days
after the end of each fiscal year of the Issuer, an audited consolidated balance
sheet of the Issuer as of the end of such fiscal year and the related audited
statements of income, retained earnings and cash flows for such fiscal year,
setting forth in each case in comparative form the figures for the previous
fiscal year, to the extent available, all reported on by an independent public
accountant of nationally recognized standing; and
(b) each time financial statements are delivered under Section
2.3(a) above, along with such financial statements, a certificate signed by a
Responsible Officer of the Issuer, certifying that such officer has made or
caused to be made a review of the transactions and financial condition of the
Issuer during the relevant fiscal period and that such review has not, to the
best of such Responsible Officer's knowledge, disclosed the existence of any
event or condition which constitutes an Issuer Event of Default or Issuer
Inchoate Default, or if any such event or condition existed or exists, the
nature thereof and the corrective actions that the Issuer has taken or proposes
to take with respect thereto, and also certifying that the Issuer is in
compliance with all applicable material provisions of each Financing Document to
which the Issuer is a party or, if such is not the case, stating the nature of
such non-compliance and the corrective actions which the Issuer has taken or
proposes to take with respect thereto.
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2.4 Inspection of Books and Records. The Issuer shall keep proper books
of accounts and records in accordance with GAAP and in compliance in all
material respects with all applicable Legal Requirements and make the same
available for inspection by the Controlling Party.
2.5 Compliance with Laws. The Issuer shall comply with all applicable
Legal Requirements, except where non-compliance could not reasonably be expected
to have an Issuer Material Adverse Effect.
2.6 Existence, Conduct of Business, Etc. The Issuer shall (a) maintain
and preserve (i) its existence as a limited liability company formed under the
laws of the State of Delaware (other than as permitted by Section 9.01 of the
Indenture), and (ii) all rights, privileges and franchises necessary or
desirable in the normal conduct of its business, (b) perform all of its
contractual obligations under the Financing Documents and (c) engage only in the
businesses (i) contemplated by the Financing Documents as represented in Section
2.1(o)(ii)(C) of the Insurance and Reimbursement Agreement or (ii) otherwise
expressly permitted by the Financing Documents. Without limiting the generality
of clause (c) in the preceding sentence, the Issuer shall not (A) enter into any
Project Document or any Additional Project Document (other than in connection
with activities expressly permitted by the Financing Documents), (B) hold any
equity, voting or other interest in any Person, or (C) have any employees.
2.7 Calculation of Ratios and Other Compliance Calculations.
(a) Within 17 days after each Determination Date, the Issuer
shall deliver to the Collateral Agent, the Trustee, the Swap Counterparty and
XLCA (if XLCA is the Controlling Party) (it being acknowledged that XLCA shall
have no obligation to provide any such certificate received by it to any other
Person) a certificate in the form of Exhibit A with the calculation of the Debt
Service Coverage Ratio for the Determination Period ending on such Determination
Date. If XLCA is the Controlling Party, XLCA shall notify the Issuer of any
errors in the calculation of the Debt Service Coverage Ratio within 10 days
after receipt of the Issuer's certificate and the Issuer and XLCA shall
diligently work to agree on the correction of any such errors. If the Issuer and
XLCA are unable to agree on the correction of any such errors within 5 days
after notification by XLCA to the Issuer of any such errors, such dispute shall
be resolved by the Fuel and Power Market Consultant within 3 days after
submission of the dispute to the Fuel and Power Market Consultant. The Issuer
shall deliver a corrected certificate to the Collateral Agent and XLCA within 3
days after agreement by the Issuer and XLCA, or resolution by the Fuel and Power
Market Consultant, on the correction of any such errors. If XLCA is not the
Controlling Party, the certificate originally delivered by the Issuer to the
Collateral Agent shall be final and conclusive.
(b) For so long as NRG Energy or any Acceptable Assignee has
obligations under the Contingent Guaranty Agreement, within 17 days after each
Determination Date, the Issuer shall deliver to the Collateral Agent, the
Trustee, the Swap Counterparty and XLCA (if XLCA is the Controlling Party) (it
being acknowledged that XLCA shall have no obligation to provide any such
certificate received by it to any other Person) a certificate in the form of
Exhibit B for the Determination Period ending on such Determination Date. If
XLCA is the Controlling Party, XLCA shall notify the Issuer of any errors in the
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calculation of any of the calculations set forth in such certificate within 10
days after receipt of such certificate and the Issuer and XLCA shall diligently
work to agree on the correction of any such errors. If the Issuer and XLCA are
unable to agree on the correction of any such errors within 5 days after
notification by XLCA to the Issuer of any such errors, such dispute shall be
resolved by the Independent Engineer and/or the Fuel and Power Market
Consultant, as indicated in Exhibit B, within 3 days after submission of the
dispute to the Independent Engineer and/or the Fuel and Power Market Consultant,
as the case may be. The Issuer shall deliver a corrected certificate to the
Collateral Agent and XLCA within 3 days after agreement by the Issuer and XLCA,
or resolution by the Independent Engineer and/or the Fuel and Power Market
Consultant, on the correction of any such errors. If XLCA is not the Controlling
Party, the certificate originally delivered by the Issuer to the Collateral
Agent shall be final and conclusive.
2.8 Further Assurances.
(a) The Issuer shall preserve the security interests in the
Issuer Collateral and shall undertake all actions which are necessary or
advisable under applicable law in such manner and in such jurisdictions to (i)
perfect and maintain the Collateral Agent's security interest in the Issuer
Collateral in full force and effect at all times (including the priority
thereof), and (ii) preserve and protect the Issuer Collateral and protect and
enforce the Issuer's rights and title and the rights of the Collateral Agent to
the Issuer Collateral, including the preparation, making or delivery of all
filings and recordations, the payment of fees and other charges and the issuance
of supplemental documentation.
(b) The Issuer shall perform such reasonable acts as may be
necessary to carry out the intent of this Agreement and the other Financing
Documents.
(c) The Issuer shall cause its equity interests to be
"certificated securities" as defined in Article 8 of the UCC and include in its
limited liability company agreement language (consistent with Section 8-103(c)
of the UCC) to the effect that such equity interests are "securities" (as such
term is defined in Article 8 of the UCC) governed by Article 8 of the UCC.
2.9 Taxes. The Issuer shall pay and discharge promptly when due all
material Taxes and governmental charges imposed upon it or upon its income or
profits or in respect of its property, in each case before the same shall become
delinquent or in default and before penalties accrue thereon, unless and to the
extent the same are being contested in good faith by appropriate proceedings and
adequate reserves with respect thereto shall, to the extent required by GAAP,
have been set aside, and failure to pay or comply with the contested item could
not reasonably be expected to have an Issuer Material Adverse Effect.
2.10 Notice of Redemption. The Issuer shall give notice to XLCA of any
redemption for any reason of any Bonds no later than the time a redemption
notice in respect of the redemption of such Bonds is given by the Issuer or the
Trustee in accordance with the Indenture.
2.11 Swap Agreement. The Issuer shall at all times be a party to an
interest rate swap agreement in respect of the Series A Bonds on the same or
similar terms (with adjustments to the aggregate notional amount as appropriate)
as the Swap Agreement and if for any reason the Issuer is not a party to the
Swap Agreement or if the Swap Agreement terminates, the Issuer shall
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ensure that it is party to a Replacement Swap Agreement such that at no time
shall the Issuer not be a party to such an interest rate swap agreement,
provided, however, that the Issuer's obligations to enter into a Replacement
Swap Agreement pursuant to this Section 2.11 shall be expressly conditioned upon
XLCA's agreement to provide a financial guaranty to the replacement swap
provider on the same or similar terms as the Swap Policy. The Issuer shall be
required to apply any amounts received from any replacement swap provider in
connection with the Issuer's entry into a Replacement Swap Agreement (a) first,
toward the satisfaction of any Swap Breakage Costs due and owing to the original
Swap Counterparty under the Swap Agreement, and (b) second, to reimburse XLCA
for any payments made under the Swap Policy constituting termination payments in
connection with an early termination of the Swap Agreement to the extent not
previously reimbursed. The Issuer shall terminate or partially terminate the
Swap Agreement, in each case subject to its terms and conditions, such that at
no time shall the aggregate notional amount under the Swap Agreement exceed the
then outstanding aggregate principal amount of the Series A Bonds.
ARTICLE 3
AFFIRMATIVE COVENANTS OF THE PROJECT COMPANIES
Each Project Company covenants and agrees that it shall
perform the covenants set forth in this Article 3, only with respect to itself
and its Project (unless waived in accordance with Section 9.2 of this
Agreement). The covenants set forth in this Article 3 that expressly require
performance only by a specified Project Company shall be required to be
performed only by such Project Company (unless such performance is waived in
accordance with Section 9.2 of this Agreement).
3.1 Use of Proceeds and Revenues.
(a) Proceeds. Unless otherwise expressly provided herein or in
the Depositary Agreement, each Project Company party to a Project Loan Agreement
shall apply, on the Closing Date, the proceeds from the sale of the Series A
Bonds borrowed from the Issuer pursuant to the Project Loan Agreement to which
such Project Company is a party to (i) reimburse NRG Energy for NRG Energy's
costs of having constructed and/or acquired the Projects (including interest
incurred during construction), (ii) pay the Premium and all additional amounts
required to be paid to XLCA pursuant to the Policy and the Insurance and
Reimbursement Agreement on the Closing Date, (iii) deposit $11,279,588 in the
Collateralized Experience Account in accordance with Section 4.3.1 of the
Depositary Agreement, and (iv) pay the transaction fees and costs due on the
Closing Date in connection with the Transaction to the relevant Persons.
(b) Revenues. Each Project Company shall deposit all Project
Revenues, Loss Proceeds and any other amounts due to it directly into the
applicable Accounts as required pursuant to the Depositary Agreement and the
other Financing Documents. Each Project Company shall use its good faith
reasonable efforts to cause all Project Revenues, Loss Proceeds and any other
amounts due to it to be paid or otherwise delivered by Persons making such
payment or delivery directly into the applicable Accounts as required pursuant
to the Depositary Agreement and the other Financing Documents.
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3.2 Reporting Requirements.
(a) Notice of Material Events. Each Project Company shall
promptly, upon acquiring notice or giving notice, as the case may be, or
obtaining knowledge thereof, give written notice (together with copies of any
underlying notices or other documentation) to the Collateral Agent, the Trustee,
the Swap Counterparty and XLCA (if XLCA is the Controlling Party) (it being
acknowledged that XLCA shall have no obligation to provide any such written
notice received by it to any other Person) of:
(i) Any action, suit, arbitration, litigation, investigation
or other proceeding or any dispute with any Governmental Authority
relating to it or its Project and that involves (A) claims against it
or its Project in excess of $2,000,000 or potential claims against it
or its Project in excess of $4,000,000, in each case in the aggregate,
(B) any injunctive, declaratory or other equitable relief that, if
determined adversely to such Project Company, could reasonably be
expected to have a Project Material Adverse Effect, (C) revocation,
modification, failure to renew or the like of any material Permit or
imposition of additional material conditions with respect thereto, or
(D) any Lien (other than a Project Company Permitted Lien) related to
its Project for taxes due and payable but not paid;
(ii) Any Project Event of Default or Project Inchoate Default,
together with a description of any action being taken or proposed to be
taken with respect thereto;
(iii) Any cancellation or suspension, or receipt of written
notice of threatened or potential cancellation or suspension, of any
insurance described in Exhibit C;
(iv) Any matter which has had or, in such Project Company's
reasonable judgment, could reasonably be expected to have, a Project
Material Adverse Effect;
(v) Any termination of, or delivery or receipt of written
notice of any material default under, any of such Project Company's
Major Project Documents;
(vi) Any written notice received from or given to any party to
any of such Project Company's Major Project Documents (A) that an event
of force majeure has occurred thereunder or (B) in respect of any claim
in connection with an event of force majeure thereunder;
(vii) The scheduled or proposed conduct of any of the
performance or other tests listed on Exhibit D (the "Completion
Tests"), which notice shall be given at least 10 Business Days prior to
the date on which such test is scheduled or proposed to occur, and a
copy of which notice shall be given to the Independent Engineer;
(viii) Any (A) fact, circumstance, condition or occurrence at,
on or arising from, such Project Company's Site, Improvements or other
Mortgaged Property that results in material noncompliance with, or
material violation of, any Hazardous Substances Law, (B) Release or
threatened Release of Hazardous Substances in, on, under or from or in
connection with, such Project Company's Site, Improvements or other
Mortgaged Property that has resulted or could reasonably be expected to
result in material personal
8
injury, material property damage or a Project Material Adverse Effect,
and (C) pending or, to the knowledge of such Project Company,
threatened Environmental Claim against it or, to the knowledge of such
Project Company, any of its Affiliates, contractors, lessees or any
other Persons, arising in connection with the development,
construction, ownership, leasing, use, operation or maintenance of its
Project, or such Project Company's occupying or conducting operations
on or at such Project Company's Site, Improvements or other Mortgaged
Property that has resulted or could reasonably be expected to result in
material personal injury, material property damage or a Project
Material Adverse Effect; and
(ix) Any Casualty Event or Condemnation Event, or the
commencement of proceedings in connection therewith, with respect to
its Project involving a probable loss of $5,000,000 or more.
Notwithstanding the foregoing, such Project Company shall not
be required to give notice of any matter described in this Section 3.2(a) that
is described in any Form 10-K, 10-Q or 8-K or other form or document filed by
such Project Company or any of its Affiliates with the Securities and Exchange
Commission and available on the Commission's Electronic Data Gathering, Analysis
and Retrieval (▇▇▇▇▇) system.
(b) Additional Documents, Periodic Reports, Etc. Each Project
Company shall deliver, or cause to be delivered, to the Collateral Agent, the
Trustee, the Swap Counterparty and XLCA (if XLCA is the Controlling Party) (it
being acknowledged that XLCA shall have no obligation to provide any notices or
other information provided to it pursuant to this Section 3.2(b) to any other
Person):
(i) Promptly, but in no event later than 10 Business Days
after it has knowledge of the execution and delivery thereof, a copy of
each of its material Additional Project Documents;
(ii) Promptly, but in no event later than 10 Business Days
after the effective date thereof, a copy of each material amendment,
supplement or other modification to any of its Major Project Documents;
(iii) Promptly, but in no event later than 10 Business Days
after receipt thereof by it, copies of any Permit listed on Part II of
the Permit Schedule and any other material Permit related to its
Project obtained by it after the date hereof;
(iv) With respect to the Bayou Cove Project only, promptly,
but in no event later than 10 Business Days after the execution and
delivery thereof, a copy of the transfer deed for the transfer of a
portion of the Site relating to the Bayou Cove Project pursuant to
Section 4.2.2 of the Bayou Cove EPC Agreement (Electric Interconnection
Facilities);
(v) Within 17 days after each Determination Date, an Annual
Operations Report substantially in the form of Exhibit E setting forth
the information required therein;
9
(vi) Within 17 days after each Determination Date, a
certificate, substantially in the form of Exhibit F certifying that the
insurance requirements set forth in Exhibit C have been implemented and
are being complied with in all material respects; and
(vii) Any other documentation or other information reasonably
requested by XLCA (if XLCA is the Controlling Party).
(c) Financial Statements. Each Project Company shall deliver,
or cause to be delivered, to the Collateral Agent, the Trustee, the Swap
Counterparty and XLCA (if XLCA is the Controlling Party) (it being acknowledged
that XLCA shall have no obligation to provide any financial statements and other
information provided to it under this Section 3.2(c) to any other Person) as
soon as available and in any event within 120 days after the end of its fiscal
year, a balance sheet (which need not be audited) of such Project Company and
the related statements of income, retained earnings and cash flows for such
fiscal year, setting forth in each case in comparative form the figures for the
previous fiscal year, to the extent available, each certified as to fairness of
presentation by a Responsible Officer of such Project Company.
3.3 Inspection of Books and Records. Each Project Company shall keep
proper books of records and accounts in accordance with GAAP and in compliance
in all material respects with all applicable Legal Requirements and make the
same available for inspection by the Controlling Party.
3.4 Plans and Specifications; Completion Tests.
(a) Plans and Specifications. Each Project Company shall cause
a complete set of as-built plans and specifications (and all supplements
thereto) related to its Project to be maintained at the corporate office at such
Project Company's Site and available for inspection by the Controlling Party and
the Independent Engineer; provided that neither the Bayou Cove Project Company
nor the Rockford II Project Company shall be required to comply with this
covenant until the Completion Date for such Project Company's Project. Without
prejudice to the immediately preceding sentence, each of the Bayou Cove Project
Company and the Rockford II Project Company shall, not later than eight months
after the Completion Date for its Project, cause an as-built survey to be
prepared and delivered to XLCA (if XLCA is the Controlling Party), the
Collateral Agent, the Trustee and the Independent Engineer.
(b) Completion Tests. Each Project Company shall permit the
Controlling Party and the Independent Engineer to witness the Completion Tests
in respect of its Project.
3.5 Compliance with Laws. Each Project Company shall comply with, and
shall ensure that its Project is operated in compliance with, and shall make
such alterations to its Project as may be required for compliance with, all
applicable Legal Requirements, except where non-compliance could not reasonably
be expected to have a Project Material Adverse Effect.
3.6 Maintenance of Existence and Business. Each Project Company shall
at all times preserve and maintain (a) its existence as a limited liability
company and its good standing under the laws of (i) in the case of the Bayou
Cove Project Company, the Big Cajun Project Company and the Sterlington Project
Company, the State of Delaware, or (ii) in the case of the Rockford I Project
Company and the Rockford II Project Company, the State of Illinois (other than
as
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permitted by Section 5.10), (b) its qualification to do business in each
jurisdiction in which the character of the properties owned or leased by it or
in which the transaction of its business as conducted or proposed to be
conducted makes such qualification necessary except to the extent that the
failure to do so could not reasonably be expected to have a Project Material
Adverse Effect, and (c) its other material rights, privileges and franchises
necessary or desirable in the normal conduct of its business.
3.7 Project Documents. Each Project Company shall exercise, preserve
and defend all of its rights under its Project Documents, except to the extent
failure to so exercise, preserve or defend such rights could not reasonably be
expected to have a Project Material Adverse Effect.
3.8 Permits. Each Project Company shall obtain all Permits required at
any time and from time to time in connection with such Project Company's
development, construction, ownership, leasing, operation, maintenance or use of
its Project, except to the extent the failure to obtain such Permits could not
reasonably be expected to have a Project Material Adverse Effect.
3.9 Further Assurances.
(a) Each Project Company shall preserve the security interests
granted or purported to be granted under the Collateral Documents to which it is
a party and undertake all actions which are necessary or advisable under
applicable law in such manner and in such jurisdictions to (i) perfect and
maintain the Collateral Agent's valid and perfected security interests in its
Project Company Collateral in full force and effect at all times (including the
priority thereof), subject to no Liens other than Project Company Permitted
Liens, and (ii) preserve and protect its Project Company Collateral and protect
and enforce its right, title and interest in and to, and the rights of the
Collateral Agent in and to, its Project Company Collateral, including the
preparation, making or delivery of all filings and recordations, the payment of
fees and other charges and the issuance of supplemental documentation.
(b) If a Project Company obtains any right, title or interest
in, to or under any real property (including leasehold interests) that is
material to the development, construction, ownership, leasing, operation,
maintenance or use of its Project and that is not covered by the Collateral
Documents to which it is a party, it shall (i) collaterally assign such right,
title or interest to the Collateral Agent for the benefit of the Secured
Parties, (ii) record a supplement to the Mortgage to which it is a party in form
and substance reasonably satisfactory to Collateral Agent encumbering such
right, title or interest by the Lien of such Mortgage, and (iii) obtain a
supplement to the applicable Title Policy insuring the first priority (subject
to Project Company Permitted Liens) of such Mortgage over such real property.
(c) Each Project Company shall perform such reasonable acts as
may be necessary to carry out the intent of this Agreement (including its
Guaranty) and the other Financing Documents to which it is a party.
(d) Each Project Company shall cause its equity interests to
be "certificated securities" as defined in Article 8 of the UCC and include in
its limited liability company
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agreement language (consistent with Section 8-103(c) of the UCC) to the effect
that such equity interests are "securities" (as such term is defined in Article
8 of the UCC) governed by Article 8 of the UCC.
3.10 Maintenance of Insurance. Each Project Company shall maintain or
cause to be maintained on its behalf in effect at all times the types of
insurance required pursuant to Exhibit C in the amounts and on the terms and
conditions specified therein (including paragraph 5 of Exhibit C).
3.11 Taxes. Each Project Company will pay and discharge promptly when
due all material Taxes and governmental charges imposed upon it or upon its
income or profits or in respect of its property, in each case before the same
shall become delinquent or in default and before penalties accrue thereon,
unless and to the extent the same are being contested in good faith by
appropriate proceedings and adequate reserves with respect thereto shall, to the
extent required by GAAP have been set aside, and failure to pay or comply with
the contested item could not reasonably be expected to have a Project Material
Adverse Effect.
3.12 Title; Maintenance of Properties.
(a) Title. Each Project Company shall preserve and maintain
good and, with respect to real property, marketable and insurable, title to its
Project and all of its other assets and good, marketable and insurable fee title
to, or as applicable, a valid and subsisting leasehold estate in, its Site and
the Improvements and Easements related to its Project, in each case free and
clear of all Liens other than Project Company Permitted Liens; provided that the
covenant set forth in this Section 3.12 shall not serve to prohibit any
disposition of assets expressly permitted under Section 5.4 of this Agreement.
(b) Bayou Cove. Specifically, notwithstanding the terms of the
Bayou Cove EPC Agreement (Electric Interconnection Facilities), the Bayou Cove
Project Company shall preserve and maintain good, marketable and insurable title
to its Site and the Improvements and Easements related to its Project, in each
case free and clear of all Liens other than its Project Company Permitted Liens,
except for the transfer of title to Entergy Louisiana of that portion of its
Site which is defined on the deed of transfer attached as Exhibit G; provided
that the covenant set forth in this Section 3.12(b) shall not serve to prohibit
any disposition of assets expressly permitted under Section 5.4 of this
Agreement.
(c) Maintenance of Properties. Each Project Company shall
maintain in good repair, working order and condition, all of its material
properties used or useful in respect of the conduct of its business and from
time to time make all appropriate repairs, renewals and replacements thereof,
except to the extent that it shall determine in good faith not to maintain,
repair, renew or replace such property if such property is no longer useful in
the conduct of its business and the failure to do so could not reasonably be
expected to have a Project Material Adverse Effect; provided that the covenant
set forth in this Section 3.12(c) shall not serve to prohibit any disposition of
assets expressly permitted under Section 5.4 of this Agreement.
3.13 Market Based Rate Authority. To the extent market-based rates are
available to similarly situated generators selling Power, Ancillary Services or
some combination of the
12
foregoing in the Applicable Markets, each Project Company shall maintain at all
times its authority to sell at market-based rates wholesale Power, Ancillary
Services and, to the extent permitted as an Exempt Wholesale Generator or under
its FERC tariff, Other Energy-Related Products and Services in the Applicable
Markets, not subject to any rate caps or mitigation measures other than rate
caps and mitigation measures generally applicable to similarly situated
generators selling Power, Ancillary Services or some combination of the
foregoing in the Applicable Markets.
3.14 Completion.
(a) The Bayou Cove Project Company shall cause the Completion
of the Bayou Cove Project to occur on or prior to June 30, 2003. In addition,
the Bayou Cove Project Company shall (i) up to a maximum aggregate cap of
$2,000,000 pay any and all Uncovered Warranty Costs that are incurred or
identified during any Warranty Period relating to the Bayou Cove Project, (ii)
pay any and all indemnity claims made against it arising out of any Bayou Cove
Equipment and Construction Contract relating to any actions or events which
occurred or failed to occur prior to Completion, and (iii) pay any damages owing
to any Bayou Cove Contractor under any Bayou Cove Equipment and Construction
Contract or any third party claim made against it arising out of any actions or
events related to any work performed to achieve Completion under a Bayou Cove
Equipment and Construction Contract (the obligations contained in this Section
3.14(a), the "Bayou Cove Completion Obligations").
(b) The Rockford II Project Company shall cause the Completion
of the Rockford II Project to occur on or prior to June 30, 2003. In addition,
the Rockford II Project Company shall (i) pay any and all indemnity claims made
against it arising out of any Rockford II Equipment and Construction Contract
relating to any actions or events which occurred or failed to occur prior to
Completion, and (ii) pay any damages owing to any Rockford II Contractor under
any Rockford II Equipment and Construction Contract or any third party claim
made against it arising out of any actions or events related to any work
performed to achieve Completion under a Rockford II Equipment and Construction
Contract (the obligations contained in this Section 3.14(b), the "Rockford II
Completion Obligations").
3.15 Operation and Maintenance. Each Project Company shall, or shall
cause its Operator to, use, operate and maintain its Project in compliance with
Prudent Utility Practices, all Legal Requirements and the terms of its Project
Documents.
3.16 Condemnation Event. If a Condemnation Event occurs or proceedings
therefor commence with respect to a Project Company's Project, such Project
Company shall (i) diligently pursue all its rights to compensation against the
relevant Governmental Authority in respect of such Condemnation Event except
where failure to do so could not reasonably be expected to have a Project
Material Adverse Effect, and (ii) not, without the written approval of XLCA (if
XLCA is the Controlling Party and which approval shall be in XLCA's absolute
discretion), compromise or settle any claim in excess of $5,000,000 against such
Governmental Authority. Each Project Company consents to the participation of
the Controlling Party in any condemnation proceedings, and each Project Company
shall from time to time deliver to the Controlling Party all documents and
instruments requested by it to permit such participation.
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3.17 Sterlington PPA Legal Opinion. The Sterlington Project Company
shall deliver a legal opinion to the Secured Parties and the Depositary Agent in
respect of the Sterlington PPA within 30 days after its acceptance by FERC and
execution by the parties thereto, which legal opinion shall be in form and
substance substantially the same as the legal opinions delivered with respect to
the other Major Project Documents on the Closing Date.
3.18 Fuel and Power Marketing Plan. Each Project Company shall comply,
in all material respects with the power marketing, fuel supply and transmission
and transportation service parameters set forth in Sections 2.2.2, 2.2.3, 3.2
and 3.3 of the Fuel and Power Marketing Plan attached to the Power Sales and
Agency Agreement to which such Project Company is a party.
3.19 Unrestricted Subsidiary. Each of the Bayou Cove Project Company,
the Big Cajun Project Company and the Sterlington Project Company shall maintain
at all times its designation as an "Unrestricted Subsidiary" (as such term is
defined in the South Central Financing Documents); provided that any such
Project Company shall not be required to comply with this covenant if it is no
longer a Subsidiary of NRG South Central.
ARTICLE 4
NEGATIVE COVENANTS OF ISSUER
The Issuer covenants and agrees that the Issuer shall perform
the covenants set forth in this Article 4 (unless waived in accordance with
Section 9.2 of this Agreement).
4.1 Contingent Liabilities. Except for the consummation of the
transactions pursuant to this Agreement and the other Financing Documents, the
Issuer shall not become liable as a surety, guarantor, accommodation endorser or
otherwise, for or upon the obligation of any other Person; provided, however,
that this Section 4.1 shall not be deemed to prohibit the incurrence, creation,
assumption or existence of Issuer Permitted Debt or Issuer Permitted Liens.
4.2 Limitations on Liens. The Issuer shall not create, assume or suffer
to exist any Lien securing a charge or obligation on any Issuer Collateral, real
or personal, whether now owned or hereafter acquired, except Issuer Permitted
Liens.
4.3 Indebtedness.
(a) The Issuer shall not incur, create, assume or permit to
exist any Debt, except Issuer Permitted Debt.
(b) Notwithstanding anything to the contrary in Section
4.3(a), and in addition to the requirements set forth in Section 3.02 of the
Indenture, Additional Bonds shall not be authenticated, delivered or issued
under the Indenture and no Debt shall be incurred by or on behalf of the Issuer
in respect of any Additional Bonds unless (i) no Issuer Event of Default or
Issuer Inchoate Default has occurred and is continuing or would occur as a
result of such authentication, delivery, issuance or incurrence, (ii) each of
Moody's and S&P has confirmed in writing that such authentication, delivery,
issuance or incurrence will not result in downgrade of (x) the ratings for the
Series A Bonds (after giving effect to the Policy) below Aaa by Moody's
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and AAA by S&P, and (y) the Shadow Ratings for the Series A Bonds below Baa3 by
Moody's and BBB- by S&P, and (iii) XLCA shall have agreed, in its absolute
discretion, to the issuance of the Additional Bonds and to unconditionally and
irrevocably guaranty the scheduled payments of principal of and interest on such
Additional Bonds in the same manner and to the same extent as scheduled payments
of principal of and interest on the Series A Bonds are guaranteed under the
Policy. The Collateral Agent shall, on behalf of the Secured Parties, execute
such documents and take such other actions as reasonably requested by, and at
the expense of, the Issuer to effect and evidence the issuance of Additional
Bonds pursuant to Section 3.02 of the Indenture.
4.4 Sale of Assets. The Issuer shall not sell, lease (as lessor),
assign, transfer or otherwise dispose of any of its material properties or
assets, whether now owned or hereafter acquired (other than in accordance with
Section 9.01 of the Indenture); provided that this Section 4.4 shall not be
deemed to prohibit the grant, creation or assumption of Issuer Permitted Liens.
The Issuer shall not sell, assign, transfer or otherwise dispose of any Project
Loan Note other than pursuant to, and in connection with, a Permitted Peaker
Buyout.
4.5 Distributions.
(a) The Issuer shall not directly or indirectly (i) make or
declare any distribution (in cash, property or obligation) on, or make any other
payment on account of, any equity interest in the Issuer, (ii) make any payment
in respect of Subordinated Debt or (iii) make any other payment from the
Distribution Account (whether to a Project Company, any Affiliate of the Issuer
or any Project Company or any other Person) (each such distribution or payment,
a "Restricted Payment") unless:
(i) no Issuer Event of Default, Issuer Inchoate Default or
Project Event of Default pursuant to Section 7.2(n) of this Agreement
(Interconnection Solution) has occurred and is continuing and such
Restricted Payment will not result in an Issuer Event of Default or an
Issuer Inchoate Default;
(ii) subject to any reduction in the amount of the Restricted
Payment in accordance with Section 4.5(b) of this Agreement, the amount
of such Restricted Payment is limited to, and such Restricted Payment
is made from, Account Funds in the Distribution Account and in
accordance with Section 4.6 of the Depositary Agreement;
(iii) the Restricted Payment is made on a Restricted Payment
Date;
(iv) as of the Restricted Payment Date, the Available
Collateralized Experience Funds equal or exceed the Collateralized
Experience Amount as of such date; and
(v) the Issuer shall have delivered to Collateral Agent, the
Trustee, the Swap Counterparty and XLCA, at least five Business Days
prior to the proposed Restricted Payment Date, a certificate dated as
of the proposed Restricted Payment Date and duly executed by a
Responsible Officer of the Issuer, certifying to the effect that each
of the foregoing conditions and the other applicable conditions of this
Section 4.5 shall have been satisfied as of such date and XLCA (if it
is the Controlling Party), acting in its absolute discretion, shall
have confirmed in writing to the Collateral Agent XLCA's
15
agreement with such certificate (provided that failure by XLCA to make
such confirmation prior to the proposed Restricted Payment Date shall
be deemed to be such confirmation).
(b) If there shall have occurred and be continuing a Project
Event of Default or an Inchoate Project Block Condition in respect of any
Project Company, the Issuer shall reduce the Restricted Payment to be made by it
pursuant to Section 4.5(a) of this Agreement by an amount equal to the Project
Company Blocked Amount for such Project Company. Subject to Section 4.5(d), such
Project Company Blocked Amount shall be deemed to be Account Funds in the
Distribution Account not disbursed within 30 days after an Annual Scheduled
Payment Date and, accordingly, the Collateral Agent shall direct the Depositary
Agent to promptly transfer such Project Company Blocked Amount to the Revenue
Account to be applied in accordance with the Depositary Agreement in the same
manner as Account Funds in the Distribution Account that are not disbursed in
accordance with Section 4.6.2 of the Depositary Agreement by the 30th day
following an Annual Scheduled Payment Date.
(c) Notwithstanding anything to the contrary in Section
4.5(a), if the Issuer is not permitted to make a Restricted Payment pursuant to
Section 4.5(a) on any Initial Restricted Payment Date solely because of an
Inchoate Block Condition:
(i) the amount of the Restricted Payment that the Issuer would
have been permitted to make pursuant to Section 4.5(a) had no such
Inchoate Block Condition been continuing on such Initial Restricted
Payment Date (the "Blocked Restricted Payment Amount") shall not be
transferred from the Distribution Account to the Revenue Account until
the earlier of the end of the Subsequent Restricted Payment Period and
the occurrence of an Issuer Event of Default (at which time the Blocked
Restricted Payment Amount or any part thereof not previously applied as
permitted by Section 4.5(c)(ii) shall be deemed to be Account Funds in
the Distribution Account not disbursed within 30 days after an Annual
Scheduled Payment Date and, accordingly, the Collateral Agent shall
direct the Depositary Agent to promptly transfer the Blocked Restricted
Payment Amount or such part thereof to the Revenue Account to be
applied in accordance with the Depositary Agreement in the same manner
as Account Funds in the Distribution Account that are not disbursed in
accordance with Section 4.6.2 of the Depositary Agreement by the 30th
day following an Annual Scheduled Payment Date); and
(ii) prior to the end of the Subsequent Restricted Payment
Period, and only if such Inchoate Block Condition shall have been cured
by, or on behalf of, the Issuer or shall have been waived by the
Controlling Party prior to maturing into or becoming an Issuer Event of
Default, the Issuer may use the Blocked Restricted Payment Amount to
make a Restricted Payment; provided that the conditions set forth in
Section 4.5(a)(i) through (v) are satisfied (the date upon which such
payment is made, the "Subsequent Restricted Payment Date").
(d) Notwithstanding anything to the contrary in Section
4.5(b), if the Issuer is not permitted to make a Restricted Payment pursuant to
Section 4.5(b) on any Initial Restricted Payment Date solely because of an
Inchoate Project Block Condition:
16
(i) the Project Company Blocked Amount shall not be
transferred from the Distribution Account to the Revenue Account until
the earlier of the end of the Subsequent Project Restricted Payment
Period and the occurrence of a Project Event of Default (at which time
the Project Company Blocked Amount or any part thereof not previously
applied as permitted by Section 4.5(d)(ii) shall be deemed to be
Account Funds in the Distribution Account not disbursed within 30 days
after an Annual Scheduled Payment Date and, accordingly, the Collateral
Agent shall direct the Depositary Agent to promptly transfer the
Project Company Blocked Amount or such part thereof to the Revenue
Account to be applied in accordance with the Depositary Agreement in
the same manner as Account Funds in the Distribution Account that are
not disbursed in accordance with Section 4.6.2 of the Depositary
Agreement by the 30th day following an Annual Scheduled Payment Date);
and
(ii) prior to the end of the Subsequent Project Restricted
Payment Period, and only if such Inchoate Project Block Condition shall
have been cured by, or on behalf of, the relevant Project Company or
shall have been waived by the Controlling Party prior to maturing into
or becoming a Project Event of Default, the Issuer may use the Project
Company Blocked Amount to make a Restricted Payment; provided that the
conditions set forth in Section 4.5(a)(i) through (v) are satisfied
(the date upon which such payment is made, the "Subsequent Project
Restricted Payment Date").
(e) Even if all of the conditions set forth in Section 4.5(a)
or 4.5(b) of this Agreement have not been satisfied as of a proposed Restricted
Payment Date, the Issuer may make distributions ("Tax Distributions") for
Federal, state or local income tax payments in an amount not to exceed the
amount that the Issuer and the Project Companies would be required to pay if
such Persons were tax paying entities forming a consolidated group for Federal
income tax purposes or a similar consolidated, combined or unitary group for
state or local income tax purposes (the "Tax Group"), which amount shall be
assumed to equal the product of (A) the net income of the Tax Group for Federal,
state or local income tax purposes multiplied by (B) the highest marginal
Federal, state or local income tax rate at the time applicable to "C"
corporations; provided that the net income of the Tax Group shall be calculated
based on the assumption that the Tax Group is not part of any other consolidated
group (or similar group for state or local income tax purposes) and that all of
the Tax Group's tax attributes and benefits (including, without limitation,
deductions, credits, refunds, carryovers and carrybacks) shall be applied solely
with respect to the Tax Group's income; and provided, further, that no Tax
Distribution pursuant to this Section 4.5(e) shall be permitted, if an Issuer
Event of Default or Issuer Inchoate Default has occurred and is continuing or
would result from such Tax Distributions.
(f) Notwithstanding anything to the contrary in Section
4.5(e), if the Issuer is not permitted to make a Tax Distribution pursuant to
Section 4.5(e) solely because there shall be continuing an Issuer Inchoate
Default:
(i) the amount of the Tax Distribution that the Issuer would
have been permitted to make pursuant to Section 4.5(e) had no such
Issuer Inchoate Default been continuing (the "Tax Distribution Amount")
shall not be transferred from the Distribution Account to the Revenue
Account until the earlier of the end of the Subsequent Tax
17
Payment Period and the occurrence of an Issuer Event of Default (at
which time the Tax Distribution Amount or any part thereof not
previously applied as permitted by Section 4.5(f)(ii) shall be deemed
to be Account Funds in the Distribution Account not disbursed within 30
days after an Annual Scheduled Payment Date and, accordingly, the
Collateral Agent shall direct the Depositary Agent to promptly transfer
the Tax Distribution Amount or such part thereof to the Revenue Account
to be applied in accordance with the Depositary Agreement in the same
manner as Account Funds in the Distribution Account that are not
disbursed in accordance with Section 4.6.2 of the Depositary Agreement
by the 30th day following an Annual Scheduled Payment Date); and
(ii) prior to the end of the Subsequent Tax Payment Period,
and only if such Issuer Inchoate Default shall have been cured by, or
on behalf of, the Issuer or shall have been waived by the Controlling
Party prior to maturing into or becoming an Issuer Event of Default,
the Issuer may use the Tax Distribution Amount to make a Tax
Distribution in the amount set forth, and in the manner contemplated,
in Section 4.5(e).
(g) Notwithstanding anything to the contrary herein or in any
other Financing Document, neither (i) Excluded Revenues nor (ii) amounts payable
to, or permitted to be disbursed to, NRG Energy pursuant to the Depositary
Agreement shall constitute Restricted Payments subject to this Section 4.5 and
such Excluded Revenues and amounts shall be permitted to be disbursed to NRG
Energy or any Affiliate thereof without regard for the conditions set forth in
this Section 4.5.
4.6 Investments. The Issuer shall not make any investments (whether by
purchase of stocks, bonds, notes or other securities, loan, extension of credit,
advance or otherwise) other than (a) Permitted Investments made pursuant to
Section 5.1 of the Depositary Agreement, and (b) the investments provided for in
the Financing Documents.
4.7 Transactions With Affiliates. The Issuer shall not enter into any
transaction or agreement (or any transaction under or pursuant to any
transaction or agreement) with any of its Affiliates other than (a) transactions
provided for in or expressly permitted by the Financing Documents, (b)
transactions or agreements certified by a Responsible Officer of the Issuer as
having terms that are not materially less favorable than the terms the Issuer
would obtain in an arm's-length transaction with a person that is not an
Affiliate, or (c) transactions or agreements between or among only the Issuer
and/or the Project Companies not otherwise prohibited by the terms of any
Financing Document.
4.8 ERISA. The Issuer shall not establish, maintain, contribute to or
become obligated to contribute to any ERISA Plan.
4.9 Liquidation; Amendment of Organizational Documents.
(a) The Issuer shall not liquidate or dissolve itself (or
suffer any liquidation or dissolution) or amend its organizational documents in
any material respect (except, in respect of such amendment of its organizational
documents, (i) as required to comply with the "special purpose entity"
requirements or similar criteria of any Rating Agency or (ii) in connection with
a Permitted Change of Control).
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(b) Section 9.01 of the Indenture shall govern the Issuer's
rights in respect of the transactions expressly referred to in such Section 9.01
(and reference is made herein to Section 9.01(4) of the Indenture and the right
of XLCA (at any time when there is no Insurer Default) to consent, in its
absolute discretion, to any transaction referred to therein prior to its
consummation). Upon any consolidation of the Issuer with, or merger of the
Issuer into, any other Person in accordance with Section 9.01 of the Indenture,
the successor Person formed by such consolidation or into which the Issuer is
merged or to which any conveyance, transfer or lease is made in accordance with
Section 9.01 of the Indenture shall succeed to, and be substituted for, and may
exercise every right and power of, the Issuer under this Agreement and the other
Financing Documents with the same effect as if such successor Person had been
named as the Issuer in this Agreement and the other Financing Documents, and
thereafter, except in the case of a lease, the predecessor Person shall be
relieved of all obligations and covenants under the Financing Documents.
4.10 Accounts. The Issuer shall not maintain, establish or use any
bank, deposit or securities accounts other than the Accounts and the Closing
Date Account.
4.11 Name and Location; Fiscal Year. The Issuer shall not (a) change
its name, the location of its principal place of business, the location of the
Issuer Collateral, its jurisdiction of organization or its organizational
identification number without notice to the Collateral Agent at least 30 days
prior to such change, or (b) for so long as XLCA is the Controlling Party,
change its fiscal year without XLCA's prior written consent.
4.12 Assignment. The Issuer shall not assign its rights or obligations
hereunder or under any other Financing Documents, except as expressly permitted
under this Agreement.
4.13 No SEC Registration. The Issuer shall not, and shall not permit
any Person acting on its behalf to, subject the offering, issuance or sale of
the Series A Bonds to Section 5 of the Securities Act.
ARTICLE 5
NEGATIVE COVENANTS OF PROJECT COMPANIES
Each Project Company covenants and agrees that it shall
perform the covenants set forth in this Article 5, only with respect to itself
and its Project (unless waived in accordance with Section 9.2 of this
Agreement). The covenants set forth in this Article 5 that expressly require
performance only by a specified Project Company shall be required to be
performed only by such Project Company (unless such performance is waived in
accordance with Section 9.2 of this Agreement).
5.1 Contingent Liabilities. Except for the consummation of the
transactions pursuant to this Agreement and the other Financing Documents, such
Project Company shall not become liable as a surety, guarantor, accommodation
endorser or otherwise, for or upon the obligation of any other Person; provided,
however, that this Section 5.1 shall not be deemed to prohibit the incurrence,
creation, assumption or existence of Project Company Permitted Debt or Project
Company Permitted Liens.
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5.2 Liens. Such Project Company shall not create, assume or suffer to
exist any Lien securing a charge or obligation on any of its Project Company
Collateral, whether now owned or hereafter acquired, except Project Company
Permitted Liens.
5.3 Indebtedness. Such Project Company shall not incur, create, assume
or permit to exist any Debt, except Project Company Permitted Debt.
5.4 Asset Dispositions. Such Project Company shall not sell, lease (as
lessor), license (as licensor), assign, pledge, transfer or otherwise dispose of
any of its assets (including any Project Company Collateral), whether now owned
or hereafter acquired, other than (a) sales of goods, products and/or services
in the ordinary course of business as contemplated by its Project Documents, (b)
sales of assets that are replaced with substantially similar assets, (c) sales
for fair market value of worn out or obsolete assets, or of surplus assets or
land, that are not useful or necessary in connection with the development,
construction, ownership, leasing, operation, maintenance or use of its Project,
in an aggregate amount (over the entire term of this Agreement) not to exceed
$10,000,000 (provided that such aggregate amount shall be increased from time to
time by reference to the United States Department of Labor Consumer Price
Index), (d) sales or transfers of assets required by the terms of its Project
Documents (provided that the Bayou Cove Project Company shall not be permitted
to transfer the entire Site of the Bayou Cove Project pursuant to the Bayou Cove
EPC Agreement (Interconnection Facilities)), and (e) in connection with a
Permitted Peaker Buyout, provided that this Section 5.4 shall not be deemed to
prohibit the grant or creation of any Project Company Permitted Liens. If a
Project Company is permitted to dispose of assets pursuant to this Section 5.4,
as certified to the Collateral Agent by a Responsible Officer of such Project
Company, the Collateral Agent shall then take all actions reasonably requested
by such Project Company in writing in order to release the Liens of the
Collateral Agent on such assets (including the execution of UCC-3 termination
statements and deeds of reconveyance).
5.5 Business Activities. Such Project Company shall not engage in any
activities other than (a) the development, ownership, leasing, construction,
operation, maintenance and use of its Project as contemplated by the Operative
Documents, (b) other activities expressly permitted by the Financing Documents,
and (c) activities reasonably incidental thereto. Such Project Company shall not
make any alterations, modifications, renovations or improvements to its Project
other than those that (i) are required to comply with Legal Requirements or (ii)
are in accordance with Prudent Utility Practices.
5.6 Subsidiaries, etc.; Investments.
(a) Subsidiaries, etc. Such Project Company shall not (a)
create or acquire any Subsidiary, (b) become a general or limited partner in any
partnership or a member in any limited liability company, (c) become a joint
venturer in any joint venture, or (d) create or hold any equity interests in any
other Person.
(b) Investments. Such Project Company shall not make any
investments (whether by purchase of stocks, bonds, notes or other securities,
loan, extension of credit, advance or otherwise) other than (i) Permitted
Investments in accordance with Article V of the
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Depositary Agreement and (ii) other investments expressly permitted in the
Financing Documents.
5.7 Distributions. Such Project Company shall not directly or
indirectly (a) make or declare any distribution (in cash, property or
obligation) on, or make any other payment on account of, any equity interest in
Project Company, (b) make any payment in respect of Subordinated Debt, or (c)
make any other payment from the Distribution Account (whether to a Project
Company, any Affiliate of the Issuer or any Project Company or any other Person)
other than distributions or payments from the Distribution Account in accordance
with Section 4.6.2 of the Depositary Agreement and Section 4.5 of this
Agreement.
5.8 Transactions With Affiliates. Such Project Company shall not enter
into any transaction or agreement with any of its Affiliates, other than (a)
transactions provided for in or expressly permitted by the Operative Documents,
(b) transactions or agreements between or among only the Issuer and/or the other
Project Companies not otherwise prohibited by the terms of any Financing
Document, or (c) transactions or agreements certified to the Controlling Party
by a Responsible Officer of such Project Company as having terms that are not
materially less favorable to such Project Company than the terms such Project
Company would obtain in an arm's-length transaction with a Person that is not
its Affiliate; provided that, in respect of each transaction or agreement
permitted pursuant to paragraph (c) of this Section 5.8, Project Company shall
perform its obligations and exercise its rights under any such transaction or
agreement as if such transaction or agreement was an arm's-length transaction
with a Person that is not its Affiliate.
5.9 ERISA. Such Project Company shall not establish, maintain,
contribute to or become obligated to contribute to any ERISA Plan.
5.10 Merger or Consolidation; Liquidation; Amendment of Organizational
Documents.
(a) Such Project Company shall not consolidate with or merge into any
other Person or permit any Person to consolidate with or merge into such Project
Company or convey, transfer or lease its properties and assets substantially as
an entirety to such Project Company, unless:
(i) immediately after giving effect to such transaction, no
Project Company Event of Default or Project Inchoate Default with
respect to such Project Company shall have occurred and be continuing;
(ii) if, as a result of any such consolidation, merger or
conveyance, transfer or lease, properties or assets of such Project
Company other than the Collateral would become subject to a mortgage,
pledge, lien, security interest or other encumbrance that would not be
permitted by this Agreement, such Project Company or such successor
Person, as the case may be, shall take such steps as shall be necessary
effectively to secure the Bonds of each series equally and ratably with
(or prior to) all indebtedness secured thereby;
(iii) such Project Company has delivered to the Trustee, with
a copy to XLCA, an Officer's Certificate (as such term is defined in
the Indenture) and an Opinion of
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Counsel (as such term is defined in the Indenture), each stating that
such consolidation, merger, conveyance, transfer or lease and, if a
supplemental indenture is required in connection with such transaction,
such supplemental indenture complies with Article Nine of the Indenture
and that all conditions precedent in this Agreement and the Indenture
provided for relating to such transaction have been complied with; and
(iv) at any time when XLCA is the Controlling Party, XLCA
consents in writing, in its absolute discretion, to such transaction
prior to the consummation thereof.
(b) Upon any consolidation of such Project Company with, or
merger of the Project Company into, any other Person in accordance with Section
5.10(a), the successor Person formed by such consolidation or into which such
Project Company is merged shall succeed to, and be substituted for, and may
exercise every right and power of, such Project Company under this Agreement and
the other Financing Documents with the same effect as if such successor Person
had been named as such Project Company in this Agreement and the other Financing
Documents, and thereafter the predecessor Person shall be relieved of all
obligations and covenants under the Financing Documents.
(c) Such Project Company shall not liquidate or dissolve
itself (or suffer any liquidation or dissolution) or amend its organizational
documents in any material respect (except, in respect of such amendment of its
organizational documents, (i) as required to comply with the "special purpose
entity" requirements or similar criteria of any Rating Agency and (ii) in
connection with a Permitted Change of Control).
(d) Nothing in this Section 5.10 shall be deemed to prohibit
any Permitted Peaker Buyout or Permitted Change of Control.
5.11 Amendments to Project Documents. Such Project Company shall not
terminate, assign its rights under, amend, modify, supplement or waive, or
permit or consent to the termination, amendment, modification, supplement or
waiver of, any provision of, or give any consent under (any such action, a
"Project Document Action") (a) Section 2.2.2, 2.2.3, 3.2 or 3.3 of the Fuel and
Power Marketing Plan attached to the Power Sales and Agency Agreement to which
such Project Company is a party or any requirement under such Power Sales and
Agency Agreement that such Project Company or NRG Power Marketing comply with
such Fuel and Power Marketing Plan (i) if XLCA is the Controlling Party, without
the written consent of XLCA (which consent shall be given or withheld in XLCA's
absolute discretion), or (ii) if XLCA is not the Controlling Party, if such
Project Document Action could reasonably be expected to have a Project Material
Adverse Effect, and (b) any of its other Major Project Documents if such Project
Document Action could reasonably be expected to have a Project Material Adverse
Effect.
5.12 Accounts. Project Company shall not maintain, establish or use any
bank, deposit or securities accounts other than (a) the Accounts, and (b) such
other local bank, deposit or securities accounts as shall be necessary to
facilitate the performance by the Bayou Cove Project Company and the Rockford II
Project Company of their obligations under Section 3.14 and/or the performance
by NRG Energy of its obligations under Section 2.5 of the Contingent Equity
Guaranty.
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5.13 Name and Location; Fiscal Year. Such Project Company shall not (a)
change its name, the location of its principal place of business, the location
of its Project Company Collateral, its jurisdiction of organization or its
organizational identification number without notice to the Collateral Agent at
least 30 days prior to such change, or (b) for so long as XLCA is the
Controlling Party, change its fiscal year without XLCA's written consent.
5.14 Assignment. Such Project Company shall not assign its rights or
obligations hereunder or under any of the other Financing Documents to which it
is a party, except as expressly permitted under this Agreement.
5.15 Acquisition of Real Property. Such Project Company shall not
acquire or lease any real property or other interest in real property (excluding
(x) the acquisition (but not the exercise) of any options to acquire any such
interests in real property and (y) the acquisition of any Easements related
thereto) unless: (a) it shall have delivered to the Collateral Agent (i) an
environmental indemnity agreement, in form and substance reasonably satisfactory
to XLCA (or if XLCA shall not be the Controlling Party, an independent
environmental consultant), pursuant to which, among other things, an indemnitor
reasonably satisfactory to XLCA (or if XLCA shall not be the Controlling Party,
an independent environmental consultant)) indemnifies the Issuer, such Project
Company and the Secured Parties from any and all claims, losses, diminutions in
value of such real property, damages or other liabilities related to or arising
from Hazardous Substances then in, on or under such real property or otherwise
caused by or attributable to such indemnitor; or (ii) an environmental insurance
policy, in form and substance, and from an insurance carrier, reasonably
satisfactory to XLCA (or, if XLCA is not the Controlling Party, an independent
environmental consultant), which provides the same protection as described for
the environmental indemnity agreement above or (b) (i) it shall have delivered
to the Collateral Agent a Phase I environmental report prepared by an
environmental consultant reasonably satisfactory to XLCA (or if XLCA shall not
be the Controlling Party, an independent environmental consultant) with respect
to such real property in accordance with ASTM standards, (along with a
corresponding reliance letter from the environmental consultant in form and
substance reasonably satisfactory to XLCA (or if XLCA shall not be the
Controlling Party, an independent environmental consultant)), stating that there
is no evidence of a Release or threatened Release that could reasonably be
expected to result in a future Release of any Hazardous Substance in, on, under
or at such real property and that no additional investigation (including a Phase
II environmental assessment) is recommended, and (ii) if evidence was found of a
Release or threatened Release that could reasonably be expected to result in a
future Release of any Hazardous Substance in, on, under or at such real property
or an additional investigation (including a Phase II environmental assessment)
is recommended in such Phase I environmental report, it shall have delivered to
the Collateral Agent a Phase II environmental report (or other recommended
investigation) with respect to such real property, pursuant to a scope of work
reasonably satisfactory to XLCA (or if XLCA shall not be the Controlling Party,
an independent environmental consultant) (along with a corresponding reliance
letter from the environmental consultant in form and substance reasonably
satisfactory to XLCA (or if XLCA shall not be the Controlling Party, an
independent environmental consultant)), confirming, to the reasonable
satisfaction of XLCA (or if XLCA shall not be the Controlling Party, an
independent environmental consultant)), either (A) that no Release or threatened
Release of any Hazardous Substance has occurred in, on, under or at such real
property, or (B) if a Release or threatened Release that could reasonably be
expected to result in a future Release of any Hazardous
23
Substance has occurred in, on, under or at such real property, that such Release
or threatened Release that could reasonably be expected to result in a future
Release of any Hazardous Substances either does not trigger any reporting or
remediation obligations under Hazardous Substances Law or has been remediated to
acceptable levels under Hazardous Substances Law.
5.16 Additional Project Documents.
(a) Such Project Company shall not enter into or become a
party to any Additional Project Document to the extent that the execution,
delivery or performance of such Additional Project Document could reasonably be
expected to have a Project Material Adverse Effect.
(b) If such Project Company enters into any Major Project
Document, such Project Company shall deliver to the Collateral Agent a Consent
from the third party under such Major Project Document in substantially the form
of Exhibit 3.1(f)(ii) to the Insurance and Reimbursement Agreement.
5.17 Use of Project Site. Such Project Company shall not use, or permit
to be used, its Site for any purpose other than as contemplated by the Operative
Documents to which it is a party.
5.18 Hazardous Substances. Such Project Company shall not, and shall
not allow any of its Affiliates, contractors or agents, or any other Person with
the consent, or under the control of, such Project Company or any of its
Affiliates, contractors or agents, to Release any Hazardous Substances in
violation of any Hazardous Substances Law or other Legal Requirement if such
Release could reasonably be expected to have a Project Material Adverse Effect.
ARTICLE 6
GUARANTY
6.1 Guaranty.
(a) Each Project Company, as primary obligor and not merely as
surety, absolutely, unconditionally and irrevocably and jointly and severally
with each other Project Company guarantees to the Secured Parties the full and
punctual payment when due, whether at stated maturity, by acceleration or
otherwise, of all of the Bond Obligations, the Reimbursement Obligations and the
Swap Obligations of the Issuer under the Financing Documents, together with the
payment in full of all fees and expenses incurred by the Collateral Agent or any
other Secured Party in enforcing any such Obligations or the terms hereof,
including reasonable fees and expenses of its legal counsel and agents
(collectively, the "Guaranteed Obligations"), and agrees that if, for any
reason, the Issuer shall fail to pay when due any of the Guaranteed Obligations,
such Project Company will pay the same forthwith. Each Project Company waives
notice of acceptance of its Guaranty and of any obligation to which it applies
or may apply under the terms hereof, and waives promptness, diligence,
presentment, demand of payment or performance, notice of dishonor or non-payment
or non-performance, protest, or notice of protest, of any such obligations, suit
or taking other action by any Secured Party against, and
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giving any notice of default or other notice to, or making any demand on, any
party liable thereon (including any Project Company).
(b) If, notwithstanding the representation and warranty set
forth in Section 2.2(aa) of the Insurance and Reimbursement Agreement or
anything to the contrary herein, enforcement of the liability of any Project
Company under its Guaranty for the full amount of the Guaranteed Obligations
would be an unlawful or voidable transfer under any applicable fraudulent
conveyance or fraudulent transfer law or any comparable law, then the liability
of such Project Company hereunder shall be reduced to the highest amount for
which such liability may then be enforced without giving rise to an unlawful or
voidable transfer under any such law.
6.2 Guaranty Absolute. The Guaranty of each Project Company is a
primary obligation of such Project Company and is an absolute, unconditional,
continuing and irrevocable guaranty of payment in full in cash of the Guaranteed
Obligations and not of collectibility, and is in no way conditioned on or
contingent upon any attempt to enforce in whole or in part the Issuer's
liabilities and obligations to the Secured Parties. If the Issuer shall fail to
pay in full in cash any of the Guaranteed Obligations to any Secured Party as
and when they are due, the Project Companies shall forthwith pay such Guaranteed
Obligations immediately (in immediately available funds in Dollars) to an
account designated by the Collateral Agent. Each failure by the Issuer to pay
any Guaranteed Obligation strictly in accordance with the terms of each
Financing Document under which such Guaranteed Obligation arises, regardless of
any Legal Requirement now or hereafter in effect in any jurisdiction, shall give
rise to a separate cause of action herewith, and separate suits may be brought
hereunder as each cause of action arises.
6.3 Rights and Obligations Absolute and Unconditional. All rights of
the Secured Parties and all obligations of each Project Company in respect of
its Guaranty hereunder shall be absolute and unconditional irrespective of:
(a) any lack of validity, legality or enforceability of any
Financing Document;
(b) the failure of any Secured Party:
(i) to assert any claim or demand or to enforce any right or
remedy against the Issuer, any Project Company or any other Person
(including any other guarantor) under the provisions of any Financing
Document or otherwise, or
(ii) to exercise any right or remedy against any other
guarantor of, or collateral securing, any of the Obligations;
(c) any change in the time, manner or place of payment of, or
in any other term of, any of the Obligations, or any other extension or renewal
of any obligation of the Issuer or any Project Company;
(d) any reduction, limitation, impairment or termination of
any of the Obligations for any reason (other than the written agreement of all
of the Secured Parties to terminate the Obligations in full), including any
claim of waiver, release, surrender, alteration or compromise, and shall not be
subject to, and Project Company hereby waives any right to or
25
claim of, any defense or setoff, counterclaim, recoupment or termination
whatsoever by reason of the invalidity, illegality, nongenuineness,
irregularity, compromise, unenforceability of, or any other event or occurrence
affecting, any obligation of the Issuer, any Project Company or otherwise, other
than Project Company's indefeasible payment in full of the Guaranteed
Obligations;
(e) any amendment to, rescission, waiver or other modification
of, or any consent to departure from, any of the terms of any Financing Document
other than its Guaranty;
(f) any addition, exchange, release, surrender or
non-perfection of any collateral, or any amendment to or waiver or release or
addition of, or consent to departure from, any other security interest held by
any Secured Party securing any of the Obligations;
(g) any sale, exchange, release or surrender of, realization
upon or other manner or order of dealing with any property by whomsoever pledged
or mortgaged to secure or howsoever securing the Obligations or any liabilities
or obligations (including any of those hereunder) incurred directly or
indirectly in respect thereof or hereof and/or any offset there against;
(h) the application of any sums by whomsoever paid or
howsoever realized to any obligations and liabilities of the Issuer or any
Project Company to the Secured Parties under the Financing Documents in the
manner provided therein regardless of what obligations and liabilities remain
unpaid;
(i) any action or failure to act in any manner referred to in
this Guaranty which may deprive Project Company of its right to subrogation
against the Issuer or any other Project Company to recover full indemnity for
any payments or performances made pursuant to its Guaranty or of its right of
contribution against any other party; or
(j) any other circumstance which might otherwise constitute a
defense available to, or a legal or equitable discharge of, the Issuer, any
Project Company, any surety or any guarantor.
6.4 Guaranty Continuing. Each Project Company's Guaranty is a
continuing Guaranty and all obligations to which it applies or may apply under
the terms hereof shall be conclusively presumed to have been created in reliance
hereon. In the event that, notwithstanding the provisions of Section 6.1, any
Project Company's Guaranty shall be deemed revocable in accordance with
applicable Legal Requirements, then any such revocation shall become effective
only upon receipt by the Collateral Agent of written notice of revocation signed
by such Project Company. No revocation or termination hereof shall affect in any
manner rights arising under any Project Company's Guaranty with respect to
Guaranteed Obligations arising prior to receipt by the Collateral Agent of
written notice of such revocation or termination.
6.5 Waivers. Each Project Company hereby waives and relinquishes all
rights and remedies accorded by applicable law to sureties or guarantors and
agrees not to assert or take advantage of any such rights or remedies, including
(a) any right to require the Collateral Agent or any other Secured Party to
proceed against the Issuer, any Project Company or any other Person or to
proceed against or exhaust any security held by the Collateral Agent or any
other
26
Secured Party at any time or to pursue any other remedy in the Collateral
Agent's or any other Secured Party's power before proceeding against such
Project Company, (b) any defense that may arise by reason of the incapacity,
lack of power or authority, dissolution, merger, termination or disability of
the Issuer, any Project Company or any other Person or the failure of the
Collateral Agent or any other Secured Party to file or enforce a claim against
the estate (in administration, bankruptcy or any other proceeding) of the
Issuer, any Project Company or any other Person, (c) demand, presentment,
protest and notice of any kind except as provided herein, including notice of
the existence, creation or incurring of any new or additional indebtedness or
obligation or of any action or non-action on the part of the Issuer, any Project
Company, the Collateral Agent, any other Secured Party, any endorser or creditor
of the Issuer, any Project Company or on the part of any other Person under this
or any other instrument in connection with any obligation or evidence of
indebtedness held by the Collateral Agent or any other Secured Party as
collateral or in connection with any Guaranteed Obligation, (d) any defense
based upon an election of remedies by the Collateral Agent or any other Secured
Party, including an election to proceed by non-judicial rather than judicial
foreclosure, which destroys or otherwise impairs the subrogation rights of any
Project Company, the right of any Project Company to proceed against the Issuer
or any other Project Company for reimbursement, or both, (e) any defense based
on any offset against any amounts which may be owed by any Person to any Project
Company for any reason whatsoever, (f) any defense based on any act, failure to
act, delay or omission whatsoever on the part of the Issuer or any Project
Company or the failure by the Issuer or any Project Company to do any act or
thing or to observe or perform any covenant, condition or agreement to be
observed or performed by it under the Financing Documents, (g) any defense based
upon any statute or rule of law which provides that the obligation of a surety
must be neither larger in amount nor in other respects more burdensome than that
of the principal; provided that, upon payment or performance in full of the
Guaranteed Obligations, a Project Company's Guaranty shall no longer be of any
force or effect, (h) any defense, setoff or counterclaim which may at any time
be available to or asserted by the Issuer or any Project Company against the
Collateral Agent, any other Secured Party or any other Person under the
Financing Documents, (i) any duty on the part of the Collateral Agent or any
other Secured Party to disclose to any Project Company any facts the Collateral
Agent or any other Secured Party may now or hereafter know about the Issuer or
any Project Company, regardless of whether the Collateral Agent or such Secured
Party have reason to believe that any such facts materially increase the risk
beyond that which any Project Company intends to assume, or have reason to
believe that such facts are unknown to any Project Company, or have a reasonable
opportunity to communicate such facts to any Project Company, since each Project
Company acknowledges that it is fully responsible for being and keeping informed
of the financial condition of the Issuer and the Project Companies and of all
circumstances bearing on the risk of non-payment or non-performance of any
obligations and liabilities hereby guaranteed, (j) any defense based on any
change in the time, manner or place of any payment or performance under, or in
any other term of, the Financing Documents or any other amendment, renewal,
extension, acceleration, compromise or waiver of or any consent or departure
from the terms of the Financing Documents, (k) any defense arising because of
the Collateral Agent's or any other Secured Party's election, in any proceeding
instituted under the Federal Bankruptcy Code, of the application of Section
1111(b)(2) of the Federal Bankruptcy Code, and (l) any defense based upon any
borrowing or grant of a security interest under Section 364 of the Federal
Bankruptcy Code.
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6.6 Acknowledgments. Each Project Company acknowledges that it has been
provided with a copy of each of the Financing Documents and has read and is
familiar with the provisions of each of the Financing Documents.
6.7 Subordination. All existing and future indebtedness of, or other
obligation owed by, the Issuer or any Project Company to any other Project
Company is hereby subordinated to all of the Guaranteed Obligations on the same
terms as required in respect of subordinated Debt of the Issuer and the Project
Companies pursuant to this Agreement as set forth in Exhibit H to this
Agreement.
6.8 Subrogation. So long as the Financing Documents remain in effect
and until all of the Guaranteed Obligations have been paid in full, (a) no
Project Company shall have any right of subrogation and each Project Company
waives all rights to enforce any remedy which the Secured Parties now have or
may hereafter have against the Issuer or any other Project Company, and waives
the benefit of, and all rights to participate in, any security now or hereafter
held by the Collateral Agent or any other Secured Party from the Issuer or any
of the Project Companies, and (b) each Project Company waives any claim, right
or remedy which it may now have or hereafter acquire against the Issuer or any
other Project Company that arises hereunder and/or from the performance by it
hereunder, including any claim, remedy or right of subrogation, reimbursement,
exoneration, contribution, indemnification, or participation in any claim, right
or remedy of the Secured Parties against the Issuer or any Project Company, or
any security which the Secured Parties now have or hereafter acquire, whether or
not such claim, right or remedy arises in equity, under contract, by statute,
under common law or otherwise. Any amount paid to any Project Company on account
of any such subrogation rights prior to the indefeasible payment in full in cash
of the Obligations (including the Guaranteed Obligations) and the termination of
all other obligations of the Secured Parties under the Financing Documents shall
be held in trust for the benefit of the Collateral Agent and shall immediately
thereafter be paid to the Collateral Agent for the benefit of the Secured
Parties.
6.9 Bankruptcy.
(a) So long as the Financing Documents remain in effect and until all
of the Obligations have been paid in full, none of the Project Companies shall,
without the prior written approval of the Controlling Party, commence, or join
with any other Person in commencing, any bankruptcy, reorganization, or
insolvency proceeding against the Issuer or any other Project Company. The
obligations of each Project Company under its Guaranty shall not be altered,
limited or affected by any proceeding, voluntary or involuntary, involving the
bankruptcy, reorganization, insolvency, receivership, liquidation or arrangement
of the Issuer, NRG Energy or any Project Company, or by any defense which the
Issuer or any other Project Company may have by reason of any order, decree or
decision of any court or the administrative body resulting from any such
proceeding.
(b) So long as the Financing Documents remain in effect and until all
of the Guaranteed Obligations have been paid in full, to the extent of any
Guaranteed Obligation, each Project Company shall file, in any bankruptcy or
other proceeding in which the filing of claims is required or permitted by Legal
Requirements, all claims which such Project Company may have against the Issuer
or any other Project Company related to any indebtedness of the Issuer or any
28
Project Company to such Project Company, and hereby assigns to the Collateral
Agent, on behalf of the Secured Parties, all rights of such Guarantor
thereunder. If any Project Company fails to file any such claim, the Collateral
Agent, as attorney-in-fact for such Project Company, is hereby authorized to do
so in the name of such Project Company or, in the Collateral Agent's discretion,
to assign the claim to a nominee and to cause proofs of claim to be filed in the
name of the Collateral Agent's nominee. The foregoing power of attorney is
coupled with an interest and cannot be revoked. The Collateral Agent or its
nominee shall have the sole right to accept or reject any plan proposed in any
such proceeding and to take any other action which a party filing a claim is
entitled to take. In all such cases, whether in administration, bankruptcy or
otherwise, the person authorized to pay such a claim shall pay the same to the
Collateral Agent to the extent of any Guaranteed Obligation which then remain
unpaid, and, to the full extent necessary for that purpose, each Project Company
hereby assigns to the Collateral Agent all of such Project Company's rights to
all such payments or distributions to which such Project Company would otherwise
be entitled; provided, however, that such Project Company's obligations
hereunder shall not be satisfied except to the extent that the Collateral Agent
receives cash by reason of any such payment or distribution. If the Collateral
Agent receives anything hereunder other than cash, the same shall be held as
collateral for amounts due under this Guaranty.
6.10 Interest; Collection Expenses. Any amount required to be paid by
any Project Company pursuant to the terms of its Guaranty shall bear interest at
the Late Payment Rate or the maximum rate permitted by Legal Requirements,
whichever is less, from the date due until paid in full. If the Collateral Agent
or any other Secured Party is required to pursue any remedy against any Project
Company, such Project Company shall pay to the Collateral Agent or such Secured
Party, as the case may be, upon demand, all reasonable attorneys' fees and
expenses all other costs and expenses incurred by the Collateral Agent or such
Secured Party in enforcing its Guaranty.
6.11 Reinstatement of Guaranty. Each Project Company's Guaranty and its
obligations of the Guarantors shall automatically be reinstated if and to the
extent that for any reason any payment made pursuant to its Guaranty is
rescinded or otherwise restored to it, whether as a result of any proceedings in
bankruptcy or reorganization or otherwise with respect to the Issuer or any
other Person or as a result of any settlement or compromise with any Person
(including any Project Company) in respect of such payment, and such Project
Company shall pay the Collateral Agent on demand all of its reasonable costs and
expenses (including reasonable fees of counsel) incurred by the Collateral Agent
in connection with such rescission or restoration.
6.12 Termination of Guaranty. The Guaranty of a Project Company shall
terminate in its entirety upon the occurrence of a Project Release Event with
respect to such Project Company.
6.13 Survival. The provisions of this Article 6 shall survive
satisfaction, discharge and/or termination of this Agreement and the other
Financing Documents.
6.14 Contribution Obligations among Project Companies. In order to
provide for just and equitable contribution among the Project Companies, each
Project Company agrees that if any payment or distribution is made by a Project
Company (a "Funding Project Company")
29
under its Guaranty, such Funding Project Company shall be entitled to a
contribution from the other Project Companies for all such payments or
distributions, or damages and expenses incurred by such Funding Project Company
in discharging any Guaranteed Obligations. Each Project Company which is not a
Funding Project Company (a "Non-Funding Project Company") shall be liable to a
Funding Project Company with respect to any such payments or distributions, or
damages and expenses, in an aggregate amount equal to (a) the ratio of (i) the
net worth of such Non-Funding Project Company, as determined in accordance with
the most recent balance sheet of such Non-Funding Project Company at the time of
such payment by a Funding Project Company, to (ii) the aggregate net worth of
all Project Companies, similarly determined, multiplied by (b) the amount which
the Funding Project Company paid on account of the Guaranteed Obligations. If at
any time there exists more than one Funding Project Company, then payment from
the other Non-Funding Project Companies pursuant to this Section 6.14 shall be
in an aggregate amount equal in proportion to the total amount of money paid for
or on account of the Guaranteed Obligations by the Funding Project Companies
pursuant to their Guaranties. If the Funding Project Company is required to make
any payment hereunder, such Funding Project Company shall also be entitled to a
right of subrogation in respect of such payment from the other Project
Companies. Notwithstanding anything in this Section 6.14 to the contrary, the
agreements in this Section 6.14 are to establish the relative rights of
contribution of the Project Companies and shall not modify the joint and several
nature of the obligations of each Project Company owed to or for the benefit of
the Secured Parties or impair the rights of the Collateral Agent for the benefit
of the Secured Parties to hold any of the Project Companies liable for payment
of the full amount of all Guaranteed Obligations.
ARTICLE 7
EVENTS OF DEFAULT; REMEDIES
7.1 Issuer Events of Default. The occurrence of any of the following
events shall constitute an "Issuer Events of Default" hereunder:
(a) Failure to Make Payments. The Issuer shall fail to pay, in
accordance with the terms of the Financing Documents, (i) any principal of any
Bond Obligation on the date that such principal is due, (ii) any amount in
respect of any Reimbursement Obligation on the date that such amount is due,
(iii) any Swap Payment Amount in accordance with the Swap Agreement, (iv) any
interest on any Bond Obligation, Reimbursement Obligation, Swap Payment Amount
or any scheduled fee, cost, charge or sum due hereunder or under the other
Financing Documents within 3 Business Days after the date that such sum is due,
or (v) any other fee, cost, charge or other sum due hereunder or under the other
Financing Documents within 10 Business Days after the date that such sum is due;
provided that any such failure of the Issuer to pay the amounts described in
this Section 7.1(a) shall not be an Issuer Event of Default if such amounts are
paid (i) by one or more of the Project Companies pursuant to, and in accordance
with, their respective Guaranties, (ii) by NRG Energy (or any other Equity
Party) pursuant to, and in accordance with, the Contingent Guaranty Agreement
(or other Equity Document), or (iii) otherwise with Account Funds from the Debt
Payment Account in accordance with the terms of the Depositary Agreement.
30
(b) Judgments. One or more final judgments for the payment of
money (if such payments are not fully covered by insurance) in excess of
$5,000,000 in the aggregate shall be rendered against the Issuer, and the Issuer
shall not discharge the same or provide for its discharge in accordance with its
terms, or procure a stay of execution thereof, within 60 days after the date of
entry thereof; provided, however, that any such judgment shall not be (and shall
not constitute part of) an Issuer Event of Default under this Section 7.1(b) if
and for so long as (i) the amount of such judgment is fully covered by a valid
and binding policy of insurance between the defendant and the insurer covering
payment thereof and (ii) such insurer has been notified of, and has not disputed
the claim made for payment of, the amount of such judgment.
(c) Misstatements; Omissions. Any representation or warranty
by the Issuer set forth in any Financing Document or in any document entered
into in connection therewith in favor of or for the benefit of any Secured Party
or in any certificate, financial statement or other document delivered in
connection therewith for the benefit of any Secured Party shall prove to have
been incorrect in any material respect when made (or deemed made) and the facts
or events underlying such incorrect representation or warranty shall not be
changed so as to correct such representation or warranty in all material
respects for a period of 30 days (or so long as the facts or events underlying
such incorrect representation or warranty are capable of being changed so as to
correct such incorrect representation or warranty in all material respects and
the Issuer is diligently proceeding to change such events or facts, such longer
period but in no event for an aggregate period in excess of 90 days) after a
Responsible Officer of the Issuer becomes aware thereof or the Issuer first
received a notice from or on behalf of the Controlling Party (or XLCA if the
proviso to this Section 7.1(c) applies) specifying such material inaccuracy and
requiring that the facts or events underlying such incorrect representation or
warranty be changed so as to correct such incorrect representation or warranty
in all material respects; provided, however, that any Issuer Event of Default
pursuant to this Section 7.1(c) arising solely from any representation or
warranty made by the Issuer for the benefit of XLCA under the Insurance and
Reimbursement Agreement shall be an Issuer Event of Default in respect of which
no Person other than XLCA shall have the rights given to the parties to this
Agreement in respect of Issuer Events of Default generally.
(d) Bankruptcy; Insolvency. The Issuer shall become subject to
a Bankruptcy Event.
(e) Debt Cross Default. The Issuer shall default for a period
beyond any applicable grace period (i) in the payment of any principal, interest
or other amount due on any Debt for Borrowed Money of the Issuer (other than the
Obligations) and such defaulted amount, together with any other principal,
interest or other amount due and unpaid on any Debt for Borrowed Money of the
Issuer (other than the Obligations) equals or exceeds $5,000,000 in the
aggregate, or (ii) in the payment of any amount then due or performance of any
obligation then required under any agreement evidencing Debt of the Issuer
(other than the Financing Documents) if, because of such default, the holder of
such Debt accelerates the payment thereof and such accelerated amount, together
with the amount of any other Debt of the Issuer then so accelerated (other than
the Obligations), equals or exceeds $5,000,000 in the aggregate.
(f) ERISA. With respect to any ERISA Plan which a member of
the Controlled Group sponsors, maintains, administers, contributes to,
participates in, or has any
31
obligation to contribute to or any liability under, an event has occurred or a
condition exists which, together with all other such events or conditions, would
reasonably be expected to have an Issuer Material Adverse Effect.
(g) Breach of Terms of Financing Documents.
(i) The Issuer shall fail to perform or observe any of the
covenants or other agreements set forth in Sections 2.1 (Use of
Proceeds and Revenues), 2.6(a)(i) and (c) (Existence, Conduct of
Business, etc.), or Article 4 (other than Section 4.6 (Investments),
4.8 (ERISA), 4.10 (Accounts) and 4.11 (Name and Location; Fiscal
Year)).
(ii) The Issuer shall fail to perform or observe any of the
covenants or other agreements set forth in the Financing Documents
which are not otherwise specifically provided for in Section 7.1(g)(i)
or elsewhere in this Section 7.1 and such failure shall continue
unremedied for a period of 30 days after the Issuer becomes aware
thereof or receives written notice thereof from the Controlling Party;
provided, however, if (A) such failure does not consist of a failure to
pay money and cannot be cured within such 30 day period, (B) such
failure is susceptible of cure within 90 days, (C) the Issuer is
proceeding with diligence and in good faith to cure such failure, (D)
the existence of such failure has not had and, after considering the
nature of the cure, could not reasonably be expected to have an Issuer
Material Adverse Effect, and (E) the Controlling Party and the
Collateral Agent shall have received an officer's certificate signed by
a Responsible Officer of the Issuer to the effect of clauses (A), (B),
(C) and (D) above and stating what action the Issuer is taking to cure
such failure, then such 30 day cure period shall be extended to such
date, not to exceed a total of 90 days, as shall be necessary for the
Issuer diligently to cure such failure.
(h) Loss of Exemption. The Issuer shall become subject to, or
not exempt from, regulation under the FPA or PUHCA, other than Section 9(a)(2)
of PUHCA, and such regulation, or loss of exemption from regulation, shall have
an Issuer Material Adverse Effect; provided that the Issuer shall have 60 days
after a Responsible Officer of the Issuer obtains knowledge of such event to
cure such event before it becomes an Issuer Event of Default so long as the
extension of time to cure such event could not reasonably be expected to have an
Issuer Material Adverse Effect.
(i) Issuer Collateral. (i) The grant of the Lien of any of the
Issuer Collateral Documents shall fail in any material respect to provide a
perfected Lien in favor of the Collateral Agent for the benefit of the Secured
Parties on any of the Issuer Collateral with the priority purported to be
created thereby, and the Issuer shall fail to cure any such failure within 15
days after the Issuer becomes aware thereof or receives written notice thereof
from the Collateral Agent, or (ii) the Collateral Agent shall receive a
Secretary of State report indicating that the Collateral Agent's security
interest in any of the Issuer Collateral is not prior to all other security
interests or other interests reflected in such report, other than Issuer
Permitted Liens, and the Issuer shall fail to cure such condition within 15 days
after the Issuer becomes aware thereof or receives written notice thereof from
the Collateral Agent.
32
(j) Loss of Control. (a) All or substantially all of the
assets of a Project Company shall be sold, leased, licensed, assigned, pledged,
transferred or otherwise disposed of by such Project Company other than pursuant
to a Permitted Peaker Buyout, or (b) NRG Energy shall fail to directly or
indirectly own 100% of the membership interests in the Issuer or any Project
Company and control the fundamental management decisions of the Issuer or any
Project Company other than in connection with (i) a Permitted Peaker Buyout or
(ii) a Permitted Change of Control.
(k) Project Events of Default.
(i) A Fundamental Project Event of Default shall have occurred
and be continuing.
(ii) Any Project Event of Default shall have occurred and be
continuing and (A) has resulted in an Issuer Material Adverse Effect,
or (B) could reasonably be expected to result in an Issuer Material
Adverse Effect, provided that there shall be no Issuer Event of Default
under this Section 7.1(k)(ii) if the Issuer consummates a Permitted
Peaker Buyout (Peaker Sale/Project Event of Default) or Peaker
Collateralization in respect of the applicable Project Company and/or
its Project.
(l) Unenforceability of Financing Documents. At any time after
the execution and delivery thereof, any material provision of any Financing
Document shall cease to be in full force and effect (other than by reason of a
release of Collateral thereunder in accordance with the terms hereof or thereof,
the satisfaction in full of the Obligations or any other termination of a
Financing Document in accordance with the terms hereof and thereof) or any
Financing Document shall be declared null and void by a Governmental Authority
of competent jurisdiction.
(m) Equity Documents and Equity Parties.
(i) Any Equity Document shall fail to be in full force and
effect (other than due to a termination thereof in accordance with the
terms hereof and thereof) or any Equity Party shall repudiate in
writing any of its obligations thereunder.
(ii) Any Equity Party shall fail to make any payment as and
when due under any Equity Document to which it is a party.
(iii) There shall have occurred and be continuing an NRG Event
of Default (other than pursuant to the matters referred to in Section
7.1 (m)(i) or Section 7.1(m)(ii)), provided that there shall be no
Issuer Event of Default pursuant to this Section 7.1(m)(iii) if the
Equity Party shall have deposited, or caused the deposit of, cash in
the Cash Collateral Accounts in accordance with Section 2.2(c) or
Section 2.3(b) of the Contingent Guaranty Agreement, in each case as
applicable.
(n) Completion. Either one or both of the Bayou Cove Project
or the Rockford II Project shall have failed to reach Completion on or prior to
June 30, 2003; provided, however, that:
33
(i) a failure of the Bayou Cove Project to reach Completion on
or prior to June 30, 2003 shall not be an Issuer Event of Default if,
on or prior to such date, the Issuer consummates a Permitted Peaker
Buyout (Completion / Loss Event) or Peaker Collateralization in respect
of the Bayou Cove Project and the Bayou Cove Project Company; and
(ii) a failure of the Rockford II Project to reach Completion
on or prior to June 30, 2003 shall not be an Issuer Event of Default
if, on or prior to such date, the Issuer consummates a Permitted Peaker
Buyout (Completion / Loss Event) or Peaker Collateralization in respect
of the Rockford II Project and the Rockford II Project Company.
(o) Significant Casualty Event or Significant Condemnation
Event.
(i) There shall have occurred a Significant Casualty Event in
respect of a Project or the Issuer shall not have delivered to the
Collateral Agent the Responsible Officer's certificate required in
respect of such Project under Section 4.7.2(a)(ii) of the Depositary
Agreement or XLCA (or the Independent Engineer) shall not have
consented to, or confirmed the statements set forth in, as the case may
be, such certificate as required by Section 4.7.2(a)(ii) of the
Depositary Agreement, provided that there shall be no Issuer Event of
Default under this Section 7.1(o)(i) if the Issuer consummates a
Permitted Peaker Buyout (Completion / Loss Event) or Peaker
Collateralization in respect of such Project.
(ii) There shall have occurred a Significant Condemnation
Event in respect of a Project or the Issuer shall not have delivered to
the Collateral Agent the Responsible Officer's certificate required in
respect of such Project under Section 4.7.2(b)(ii) of the Depositary
Agreement or XLCA (or the Independent Engineer) shall not have
consented to, or confirmed the statements set forth in, as the case may
be, such certificate as required by Section 4.7.2(b)(ii) of the
Depositary Agreement, provided that there shall be no Issuer Event of
Default under this Section 7.1(o)(ii) if the Issuer consummates a
Permitted Peaker Buyout (Completion / Loss Event) or Peaker
Collateralization in respect of such Project.
7.2 Project Events of Default. The occurrence of any of the following
events in respect of a Project Company shall constitute a "Project Event of
Default" with respect to such Project Company hereunder:
(a) Failure to Make Payments. Such Project Company shall fail
to pay, in accordance with the terms of its Guaranty, any amount due
thereunder on the date that such amount is due.
(b) Judgments. One or more final judgments for the payment of
money (if such payments are not fully covered by insurance) in excess
of $5,000,000 in the aggregate shall be rendered against such Project
Company, and such Project Company shall not discharge the same or
provide for its discharge in accordance with its terms, or procure a
stay of execution thereof, within 60 days after the day of entry
thereof; provided, however, that any such judgment
34
shall not be (and shall not constitute part of) a Project Event of
Default under this Section 7.2(b) if and for so long as (i) the amount
of such judgment is fully covered by a valid and binding policy of
insurance between the defendant and the insurer covering payment
thereof and (i) such insurer has been notified of, and has not disputed
the claim made for payment of, the amount of such judgment.
(c) Misstatements; Omissions. Any representation or warranty
by such Project Company set forth in any Financing Document or in any document
entered into in connection therewith in favor of or for the benefit of any
Secured Party or in any certificate, financial statement or other document
delivered in connection therewith for the benefit of any Secured Party shall
prove to have been incorrect in any material respect when made (or deemed made)
and the facts or events underlying such incorrect representation or warranty
shall not be changed so as to correct such representation or warranty in all
material respects for a period of 30 days (or so long as the facts or events
underlying such incorrect representation or warranty are capable of being
changed so as to correct such incorrect representation or warranty in all
material respects and such Project Company is diligently proceeding to change
such events or facts, such longer period but in no event for an aggregate period
in excess of 90 days) after a Responsible Officer of such Project Company
becomes aware thereof or receives written notice thereof from or on behalf of
the Controlling Party (or XLCA if the proviso to this Section 7.2(c) applies)
specifying such material inaccuracy and requiring that the facts or events
underlying such incorrect representation or warranty be changed so as to correct
such incorrect representation or warranty in all material respects; provided,
however, that any Project Event of Default pursuant to this Section 7.2(c)
arising solely from any representation or warranty made by a Project Company for
the benefit of XLCA under the Insurance and Reimbursement Agreement shall be an
Issuer Event of Default in respect of which no Person other than XLCA shall have
the rights given to parties to this Agreement in respect of Issuer Events of
Default generally.
(d) Bankruptcy.
(i) Such Project Company shall become subject to a Bankruptcy
Event.
(ii) Any Major Project Participant (other than such Project
Company) in such Project Company's Project (so long as such Major
Project Participant has any remaining obligations (other than
indemnification obligations) under the Major Project Documents related
to such Project to which it is a party) shall become subject to a
Bankruptcy Event; provided that no Project Event of Default shall occur
as a result of such Bankruptcy Event if: (A) with respect to any such
Major Project Participant that is the only Person able to provide the
services that are being provided under the Major Project Document to
which it is a party on a commercially reasonable basis, (x) such Major
Project Participant is continuing to perform all of its obligations
under such Major Project Document in accordance with the terms thereof
and (y) the Controlling Party does not, within 60 days after the
occurrence of such Bankruptcy Event, declare a Project Event of Default
with respect thereto; and (B) with respect to any Major Project
Participant in such Project Company's Project, (t) within 30 days after
the occurrence of such Bankruptcy Event, such Project Company notifies
the Controlling Party and the Collateral Agent in writing that it
intends to replace the affected Person in accordance with this clause
(B), (u) within 135 days after the occurrence of such Bankruptcy Event,
such Project Company replaces
35
the affected Person with a Person that is reasonably satisfactory to
XLCA (if XLCA is then the Controlling Party) or whose replacement of
the affected Person could not reasonably be expected to have a Project
Material Adverse Effect (if XLCA is not then the Controlling Party)
pursuant to documentation that is reasonably satisfactory to XLCA (if
XLCA is then the Controlling Party) or that could not reasonably be
expected to have a Project Material Adverse Effect (if XLCA is not then
the Controlling Party), and (v) such Bankruptcy Event does not have a
Project Material Adverse Effect.
(e) Debt Cross Default. Such Project Company shall default for
a period beyond any applicable grace period (i) in the payment of any principal,
interest or other amount due on any Debt for Borrowed Money of such Project
Company (other than the Obligations) and such defaulted amount, together with
any other principal, interest or other amount due and unpaid on any Debt for
Borrowed Money of such Project Company (other than the Obligations) equals or
exceeds $5,000,000 in the aggregate, or (ii) in the payment of any amount then
due or performance of any obligation then required under any agreement
evidencing Debt of such Project Company (other than the Financing Documents) if,
because of such default, the holder of such Debt accelerates the payment thereof
and such accelerated amount, together with the amount of any other Debt of such
Project Company then so accelerated (other than the Obligations), equals or
exceeds $5,000,000 in the aggregate.
(f) Breach of Terms of Financing Documents.
(i) Such Project Company shall fail to perform or observe any
of the covenants set forth in Section 3.1 (Use of Proceeds and
Revenues), 3.6(a) (Maintenance of Existence and Business), 3.10
(Insurance) or Article 5 (other than Section 5.6(b) (Investments), 5.9
(ERISA), 5.12 (Accounts), 5.13 (Name Change, etc.) or 5.18 (Hazardous
Substances)); provided that in the case where such Project Company's
failure to perform or observe the covenants set forth in Section 3.1 is
not an intentional failure, such failure shall not become a Project
Event of Default unless such Project Company does not cure such failure
within three Business Days after the occurrence of such failure.
(ii) Such Project Company shall fail to perform or observe any
of the covenants or other agreements set forth hereunder or in any
other Financing Document which are not otherwise specifically provided
for in Section 7.2(f)(i) or elsewhere in this Section 7.2 and such
failure shall not be susceptible of cure or, if susceptible of cure,
shall continue unremedied for a period of 30 days after such Project
Company becomes aware thereof or receives written notice thereof from,
or on behalf of, the Controlling Party; provided, however, if (A) such
failure does not consist of a failure to pay money and cannot be cured
within such 30-day period, (B) such failure is susceptible of cure
within 90 days, (C) such Project Company is proceeding with diligence
and in good faith to cure such failure, (D) the existence of such
failure has not had and, after considering the nature of the cure,
could not be reasonably expected to have, a Project Material Adverse
Effect, and (E) the Controlling Party and the Collateral Agent shall
have received an officer's certificate signed by a Responsible Officer
of such Project Company to the effect of clauses (A), (B), (C) and (D)
above and stating what action such Project Company is taking to cure
such failure, then such 30-day cure period shall be extended to
36
such date, not to exceed a total of 90 days, as shall be necessary for
such Project Company diligently to cure such failure.
(g) Major Project Documents.
(i) Any Person (other than a Secured Party) shall be in breach
of, or in default under, (A) a Major Project Document relating to such
Project Company's Project (after giving effect to any applicable grace
period set forth in such Major Project Document), or (B) any Consent
related to such Major Project Document, and in each case such breach or
default could reasonably be expected to have a Project Material Adverse
Effect, and such breach or default shall not be susceptible of cure or,
if susceptible of cure, shall continue unremedied for a period of 45
days; provided that if (A) such breach or default does not consist of a
failure to pay money and cannot be cured within such 45-day period, (B)
such breach or default is susceptible of cure within 90 days, (C) the
breaching party is proceeding with diligence and in good faith to cure
such breach, and (D) the existence of such breach or default does not
have a Project Material Adverse Effect and the extension of time to
cure such breach or default could not, after considering the nature of
the cure, be reasonably expected to have a Project Material Adverse
Effect, then such 45-day cure period shall be extended to such date,
not to exceed a total of 90 days, as shall be necessary for the
breaching party diligently to cure such breach or default; provided,
further, that no Project Event of Default shall be declared or deemed
to exist as a result of any such breach or default if: (y) within the
90-day cure period referred to in this Section 7.2(g)(i) (or within the
45-day cure period, if no extension is given), such Project Company
replaces the affected Person (other than such Project Company) with a
Person that is reasonably satisfactory to XLCA (if XLCA is then the
Controlling Party) or whose replacement of the affected Person could
not reasonably be expected to have a Project Material Adverse Effect
(if XLCA is not then the Controlling Party) pursuant to documentation
that is reasonably satisfactory to XLCA (if XLCA is then the
Controlling Party) or that could not reasonably be expected to have a
Project Material Adverse Effect (if XLCA is not then the Controlling
Party), and (z) the existence of such breach or default does not have a
Project Material Adverse Effect and the extension of time (if any) to
obtain a replacement Person could not reasonably be expected to have a
Project Material Adverse Effect.
(ii) Any Major Project Document relating to such Project
Company's Project shall terminate, any material provision in any such
Major Project Document shall for any reason cease to be valid and
binding on any Person party thereto except upon fulfillment of such
Person's obligations thereunder (or any such Person shall so state in
writing), or shall be declared null and void, or the validity or
enforceability thereof shall be contested by any party thereto or any
Governmental Authority, or any such Person shall deny in writing that
it has any liability or obligation thereunder, except upon fulfillment
of its obligations thereunder, and in each case such occurrence could
reasonably be expected to have a Project Material Adverse Effect;
provided that no Project Event of Default shall be declared or deemed
to exist as a result of the occurrence of such event if: (A) within 30
days after the occurrence of such event, such Project Company notifies
the Controlling Party and the Collateral Agent in writing that it
intends to cure such event, (B) within 135 days after the occurrence of
such event, such Project Company (x) replaces the affected
37
Person (other than Project Company) with a Person that is
reasonably satisfactory to XLCA (if XLCA is then the Controlling Party) or whose
replacement of the affected Person could not reasonably be expected to have a
Project Material Adverse Effect (if XLCA is not then the Controlling Party)
pursuant to documentation that is reasonably satisfactory to XLCA (if XLCA is
then the Controlling Party) or that could not reasonably be expected to have a
Project Material Adverse Effect (if XLCA is not then the Controlling Party) or
(y) replaces the affected Major Project Document with a Project Document that is
reasonably satisfactory to XLCA (if XLCA is then the Controlling Party) or that
could not reasonably be expected to have a Project Material Adverse Effect (if
XLCA is not then the Controlling Party); and (C) the occurrence of such event
does not have a Project Material Adverse Effect and the extension of time to
cure such event could not reasonably be expected to have a Project Material
Adverse Effect.
(h) Loss of EWG Status. Such Project Company shall cease to be
an Exempt Wholesale Generator or its Project shall cease to be an Eligible
Facility, or such Project Company shall fail to take all actions required to
maintain such status (except if such Project Company or such Project, as the
case may be, is no longer required to hold such status in order to be exempt
from PUHCA), and such cessation or failure shall have a Project Material Adverse
Effect; provided that such Project Company shall have 60 days after a
Responsible Officer of such Project Company obtains knowledge of such cessation
or failure to cure such cessation or failure before it becomes a Project Event
of Default so long as the extension of time to cure such cessation or failure
could not reasonably be expected to have a Project Material Adverse Effect.
(i) Abandonment. At any time following the Completion Date for
its Project, such Project Company shall announce that it is abandoning such
Project or such Project shall be abandoned or operation thereof shall
substantially cease for a continuous period of more than 2 years for any reason.
(j) Permits. Any Permit shall be revoked, canceled, not
renewed or materially modified by the issuing agency or other Governmental
Authority having jurisdiction (excluding any revocation, cancellation,
non-renewal, or material modification at the request of the relevant Project
Company and with the prior written consent of the Controlling Party and the
Collateral Agent) and within 90 days thereafter the relevant Project Company is
not able to demonstrate to the reasonable satisfaction of XLCA (if XLCA is then
the Controlling Party) acting in consultation with the Independent Engineer (or
a Responsible Officer of such Project Company is not able to certify to the
Trustee (if XLCA is not then the Controlling Party) that such revocation,
cancellation or material modification of, or failure to renew, such Permit could
not reasonably be expected to have a Project Material Adverse Effect.
(k) ERISA. With respect to any ERISA Plan which a member of
the Controlled Group sponsors, maintains, administers, contributes to,
participates in, or has any obligation to contribute to or any liability under,
an event has occurred or a condition exists which, together with all other such
events or conditions, could reasonably be expected to have a Project Material
Adverse Effect.
(l) Project Company Collateral. (i) The grant of the Lien of
such Project Company's Project Company Collateral Documents shall fail in any
material respect to provide a
38
perfected Lien in favor of the Collateral Agent for the benefit of the Secured
Parties on any of such Project Company's Project Company Collateral with the
priority purported to be created thereby, and such Project Company shall fail to
cure any such failure within 15 days after it becomes aware thereof or receives
written notice thereof from the Collateral Agent, or (ii) Collateral Agent shall
receive a Secretary of State report indicating that the Collateral Agent's
security interest in any of such Project Company Collateral is not prior to all
other security interests or other interests reflected in such report, other than
Project Company Permitted Liens, and such Project Company shall fail to cure
such condition within 15 days after it becomes aware thereof or receives written
notice thereof from the Collateral Agent.
(m) Liens of Certain Equity Interests. The membership
interests in the Big Cajun Project Company or the Sterlington Project Company
shall be, or shall become, subject to any Lien (whether or not existing before
or after the Closing Date but other than (i) a Lien in favor of the Secured
Parties pursuant to which any such membership interests become part of the
Collateral, or (ii) Project Company Permitted Liens as described in paragraphs
(b) and (d) of the definition of Project Company Permitted Liens) and such Lien
shall not be discharged within 15 days after such Project Company becomes aware
thereof or receives written notice thereof from the Collateral Agent.
(n) Interconnection Solution. The Interconnection Solution
shall fail to be in full force and effect within nine months after the Closing
Date; provided, however, that if the Big Cajun Project Company is proceeding
with diligence and in good faith to cure such failure, such failure shall not be
considered a Project Event of Default unless it continues unremedied for an
additional 90 days following the end of such nine month period.
7.3 Fundamental Project Event of Default. The occurrence of any of the
following Project Events of Default with respect to a Project Company shall
constitute a "Fundamental Project Event of Default" with respect to such Project
Company (provided that any such Project Event of Default shall not be a
Fundamental Project Event of Default with respect to a Project Company if the
Issuer consummates a Permitted Peaker Buyout (Peaker Sale / Project Event of
Default) or a Peaker Collateralization in respect of such Project Company and/or
its Project):
(a) The occurrence of a Project Event of Default under Section
7.2(d)(i) (Bankruptcy of Project Company) with respect to such Project
Company;
(b) The occurrence of a Project Event of Default under Section
7.2(f)(i) (Breach of Terms of Financing Documents) with respect to such
Project Company's failure to perform or observe the covenants set forth
in:
(i) Section 3.1 (Use of Proceeds and Revenues), if such
failure shall continue unremedied for a period of 30 days;
(ii) Section 3.6(a) (Maintenance of Existence);
(iii) Section 3.10 (Insurance), if such failure shall continue
unremedied for a period of 30 days;
39
(iv) Section 3.12(a) (Title), if such failure is in respect of
all or substantially all of such Project Company's assets;
(v) Section 5.2 (Liens), in respect of Liens in excess of
$5,000,000, if such failure shall continue unremedied for a period of
30 days;
(vi) Section 5.3 (Indebtedness);
(vii) Sections 5.4(a), (b), (c) or (d) (Asset Dispositions),
in respect of any asset that is material to the ownership, leasing,
operation, maintenance or use of such Project Company's Project;
(viii) Section 5.10 (Merger or Consolidation; Liquidation) in
respect of a merger, consolidation, liquidation or dissolution; and
(ix) Section 5.14 (Assignment).
(c) The occurrence of a Project Event of Default under Section
7.2(i) (Abandonment) with respect to such Project Company's Project;
(d) The occurrence of a Project Event of Default under Section
7.2(h) (Loss of Exemption) with respect to such Project Company or its Project;
(e) The occurrence of a Project Event of Default under Section
7.2(j) (Permits) with respect to a Permit that is necessary to operate such
Project Company's Project on a commercially feasible basis, if such Project
Event of Default continues unremedied for a period of 90 days; and
(f) The occurrence of a Project Event of Default under Section
7.2(l) (Project Company Collateral) with respect to all or substantially all of
the Project Company Collateral of such Project Company
(g) The occurrence or continuation of a Project Event of
Default under Section 7.2(n) (Interconnection Solution) at any time that the Big
Cajun PPA or an Alternate Big Cajun PPA is not in full force and effect.
7.4 Controlling Party Agreement.
(a) Each party to this Agreement agrees that the Controlling
Party shall, subject to Section 9.2 (b) as to matters referred to in
the proviso to Section 9.2(b), have the exclusive power to determine,
control and direct any request, demand, authorization, direction,
notice, consent, waiver or other action to be given, made or taken by
any party to any Financing Document. Notwithstanding anything to the
contrary in any Financing Document, each of the Swap Counterparty, the
Collateral Agent and the Trustee (on behalf of itself and the
Bondholders) agrees not to give, make or take any such request, demand,
authorization, direction, notice, consent, waiver or other action for
so long as XLCA is the Controlling Party (unless, in each such case, it
is directed to do so by XLCA). Without prejudice to Section 2.11 of
this Agreement, this Section 7.4(a) shall not prohibit (a) notices by
the Issuer to the Swap
40
Counterparty under the Swap Agreement from becoming effective if, pursuant to
the express terms of the Swap Agreement, such notices are to be effective
without XLCA's consent upon being given to XLCA, or (b) the Swap Counterparty
from designating an early termination of the Swap Agreement (as expressly
permitted by its terms) without XLCA's consent.
(b) Each party to this Agreement agrees that the Controlling
Party shall have the exclusive power to determine the exercise of all rights and
remedies in respect of any Issuer Event of Default or any other default or event
of default under any Financing Document howsoever arising. Notwithstanding
anything to the contrary in any Financing Document, each of the Swap
Counterparty, the Collateral Agent and the Trustee (on behalf itself and the
Bondholders) agrees not to exercise any rights or remedies granted in, or
pursuant to or in respect of any, Financing Document or available to it at law
or in equity in respect of any default or event of default under any Financing
Document for so long as XLCA is the Controlling Party (unless, in each such
case, it is directed to exercise such rights and remedies by XLCA). Without
prejudice to Section 2.11 of this Agreement, this Section 7.4(b) shall not
prohibit the Swap Counterparty from designating an early termination of the Swap
Agreement (as expressly permitted by its terms) without XLCA's consent.
(c) Without prejudice to the generality of Section 7.4(a) or
7.4(b) of this Agreement, each of the Trustee, on behalf of itself and the
Bondholders, and the Swap Counterparty, hereby assigns to XLCA the respective
rights of the Trustee, the Bondholders and the Swap Counterparty with respect to
the Obligations to the extent of any payments under the Policy or the Swap
Policy. The foregoing assignment is in addition to, and not in limitation of,
rights of subrogation otherwise available to XLCA in respect of the Policies
(including pursuant to Section 4.2 of the Insurance and Reimbursement
Agreement), which subrogation rights are acknowledged, and agreed to, by the
other Secured Parties. Payments to XLCA in respect of the foregoing assignment
shall in all cases be subject to and subordinate to the rights of the
Bondholders to receive all scheduled payments of interest and principal under
the Bond Obligations. The Controlling Party is hereby appointed agent and
attorney-in-fact for each other Secured Party in any legal proceeding in respect
of the Obligations. Each Secured Party agrees that the Controlling Party may at
any time during the continuation of any proceeding by or against any debtor with
respect to which a claim seeking the avoidance as a preferential transfer of any
payment made with respect to the Obligations (a "Preference Claim"), or other
claim with respect to the Obligations is asserted under any proceeding in
connection with a Bankruptcy Event, direct all matters relating to such
proceeding, including, without limitation, (i) all matters relating to any
Preference Claim, (ii) the direction of any appeal of any order relating to any
Preference Claim and (iii) the posting of any surety or performance bond pending
any such appeal. The Trustee, on behalf of itself and the Bondholders, and the
Swap Counterparty each hereby agrees that XLCA shall be subrogated to, and the
Trustee, on behalf of itself and the Bondholders, and the Swap Counterparty each
hereby delegates and assigns, to the fullest extent permitted by law, the
respective rights of the Trustee, the Bondholders and the Swap Counterparty in
the conduct of any proceeding in connection with a Bankruptcy Event, including,
without limitation, all rights of any party to an adversary proceeding or action
with respect to any court order issued in connection with any such proceeding.
(d) Each party to this Agreement agrees that in respect of the
matters set forth or contemplated in Sections 7.4, 7.5, 7.6 and 7.7 and in
respect of related matters set forth or
41
contemplated in the Financing Documents, the Swap Counterparty shall abide by
the decisions, and follow and comply with the requests, of the Controlling Party
and shall have no voting or other related rights in respect of any such matters.
7.5 Remedies. Upon the occurrence and during the continuation of an
Issuer Event of Default, the Controlling Party may, without any obligation to do
so and without further notice of default, presentment or demand for payment,
protest or notice of non-payment or dishonor, or other notices or demands of any
kind (all such notices and demands being waived), exercise any or all of the
following rights and remedies, in any combination or order, in addition (but
without prejudice to its rights as Controlling Party pursuant to Section 7.4) to
such other rights or remedies as the Secured Parties may have hereunder or under
the Collateral Documents or at law or in equity:
(a) Cure. Make disbursements to or on behalf of the Issuer to
cure any Issuer Event of Default hereunder and to cure any default or render any
performance under any Project Document as XLCA in its absolute discretion may
consider necessary or appropriate, whether to preserve and protect the
Collateral or the Secured Parties' interests therein or for any other reason,
and all sums so expended, together with interest on such total amount at the
Late Payment Rate (but in no event shall the rate exceed the maximum lawful
rate), shall be repaid by the Issuer to Collateral Agent promptly upon demand
therefor and shall be secured by the Financing Documents.
(b) Acceleration. Declare and make all sums of accrued and
outstanding principal, accrued but unpaid interest and accrued but unpaid
premium remaining under the Financing Documents, together with all unpaid
amounts, fees, costs and charges due hereunder or under any other Financing
Document (including in respect of any Reimbursement Obligation, Depositary
Obligation or Bond Obligation) immediately due and payable, and require the
Issuer immediately, without presentment, demand, protest or other notice of any
kind, all of which the Issuer hereby expressly waives, to pay to the Collateral
Agent an amount in immediately available funds equal to the aggregate amount of
any such outstanding accelerated obligations; provided that XLCA, so long as it
shall be the Controlling Party, shall not cause such an acceleration upon the
occurrence and during the continuation of an Issuer Event of Default pursuant to
Section 7.1(a) (Failure to Make Payments) if at such time (i) the discounted
present value of the aggregate amount of all payments made under the Policies
for which XLCA has not been reimbursed under the Insurance and Reimbursement
Agreement (or otherwise) is less than $25,000,000 (such discounted present value
being calculated by discounting the value of such aggregate amount back to the
Closing Date at a discount rate of 6.672826%), and (ii) no Issuer Event of
Default or Issuer Inchoate Default shall have occurred or be continuing (other
than pursuant to or in respect of Section 7.1(a) of this Agreement); and
provided, further, that in the event of an Issuer Event of Default occurring
under Section 7.1(d) (Bankruptcy), all such amounts, notwithstanding anything to
the contrary in this Agreement, shall become immediately due and payable without
further act of any Secured Party.
(c) Cash Collateral. Apply to any Obligation then due any
amounts on deposit in any Account, any funds on deposit in any Cash Collateral
Account, any drawings made under any Acceptable Letter of Credit or any proceeds
or any other monies of the Issuer on deposit with Depositary Agent or any
Secured Party in the manner provided in this Agreement or
42
in the Uniform Commercial Code and other relevant statutes and decisions and
interpretations thereunder with respect to cash collateral.
(d) Possession of Projects. Enter into possession of any
Project and perform any and all work and labor necessary to complete such
Project or to operate and maintain such Project, and all sums expended in so
doing, together with interest on such total amount at the Late Payment Rate,
shall be repaid by the Issuer to the Secured Party or Parties expending such
sums promptly upon demand and shall be secured by the Financing Documents to the
extent provided herein.
(e) Remedies Under Collateral Documents. Exercise any and all
rights and remedies available to the Secured Parties under any of the Collateral
Documents, including judicial or non-judicial foreclosure or public or private
sale of any of the Collateral pursuant to the Collateral Documents.
7.6 Notice to Trustee and Project Events of Default. In exercising its
rights as Controlling Party in respect of remedies under Section 7.5 under this
Agreement, XLCA shall give the Trustee notice of XLCA's exercise of such
remedies (provided that failure by XLCA to give such notice shall in no way
limit, prejudice or affect XLCA's ability to exercise any remedies and XLCA
shall have no liability of any kind to any Person for failure to give such
notice). Without limiting anything set forth in this Article 7, upon the
occurrence of a Project Event of Default hereunder, the remedies available to
the Controlling Party and the other Secured Parties shall not include the
remedies set forth in Section 7.5 unless an Issuer Event of Default has also
occurred and is continuing.
7.7 Application of Proceeds. If there shall have occurred an Issuer
Event of Default, all money, proceeds and other property received or held by the
Collateral Agent comprising Collateral or pursuant to the exercise by the
Collateral Agent of rights and remedies of the Secured Parties under any
Financing Document in respect of the Collateral shall be applied by the
Collateral Agent as follows (and if any Secured Party receives any such money,
proceeds or property other than as distributed by the Collateral Agent pursuant
to this Section 7.7, such Secured Party shall promptly pay or transfer the same
to the Collateral Agent for distribution in accordance with this Section 7.7):
first: to the payment of all and any fees, costs and expenses
owed to the Collateral Agent and the Trustee in their respective trust
capacities pursuant to any Financing Document;
second: to the payment of the whole amount then outstanding
(including accrued interest, principal and premium (if any)) of the Obligations
(or if the Obligations shall only have been accelerated in part, the whole
amount then outstanding of such part) and in case such proceeds are not
sufficient to pay in full the whole amount so outstanding, then to make pro-rata
payments without any preference or priority, to each Secured Party (other than
the Collateral Agent or the Trustee) in respect of the Obligations; and
third: after the payment in full of the Obligations, to the
payment of the remainder, if any, to the Issuer or as a court of competent
jurisdiction may direct.
43
ANNEX A
DEFINITIONS
"364 Day Revolver" means that certain 364-Day Revolving Credit
Agreement, dated as of March 8, 2002 and amended as of April 8, 2002 and May 14,
2002, among NRG Energy, the financial institutions party thereto, ABN AMRO Bank,
N.V., as Administrative Agent, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, Inc., as Syndication Agent,
Barclays Bank plc, as Co-Syndication Agent, and The Royal Bank of Scotland plc
and Bayerische Hypo-und Vereinsbank AG, New York Branch, as Co-Documentation
Agents.
"Acceptable Assignee" has the meaning given in Section 11 of
the Contingent Guaranty Agreement.
"Acceptable Letter of Credit" means a letter of credit that
(a) is issued by a bank or other financial institution rated at least A2 by
▇▇▇▇▇'▇ and at least A by S&P, (b) has no account party that is a Financing
Party or any Affiliate of any Financing Party, and (c) is in the form attached
as Exhibit B to the Depositary Agreement.
"Acceptable PPA" means, with respect to a Project, an
agreement for the sale of Power generated by such Project that (a) does not
require the applicable Project Company to accept fuel price market risk (e.g., a
tolling agreement, fuel pass-through, energy prices indexed to fuel prices,
prices otherwise structured to limit negative spark spread risk), (b) has an
initial term of at least one year, (c) provides for annual revenues that equal
or exceed such Project Company's Allocation Percentage multiplied by the
aggregate amount of Scheduled Debt Service payments on the Series A Bonds
Outstanding (as such term is defined in the Indenture) for each year during the
term of such agreement for the sale of Power, and (d) provides for the
counterparty credit support that complies with the credit support criteria
contained in the NRG Credit Risk Policy; provided that with respect to any such
agreement entered into by NRG Power Marketing as principal under the Power Sales
and Agency Agreement to which such Project Company is a party, such agreement
will be an Acceptable PPA with respect to such Project Company only if such
Project Company and NRG Power Marketing have entered into a written agreement
evidencing and/or attaching the terms and conditions of the agreement that is
being passed through to such Project Company as contemplated by Section 2.9 of
such Power Sales and Agency Agreement.
"Account Funds" means all cash, cash equivalents, financial
assets, instruments, investments, investment property, securities and other
property, including Permitted Investments, on deposit in or credited to an
Account in accordance with the Depositary Agreement.
"Accounts" has the meaning given in Section 2.1 of the
Depositary Agreement.
"Accrued Insurer Loss Amount (Bond)" means, as of any Annual
Scheduled Payment Date, the aggregate amount then due and owing to XLCA by the
Issuer under the Insurance and Reimbursement Agreement in respect of the
Reimbursement Obligations relating to the Policy.
"Accrued Insurer Loss Amount (Swap)" means, as of any Annual
Scheduled Payment Date, the aggregate amount then due and owing to XLCA by the
Issuer under the Insurance and Reimbursement Agreement in respect of the
Reimbursement Obligations relating to the Swap Policy.
"Acquisition Agreements" means the Bayou Cove Membership
Interest Purchase Agreement, the Bayou Cove Assignment and Assumption Agreement,
the Rockford Acquisition Agreement, the Rockford Assignment and Assumption
Agreement, the Sterlington Project Development Agreement, the Sterlington
Supplement and Modification to Project Development Agreement, and the
Sterlington and NRG South Central Assignment and Assumption Agreement.
"Acquisition Indemnity Payment" means, for any Project, any
and all amounts paid as indemnification payments to an Affiliate of the Project
Company owning such Project pursuant to an Acquisition Agreement relating to
such Project in order to compensate the relevant acquirer of such Project (or
Affiliate of such acquirer) for any devaluation of such Project due to a breach
of any representation, warranty or covenant contained in such Acquisition
Agreement.
"Acquisition Indemnity/Performance LD Reserve Account" has the
meaning given in Section 2.1 of the Depository Agreement.
"Actual Net Revenue" (a) in connection with the calculation of
a Performance Shortfall has the meaning given in Appendix I to the Contingent
Guaranty Agreement and (b) in connection with the calculation of an Experience
Accrual Amount or Experience Reduction Amount has the meaning given in Appendix
II to the Contingent Guaranty Agreement.
"Additional Bonds" has the meaning given in the Indenture.
"Additional Contingent Guaranty Agreement" means any
contingent guaranty agreement, substantially in the form of the Contingent
Guaranty Agreement or as otherwise in form and substance satisfactory to the
Controlling Party, provided by an Acceptable Assignee in connection with a
Permitted Change of Control pursuant to Section 10 of the Contingent Guaranty
Agreement.
"Additional Project Document" means, with respect to any
Project, any Project Document entered into with respect to such Project after
the Closing Date.
"Affiliate" means, with respect to a specified Person, any
other Person that directly, or indirectly through one or more intermediaries,
controls, is controlled by or is under common control with the Person specified,
or who holds or beneficially owns 10% or more of the equity interest in the
Person specified or 10% or more of any class of voting securities of the Person
specified. For the purposes of this definition "control" (including with
correlative meanings, the terms "controlling," "controlled by" and "under common
control with"), as used with respect to any Person, means the possession,
directly or indirectly, of the power to direct or to cause the direction of the
management or policies of such Person, whether through the ownership of voting
securities, by agreement or otherwise. When used with respect to the Issuer,
"Affiliate" shall include NRG Energy and each Project Company.
2
"Affiliated Major Project Participant" means any Major Project
Participant that is an Affiliate of the applicable Project Company (in each case
to the extent such Person has remaining obligations under the Major Project
Documents).
"Allocation Percentage" means (a) in respect of the Bayou Cove
Project Company, 20%, (b) in respect of the Big Cajun Project Company, 28%, (c)
in respect of the Rockford I Project Company, 31%, (d) in respect of the
Rockford II Project Company, 10%, and (e) in respect of the Sterlington Project
Company, 11%; provided that upon a Permitted Peaker Buyout, the Allocation
Percentage for the Project Company subject to such Permitted Peaker Buyout shall
be reduced to 0% and the Allocation Percentage for each other Project Company
not subject to such Permitted Peaker Buyout shall be increased to its Allocation
Increased Percentage.
"Allocation Increased Percentage" means, in connection with a
Permitted Peaker Buyout and with respect to a Project Company that is not
subject to such Permitted Peaker Buyout, a percentage amount that is equal to
100% multiplied by (a) the product in Dollars of (x) such Project Company's
Allocation Percentage immediately prior to the consummation of such Permitted
Peaker Buyout multiplied by (y) the aggregate principal amount of all Series A
Bonds Outstanding (as such term is defined in the Indenture) immediately prior
to such consummation, divided by, (b) the aggregate principal amount of all
Series A Bonds Outstanding (as such term is defined in the Indenture)
immediately after such consummation.
"Allocation Percentage Buyout Amount" means, in respect of a
Project Company, an amount equal to the Allocation Percentage for such Project
Company multiplied by the aggregate principal amount of Series A Bonds then
Outstanding (as such term is defined in the Indenture).
"Alternate Big Cajun PPA" means, with respect to the Big Cajun
Project, any Acceptable PPA which has been entered into by the Big Cajun Project
Company as a replacement for the Big Cajun PPA; provided that (i) such
Acceptable PPA specifies the same delivery point for electricity as the Big
Cajun PPA and (ii) the counterparty to such Acceptable PPA has entered into a
Consent on terms and conditions similar to those contained in the Consent
relating to the Big Cajun PPA delivered on the Closing Date.
"Ancillary Services" means, in respect of a Project Company,
the ancillary services that FERC has authorized to be sold at market-based rates
in the Applicable Markets for such Project Company's Project.
"Annual Operations Report" means, in respect of each Project,
an annual operations report for such Project substantially in the form of
Exhibit E to the Common Agreement.
"Annual Scheduled Payment Date" means each (a) December 10th
commencing on December 10, 2002 and ending on, and including, December 10, 2018,
and (b) June 10, 2019.
"Applicable Markets" means, with respect to any Project, the
markets for Energy Products and Services in which such Project is interconnected
or in which such Project Company buys, sells or offers for delivery such
products or services.
3
"Associated Support Obligations" means, with respect to a
Project in connection with a Permitted Change of Control, the product of (a) the
percentage of such Project, or the membership interests in the applicable
Project Company, purchased by the Acceptable Assignee multiplied by (b) the sum
of (i) the product of (A) the Allocation Percentage of the applicable Project
Company multiplied by (B) the NRG Support Obligations under the Contingent
Guaranty Agreement, prior to giving effect to such Permitted Change of Control
(excluding NRG Energy's obligations under Sections 2.5 and 2.10 of the
Contingent Guaranty Agreement), plus (ii) if such Project is the Bayou Cove
Project or the Rockford II Project and such Permitted Change of Control occurs
prior to Completion of such Project, 100% of NRG Energy's obligations under
Section 2.5 of the Contingent Guaranty Agreement with respect to such Project,
plus (iii) if such Project is the Big Cajun I Units 3&4 Project, 100% of NRG
Energy's obligations under Section 2.10 of the Contingent Guaranty Agreement.
"Authorized Signatory" has the meaning given in Section 6.5 of
the Depositary Agreement.
"Available Collateralized Deductible Funds" means, as of any
date, the aggregate amount of (i) Account Funds on deposit in the Collateralized
Deductible Account on such date, (ii) any Deductible Cash Collateral Deposits
made and not reimbursed as of such date and (iii) amounts available for drawing
on such date under any Acceptable Letter of Credit posted for the Collateralized
Deductible Account or such Deductible Cash Collateral Deposits.
"Available Collateralized Experience Funds" means, as of any
date, the aggregate amount of (i) Account Funds on deposit in the Collateralized
Experience Account on such date, (ii) any Experience Cash Collateral Deposits
made and not reimbursed as of such date and (iii) amounts available for drawing
on such date under any Acceptable Letter of Credit posted for the Collateralized
Experience Account or such Experience Cash Collateral Deposits.
"Bankruptcy" means, in respect of any Person, a Bankruptcy
Event of such Person.
"Bankruptcy Event" shall be deemed to occur with respect to
any Person if (a) such Person shall institute a voluntary case seeking
liquidation or reorganization under Bankruptcy Law, or shall consent to the
institution of an involuntary case thereunder against it; (b) such Person shall
file a petition or consent or shall otherwise institute any similar proceeding
under any other applicable Federal or state law, or shall consent thereto; (c)
such Person shall apply for, or by consent there shall be an appointment of, a
receiver, liquidator, sequestrator, trustee or other officer with similar powers
for itself or any substantial part of its assets; (d) such Person shall make an
assignment for the benefit of its creditors; (e) such Person shall admit in
writing its inability to pay its debts generally as they become due; (f) an
involuntary case shall be commenced seeking liquidation or reorganization of
such Person under Bankruptcy Law or any similar proceedings shall be commenced
against such Person under any other applicable Federal or state law and (i) the
petition commencing the involuntary case is not timely controverted, (ii) the
petition commencing the involuntary case is not dismissed within 60 days of its
filing, (iii) an interim trustee is appointed to take possession of all or a
portion of the property, and/or to operate all or any part of the business, of
such Person and such appointment is not vacated within 60 days, or (iv) an order
for relief shall have been issued or entered therein; (g) a decree or order
4
of a court having jurisdiction in the premises for the appointment of a
receiver, liquidator, sequestrator, trustee or other officer having similar
powers of such Person or all or a part of its property shall have been entered;
or (h) any other similar relief shall be granted against such Person under any
applicable Federal or state law.
"Bankruptcy Law" means ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Code, and any
other state or federal insolvency, reorganization, moratorium or similar law for
the relief of debtors, or any successor statute and, additionally, with respect
to XLCA, Article 74 of the New York Insurance Law.
"Base Case Project Projections" means a projection of
operating results for the Projects delivered pursuant to Section 3.1(n) of the
Insurance and Reimbursement Agreement.
"Bayou Cove Assignment and Assumption Agreement" means the
Assignment and Assumption Agreement between NRG Bayou Cove LLC and El Paso
Merchant Energy Company, dated as of September 10, 2002.
"Bayou Cove Completion Obligations" has the meaning given in
Section 3.14(a) of the Common Agreement.
"Bayou Cove Construction Costs" means, collectively, any and
all costs (other than Uncovered Warranty Costs), expenses, fees, taxes or
reimbursement obligations incurred by or on behalf of the Bayou Cove Project
Company under or in connection with a Bayou Cove Equipment and Construction
Contract or otherwise in connection with achieving Project Completion of the
Bayou Cove Project, in each case on or prior to Completion of the Bayou Cove
Project.
"Bayou Cove Contractors" means, collectively, each of the
contractors, service providers and/or suppliers providing equipment and/or
services to the Bayou Cove Project pursuant to the terms of any Bayou Cove
Equipment and Construction Contract or any agent or subcontractor thereof.
"Bayou Cove Electric Interconnection Agreement" means the
Interconnection and Operating Agreement between the Bayou Cove Project Company
and Entergy Gulf States, Inc., effective as of October 18, 2001.
"Bayou Cove Electric Interconnection Facilities" means,
collectively, the electric interconnection facilities, including any system
upgrades, contemplated to be engineered, constructed, installed, tested,
commissioned and completed pursuant to the Bayou Cove EPC Agreement (Electric
Interconnection Facilities), the Bayou Cove Electric Interconnection Agreement
and any sub-contract related thereto.
"Bayou Cove EPC Agreement (Balance of Plant)" means the
Turnkey Contract among Stone & ▇▇▇▇▇▇▇, Inc., ▇▇▇▇ Constructors, Inc. and the
Bayou Cove Project Company, dated as of November 21, 2001.
5
"Bayou Cove EPC Agreement (Electric Interconnection
Facilities)" means the Agreement for Engineering, Procurement and Construction
between the Bayou Cove Project Company and Entergy Louisiana, dated as of
October 31, 2001.
"Bayou Cove Equipment and Construction Contracts" means,
collectively, (i) the Bayou Cove Turbine Purchase Agreement, (ii) the Bayou Cove
Generator Step-Up Transformers Purchase Agreement, (iii) the Bayou Cove EPC
Agreement (Balance of Plant), (iv) the Bayou Cove EPC Agreement (Electric
Interconnection Facilities), (v) the Bayou Cove Electric Interconnection
Agreement, and (vi) any other agreement or document (including any subcontracts)
entered into with respect to achieving Project Completion for the Bayou Cove
Project.
"Bayou Cove Gas Interconnection Agreement" means the
Reimbursement, Construction, Ownership and Operating Agreement between the Bayou
Cove Project Company and ▇▇▇▇ Hub Partners, L.P., dated as of February 8, 2002.
"Bayou Cove Generator Step-Up Transformers Purchase Agreement"
means the Generator Step-Up Transformers Contract Agreement between the Bayou
Cove Project Company and ABB Power T&D Company, Inc., dated as of June 1, 2001.
"Bayou Cove Major Project Documents" means, collectively, (a)
the Bayou Cove Electric Interconnection Agreement, the Bayou Cove Gas
Interconnection Agreement and the Bayou Cove PSA Agreement, (b) any Additional
Project Document for the Bayou Cove Project that replaces any of the agreements
described in clause (a), (c) any Major Power Purchase Agreement, Major FSA or
Major FTA for the Bayou Cove Project and (d) any Additional Project Document for
the Bayou Cove Project that constitutes a material ground lease agreement,
material electric interconnection agreement or material sharing agreement.
"Bayou Cove Membership Interest Purchase Agreement" means the
Membership Interest Purchase Agreement between NRG Bayou Cove LLC and El Paso
Remediation Company, dated as of September 10, 2001 by which NRG Bayou Cove LLC
purchased all of El Paso Remediation Company's membership interests in the Bayou
Cove Project Company, constituting 100% of the membership interests in the Bayou
Cove Project Company.
"Bayou Cove Project" means the natural gas-fired electric
generation facility owned by the Bayou Cove Project Company currently under
construction near Jennings, Louisiana in Acadia Parish which, upon Completion,
is expected to generate 295 MW (summer capacity) / 345 MW (winter capacity).
"Bayou Cove Project Company" means Bayou Cove Peaking Power,
LLC, a Delaware limited liability company.
"Bayou Cove Project Documents" means all Project Documents for
the Bayou Cove Project.
"Bayou Cove PSA Agreement" means the Power Sales and Agency
Agreement between NRG Power Marketing and the Bayou Cove Project Company, dated
as of the Closing Date, including the Fuel and Power Marketing Plan attached
thereto.
6
"Bayou Cove Turbine Purchase Agreement" means the Turbine
Purchase Site Specific Agreement between NRG Energy and General Electric
Company, dated as of December 5, 2001, as assigned by NRG Energy to the Bayou
Cove Project Company.
"Big Cajun Act of Cash Sale and Grant of Servitude" means the
Act of Cash Sale and Grant of Servitude signed by Louisiana Generating and the
Big Cajun Project Company on the Closing Date.
"Big Cajun Act of Subordination" means the Act of
Subordination of Act of Mortgage, Pledge and Assignment of Leases and Rents
executed by JPMorgan Chase Bank on June 13, 2002.
"Big Cajun PPA" means the Power Purchase Agreement among the
Big Cajun Project Company, Louisiana Generating and NRG South Central, dated as
of February 15, 2002.
"Big Cajun PSA Agreement" means the Power Sales and Agency
Agreement between NRG Power Marketing and the Big Cajun Project Company, dated
as of the Closing Date, including the Fuel and Power Marketing Plan attached
thereto.
"Big Cajun Project Company" means Big Cajun I Peaking Power
LLC, a Delaware limited liability company.
"Big Cajun I ▇▇▇▇▇ ▇&▇ ▇▇▇▇▇ Project Documents" means,
collectively, (a) the Big Cajun PSA Agreement, the Big Cajun PPA, any Alternate
Big Cajun PPA, the Big Cajun Shared Facilities Agreement, the Big Cajun Sale of
Moveables in Place, the Big Cajun Switchyard Servitude Agreement and the Big
Cajun Act of Cash Sale and Grant of Servitude, (b) any Additional Project
Document for the Big Cajun I Units 3&4 Project that replaces any of the
agreements described in clause (a), (c) any Major Power Purchase Agreement,
Major FSA or Major FTA for the Big Cajun I Units 3&4 Project and (d) any
Additional Project Document for the Big Cajun I Units 3&4 Project that
constitutes a material ground lease agreement, material electric interconnection
agreement or material sharing agreement.
"Big Cajun I Units 3&4 Project Documents" means all Project
Documents for the Big Cajun I Units 3&4 Project.
"Big Cajun I Units 1&2 Project" means the approximately 220 MW
natural gas-fired electric generation facility owned by Louisiana Generating,
which is located in New Roads, Louisiana, adjacent to the Big Cajun I Units 3&4
Project.
"Big Cajun I Units 3&4 Project" means the approximately 204 MW
(summer capacity) / 239 MW (winter capacity) natural gas-fired electric
generation facility owned by the Big Cajun Project Company, which is located in
New Roads, Louisiana adjacent to the Big Cajun I Units 1&2 Project.
"Big Cajun Sale of Moveables in Place" means the sale of
Moveables in Place signed by Louisiana Generating and the Big Cajun Project
Company on the Closing Date.
7
"Big Cajun Shared Facilities Agreement" means the Shared
Facilities Agreement between the Big Cajun Project Company and Louisiana
Generating, dated as of the Closing Date.
"Big Cajun Switchyard Servitude Agreement" means the
Switchyard Servitude Agreement between NRG New Roads Holding LLC and the Big
Cajun Project Company dated June 18, 2002.
"Blocked Restricted Payment Amount" has the meaning given in
Section 4.5(c)(i) of the Common Agreement.
"Bond Obligations" means each payment and performance
obligation of the Issuer (monetary or otherwise and whether arising by
acceleration or otherwise) arising under or in connection with the Indenture and
the Series A Bonds, including in respect of payment of principal of, premium, if
any, and interest on the Series A Bonds when due and payable and all other
amounts or performances due or to become due under or in connection therewith.
"Bondholders" has the meaning given in the preamble to the
Common Agreement.
"Bonds" means, collectively, the Series A Bonds and any
Additional Bonds.
"Business Day" means any day other than a Saturday, Sunday,
legal holiday or other day on which commercial banking institutions in New York
are authorized or obligated by law, executive order or governmental decree to be
closed.
"Calculation Agent" means The Bank of New York, or any
successor Calculation Agent as appointed by the Issuer with the consent of XLCA
(if XLCA is the Controlling Party) and the Swap Counterparty.
"Capital Lease Obligations" means, for any Person, all
obligations of such Person to pay rent or other amounts under a lease of (or
other agreement conveying the right to use) property to the extent such
obligations are classified and accounted for as a capital lease on a balance
sheet for such Person under GAAP, and, for purposes of the Financing Documents,
the amount of such obligations shall be the capitalized amount thereof,
determined in accordance with GAAP.
"Capital Stock" means, with respect to any Person, any common
stock, preferred stock and any other capital stock of such Person and shares,
interests, participations or other ownership interest (however designated), of
any Person and any rights (other than debt securities convertible into, or
exchangeable for, capital stock or such other ownership interests), warrants,
options or other rights to purchase any of the foregoing, including each class
of common stock and preferred stock of such Person if such Person is a
corporation and each general and/or limited partnership interest of such Person
if such Person is a partnership and/or limited liability company interest of
such Person if such Person is a limited liability company.
"Cash Available for Debt Service" means, for any period, all
Operating Revenues received, or projected to be received (in accordance with
revenue projections prepared by the Power and Fuel Market Consultant within 3
months prior to the determination of Cash Available
8
for Debt Service for such period), during such period minus all Operating Costs
paid, or projected to be paid (in accordance with cost projections prepared by
the Power and Fuel Market Consultant within 3 months prior to the determination
of Cash Available for Debt Service for such period), during such period.
"Cash Collateral Accounts" has the meaning given in Section
7.6 of the Contingent Guaranty Agreement.
"Cash Collateral Deposits" means Experience Cash Collateral
Deposits and Deductible Cash Collateral Deposits.
"Casualty Event" means any damage to or destruction of a
Project.
"Casualty Insurance Proceeds" means any and all proceeds of
any insurance, indemnity, warranty or guaranty payable from time to time with
respect to any Casualty Event, other than business interruption insurance
proceeds and similar proceeds.
"CERCLA" means the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, 42 U.S.C.ss.ss.9601 et seq., as amended
by the Superfund Amendments and Reauthorization Act of 1986, and all rules and
regulations thereunder.
"Closing Date" means June 18, 2002.
"Closing Date Account" means an account established by the
Issuer solely for the purposes of receiving and disbursing the proceeds of the
sale of the Series A Bonds on the Closing Date and to be used solely for such
purposes, which account shall be closed on or shortly after the Closing Date.
"Co-Collateral Agent" means the co-collateral agent appointed
pursuant to Section 11.8 of the Common Agreement.
"Code" means the Internal Revenue Code of 1986, as amended,
and any successor statute.
"Collateral" means, collectively, the Issuer Collateral and
all Project Company Collateral.
"Collateral Agent" has the meaning given in the preamble to
the Common Agreement.
"Collateral Documents" means, collectively, the Issuer
Collateral Documents and all Project Company Collateral Documents.
"Collateralized Deductible Account" has the meaning given in
Section 2.1 of the Depositary Agreement.
9
"Collateralized Deductible Amount" means (a) the Deductible
Limit minus (b) the aggregate of all Deductible Payments previously made by NRG
Energy which have not been reimbursed to NRG Energy pursuant to Section 4.2.1 of
the Depositary Agreement.
"Collateralized Experience Account" has the meaning given in
Section 2.1 of the Depositary Agreement.
"Collateralized Experience Amount" means, as of any Annual
Scheduled Payment Date, the sum of the Collateralized Experience Amount
(Project) for all Projects as of such Annual Scheduled Payment Date; provided,
however, that if either (a) NRG Energy's ratings or the Shadow Ratings for the
Series A Bonds fall below Investment Grade from ▇▇▇▇▇'▇ or S&P, or (b) the Debt
Service Coverage Ratio for the previous 12 months is below 1.20 to 1.00, then
the Collateralized Experience Amount as of such Annual Scheduled Payment Date
shall be equal to 200% of Scheduled Debt Service due on the next Annual
Scheduled Payment Date; provided, further, that if the event described in clause
(b) of the foregoing proviso occurs and NRG Energy's ratings as of such Annual
Scheduled Payment Date are at least Baa2 from Moody's and BBB from S&P, then the
Collateralized Experience Amount as of such Annual Scheduled Payment Date shall
be equal to 150% of Scheduled Debt Service due on the next Annual Scheduled
Payment Date.
"Collateralized Experience Amount (Project)" means, as of any
Annual Scheduled Payment Date, with respect to a Project, the product of (x)
Scheduled Debt Service due on the next Annual Scheduled Payment Date multiplied
by (y) the Allocation Percentage for the applicable Project Company; provided,
however, that during a Tolling Period with respect to such Project, the
Collateralized Experience Amount (Project) with respect to such Project shall be
an amount equal to 50% of the product of (x) Scheduled Debt Service due on the
next Annual Scheduled Payment Date and (y) the Allocation Percentage for the
applicable Project Company.
"ComEd" means Commonwealth Edison Company, an Illinois
corporation.
"Common Agreement" means that certain Common Agreement, dated
as of the Closing Date, among XLCA, the Swap Counterparty, the Trustee, the
Collateral Agent, the Issuer and each Project Company.
"Complete" or "Completion" means, with respect to each of the
Bayou Cove Project and the Rockford II Project, the earliest date on which all
of the following shall have occurred:
(a) such Project shall have achieved Project Completion and
the Controlling Party shall have received a certificate of the
Independent Engineer to that effect, which certificate will be in form
and substance reasonably satisfactory to XLCA if XLCA is the
Controlling Party;
(b) with respect to the Bayou Cove Project only, either (i)
all Punch List Items for the Bayou Cove Project shall have been
completed and paid for in full or (ii) the Bayou Cove Project Company
shall have itemized all Punch List Items for the Bayou Cove Project,
which list shall have been confirmed by the Independent Engineer, and
the
10
deposit into the Punch List Account required pursuant to Section 4.8 of
the Depositary Agreement with respect to such Punch List Items shall
have been made in full;
(c) with respect to the Rockford II Project only, either (i)
all Punch List Items for the Rockford II Project shall have been
completed and paid for in full, or (ii) the Rockford II Project Company
shall have itemized all Punch List Items for the Rockford II Project,
which list shall have been confirmed by the Independent Engineer, and
the deposit into the Punch List Account required pursuant to Section
4.8 of the Depositary Agreement with respect to such Punch List Items
shall have been made in full;
(d) all material Permits required for operation of such
Project (including all certificates of occupancy for such Project)
shall have been obtained and shall be in full force and effect and
shall not be subject to any pending appeal, intervention, or similar
proceeding that could reasonably be expected to have a Project Material
Adverse Effect, and the Controlling Party shall have received copies of
all such Permits and all fees and charges associated therewith shall
have been paid in full;
(e) with respect to the Bayou Cove Project only, (i) all Bayou
Cove Construction Costs shall have been paid in full (other than those
subject to a good faith dispute and for which adequate reserves in
accordance with GAAP have been set aside), (ii) either (x) all
performance guarantees under the Bayou Cove Equipment and Construction
Contracts shall have been satisfied in full or (y) the minimum
performance standards specified therein shall have been satisfied and
all Performance Liquidated Damages to be paid (including by way of NRG
Energy or any Affiliate thereof making payments into the Acquisition
Indemnity/Performance LD Reserve Account) pursuant to the Bayou Cove
Equipment and Construction Contracts shall have been paid in full to
the Bayou Cove Project Company without regard for any limitations
placed on the payment of Liquidated Damages in the Bayou Cove Equipment
and Construction Contracts (other than those subject to a good faith
dispute in an amount not to exceed $5,000,000 in the aggregate, taking
into account any and all retainage amounts also subject to a good faith
dispute), (iii) any retainage or other amounts withheld from payment to
any Bayou Cove Contractor under a Bayou Cove Equipment and Construction
Contract shall have been paid over in full to the relevant Bayou Cove
Contractor (other than those which are (A) deposited into the Punch
List Account or (B) subject to a good faith dispute in an amount not to
exceed $5,000,000 in the aggregate, taking into account any and all
Performance Liquidated Damages also subject to a good faith dispute),
and (iv) any lien or encumbrance over any portion of the Bayou Cove
Project in favor of a Bayou Cove Contractor shall have been released
and discharged in full (other than Project Company Permitted Liens);
and
(f) with respect to the Rockford II Project only, (i) the
Rockford II Construction Costs shall have been paid in full (other than
those subject to a good faith dispute and for which adequate reserves
in accordance with GAAP have been set aside), (ii) either (x) all
performance guarantees under the Rockford II Equipment and Construction
Contracts shall have been satisfied in full or (y) the minimum
performance standards specified therein shall have been satisfied and
all Performance Liquidated Damages to be paid (including by way of NRG
Energy or any Affiliate thereof making
11
payments into the Acquisition Indemnity/Performance LD Reserve Account)
by the Rockford II Contractors pursuant to the Rockford II Equipment
and Construction Contracts shall have been paid to the Rockford II
Project Company without regard for any limitations placed on the
payment of Liquidated Damages in the Rockford II Equipment and
Construction Contracts (other than those subject to a good faith
dispute in an amount not to exceed $5,000,000 in the aggregate, taking
into account any and all retainage amounts also subject to a good faith
dispute), (iii) any retainage or other amounts withheld from payment to
any Rockford II Contractor under a Rockford II Equipment and
Construction Contract shall have been paid over in full to the relevant
Rockford Contractor (other than those which are (A) deposited into the
Punch List Account or (B) subject to a good faith dispute in an amount
not to exceed $5,000,000 in the aggregate taking into account any and
all Performance Liquidated Damages also subject to a good faith
dispute), (iv) any lien or encumbrance over any portion of the Rockford
II Project in favor of a Rockford II Contractor shall have been
released and discharged in full (other than Project Company Permitted
Liens), and (v) title to all equipment acquired for the Rockford II
Project under the Rockford II Equipment and Construction Contracts
shall have been duly transferred to the Rockford II Project Company
free and clear of all liens (other than Project Company Permitted
Liens).
"Completion Date" means, in respect of the Bayou Cove Project
and the Rockford II Project, the date upon which such Project achieves
Completion.
"Completion Tests" has the meaning given in Section
3.2(a)(vii) of the Common Agreement.
"Condemnation Event" means any Project (or any portion
thereof) is condemned, confiscated, requisitioned, captured, seized or subjected
to forfeiture, or title thereto is taken, by any Governmental Authority.
"Condemnation Proceeds" means any and all payments (in any
form whatsoever) made or due and payable from time to time in connection with
any Condemnation Event by any Governmental Authority (or any person acting under
color of Governmental Authority).
"Consents" means, collectively, the third-party consents and
assignments required pursuant to Section 3.1(f)(ii) of the Insurance and
Reimbursement Agreement or Section 5.16(b) of the Common Agreement.
"Consolidated Net Tangible Assets" has the meaning given in
Section 4.1(ii) of the Contingent Guaranty Agreement.
"Contingent Guaranty Agreement" means the Contingent Guaranty
Agreement, dated as of the Closing Date, by NRG Energy in favor of the
Collateral Agent.
"Construction Contractors" means, as applicable, the Bayou
Cove Contractors or the Rockford II Contractors.
"Construction Contracts" means, as applicable, the Bayou Cove
Equipment and Construction Contracts or the Rockford II Equipment and
Construction Contracts.
12
"Controlled Group" means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with the Issuer or any Project Company, are
treated as a single employer under Section 414(b), (c), (m) or (o) of the Code
or under Section 4001(b)(1) of ERISA.
"Controlling Party" means XLCA for so long as either of the
Policies shall be effective and there shall not have occurred and be continuing
an Insurer Default and, at all other times, the requisite number or percentage
of Bondholders acting pursuant to the Indenture.
"Debt" of any Person at any date means, without duplication,
(a) such Person's Debt for Borrowed Money, (b) all obligations of such Person
evidenced by bonds, debentures, notes or other similar instruments, (c) all
obligations of such Person to pay the deferred purchase price of property or
services, except trade accounts payable arising in the ordinary course of
business (which exception is intended to encompass ordinary course obligations
under the Project Documents), (d) all Capitalized Lease Obligations of such
Person, (e) all obligations of such Person to purchase securities (or other
property) which arise out of or in connection with the sale of the same or
substantially similar securities (or property), (f) all deferred obligations of
such Person to reimburse any bank or other Person in respect of amounts paid or
advanced under a letter of credit or other instrument, (g) all Debt of others
secured by a Lien on any asset of such Person, whether or not such Debt is
assumed by such Person, and (h) all Debt (or other obligations) of others
guaranteed directly or indirectly by such Person or as to which such Person has
an obligation substantially the economic equivalent of a guaranty (provided
that, for purposes determining the amount of any Debt of the type described in
this clause (h), if the amount of such guaranty or similar obligation is less
than the full amount of the Debt or other obligation guaranteed, the amount of
such Debt shall be limited to the amount of such guaranty or similar
obligation).
"Debt for Borrowed Money" means, with respect to any Person,
all obligations of such person for borrowed money.
"Debt Payment Account" has the meaning given in Section 2.1 of
the Depositary Agreement.
"Debt Service Coverage Ratio" means, for any period, the ratio
of (a) all Cash Available for Debt Service for such period to (b) all Scheduled
Debt Service due during such period.
"Debt Service Shortfall" means, with respect to any Annual
Scheduled Payment Date, the amount, if any, by which (a) Scheduled Debt Service
on such date exceeds (b) funds in the Debt Payment Account available therefor in
accordance with the terms of Section 4.2 of the Depositary Agreement, without
giving effect to funding sources other than those described in priorities First,
Second and Third of Section 4.2.3 of the Depositary Agreement.
"Deductible Cash Collateral Deposit" has the meaning given in
Section 2.3(b) of the Contingent Guaranty Agreement.
"Deductible Limit" means $56,679,911
13
"Deductible Payment" means (a) any payment made by NRG Energy
pursuant to Section 2.3(a) of the Contingent Guaranty Agreement and (b) any
amount applied pursuant to priority Eighth or Ninth in Section 4.2.3 of the
Depositary Agreement.
"Deductible Termination Payment" has the meaning given in
Section 2.3(c) of the Contingent Guaranty Agreement.
"Delay Amounts" means Delay Liquidated Damages, proceeds under
delay in start-up or similar insurance and other similar amounts.
"Delay Liquidated Damages" means all amounts paid under a
Project Document as liquidated damages for failure to complete all or a portion
of a Project, or failure to deliver equipment for a Project, by the date set
forth for completion or delivery thereof in such Project Document, including
amounts paid under guaranties, letters of credit and other support instruments
for such purposes.
"Depositary Agent" means The Bank of New York, in its capacity
as depositary agent and securities intermediary under the Depositary Agreement,
or its successor appointed pursuant to the terms of the Depositary Agreement.
"Depositary Agreement" means the Security Deposit Agreement,
dated as of the Closing Date, among the Issuer, each Project Company, the
Collateral Agent and the Depositary Agent.
"Depositary Obligations" means each payment and performance
obligation of the Issuer under the Depositary Agreement.
"Designated Monthly Date" means any date specified by the
Issuer in a Disbursement Request. The Designated Monthly Date may vary from time
to time, but there shall not be more than one Designated Monthly Date in any
given month.
"Determination Date" means, October 31 of each year with the
first such date being October 31, 2002 and the last such date being October 31,
2018.
"Determination Period" means (a) the period from the Closing
Date through and including October 31, 2002, and (b) thereafter, each period
from November 1 of each year through and including October 31 of the following
year.
"Disbursement Project Event of Default" means a Project Event
of Default with respect to a Project for which a disbursement of Loss Proceeds
is being requested pursuant to Section 4.7.2 of the Depositary Agreement.
"Disbursement Request" means a Disbursement Request
substantially in the form of Exhibit A to the Depositary Agreement.
"Distribution Account" has the meaning given in Section 2.1 of
the Depositary Agreement.
14
"Dollars" and "$" mean United States dollars or such coin or
currency of the United States of America as at the time of payment shall be
legal tender for the payment of public and private debts in the United States of
America.
"Early Termination Date" has the meaning given in Section
2.2(d) of the Contingent Guaranty Agreement.
"Easements" means, with respect to any parcel of real
property, (a) all agreements, easements, rights of way or use, rights of ingress
or egress, privileges, appurtenances, tenements, hereditaments and other rights
and benefits appurtenant, belonging or pertaining to such parcel, including the
use of any streets, ways, alleys, vaults or strips of land adjoining, abutting,
adjacent or contiguous to such parcel, and (b) all permits, licenses and rights,
whether or not of record, appurtenant to such parcel.
"Effective Date" means the date on which the Policies are
issued.
"Eligible Facility" means an eligible facility within the
meaning of Section 32(a)(2) of PUHCA.
"Energy Products and Services" means, collectively, Power,
Ancillary Services, Fuel Products and Other Energy-Related Products and
Services.
"Energy Transaction Costs" means all costs (including
liquidated damages or other damages or penalties) incurred by a Project Company
in connection with the purchase, sale, resale or other use of Energy Products
and Services, including Fuel Costs, Hedging Costs and costs under such Project
Company's Power Sales and Agency Agreement.
"Entergy Louisiana" means Entergy Louisiana, Inc., a Louisiana
corporation.
"Environmental Claim" means any claim, notice of claim,
complaint, notice of violation, letter or other written assertion of any kind
concerning any asserted or actual violation of or liability under any Hazardous
Substances Law or any asserted or actual violation or liability relating to any
Hazardous Substance.
"Environmental Consultant" means (a) if XLCA is the
Controlling Party, an environmental consultant reasonably acceptable to XLCA
(which shall include URS Corporation and ▇.▇. ▇▇▇▇▇▇▇▇ & Associates, Inc.), and
(b) if XLCA is not the Controlling Party, an independent nationally recognized
environmental consultant.
"Environmental Reports" means, with respect to a Project, the
environmental reports delivered to XLCA in accordance with Section 3.1(v) of the
Insurance and Reimbursement Agreement for such Project.
"Environmental Subject Claims" has the meaning given in
Section 9.1(b) of the Common Agreement.
"Equity Documents" means the Contingent Guaranty Agreement and
any Additional Contingent Guaranty Agreement.
15
"Equity Party" means NRG Energy and any Acceptable Assignee.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Plan" means any employee benefit plan covered by Title
IV of ERISA or to which Section 412 of the Code applies.
"Exelon" means Exelon Generating Company, LLC, a Delaware
limited liability company.
"Excluded Revenues" means, collectively, proceeds from the
sale of the Series A Bonds on the Closing Date, Delay Amounts, payments by NRG
Energy to any Project Company pursuant to Section 2.5 or 2.6 of the Contingent
Guaranty Agreement, Peaker Buyout Profits and proceeds received in connection
with a Permitted Change of Control.
"Exempt Wholesale Generator" means an exempt wholesale
generator within the meaning of Section 32(a)(1) of PUHCA.
"Experience Accrual Amount" has the meaning given in Appendix
II to the Contingent Guaranty Agreement.
"Experience Amount Percentage" means, with respect to a
Project Company, the percentage of the Total Experience Amount attributed to
such Project Company.
"Experience Cash Collateral Deposit" has the meaning given in
Section 2.2(c) of the Contingent Guaranty Agreement.
"Experience Payment" has the meaning given in Section 2.2(b)
of the Contingent Guaranty Agreement.
"Experience Reduction Amount" has the meaning given in
Appendix II to the Contingent Guaranty Agreement.
"Experience Termination Payment" has the meaning given in
Section 2.2(d) of the Contingent Guaranty Agreement.
"FERC" means the Federal Energy Regulatory Commission and any
successor thereto.
"Final Scheduled Payment Date" means June 10, 2019.
"Financing Documents" means the Common Agreement (including
the Guaranty of each Project Company), the Policy, the Swap Policy, the Premium
Letter, the Insurance and Reimbursement Agreement, the Indenture, the Bonds, the
Swap Agreement, the Equity Documents, the Collateral Documents, the Depositary
Agreement, the Project Loan Agreements, the Project Loan Notes, the Consents,
the Lease Estoppels, the Nondisturbance Agreements, the Rockford I Lien
Subordination Agreement, the Big Cajun Act of Subordination, and each other
16
agreement, document, certificate or instrument entered into or delivered in
connection therewith by any Financing Party or any Equity Party and any Secured
Party in connection with the Transaction, whether or not specifically mentioned
therein, provided that neither the Purchase Agreement nor any other agreement
between a Financing Party and the Initial Purchaser shall be a "Financing
Document."
"Financing Parties" means the Issuer and each Project Company.
"Fiscal Agent" means the fiscal agent, if any, designated
pursuant to the terms of the Policies.
"FPA" means the Federal Power Act, as amended.
"Fuel and Power Marketing Plan" means, with respect to a
Project Company, the Fuel and Power Marketing Plan attached as Exhibit A to the
Power Sales and Agency Agreement to which such Project Company is a party.
"Fuel Costs" means all costs associated with Fuel Products,
including imbalance charges and applicable taxes.
"Fuel Products" means Natural Gas supply and transportation
and other fuel and fuel-related products and services.
"Funding Project Company" has the meaning given to in Section
6.14 of the Common Agreement.
"Fundamental Project Event of Default" has the meaning given
in Section 7.3 of the Common Agreement.
"Funds Block Condition" means, in each case as applicable, any
Issuer Event of Default, Issuer Inchoate Default, Project Event of Default,
Project Inchoate Default, Inchoate Block Condition or Inchoate Project Block
Condition.
"GAAP" means generally accepted accounting principles in the
United States of America consistently applied.
"General Subject Claims" has the meaning given in Section
9.1(a) of the Common Agreement.
"Governmental Authority" means any applicable national, state
or local government (whether domestic or foreign), any political subdivision
thereof or any other governmental, quasi-governmental, judicial, public or
statutory instrumentality, authority, body, agency, bureau or entity (including
any zoning authority, FERC and the applicable PUC) or any arbitrator with
authority to bind a party at law.
"Governmental Rule" means any applicable law, rule,
regulation, ordinance, order, code interpretation, treaty, judgment, decree,
directive, guideline, policy or similar form of decision of any Governmental
Authority.
17
"Ground Lease" means each of the Rockford I Ground Lease, the
Rockford II Ground Lease and the Sterlington Ground Lease.
"Guaranteed Obligations" has the meaning given in Section
6.1(a) of the Common Agreement.
"Guaranty" means, in respect of a Project Company, its
guaranty pursuant to Article 6 of the Common Agreement.
"Hazardous Substance" means any of the following: (a) any
petroleum or petroleum product, explosives, radioactive materials, asbestos,
formaldehyde, polychlorinated biphenyls, lead or radon gas; or (b) any
substance, material, product, derivative, compound or mixture, mineral,
chemical, waste, gas, medical waste or pollutant that is regulated under or that
could reasonably be expected to support the assertion of a claim under any
Hazardous Substances Law, whether or not defined as hazardous under any
Hazardous Substances Laws.
"Hazardous Substances Law" means, any applicable law, statute,
ordinance, code, rule, regulation, license, permit, authorization, approval,
covenant, administrative or court order, judgment, decree, injunction, code or
requirement of or any agreement with, any Governmental Authority:
(a) relating to pollution (or the cleanup, removal or
remediation thereof, or any other response thereto), human health,
safety, natural resources or the environment, including ambient or
indoor air, water vapor, surface water, groundwater, drinking water,
land (including surface or subsurface), plant, aquatic and animal life;
or
(b) concerning exposure to, or the use, containment, storage,
recycling, treatment, generation, Release or threatened Release,
transportation, processing, handling, labeling, containment,
production, disposal or remediation of any Hazardous Substance,
in each case as amended and as now or hereafter in effect, and any common law or
equitable doctrine (including injunctive relief and tort doctrines such as
negligence, nuisance, trespass and strict liability) that may impose liability
or obligations for injuries (whether personal or property) or damages due to or
threatened as a result of the presence of, exposure to, or ingestion of, any
Hazardous Substance, whether such common law or equitable doctrine is now or
hereafter recognized or developed. "Hazardous Substances Laws" include CERCLA;
the Resource Conservation and Recovery Act of 1976, 42 U.S.C.ss.ss.6901 et seq.;
the Federal Water Pollution Control Act, 33 U.S.C.ss.ss.1251 et seq.; the Clean
Air Act, 42 U.S.C.ss.ss.7401 et seq.; the Refuse Act, 33 U.S.C.ss.ss.401 et
seq.; the Hazardous Materials Transportation Act of 1975, 49
U.S.C.ss.ss.1801-1812; the Toxic Substances Control Act, 15 U.S.C.ss.ss.2601 et
seq.; the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C.ss.ss.136
et seq.; the Safe Drinking Water Act, 42 U.S.C.ss.ss.300 et seq.; and the
Occupational Safety and Health Act of 1970.
"Hedging Costs" means costs associated with options and other
hedging arrangements entered into in connection with the purchase, sale, resale
or other use of Energy Products and Services.
18
"Improvements" has the meaning given in the applicable
Mortgage.
"Inchoate Block Conditions" means, as of any date, that there
shall have occurred and be continuing an Issuer Inchoate Default or that an
Issuer Inchoate Default would have occurred if a Restricted Payment would have
been made on such date.
"Inchoate Project Block Condition" means, as of any date, that
there shall have occurred and be continuing a Project Inchoate Default or that a
Project Inchoate Default would have occurred if a Restricted Payment would have
been made on such date.
"Indemnitee" has the meaning given in Section 9.1(a) of the
Common Agreement.
"Indenture" means the Indenture, dated as of the Closing Date,
among the Issuer, the Project Companies, XLCA and the Trustee.
"Independent Consultants" means, collectively, the Insurance
Consultant, the Independent Engineer and the Power and Fuel Market Consultant.
"Independent Engineer" has the meaning given in Section
10.1(a) of the Common Agreement.
"Indexed Net Revenue" shall have the meaning set forth in
Appendix I to the Contingent Guaranty Agreement.
"Initial Purchaser" means ▇▇▇▇▇▇▇ Sachs International.
"Initial Restricted Payment Date" means any Annual Scheduled
Payment Date or any date within 30 days thereafter.
"Insurance and Reimbursement Agreement" means the Financial
Guaranty Insurance and Reimbursement Agreement, dated as of the Closing Date,
among XLCA, the Issuer and the Project Companies.
"Insurance Consultant" has the meaning given in Section
10.1(b) of the Common Agreement.
"Insurer Default" means the existence and continuance of any
of the following: (a) a failure by XLCA to make a payment when or as required
under the Policy in accordance with its terms or under the Swap Policy in
accordance with its terms; or (b)(i) XLCA (A) files any petition or commences
any case or proceeding under any provision or chapter of the Bankruptcy Law or
any other similar federal or state law relating to insolvency, bankruptcy,
rehabilitation, liquidation or reorganization, (B) makes a general assignment
for the benefit of its creditors, or (C) has an order for relief entered against
it under the Bankruptcy Law or any other similar federal or state law relating
to insolvency, bankruptcy, rehabilitation, liquidation or reorganization which
is final and nonappealable; or (ii) a court of competent jurisdiction, the New
York Department of Insurance or other competent regulatory authority enters a
final and nonappealable order, judgment or decree (A) appointing a custodian,
trustee, agent or receiver for XLCA or for all or any material portion of its
property or (B) authorizing the taking of
19
possession by a custodian, trustee, agent or receiver of XLCA (or the taking of
possession of all or any material portion of the property of the XLCA).
"Interconnection Solution" means, with respect to the Big
Cajun I Units 3&4 Project, the implementation and effectiveness, in a manner
satisfactory to XLCA in its absolute discretion (if it is the Controlling
Party), of any of the following methods for obtaining direct contractual
electric interconnection access rights for the Big Cajun I Units 3&4 Project
with the Entergy transmission system (or any successor transmission system): (i)
the assignment of a portion of Louisiana Generating's rights under the Louisiana
Generating Interconnection Agreement to the Big Cajun Project Company; (ii) the
amendment of the Louisiana Generating Interconnection Agreement, as appropriate,
to include the Big Cajun I Units 3&4 Project and the Big Cajun Project Company;
(iii) the execution of a separate interconnection agreement directly between the
Big Cajun Project Company and Entergy or its relevant Affiliate (or any
successor thereto); or (iv) any other method of obtaining such direct
contractual electric interconnection access rights, in each case effected by
assignments, amendments or new agreements, as the case may be, and such other
documentation as XLCA (if it is the Controlling Party) shall reasonably request.
"Investment Grade" means, with respect to any debt instrument
or Person, a rating of at least Baa3 by Moody's and at least BBB- by S&P (or, in
each case, an equivalent rating by another nationally recognized credit rating
agency if either of such rating agencies is not then rating the subject debt
instrument or Person).
"Issuer" has the meaning given in the preamble to the Common
Agreement.
"Issuer Collateral" means, collectively, all real, personal
and mixed property which is subject or is intended to become subject to the
security interests or Liens granted pursuant to any of the Issuer Collateral
Documents; provided that "Issuer Collateral" shall not include any Released
Assets (as defined in any Issuer Collateral Document).
"Issuer Collateral Documents" means, collectively, the
Depositary Agreement, the Issuer Security Agreement, the Issuer Pledge
Agreement, any other agreement or instrument granting a Lien on the real,
personal and/or mixed property of Issuer in favor of the Collateral Agent for
the benefit of the Secured Parties, and any financing statements, notices and
the like filed, recorded or delivered in connection with the foregoing.
"Issuer Event of Default" has the meaning given in Section 7.1
of the Common Agreement.
"Issuer Inchoate Default" means any occurrence, circumstance
or event, or any combination thereof, which, with the lapse of time and/or the
giving of notice, would constitute an Issuer Event of Default.
"Issuer Material Adverse Effect" means:
(a) a material adverse change in the business, property,
results of operation or financial condition of the Issuer and the
Project Companies (taken as a whole); or
20
(b) any event or occurrence of whatever nature which could
reasonably be expected to materially and adversely effect (i) the
ability of the Issuer and the Project Companies (taken as a whole) to
perform their respective obligations under any of the Financing
Documents, or (ii) the validity or enforceability of the Operative
Documents (taken as a whole); or
(c) any event or occurrence of whatever nature which could
reasonably be expected to materially and adversely effect the validity
and priority of the Secured Parties' security interests in the
Collateral (taken as a whole);
provided that (i) any adverse change in the Natural Gas supply market or the
Power market after the Closing Date which could cause a change in the conditions
or market forecasts contained in the reports delivered on the Closing Date by
the Power and Fuel Market Consultant shall not be deemed to, in and of itself,
have an "Issuer Material Adverse Effect", and (ii) a downgrade in any rating
assigned to the Issuer, any Project Company, any Affiliate thereof, the
Obligations, the Transaction or any Tranche shall not be deemed to, in and of
itself, be an "Issuer Material Adverse Effect".
"Issuer Permitted Debt" means (a) Debt of the Issuer under the
Financing Documents (including Additional Bonds), (b) unsecured Debt which is
subordinated to the Obligations in accordance with the terms set forth in
Exhibit H to the Common Agreement, (c) unsecured guaranties by the Issuer of the
obligations of the Project Companies to pay Energy Transaction Costs (or,
without duplication, unsecured guaranties by the Issuer of NRG Power Marketing
to pay Energy Transaction Costs in connection with any transaction entered into
by NRG Power Marketing as principal in accordance with a Power Sales and Agency
Agreement), (d) the Subordinated Bonds, and (e) Project Company Permitted Debt
incurred by the Issuer and on-lent to the Project Companies.
"Issuer Permitted Liens" means, collectively, (a) the Lien,
security interests and related rights and interests of the Secured Parties as
provided in the Financing Documents (including Liens securing Additional Bonds);
(b) Liens for any tax, assessment or other governmental charge either not yet
due or being contested in good faith and by appropriate proceedings, so long as
(i) such proceedings shall not involve any substantial danger of the sale,
forfeiture or substantial loss of a Project, the related Site or any related
Easements, title thereto or any material interest therein and shall not
interfere in any material respect with the use or disposition of such Project,
Site or Easements, or (ii) a bond or other security reasonably acceptable to the
Collateral Agent has been posted or provided in such manner and amount as to
reasonably assure the Collateral Agent that any taxes, assessments or other
charges reasonably determined to be due will be promptly paid in full when such
contest is determined; (c) Liens arising out of judgments or awards so long as
an appeal or proceeding for review is being prosecuted in good faith and for the
payment of which adequate reserves, bonds or other security reasonably
acceptable to the Collateral Agent have been provided or the payment of which is
fully covered by insurance reasonably acceptable to the Collateral Agent; (d)
Liens securing the Subordinated Bonds on terms set forth in Exhibit I to the
Common Agreement; (e) Liens securing the Issuer Permitted Debt referred to in
paragraph (e) of the definition of Issuer Permitted Debt to the extent the
applicable Project Company Permitted Debt is permitted to be secured, and (f)
Liens contemplated in Section 9.01(2) of the Indenture.
21
"Issuer Pledge Agreement" means the Issuer Pledge Agreement,
dated as of the Closing Date, among the Issuer, NRG Capital II LLC and the
Collateral Agent.
"Issuer Security Agreement" means the Issuer Security
Agreement, dated as of the Closing Date, between the Issuer and the Collateral
Agent.
"Late Payment Rate" means the lesser of (a) the greater of the
per annum rate of interest, publicly announced from time to time by The Bank of
New York in New York City, as its prime rate plus 2%, and (b) the maximum rate
permissible under applicable usury or similar laws limiting interest rates. The
Late Payment Rate shall be computed on the basis of a 360 day year for the
actual number of days elapsed for such period. The Late Payment Rate shall be
calculated, in good faith, by the Calculation Agent.
"Lease Estoppels" means, collectively, the Rockford I Lease
Estoppel, the Rockford II Lease Estoppel and the Sterlington Lease Estoppel.
"Legal Requirement" means, as to any Person, the articles of
incorporation, bylaws or other organizational or governing documents of such
Person, and any requirement under a Permit, and any Governmental Rule, in each
case applicable to or binding upon such Person or any of its properties or to
which such Person or any of its property is subject.
"Lien" means, with respect to an asset, any mortgage, deed of
trust, lien, pledge, charge, security interest, easement or encumbrance of any
kind in respect of such asset, whether or not filed, recorded or otherwise
perfected or effective under applicable law, as well as the interest of a vendor
or lessor under any conditional sale agreement, capital lease or other title
retention agreement relating to such asset.
"Liquidated Damages" means, collectively, Delay Liquidated
Damages and Performance Liquidated Damages.
"Loan Life Coverage Ratio" means, for any period, (i) the sum
of Cash Available for Debt Service for all remaining Scheduled Debt Service
Payment periods, divided by (ii) the sum of all remaining unpaid Scheduled Debt
Service Payments.
"LOC Substitution Date" means any date upon which an
Acceptable Letter of Credit is provided to the Collateral Agent instead of, or
in replacement of, cash on deposit in any Account or Cash Collateral Account, as
the case may be.
"Loss Proceeds" means, collectively, Casualty Insurance
Proceeds and Condemnation Proceeds.
"Loss Proceeds Account" has the meaning given in Section 2.1
of the Depositary Agreement.
"Louisiana Generating" means Louisiana Generating LLC, a
Delaware limited liability company.
22
"Louisiana Generating Interconnection Agreement" means the
Interconnection and Operating Agreement between Louisiana Generating and Entergy
Gulf States, Inc. filed with FERC on June 11, 2002.
"MAIN Market Region" means the region covered by the
Mid-America Interconnected Network regional reliability council.
"Major FSAs" with respect to a Project Company, has the
meaning given in the Fuel and Power Marketing Plan attached as Exhibit A to the
Power Sales and Agency Agreement to which such Project Company is a Party.
"Major FTAs" with respect to a Project Company, has the
meaning given in the Fuel and Power Marketing Plan attached as Exhibit A to the
Power Sales and Agency Agreement to which such Project Company is a Party.
"Major Power Purchase Agreement" with respect to a Project
Company, has the meaning given in the Fuel and Power Marketing Plan attached as
Exhibit A to the Power Sales and Agency Agreement to which such Project Company
is a Party.
"Major Project Documents" means (a) in respect of the Bayou
Cove Project and the Bayou Cove Project Company, the Bayou Cove Major Project
Documents, (b) in respect of the Big Cajun I Units 3&4 Project and the Big Cajun
Project Company, the Big Cajun ▇▇▇▇▇ ▇&▇ ▇▇▇▇▇ Project Documents, (c) in respect
of the Sterlington Project and the Sterlington Project Company, the Sterlington
Major Project Documents, (d) in respect of the Rockford I Project and the
Rockford I Project Company, the Rockford I Major Project Documents, and (e) in
respect of the Rockford II Project and the Rockford II Project Company, the
Rockford II Major Project Documents.
"Major Project Participants" means, with respect to a Project,
the Project Company that owns such Project and each other party to the Major
Project Documents entered into for such Project.
"Mezzanine Tranche" means the portion of the Policy initially
insuring $332,352,000 of principal and interest in respect of the Series A Bonds
representing the second loss layer of the Policy to be drawn in the event of a
Policy Payment.
"Monthly Date" means the 10th day of each month.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc., or any
successor thereto, and, if such corporation shall for any reason no longer
perform the functions of a securities rating agency, "Moody's" shall be deemed
to refer to any other nationally recognized rating agency designated by the
Issuer; provided, that with respect to the rating of the Bonds, the designation
shall be with the consent of XLCA (if XLCA shall be the Controlling Party).
"Mortgaged Properties" has the meaning given in the applicable
Mortgage.
"Mortgages" means, collectively, each of the mortgages
encumbering the Sites and/or Easements related to the Projects as security for
the Guaranteed Obligations.
23
"Natural Gas" any mixture of hydrocarbons and non-combustible
gases as a gaseous state consisting primarily of methane.
"Net Peaker Buyout Proceeds" means Peaker Buyout Proceeds
minus Peaker Buyout Profits.
"New Revolving Credit Facility" means a new revolving credit
facility entered into by NRG Energy which refinances all outstanding loans and
commitments under the 364 Day Revolver or any New Revolving Credit Facility.
"Nondisturbance Agreements" means, collectively, the Rockford
I Non-Disturbance Agreement and the Rockford II Non-Disturbance Agreement.
"Non-Funding Project Company" has the meaning given in Section
6.14 of the Common Agreement.
"Nonrecourse Persons" has the meaning given in Article 8 of
the Common Agreement.
"Notice" has the meaning assigned to such term in the
Policies.
"NRG Credit Risk Policy" with respect to a Project Company,
has the meaning given in the Power Sales and Agency Agreement to which such
Project Company is a party.
"NRG Energy" means NRG Energy, Inc., a Delaware corporation.
"NRG Energy Material Adverse Effect" means:
(a) a material adverse change in the business, property,
results of operations or financial condition of NRG Energy; or
(b) any event or occurrence of whatever nature which could
reasonably be expected to materially and adversely effect (i) the
ability of NRG Energy to perform its obligations under the Contingent
Guaranty Agreement or (ii) the validity or enforceability of the
Contingent Guaranty Agreement;
provided that a downgrade in any rating assigned to NRG Energy or its debt
obligations shall not be deemed, in and of itself, to be a "NRG Energy Material
Adverse Effect".
"NRG Event of Default" has the meaning given in Section 13 of
the Contingent Guaranty Agreement.
"NRG Guaranteed Obligations" has the meaning given in Section
2 of the Contingent Guaranty Agreement.
"NRG Permitted Liens" means, collectively, (a) Liens for any
tax, assessment or other governmental charge either not yet due or being
contested in good faith and by appropriate proceedings, so long as (i) such
proceedings shall not involve any substantial danger of the sale,
24
forfeiture or substantial loss of a Project, the related Site or any related
Easements, title thereto or any material interest therein and shall not
interfere in any material respect with the use or disposition of such Project,
Site or Easements, or (ii) a bond or other security reasonably acceptable to the
Collateral Agent has been posted or provided in such manner and amount as to
reasonably assure the Collateral Agent that any taxes, assessments or other
charges reasonably determined to be due will be promptly paid in full when such
contest is determined; and (b) Liens arising out of judgments or awards so long
as an appeal or proceeding for review is being prosecuted in good faith and for
the payment of which adequate reserves, bonds or other security reasonably
acceptable to the Collateral Agent have been provided or the payment of which is
fully covered by insurance reasonably acceptable to the Collateral Agent.
"NRG Power Marketing" means NRG Power Marketing, Inc., a
Delaware corporation.
"NRG South Central" means NRG South Central Generating LLC, a
Delaware limited liability company.
"NRG Support Obligations" has the meaning given in Section 2
of the Contingent Guaranty Agreement.
"Obligations" means the Bond Obligations, the Reimbursement
Obligations, the Depositary Obligations, the Swap Obligations and the
obligations of each Project Company under its Guaranty.
"Offering Circular" means the final offering circular, dated
June 14, 2002, in respect of the Series A Bonds and, unless otherwise stated,
the Preliminary Offering Circular.
"Operating Costs" means, collectively, Stipulated O&M Costs
and Energy Transaction Costs.
"Operating Revenues" means, collectively, (a) all payments
received by the Project Companies under the Project Documents (excluding Loss
Proceeds required to be deposited in the Loss Proceeds Account), (b) income
derived from the sale, resale or other use of Energy Products and Services by,
or on behalf of, the Project Companies, (c) proceeds of business interruption
insurance or similar insurance, and (d) earnings on Permitted Investments, in
each case as determined in conformity with cash accounting principles and
subject to netting requirements (if any) contained in the Project Documents;
provided, that "Operating Revenues" shall not include Excluded Revenues.
"Operative Documents" means the Financing Documents and the
Project Documents.
"Optional Redemption" has the meaning given in the Indenture.
"Other Energy-Related Products and Services" means ancillary
services, emissions credits, conversion services and other related products and
services.
25
"Other Undertakings" has the meaning given in Section 2 of the
Contingent Guaranty Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under Title IV of ERISA.
"Peaker Buyout" means either (a) the sale, transfer or other
disposition by a Project Company or all or substantially all of its assets or
(b) the sale, transfer or other disposition by NRG Energy of 100% of its direct
or indirect interests in any Project Company.
"Peaker Buyout Proceeds" means all proceeds received by NRG
Energy or any of its Affiliates in connection with a Peaker Buyout.
"Peaker Buyout Profits" means, in connection with a Peaker
Buyout, (i) Peaker Buyout Proceeds associated therewith, minus (ii) the
aggregate amount of payments required to be made by the Issuer and the Project
Companies under the Financing Documents in connection with such Peaker Buyout
(including such payments as are set out in the definition of Permitted Peaker
Buyout (Completion / Loss Event) and clause (i) of the definition of Permitted
Peaker Buyout (Peaker Sale / Project Event of Default) but excluding such
payments as are set out in clause (ii) of the definition of Permitted Peaker
Buyout (Peaker Sale / Project Event of Default)).
"Peaker Collateralization" means, with respect to a Project
Company, the deposit into the Peaker Collateralization Account of an amount in
cash or an Acceptable Letter of Credit equal to at least the Allocation
Percentage Buyout Amount, using Loss Proceeds and/or other funds not comprising
the Collateral.
"Peaker Collateralization Account" has the meaning given in
Section 2.1 of Depositary Agreement.
"Performance Liquidated Damages" means all amounts paid under
a Project Document as liquidated damages for failure of a Project to meet the
performance or other guarantees (excluding schedule guarantees) specified in
such Project Document, including amounts paid under guaranties, letters of
credit and other support instruments for such purposes.
"Performance Shortfall" has the meaning given in Appendix I to
the Contingent Guaranty Agreement.
"Performance Shortfall Payment" has the meaning given in
Section 2.1 of the Contingent Guaranty Agreement.
"Permit" means any applicable permit, authorization,
registration, notice to and declaration of or with, consent, approval, waiver,
exception, variance, order, judgment, decree, license, exemption or filing,
required by or from any Governmental Authority, or required by any Legal
Requirement, and shall include any environmental or operating permit or license
that is required for the full use, occupancy, zoning and operation of a Project.
"Permit Schedule" has the meaning given in Section 3.1(bb)(i)
of the Insurance and Reimbursement Agreement.
26
"Permitted Change of Control" means a sale, transfer or other
disposition of no more than 50% of NRG Energy's direct or indirect interests in
the Issuer or any Project Company in respect of which the Permitted Change of
Control Conditions have been satisfied.
"Permitted Change of Control Conditions" means, in respect of
any sale, transfer or other disposition of no more than 50% of NRG Energy's
direct or indirect interests in the Issuer or any Project Company, that after
giving effect to such sale, transfer or other disposition, (i) each Project, and
all other Collateral, remains part of the Collateral, (ii) NRG Energy shall
directly or indirectly control (or control equally and jointly with another
Person) the fundamental management decisions of the Project Companies (it being
acknowledged that the possession by a Person other than NRG Energy of a veto
power over material events with respect to such Project Company (e.g.,
dissolution of such Project Company, merger or consolidation of such Project
Company, sale of all or substantially all assets of such Project Company,
material amendments to such Project Company's organizational documents) shall
not in and of itself constitute a failure by NRG Energy to directly or
indirectly control the fundamental management decisions of such Project
Company), (iii) each Project Company remains obligated under its Guaranty, and
(iv) either (x) NRG Energy shall remain obligated to XLCA under the Contingent
Guaranty Agreement and any other Financing Document to which it is a party, or
(y) the buyer (A) has assumed Associated Support Obligations with respect to the
transferred ownership interests by executing an assignment and assumption
agreement in form and substance reasonably satisfactory to XLCA (if XLCA is the
Controlling Party), (B) if XLCA is the Controlling Party, has provided opinions
of counsel (which may be in-house counsel) to XLCA in respect of customary
matters (i.e., formation, requisite authority, due authorization, execution and
delivery, enforceability, the absence of conflicts, consents and litigation)
relating to it and such assignment and assumption, and (C) such buyer is either
(x) rated at least A3 by Moody's and A- by S&P, or (y) is rated at least Baa2 by
Moody's and BBB by S&P and has provided cash, Acceptable Letters of Credit or
other credit support acceptable to the Controlling Party (acting in its sole
discretion) with respect to that portion of the NRG Guaranteed Obligations under
Section 2.3 of the Contingent Guaranty Agreement assumed by the buyer.
"Permitted Encumbrances" means, with respect to a Project,
those liens, encumbrances or other exceptions to title specified on a Title
Policy delivered pursuant to Section 3.1(dd) of the Insurance and Reimbursement
Agreement (it being understood that the exceptions to title appearing on said
Title Policy shall be reasonably acceptable to XLCA).
"Permitted Investments" means any of the following:
(a) securities issued or directly and fully guaranteed or
insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the
United States of America is pledged in support thereof) having a
maturity not exceeding one year from the date of issuance;
(b) time deposits and certificates of deposit of any domestic
commercial bank rated at least A-1 or the equivalent thereof by S&P or
at least P-1 or the equivalent thereof by Moody's having capital and
surplus in excess of $250,000,000;
27
(c) fully secured repurchase obligations with a term of not
more than 7 days for underlying securities of the types described in
clause (a) above entered into with any bank meeting the qualifications
established in clause (b) above;
(d) commercial paper of any corporation rated at least A-1 or
the equivalent thereof by S&P or at least P-1 or the equivalent thereof
by Moody's and in each case, having a maturity not exceeding 90 days
from the date of acquisition;
(e) commercial paper of any domestic corporation rated at
least A-2 or the equivalent thereof by S&P or at least P-2 or the
equivalent thereof by Moody's and, in each case having a maturity not
exceeding 90 days from the date of acquisition (provided that the
aggregate amount of any such commercial paper of any single issuer
thereof shall not exceed $3,000,000);
(f) fully secured repurchase obligations with a term of not
more than 7 days for underlying securities of the types described in
clause (a) above entered into with any bank meeting the qualifications
established in clause (b) above; and
(g) money market mutual funds.
provided, however, that Permitted Investments shall not include any commercial
paper, notes, bonds or other securities of any kind of NRG Energy or any
Affiliate of NRG Energy.
"Permitted Liens" means Issuer Permitted Liens and Project
Company Permitted Liens.
"Permitted Peaker Buyout" means a Permitted Peaker Buyout
(Completion / Loss Event) or a Permitted Peaker Buyout (Peaker Sale / Project
Event of Default), as applicable.
"Permitted Peaker Buyout (Completion / Loss Event)" means a
Peaker Buyout for which the following conditions are satisfied:
(i) such Peaker Buyout is effected to cure an Issuer Event of
Default under Section 7.1(n) or 7.1(o) of the Common Agreement; and
(ii) the Issuer redeems Series A Bonds in accordance with
Article 12 of the Indenture in a principal amount equal to at least the
Allocation Percentage Buyout Amount for such Project Company and pays
all Swap Breakage Costs associated with such redemption, using Peaker
Buyout Proceeds from such Peaker Buyout (if any) and/or other funds not
comprising the Collateral.
"Permitted Peaker Buyout (Peaker Sale / Project Event of
Default)" means a Peaker Buyout for which the following conditions are
satisfied:
(i) (A) if the Allocation Percentage for the applicable
Project Company is greater than the Experience Amount Percentage for
such Project Company, the Issuer redeems Series A Bonds in accordance
with Article 12 of the Indenture in a principal amount equal to at
least the Allocation Percentage Buyout Amount, and pays the
28
Redemption Premium and all Swap Breakage Costs associated with such
redemption, using Peaker Buyout Proceeds from such Peaker Buyout (if
any) and/or other funds not comprising the Collateral, or (B) if the
Experience Amount Percentage for such Project Company is greater than
the Allocation Percentage for such Project Company, one of the
following three conditions (as selected by the Issuer) is satisfied:
(1) the Issuer redeems Series A Bonds in accordance with Article 12 of
the Indenture in a principal amount equal to the Experience Amount
Percentage for such Project Company multiplied by the aggregate
principal amount of Series A Bonds then Outstanding (as defined in the
Indenture), and pays the Redemption Premium and all Swap Breakage Costs
associated with such redemption, using Peaker Buyout Proceeds from such
Peaker Buyout (if any) and/or other funds not comprising the
Collateral; (2) the Issuer redeems Series A Bonds in accordance with
Article 12 of the Indenture in a principal amount equal to at least the
Allocation Percentage Buyout Amount, and pays the Redemption Premium
and all Swap Breakage Costs associated with such redemption, using
Peaker Buyout Proceeds from such Peaker Buyout (if any) and/or other
funds not comprising Collateral and, prior to the consummation of such
Peaker Buyout, Moody's or S&P confirms in writing that such Peaker
Buyout will not result in the Shadow Ratings of (w) the Series A Bonds
being lower than Ba2 (if rated by Moody's) or BB (if rated by S&P), (x)
the Senior Tranche being lower than A1 (if rated by Moody's) or A (if
rated by S&P), (y) the Mezzanine Tranche being lower than Ba1 (if rated
by Moody's) or BBB- (if rated by S&P), and (z) the Subordinated Tranche
being lower than B2 (if rated by Moody's) or BB (if rated by S&P); or
(3) the Issuer redeems Series A Bonds in accordance with Article 12 of
the Indenture in a principal amount equal to at least the Allocation
Percentage Buyout Amount, and pays the Redemption Premium and all Swap
Breakage Costs associated with such redemption, using Peaker Buyout
Proceeds from such Peaker Buyout (if any) and/or other funds not
comprising Collateral and the Loan Life Coverage Ratio (calculated
using current market projections from the Power and Fuel Market
Consultant), after giving effect to such Peaker Buyout, is at least
1.50 to 1.00;
(ii) if on the date of the consummation of such Peaker Buyout,
the amount of Available Collateralized Experience Funds is less than
the Collateralized Experience Amount as of the immediately preceding
Annual Scheduled Payment Date (or as of the Closing Date if the first
Annual Scheduled Payment Date has not occurred), an amount of funds
equal to the lesser of (x) the amount of such deficiency in the
Collateralized Experience Account and (y) the amount of Peaker Buyout
Profits received in connection with such Peaker Buyout is deposited
into the Collateralized Experience Account;
(iii) after giving effect to such Peaker Buyout, (A) the
number of Projects comprising the Collateral is at least three and (B)
at least one remaining Project comprising the Collateral is located in
each of the MAIN Market Region and the SERC Market Region;
(iv) no Issuer Event of Default has occurred and is continuing
(other than an Issuer Event of Default relating solely to the Project
or Project Company involved in such Peaker Buyout which is cured or
eliminated by such Peaker Buyout); and
29
(v) if XLCA is the Controlling Party and such Peaker Buyout is
with respect to the Rockford I Project, Rockford I Project Company,
Rockford II Project or Rockford II Project Company, such agreements for
the sharing of facilities for the Rockford I Project and the Rockford
II Project as reasonably requested by XLCA are entered into by the
Rockford I Project Company and the Rockford II Project Company on or
prior to the consummation of such Peaker Buyout.
"Person" means any natural person, corporation, partnership,
limited liability company, firm, association, Governmental Authority or any
other entity whether acting in an individual, fiduciary or other capacity.
"Pledgor" means any Person pledging its interests (a) in a
Project Company or in the Rockford II Equipment Company under a Project Company
Pledge Agreement, or (b) in the Issuer under the Issuer Pledge Agreement
(collectively the "Pledgors").
"Policies" means the Policy and the Swap Policy.
"Policy" means the Financial Guaranty Insurance Policy,
including any endorsements thereto, issued by XLCA with respect to the Series A
Bonds, dated as of the Closing Date, substantially in the form of Appendix I to
the Insurance and Reimbursement Agreement.
"Policy Payment" has the meaning given in Section 4.1(a) of
the Insurance and Reimbursement Agreement.
"Policy Termination Date" means the Termination Date as
defined in the Policy.
"Power" means electric capacity, electric energy and/or
ancillary services.
"Power and Fuel Market Consultant" has the meaning given in
Section 10.1(c) of the Common Agreement.
"Power Sales and Agency Agreement" means, individually or
collectively, as the context requires, (i) the Bayou Cove PSA Agreement, (ii)
the Big Cajun PSA Agreement, (iii) the Rockford I PSA Agreement, (iv) the
Rockford II PSA Agreement and (v) the Sterlington PSA Agreement.
"Preference Claim" has the meaning given in Section 7.4(c) of
the Common Agreement.
"Preliminary Offering Circular" means the first preliminary
offering circular, dated May 24, 2002, and the second preliminary offering
circular, dated June 13, 2002, each in respect of the Series A Bonds.
"Premium" means the insurance premium (including any
additional premium) payable in respect of the Policy by the Issuer in accordance
with the Premium Letter and the Insurance and Reimbursement Agreement.
30
"Premium Letter" means the side letter, dated as of the
Closing Date, among XLCA, the Issuer and the Project Companies entered into in
consideration of the issuance of the Policies.
"Premiums" means the Policy Premium and the Swap Policy
Premium.
"Pricing Date" means the date of the Purchase Agreement.
"Project Companies" means, collectively, the Bayou Cove
Project Company, the Big Cajun Project Company, the Rockford I Project Company,
the Rockford II Project Company, and the Sterlington Project Company (each,
individually, a "Project Company"); provided that upon the occurrence of a
Project Release Event with respect to a Project Company, such Project Company
will no longer be a "Project Company" under the Financing Documents.
"Project Company Blocked Amount" means, in respect of a
Project Company and in connection with a proposed Restricted Payment pursuant to
Section 4.5 of the Common Agreement, an amount in Dollars equal to the Account
Funds that would have been available for the making of a Restricted Payment
pursuant to Section 4.5(a) of the Common Agreement had no Project Event of
Default or Project Inchoate Default occurred and be continuing multiplied by
such Project Company's Allocation Percentage.
"Project Company Collateral" means, with respect to a Project
Company or the Rockford II Equipment Company, all real, personal and mixed
property which is subject or is intended to become subject to the security
interests or Liens granted pursuant to the Project Company Collateral Documents
for such Project Company or the Rockford II Equipment Company; provided that
"Project Company Collateral" shall not include any Released Assets (as defined
in each Project Company Collateral Document).
"Project Company Collateral Documents" means, collectively,
the Mortgages, the Depositary Agreement, the Project Company Security
Agreements, the Project Company Pledge Agreements, any other agreement or
instrument granting a Lien on the real, personal and/or mixed property of a
Project Company or the Rockford II Equipment Company in favor of the Collateral
Agent for the benefit of the Secured Parties, and any subordination agreements,
financing statements, notices and the like filed, recorded or delivered in
connection with the foregoing.
"Project Company Permitted Debt" means, with respect to a
Project Company, (a) Debt under the Operative Documents to which such Project
Company is a party (including guarantees of the Additional Bonds), (b) trade
accounts payable (other than for borrowed money) arising, and accrued expenses
incurred, in the ordinary course of business so long as such trade accounts
payable or accrued expenses incurred are (i) payable within 90 days of the date
the respective goods are delivered or the respective services are rendered or
(ii) being contested in good faith by appropriate proceedings and adequate
reserves with respect thereto shall, to the extent required by GAAP, have been
set aside, (c) purchase money obligations and Capital Lease Obligations incurred
to finance discrete items of equipment not comprising an integral part of its
Project that extend only to the equipment being financed in an aggregate not
exceeding $5,000,000 at any one time outstanding for such Project Company, (d)
obligations in respect of
31
surety bonds or similar instruments in an aggregate amount not exceeding
$5,000,000 at any one time outstanding for such Project Company, (e) unsecured
Debt which is subordinated to the Obligations in accordance with the terms set
forth in Exhibit H to the Common Agreement, and (f) guaranties of Issuer
Permitted Debt and Project Company Permitted Debt.
"Project Company Permitted Liens" means, in respect of a
Project Company or the Rockford II Equipment Company, (a) the rights and
interests of the Secured Parties as provided in the Financing Documents; (b)
Liens for any tax, assessment or other governmental charge either not yet due or
being contested in good faith and by appropriate proceedings, so long as (i)
such proceedings shall not involve any substantial danger of the sale,
forfeiture or substantial loss of its Project, the related Site or any related
Easements, title thereto or any material interest therein and shall not
interfere in any material respect with the use or disposition of such Project,
Site or Easements, or (ii) a bond or other security (including funds that have
been withheld or reserved) reasonably acceptable to the Collateral Agent has
been posted or provided in such manner and amount as to reasonably assure the
Collateral Agent that any taxes, assessments or other charges determined to be
due will be promptly paid in full when such contest is determined; (c)
materialmen's, mechanics', workers', repairmen, employees' or other like Liens,
junior in right of payment to the Lien of the Project Company Collateral
Documents or for which the Secured Parties are otherwise indemnified, arising in
the ordinary course of business or in connection with the construction of the
Project, either for amounts not yet due or for amounts being contested in good
faith and by appropriate proceedings, so long as (i) such proceedings shall not
involve any substantial danger of the sale, forfeiture or substantial loss of
such Project, the related Site or any related Easements, title thereto or any
material interest therein and shall not interfere in any material respect with
the use or disposition of such Project, Site or Easements, or (ii) a bond or
other security reasonably acceptable to the Collateral Agent has been posted or
provided in such manner and amount as to reasonably assure the Collateral Agent
that any amounts determined to be due will be promptly paid in full when such
contest is determined; (d) Liens arising out of judgments or awards so long as
an appeal or proceeding for review is being prosecuted in good faith and for the
payment of which adequate reserves, bonds or other security reasonably
acceptable to the Collateral Agent have been provided or the payment of which is
fully covered by insurance reasonably acceptable to the Collateral Agent; (e)
Permitted Encumbrances; (f) Liens, deposits or pledges to secure statutory
obligations or performance of bids, tenders, contracts (other than for the
repayment of borrowed money) or leases, or for purposes of like general nature
in the ordinary course of its business, not to exceed $5,000,000 in the
aggregate at any time for such Project Company, and with any such Lien to be
released as promptly as practicable; (g) other Liens incident to the ordinary
course of business that are not incurred in connection with the obtaining of any
loan, advance or credit and that do not in the aggregate materially impair the
use of the property or assets of Project Company or the value of such property
or assets for the purposes of such business; (h) Liens securing Project Company
Permitted Debt described to in paragraph (c) of the definition thereof; (i)
Liens securing the Project Company Permitted Debt described in paragraph (f) of
the definition thereof to the extent the applicable Issuer Permitted Debt or
Project Company Permitted Debt is permitted to be secured; (j) Liens
contemplated in Section 5.10 (a)(ii) of the Common Agreement; and (k) Liens
disclosed on Schedule 3.1 of the Insurance and Reimbursement Agreement.
32
"Project Company Pledge Agreements" means the Project Company
Pledge Agreements, dated as of the Closing Date, among the applicable Pledgor,
the applicable Project Company and, as applicable, the Rockford II Equipment
Company, and the Collateral Agent.
"Project Company Security Agreements" means (a) the Project
Company Security Agreements, dated as of the Closing Date, between the
applicable Project Company and the Collateral Agent, and (b) the Rockford II
Equipment Security Agreement, dated as of the Closing Date, between Rockford II
Equipment Company and the Collateral Agent.
"Project Completion" means:
(a) with respect to the Bayou Cove Project, the occurrence of
each of (i) the Acceptance of the Facilities (as defined in the Bayou
Cove EPC Agreement (Balance of Plant)), (ii) the final acceptance and
commissioning of the Project (as defined in) Bayou Cove EPC Agreement
(Electric Interconnection Facilities)), (iii) the construction,
installation, testing, commissioning and completion of the Bayou Cove
Electric Interconnection Facilities and the Interconnecting Facilities
(as defined in the Bayou Cove Gas Interconnection Agreement), to the
extent not covered in the Bayou Cove EPC Agreement (Balance of Plant),
(iv) the construction, installation, testing, commissioning and
completion of the water well required to supply the Bayou Cove Project
with water, and (v) the completion of any other work relating to the
engineering, procurement, construction, installation, testing, and
commissioning of the Bayou Cove Project, inclusive of all gas and
electric interconnection points and water supply and wastewater
discharge arrangements, such that the Bayou Cove Project is capable of
(A) receiving all Natural Gas required to operate in accordance with
the Bayou Cove Project Documents, and (B) delivering electricity to the
point of interconnection designated in the Bayou Cove Project
Documents, in each case while in compliance with all applicable Legal
Requirements, Permits and the Bayou Cove Project Documents; and
(b) with respect to the Rockford II Project, the occurrence of
each of (i) Final Acceptance (as defined in the Rockford II Combustion
Turbine Equipment Supply Contract), (ii) the delivery of all equipment
required to be delivered pursuant to the Rockford II Transformer
Purchase Documents, (iii) the delivery of the Notice of Completion (as
defined in the Rockford II Construction Contract) by the Rockford II
Project Company, (iv) the termination of the Rockford II Construction
Management Services Agreement, (v) the design, construction,
installation, testing, commissioning and completion of the
Interconnection Facilities (as defined in the Rockford II Electric
Interconnection Agreement), (vi) the delivery of the Mechanical
Acceptance notice (as defined in the Rockford II Gas Interconnection
Agreement) by the Rockford II Project Company, and (vii) the completion
of any other work relating to the engineering, procurement,
construction, installation, testing, and commissioning of the Rockford
II Project, inclusive of all gas and electric interconnection points
and water supply and wastewater discharge arrangements, such that the
Rockford II Project is capable of (A) receiving all Natural Gas
required to operate in accordance with the Rockford II Project
Documents, and (B) delivering electricity to the point of
interconnection designated in the Rockford II Project Documents, in
each case while in compliance with all applicable Legal Requirements,
Permits and the Rockford II Project Documents.
33
"Project Document Action" has the meaning given in Section
5.11(a) of the Common Agreement.
"Project Documents" means, with respect to a Project, all
Major Project Documents for such Project and all other contracts, agreements,
instruments and other documents related to the development, design, engineering,
construction, use, operation, maintenance, improvement, ownership and/or
acquisition of such Project.
"Project Event of Default" has the meaning given in Section
7.2 of the Common Agreement.
"Project Inchoate Default" means any occurrence, circumstance
or event, or any combination thereof, which, with the lapse of time or giving of
notice, would constitute a Project Event of Default.
"Project Loan Agreements" means, collectively, (a) the Project
Loan Agreement, dated as of the Closing Date, between the Issuer and the Bayou
Cove Project Company, (b) the Project Loan Agreement, dated as of the Closing
Date, between the Issuer and the Rockford I Project Company, and (c) the Project
Loan Agreement, dated as of the Closing Date, between the Issuer and the
Rockford II Project Company.
"Project Loan Amount" means (a) in respect of the Bayou Cove
Project Company, $107,353,000, (b) in respect of the Rockford I Project Company,
$111,867,000, and (c) in respect of the Rockford II Project Company
$105,780,000.
"Project Loan Notes" means, collectively, (a) the promissory
note issued by the Bayou Cove Project Company to the Issuer on the Closing Date
pursuant to the Project Loan Agreement to which the Bayou Cove Project Company
is a party, (b) the promissory note issued by the Rockford I Project Company to
the Issuer on the Closing Date pursuant to the Project Loan Agreement to which
the Rockford I Project Company is a party, and (c) the promissory note issued by
the Rockford II Project Company to the Issuer on the Closing Date pursuant to
the Project Loan Agreement to which the Rockford II Project Company is a party.
"Project Material Adverse Effect" means, with respect to an
individual Project and the related Project Company:
(a) a material adverse change in the business, property,
results of operations or financial condition of such Project or Project
Company;
(b) any event or occurrence of whatever nature which could
reasonably be expected to materially and adversely effect (i) the
ability of such Project Company to perform its obligations under any of
the Financing Documents, or (ii) the validity or enforceability of the
Financing Documents and the Major Project Documents to which such
Project Company is a party or by which it or any of its assets is bound
(taken as a whole); or
34
(c) any event or occurrence of whatever nature which could
reasonably be expected to materially and adversely effect the validity
and priority of Secured Parties' security interests in the Project
Company Collateral related to such Project;
provided that (i) any adverse change in the Natural Gas supply market or the
Power market after the Closing Date which could cause a change in the conditions
or market forecasts contained in the reports delivered on the Closing Date by
the Power and Fuel Market Consultant with respect to such Project shall not be
deemed to, in and of itself, have a "Project Material Adverse Effect", and (ii)
a downgrade in any rating assigned to such Project Company, any Affiliate
thereof, the Obligations or the Transaction or any Tranche shall not be deemed
to, in and of itself, be a "Project Material Adverse Effect."
"Project Release Event" means, with respect to a Project
Company, the earlier to occur of (a) the indefeasible payment or satisfaction in
full in cash of all the Obligations and (b) the occurrence of a Permitted Peaker
Buyout with respect to such Project Company and/or its Project. A Project
Release Event with respect to the Rockford II Project Company shall be deemed
also to be a Project Release Event with respect to the Rockford II Equipment
Company.
"Project Revenues" means, collectively, (a) income and
receipts of the Project Companies derived from the ownership or operation of the
Projects and other payments received by the Project Companies under the Project
Documents (including Loss Proceeds), (b) proceeds of any business interruption
insurance or other insurance, (c) income derived from the sale, resale or other
use of Energy Products and Services by, or on behalf of, the Project Companies,
(d) unscheduled payments received by the Issuer under the Swap Agreement, (e)
receipts derived from the sale of any property pertaining to the Projects or
incidental to the operation of the Projects, (f) earnings on Permitted
Investments, and (g) proceeds from the Collateral Documents with respect to the
Projects, in each case as determined in conformity with cash accounting
principles and subject to netting requirements (if any) contained in the Project
Documents; provided, that "Project Revenues" shall not include Excluded
Revenues.
"Projects" means, collectively, the Bayou Cove Project, the
Big Cajun I Units 3&4 Project, the Rockford I Project, the Rockford II Project
and the Sterlington Project (each, individually, a "Project"); provided that
upon the occurrence of a Project Release Event with respect to a Project, such
Project will no longer be a "Project" under the Financing Documents.
"Prudent Utility Practices" means those practices, methods,
equipment, specifications and standards of safety and performance, as the same
may change from time to time, as are commonly used by electric generation
stations owned by independent power producers utilizing comparable fuels in the
state where a Project is located, as applicable, of a type and size similar to
the applicable Project as good, safe and prudent engineering practices in
connection with the design, construction, operation, maintenance, repair and use
of electrical and other equipment, facilities and improvements of such
electrical station, with commensurate standards of safety, performance,
dependability, efficiency and economy. Prudent Utility Practices does not
necessarily mean one particular practice, method, equipment specification or
standard in all cases, but is instead intended to encompass a broad range of
acceptable practices, methods, equipment specifications and standards.
35
"PUC" means, with respect to a Project, the Public Utility
Commission, Public Service Commission or equivalent Government Authority in the
state where such Project is located.
"PUHCA" means the Public Utility Holding Company Act of 1935,
as amended, and all rules and regulations adopted thereunder.
"Punch List Account" has the meaning given in Section 2.1 of
the Depositary Agreement.
"Punch List Items" means, in connection with Completion of the
Bayou Cove Project or the Rockford II Project, such punch list items
contemplated in the Construction Contracts for such Project.
"Purchase Agreement" means the Purchase Agreement, dated June
14, 2002, among the Issuer, the Project Companies and the Initial Purchaser.
"Rating Agency" means Moody's or S&P or, if Moody's and S&P
cease to exist, any nationally recognized statistical rating organization or
other comparable Person designated by the Issuer and acceptable to XLCA (if XLCA
is the Controlling Party), notice of which designation shall have been given to
the Trustee.
"Redemption Premium" has the meaning given in the Indenture.
"Reimbursement Obligation" means each payment and performance
obligation of the Issuer under the Insurance and Reimbursement Agreement
(including the Issuer's obligation to pay the Premiums pursuant to Section 3.2
of the Insurance and Reimbursement Agreement and to cash collateralize its
reimbursement obligations pursuant to Section 6.2(b) of the Insurance and
Reimbursement Agreement).
"Reinstatement Guaranty" means a guaranty from NRG Energy in
form and substance reasonably satisfactory to XLCA guaranteeing the Obligations
upon reinstatement thereof at any time during the period following the payment
or other satisfaction in full of the Obligations until the date which is 366
days after such payment or other satisfaction.
"Release" means any release, pumping, pouring, emptying,
injecting, escaping, leaching, dumping, seepage, spill, leak, flow, discharge,
disposal or emission of a Hazardous Substance.
"Replacement Swap Agreement" means any replacement swap
agreement approved by XLCA (acting in its absolute discretion) that replaces the
Swap Agreement and that is with a replacement swap provider that is approved by
XLCA (acting in its absolute discretion).
"Reseller" means a power marketing company or any wholesale
buyer of electric products.
"Responsible Officer" means, as to any Person, its president,
chief executive officer, treasurer or secretary (or assistant secretary), any of
its vice presidents, or any managing
36
general partner or managing member of such Person that is a natural person (or
any of the preceding with regard to any managing general partner or managing
member of such Person that is not a natural person).
"Restricted Payment" has the meaning given in Section 4.5 of
the Common Agreement.
"Restricted Payment Date" means any Initial Restricted Payment
Date, any Subsequent Restricted Payment Date or any Subsequent Project
Restricted Payment Date, as applicable.
"Revenue Account" has the meaning given in Section 2.1 of the
Depositary Agreement.
"Rockford Acquisition Agreement" means the Purchase Agreement
among NRG Energy, Indeck Energy Services, Inc., Indeck Energy Services of Ilion,
Inc., and Indeck-Ilion Cogeneration Corporation, dated as of May 4, 2001.
"Rockford Assignment and Assumption Agreement" means the
General Assignment and Assumption Agreement among NRG Energy, NRG Rockford
Acquisition LLC, and NRG Ilion LP LLC, dated as of July 13, 2001.
"Rockford I Electric Interconnection Agreement" means the
Interconnection Agreement between ComEd and the Rockford I Project Company,
dated as of June 20, 2000.
"Rockford I Gas Interconnection Agreement" means the
Interconnection Agreement between the Rockford I Project Company and Northern
Illinois Gas Company, dated as of March 16, 2000.
"Rockford I Ground Lease" means the Ground Lease by and
between Rock River Valley Industrial Park, Inc. and the Rockford I Project
Company, dated as of January 1, 2000, as amended.
"Rockford I Lease Estoppel" means the estoppel letter dated
June 18, 2002 addressed to the Collateral Agent from Rock River Valley
Industrial Park, Inc. with respect to the Rockford I Ground Lease.
"Rockford I Lien Subordination Agreement" means that certain
lien subordination agreement between the Rockford I Project Company, the
Collateral Agent and Rock River Valley Industrial Park, Inc. dated June 18,
2002.
"Rockford I Major Project Documents" means, collectively, (a)
the Rockford I Electric Interconnection Agreement, the Rockford I Gas
Interconnection Agreement, the Rockford I PSA Agreement, the Rockford I Tolling
Agreement and the Rockford I Ground Lease, (b) any Additional Project Document
for the Rockford I Project that replaces any of the agreements described in
clause (a), (c) any Major Power Purchase Agreement, Major FSA or Major FTA for
the Rockford I Project and (d) any Additional Project Document for the Rockford
37
I Project that constitutes a material ground lease agreement, material electric
interconnection agreement or material sharing agreement.
"Rockford I Non-Disturbance Agreement" means the
Subordination, Non-Disturbance, and Attornment Agreement dated June 18, 2002
between Northwest Bank of Rockford and the Collateral Agent.
"Rockford I Project" means the 294 MW (summer capacity) / 310
MW (winter capacity) natural gas-fired electric generation facility owned by the
Rockford I Project Company and located in Rockford, Illinois.
"Rockford I Project Company," means NRG Rockford LLC, an
Illinois limited liability company formerly known as Indeck-Rockford, L.L.C.
"Rockford I Project Documents" means all Project Documents for
the Rockford I Project.
"Rockford I PSA Agreement" means the Power Sales and Agency
Agreement between NRG Power Marketing and the Rockford I Project Company, dated
as of the Closing Date, including the Fuel and Power Marketing Plan attached
thereto.
"Rockford I Tolling Agreement" means the Sales Agreement
between Exelon (as assignee of ComEd) and the Rockford I Project Company, dated
as of January 7, 2000 and amended as of June 23, 2000.
"Rockford II Combustion Turbine Equipment Supply Contract"
means the Contract for Combustion Turbine Equipment Supply (Unit I) between the
Rockford II Equipment Company (as assignee of Indeck Equipment Company, L.L.C.)
and Siemens Westinghouse Power Corporation, dated as of November 27, 2000, as
amended by Change Orders No. 1 through 6.
"Rockford II Completion Obligations" has the meaning given in
Section 3.14(b) of the Common Agreement.
"Rockford II Construction Agreement" means the Construction
Agreement by and between the Rockford II Project Company and ▇▇▇▇▇▇ ▇▇▇▇▇▇,
Inc., dated as of August 2, 2001.
"Rockford II Construction Costs" means, collectively, any and
all costs, expenses, fees, taxes, or reimbursement obligations incurred by or on
behalf of the Rockford II Project Company, under or in connection with a
Rockford II Equipment and Construction Contract or otherwise in connection with
achieving Project Completion of the Rockford II Project, in each case on or
prior to Completion of the Rockford II Project.
"Rockford II Construction Management Services Agreement" means
the Construction Management Services Agreement by and between the Rockford II
Project Company and Indeck Energy Services, Inc. dated as of September 1, 2001.
38
"Rockford II Contractors" means, collectively, each of the
contractors and/or services providers providing equipment and/or services to the
Rockford II Project pursuant to the terms of any Rockford II Equipment and
Construction Contract or any agent or subcontractor thereof.
"Rockford II Electric Interconnection Agreement" means the
Interconnection Agreement between ComEd and the Rockford II Project Company,
dated as of September 14, 2001.
"Rockford II Engineering Services Agreement" means the
Agreement for Engineering Services between the Rockford II Project Company and
▇▇▇▇▇▇▇ Professional Group, dated as of March 14, 2001.
"Rockford II Equipment and Construction Contracts" means,
collectively, (i) the Rockford II Combustion Turbine Equipment Supply Contract,
(ii) the Rockford II Transformer Purchase Documents, (iii) the Rockford II
Engineering Services Agreement, (iv) the Rockford II Construction Agreement, (v)
the Rockford II Construction Management Services Agreement, (vi) the Rockford II
Electric Interconnection Agreement, (vii) the Rockford II Gas Interconnection
Agreement and (viii) any other agreement or document (including any subcontract)
entered into with respect to achieving Project Completion for the Rockford II
Project.
"Rockford II Equipment Company" means NRG Rockford Equipment
II LLC, an Illinois limited liability company formerly known as Indeck-Equipment
Company II, L.L.C.
"Rockford II Gas Interconnection Agreement" means the
Interconnection Agreement between the Rockford II Project Company and Northern
Illinois Gas Company, dated as of April 1, 2002.
"Rockford II Ground Lease" means the Ground Lease by and
between Rock River Valley Industrial Park, Inc. and the Rockford II Project
Company, dated as of March 20, 2001, as amended.
"Rockford II Lease Estoppel" means the estoppel letter dated
June 18, 2002 addressed to the Collateral Agent from Rock River Valley
Industrial Park, Inc. with respect to the Rockford II Ground Lease.
"Rockford II Major Project Documents" means, collectively, (a)
the Rockford II PSA Agreement, the Rockford II Electric Interconnection
Agreement, the Rockford II Gas Interconnection Agreement and the Rockford II
Ground Lease, (b) any Additional Project Document for the Rockford II Project
that replaces any of the agreements described in clause (a), (c) any Major Power
Purchase Agreement, Major FSA or Major FTA for the Rockford II Project and (d)
any Additional Project Document for the Rockford II Project that constitutes a
material ground lease agreement, material electric interconnection agreement or
material sharing agreement.
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"Rockford II Non-Disturbance Agreement" means the
Subordination, Non-Disturbance and Attornment Agreement dated June 18, 2002
between Northwest Bank of Rockford and the Collateral Agent.
"Rockford II Project" means the natural gas-fired electric
generation facility owned by the Rockford II Project Company currently under
construction in Rockford, Illinois on a site adjacent to the Rockford I facility
which, upon Completion, is expected to generate 153 MW (summer capacity) / 171
MW (winter capacity).
"Rockford II Project Company" means NRG Rockford II LLC, an
Illinois limited liability company formerly known as Indeck-Rockford II, LLC.
"Rockford II Project Documents" means all Project Documents
for the Rockford II Project.
"Rockford II PSA Agreement" means the Power Sales and Agency
Agreement between NRG Power Marketing and the Rockford II Project, dated as of
the Closing Date, including the Fuel and Power Marketing Plan attached thereto.
"Rockford II Transformer Purchase Documents" means the
purchase order No 105079 between Waukesha Electric Systems and Indeck-Pleasant
Valley, L.L.C. (together with annexes, general conditions and technical
requirements), dated as of May 2, 2000, as assigned to the Rockford II Equipment
Company.
"S&P" means Standard & Poor's Rating Services, a division of
The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., or any successor thereto, and, if such
corporation shall for any reason no longer perform the functions of a securities
rating agency, "S&P" shall be deemed to refer to any other nationally recognized
rating agency designated by the Issuer; provided, that with respect to the
rating of the Bonds, the designation shall be with the consent of XLCA (if XLCA
is the Controlling Party).
"Scheduled Debt Service" means, collectively, (a) all
regularly scheduled payments of principal of and interest on outstanding Series
A Bonds and all scheduled payments made by the Issuer to the Swap Counterparty
under the Swap Agreement, less (b) all scheduled payments received by the Issuer
from the Swap Counterparty under the Swap Agreement.
"Scheduled Payment Date" means each March 10, June 10,
September 10 and December 10 (the Annual Scheduled Payment Date) of each year
commencing on September 10, 2002 and ending on and including June 10, 2019.
"Secured Parties" means XLCA, the Bondholders, the Swap
Counterparty, the Collateral Agent (for the benefit of itself and the Secured
Parties) and the Trustee (for the benefit of itself and the Bondholders) (each,
a "Secured Party").
"Securities Act" means the Securities Act of 1933, including,
unless the context otherwise requires, the rules and regulations thereunder, as
amended from time to time.
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"Securities Exchange Act" means the Securities Exchange Act of
1934, including, unless the context otherwise requires, the rules and
regulations thereunder, as amended from time to time.
"Senior Tranche" means the portion of the Policy initially
insuring $129,684,000 of principal and interest in respect of the Series A Bonds
representing the third loss layer of the Policy to be drawn in the event of a
Policy Payment.
"SERC Main Market Region" means the region covered by the
Southern Electric Reliability Council.
"Series A Bonds" means the Series A Floating Rate Senior
Secured Bonds due 2019 issued by the Issuer on the Closing Date pursuant to the
Indenture in an aggregate principal amount of $325,000,000.
"Shadow Ratings" means any or all, as applicable of the
ratings issued by the Rating Agencies for (a) the Series A Bonds (rated Baa3 by
Moody's and BBB- by S&P at the Closing Date), (b) the Senior Tranche (rated Aa2
by Moody's and AA- by S&P at the Closing Date), (c) the Mezzanine Tranche (rated
Baa2 by Moody's and BBB+ by S&P at the Closing Date), and (d) the Subordinated
Tranche (rated Ba3 by Moody's and BBB- by S&P at the Closing Date), in each case
without giving effect to the Policies.
"Significant Casualty Event" means, with respect to a Project,
any of the following events or conditions: (a) the actual total loss of such
Project; (b) a constructive total loss of such Project under applicable
insurance policies or an agreed or a compromised total loss of such Project; or
(c) such Project shall be either substantially destroyed or irreparably damaged
to an extent rendering restoration impracticable or uneconomical.
"Significant Condemnation Event" means any Condemnation Event
with respect to a Project that in the reasonable, good faith judgment of the
applicable Project Company (as evidenced by an officer's certificate of such
Project Company) (a) renders such Project unsuitable for its intended use, (b)
is such that restoration of such Project to substantially its condition as
existed immediately prior to such Condemnation Event would be impracticable or
impossible or (c) constitutes a taking of the applicable Project Company's title
to such Project.
"Site" means the "Premises" described in the applicable
Mortgage.
"South Central Finance Documents" means the "Finance
Documents" as defined in Appendix A to the Trust Indenture, dated as of March
30, 2000, among NRG South Central, Louisiana Generating and JPMorgan Chase Bank
(formerly The Chase Manhattan Bank), as Bond Trustee and Depositary Bank.
"Specified Financial Covenants" means the covenants set forth
in Section 7.12 (Consolidated Net Worth), Section 7.13 (Indebtedness to
Consolidated Capitalization) and Section 7.14 (Interest Coverage Ratio) of the
364 Day Revolver or any comparable provisions contained in any New Revolving
Credit Facility, as applicable, together with, in each case, all related
definitions and ancillary provisions.
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"Stated Amount" means with respect to any Acceptable Letter of
Credit, the total amount to be drawn thereunder at the time in question in
accordance with the terms of such Acceptable Letter of Credit.
"Sterlington and NRG South Central Assignment and Assumption
Agreement" means the Assignment and Assumption Agreement between ▇▇▇▇ Power,
Inc. and NRG South Central, dated as of August 17, 2000.
"Sterlington Electric Interconnection Agreement" means the
Interconnection and Operating Agreement between the Sterlington Project Company
and Entergy Louisiana, dated as of May 5, 2000.
"Sterlington Gas Interconnection Agreement" means the
Interconnect Agreement between ▇▇▇▇ Gateway Pipeline Company and the Sterlington
Project Company, dated as of May 3, 2000.
"Sterlington Ground Lease" means the Lease Agreement between
▇▇▇▇ Nitrogen Company and the Sterlington Project Company, dated as of July 1,
2000.
"Sterlington Lease Estoppel" means the Ground Lessor Estoppel
Certificate dated June 18, 2002 executed by ▇▇▇▇ Nitrogen Company with respect
to the Sterlington Ground Lease.
"Sterlington Major Project Documents" means, collectively, (a)
the Sterlington Electric Interconnection Agreement, the Sterlington Utilities
and Services Agreement, the Sterlington PSA Agreement, the Sterlington Gas
Interconnection Agreement, the Sterlington PPA (when accepted by the FERC and
executed by the parties thereto) and the Sterlington Ground Lease, (b) any
Additional Project Document for the Sterlington Project that replaces any of the
agreements described in clause (a), (c) any Major Power Purchase Agreement,
Major FSA or Major FTA for the Sterlington Project and (d) any Additional
Project Document for the Sterlington Project that constitutes a material ground
lease agreement, material electric interconnection agreement or material sharing
agreement.
"Sterlington PPA" means the Power Purchase Agreement among
Louisiana Generating, the Sterlington Project Company and NRG South Central, to
be executed after the Closing Date upon acceptance thereof by FERC and to be
dated as of May 15, 2002.
"Sterlington Project" means the 170 MW (summer capacity) / 193
MW (winter capacity) natural gas-fired electric generation facility owned by the
Sterlington Project Company and located in Sterlington, Louisiana.
"Sterlington Project Company" means NRG Sterlington Power LLC,
a Delaware limited liability company formerly known as ▇▇▇▇ Power Louisiana,
L.L.C.
"Sterlington Project Development Agreement" means the Project
Development Agreement between NRG Energy and ▇▇▇▇ Power, Inc., dated as of April
14, 1999.
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"Sterlington Project Documents" means all Project Documents
for the Sterlington Project; provided that the Sterlington PPA shall not be a
Project Document for the Sterlington Project until accepted by the FERC and
executed by the parties thereto.
"Sterlington PSA Agreement" means the Power Sales and Agency
Agreement between NRG Power Marketing and the Sterlington Project Company, dated
as of the Closing Date, including the Fuel and Power Marketing Plan attached
thereto.
"Sterlington Supplement and Modification to Project
Development Agreement" means the Supplement and Modification to Project
Development Agreement between NRG Energy and ▇▇▇▇ Power, Inc., dated as of May
25, 2000 and the Letter Agreement Re: Supplement and Modification to Project
Development Agreement between NRG Energy, and ▇▇▇▇ Power, Inc., dated as of
August 17, 2000.
"Sterlington Utilities and Services Agreement" means the
Utilities and Services Agreement between ▇▇▇▇ Nitrogen Company and the
Sterlington Project Company, dated as of July 1, 2000.
"Stipulated Fixed O&M Expenses" means, with respect to a
Project, the Stipulated Fixed O&M Expenses set forth for such Project in Part I
of Exhibit J to the Common Agreement.
"Stipulated Non-Fuel Variable O&M Expenses" means, with
respect to a Project, the Stipulated Non-Fuel O&M Expenses set forth for such
Project in Part II of Exhibit J to the Common Agreement.
"Stipulated O&M Expenses" means, collectively, Stipulated
Fixed O&M Expenses and Stipulated Non-Fuel Variable O&M Expenses.
"Subject Claims" has the meaning given in Section 9.1(b) of
the Common Agreement.
"Subordinated Bonds" means Debt for Borrowed Money of the
Issuer issued after the Closing Date pursuant to a note in favor of any Person
other than a Financing Party or any of its Affiliates, which Debt for Borrowed
Money and note are (a) subordinated in all respects to the Obligations in
accordance with the terms set forth in Exhibit I to the Common Agreement, (b)
not secured other than by a security interest that is subordinated in all
respects to the security interest of the Secured Parties in the Collateral and
as additionally set forth in Exhibit I to the Common Agreement, (c) not
guarantied other than by a guaranty that is subordinated in all respects to the
Guaranties as set forth in Exhibit I to the Common Agreement (and any Lien
securing such guaranty is subordinated in all respects to the security interest
of the Secured Parties in the Collateral as set forth in Exhibit I to the Common
Agreement), and (d) not entitled to the benefit of the Contingent Guaranty
Agreement or any other Financing Document.
"Subordinated Debt" means Debt of the Issuer or any Project
Company that is subordinated to the Obligations in accordance with the terms set
forth in Exhibit H or I to the Common Agreement.
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"Subordinated Tranche" means the portion of the Policy
initially insuring $104,764,000 of principal and interest in respect of the
Series A Bonds representing the first loss layer of the Policy to be drawn in
the event of a Policy Payment.
"Subsequent Project Restricted Payment Date" has the meaning
given in Section 4.5(d) of the Common Agreement.
"Subsequent Project Restricted Payment Period" means, for the
purposes of Section 4.5 of the Common Agreement, the period prior to any Project
Event of Default and commencing on the occurrence of an Inchoate Project Block
Condition and ending on the 30th day following the cure (prior to such Inchoate
Project Block Condition maturing into or becoming a Project Event of Default) of
such Inchoate Project Block Condition.
"Subsequent Restricted Payment Date" has the meaning give to
it in Section 4.5(c) of the Common Agreement.
"Subsequent Restricted Payment Period" means, for the purposes
of Section 4.5 of the Common Agreement, the period prior to any Issuer Event of
Default and commencing on the occurrence of an Inchoate Block Condition and
ending on the 30th day following the cure (prior to such Inchoate Block
Condition maturing into or becoming an Issuer Event of Default) of such Inchoate
Block Condition.
"Subsequent Tax Payment Period" means, for the purposes of
Section 4.5 of the Common Agreement, the period prior to any Issuer Event of
Default and commencing on the occurrence of an Issuer Inchoate Default and
ending on the 30th day following the cure (prior to such Issuer Inchoate Default
maturing into or becoming an Issuer Event of Default) of such Issuer Inchoate
Default.
"Subsidiary" means, with respect to any Person, (a) any
corporation, association, or other business entity (other than a partnership or
a limited liability company) of which 50% or more of the total voting power of
shares of capital stock entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time of determination owned or controlled, directly or indirectly, by
such Person or one or more of the other Subsidiaries of that Person or a
combination thereof, and (b) any partnership or limited liability company of
which 50% or more of the partnership's or limited liability company's, as the
case may be, capital accounts, distribution rights or general or limited
partnership interests or limited liability company membership interests, as the
case may be, are owned or controlled, directly or indirectly, by such Person or
one or more of the other Subsidiaries of that Person or a combination thereof.
"Summer Month" means any of May, June, July, August or
September.
"Swap Agreement" means the ISDA Master Agreement, dated as of
the Closing Date, between the Issuer and the Swap Counterparty, including the
Schedule and the Confirmation thereto and any Replacement Swap Agreement.
"Swap Breakage Costs" means any breakage costs and/or
termination costs which became due under the Swap Agreement.
44
"Swap Counterparty" has the meaning given in the preamble to
the Common Agreement, together with any replacement swap provider thereafter
approved by XLCA under a Replacement Swap Agreement.
"Swap Obligations" means each payment obligation of the Issuer
under the Swap Agreement including in respect of Swap Payment Amounts and Swap
Breakage Costs.
"Swap Payment Amount" has the meaning given in the Swap
Policy.
"Swap Policy" means the Financial Guaranty Insurance Policy,
including any endorsements thereto, issued by XLCA with respect to the Swap
Payment Amounts, dated as of the Closing Date, substantially in the form of
Appendix II to the Insurance and Reimbursement Agreement.
"Swap Policy Premium" means the insurance premium (including
any additional premium) payable in respect of the Swap Policy by the Issuer in
accordance with the Premium Letter and the Insurance and Reimbursement
Agreement.
"Swap Policy Termination Date" means the Termination Date as
defined in the Swap Policy.
"Taxes" means all present or future income, excise, stamp,
documentary, property or franchise taxes and other taxes, fees, duties, levies,
imposts, deductions, withholdings or other charges of any nature whatsoever (but
excluding franchise taxes and taxes imposed on or measured by net income or
receipts) imposed by any taxing authority, including, without limitation, any
penalties, interest or additions to tax with respect thereto.
"Tax Distributions" has the meaning given in Section 4.5(e) of
the Common Agreement.
"Tax Distribution Amount" has the meaning given in Section
4.5(f) of the Common Agreement.
"Tax Group" has the meaning given in Section 4.5(e) of the
Common Agreement.
"Title Insurer" means (a) with respect to the Bayou Cove
Project, the Big Cajun I Units 3&4 Project and the Sterlington Project, First
American Title Insurance Company (or any affiliate thereof), and (b) with
respect to the Rockford I Project and the Rockford II Project, Chicago Title
Insurance Company (or any affiliate thereof).
"Title Policy" means any title policy delivered by Issuer
pursuant to Section 3.1(dd) of the Insurance and Reimbursement Agreement.
"Tolling Period" means:
(A) with respect to any Project, any period during which the
applicable Project Company has entered into an Acceptable PPA with a
Reseller;
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(B) with respect to the Rockford I Project, the period
commencing on the Closing Date and ending on the date on which the
Rockford I Tolling Agreement terminates;
(C) with respect to the Sterlington Project, the period
commencing on the date after the Closing Date upon which the
Sterlington PPA is accepted by the FERC and executed by the parties
thereto and ending on the date on which the Sterlington PPA terminates;
and
(D) with respect to the Big Cajun Project, the period
commencing on the Closing Date and ending on the date on which the Big
Cajun PPA terminates;
provided, in each case, (i) if the Reseller is an Affiliate of the Issuer (a)
such Reseller (or any Affiliate guaranteeing its obligations) maintains a
rating, independent of NRG Energy, of at least Investment Grade from each of S&P
and ▇▇▇▇▇'▇ and (b) such rating is affirmed as "stable" Investment Grade (or the
equivalent) or better if NRG Energy is downgraded or placed on credit review or
watch by either of S&P or Moody's and (ii) the applicable power purchase
agreement, tolling agreement or other contractual arrangement has not been
terminated, otherwise ceases to be in full force and effect or the Reseller
thereunder has defaulted thereunder, which default has not been cured within the
time period provided for such cure under such agreement.
"Total Experience Amount" means the initial Total Experience
Amount set forth in Section 2.4 of the Contingent Guaranty Agreement, as reduced
or increased from time to time in accordance therewith.
"Tranche" mean the Senior Tranche, the Mezzanine Tranche
and/or the Subordinated Tranche, as applicable.
"Transaction" means the portfolio financing transaction in
respect of the Projects contemplated by the Financing Documents.
"Trustee" has the meaning given in the preamble to the Common
Agreement.
"Uncovered Warranty Costs" means any costs relating to repair
work performed during any Warranty Period under either the Bayou Cove EPC
Agreement (Balance of Plant) or Bayou Cove EPC Agreement (Electric
Interconnection Facilities) which are not paid for or otherwise covered by the
relevant Bayou Cove Contractor as the result of any limits on liability under
the Bayou Cove EPC Agreement (Balance of Plant) or Bayou Cove EPC Agreement
(Electric Interconnection Facilities), as applicable.
"UCC" means the Uniform Commercial Code as the same may, from
time to time, be in effect in the State of New York; provided, however, in the
event that, by reason of mandatory provisions of law, any or all of the
perfection or priority of the security interest in any Collateral is governed by
the Uniform Commercial Code as in effect in a jurisdiction other than the State
of New York, the term "UCC" shall mean the Uniform Commercial Code as in effect
in such other jurisdiction for purposes of the provisions hereof relating to
such perfection or priority and for purposes of definitions related to such
provisions.
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"Warranty Period" means, with respect to the Bayou Cove EPC
Agreement (Balance of Plant) and the Bayou Cove EPC Agreement (Electric
Interconnection Facilities), the warranty period or periods specified therein,
as such periods may be extended pursuant to the terms thereof.
"Winter Month" means any of October, November, December,
January, February, March or April.
"XLCA" has the meaning given in the preamble to the Common
Agreement.
47
RULES OF INTERPRETATION
A. The singular includes the plural and the plural includes the singular.
B. "or" is not exclusive.
C. A reference to a Governmental Rule includes any amendment or
modification to such Governmental Rule, and all regulations, rulings
and other Governmental Rules promulgated under such Governmental Rule.
D. A reference to a Person includes its permitted successors and permitted
assigns.
E. Accounting terms have the meanings assigned to them by GAAP, as applied
by the accounting entity to which they refer.
F. The words "include", "includes" and "including" are not limiting.
G. A reference in a document to an Article, Section, Exhibit, Schedule,
Annex or Appendix is to the Article, Section, Exhibit, Schedule, Annex
or Appendix of such document unless otherwise indicated. Exhibits,
Schedules, Annexes or Appendices to any document shall be deemed
incorporated by reference in such document. In the event of any
conflict between the provisions of a Financing Document (exclusive of
the Exhibits, Schedules, Annexes and Appendices thereto) and any
Exhibit, Schedule or Annex thereto, the provisions of such Financing
Document shall control. A reference to any Exhibit, Schedule, Annex or
Appendix of a Financing Document shall mean such Exhibit, Schedule,
Annex or Appendix as, amended, modified or supplemented from time to
time in accordance with such Financing Document; provided that no
Exhibit, Schedule, Annex or Appendix may be amended, modified or
supplemented by Issuer except to the extent specifically permitted in
such Financing Document.
H. References to any document, instrument or agreement (i) shall include
all exhibits, schedules and other attachments thereto, (ii) shall
include all documents, instruments or agreements issued or executed in
replacement thereof, and (iii) shall mean such document, instrument or
agreement, or replacement or predecessor thereto, as amended, amended
and restated, supplemented or otherwise modified from time to time and
in effect at any given time.
I. The words "hereof", "herein" and "hereunder" and words of similar
import when used in any document shall refer to such document as a
whole and not to any particular provision of such document.
J. The word "will" shall be construed to have the same meaning and effect
as the word "shall".
K. The use in this Agreement of the words "asset" and "property" shall be
construed to have the same meaning and effect and to refer to any and
all tangible and intangible assets and properties, including cash,
securities, accounts and contract rights.
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L. Any consent, approval, satisfaction or similar acquiescence to be
granted under any provision of any Operative Document shall not be
unreasonably withheld or delayed unless otherwise provided therein.
M. References to "days" shall mean calendar days, unless the term
"Business Days" shall be used. References to "years" shall mean
calendar years, unless otherwise specified. References to a time of day
shall mean such time in New York, unless otherwise specified.
N. The Financing Documents are the result of negotiations between, and
have been reviewed by the Financing Parties, NRG Energy, XLCA, the Swap
Counterparty, the Trustee, the Collateral Agent, the Depositary Agent
and their respective counsel. Accordingly, the Financing Documents
shall be deemed to be the product of all parties thereto, and no
ambiguity shall be construed in favor of or against any Financing
Party, any Equity Party, XLCA, the Swap Counterparty, the Trustee, the
Collateral Agent or the Depositary Agent solely as a result of any such
Person having drafted or proposed the ambiguous provision.
49