Exhibit 10.3
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RELIANT ENERGY, INC.,
as guarantor
PENNSYLVANIA ECONOMIC DEVELOPMENT FINANCING AUTHORITY
EXEMPT FACILITIES REVENUE BONDS
(Reliant Energy ▇▇▇▇▇▇, LLC Project)
SERIES 2002A
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GUARANTEE AGREEMENT
Dated as of December 22, 2004
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▇.▇. ▇▇▇▇▇▇ Trust Company, National Association,
as Trustee
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TABLE OF CONTENTS
PAGE
ARTICLE 1.
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01 Definitions................................................................................. 1
Section 1.02 Other Definitions........................................................................... 37
Section 1.03 Definition of "Obligor.".................................................................... 37
Section 1.04 Rules of Construction....................................................................... 37
ARTICLE 2.
DESIGNATED SENIOR DEBT
Section 2.01 Reserved.................................................................................... 38
Section 2.02 Reserved.................................................................................... 38
Section 2.03 Reserved.................................................................................... 38
Section 2.04 Reserved.................................................................................... 38
Section 2.05 Reserved.................................................................................... 38
Section 2.06 Reserved.................................................................................... 38
Section 2.07 Reserved.................................................................................... 38
Section 2.08 Reserved.................................................................................... 38
Section 2.09 Reserved.................................................................................... 38
Section 2.10 Reserved.................................................................................... 38
Section 2.11 Reserved.................................................................................... 38
Section 2.12 Reserved.................................................................................... 38
Section 2.13 Reserved.................................................................................... 38
Section 2.14 Designated Senior Debt...................................................................... 38
Section 2.15 Reserved.................................................................................... 38
ARTICLE 3.
REI GUARANTEE
Section 3.01 Guarantee................................................................................... 38
Section 3.02 Limitation on Liability..................................................................... 39
Section 3.03 Execution and Delivery of Guarantee Agreement............................................... 40
Section 3.04 Releases.................................................................................... 40
ARTICLE 4.
COVENANTS
Section 4.01 Reserved.................................................................................... 40
Section 4.02 Reserved.................................................................................... 40
Section 4.03 Reports..................................................................................... 40
Section 4.04 Compliance Certificate...................................................................... 41
Section 4.05 Taxes....................................................................................... 41
Section 4.06 Stay, Extension and Usury Laws.............................................................. 42
Section 4.07 Restricted Payments......................................................................... 42
Section 4.08 Dividend and Other Payment Restrictions Affecting Subsidiaries.............................. 45
Section 4.09 Incurrence of Indebtedness and Issuance of Preferred Stock.................................. 47
Section 4.10 Reserved.................................................................................... 51
Section 4.11 Transactions with Affiliates................................................................ 51
Section 4.12 Liens....................................................................................... 52
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Section 4.13 Line of Business............................................................................ 52
Section 4.14 Corporate Existence......................................................................... 52
Section 4.15 Offer to Repurchase Upon Change of Control.................................................. 53
Section 4.16 Limitation on Sale and Leaseback Transactions............................................... 54
Section 4.17 Payments for Consent........................................................................ 54
Section 4.18 Additional Subsidiary Guarantees............................................................ 54
Section 4.19 Changes in Covenants When Series 2002A Bonds Rated Investment Grade......................... 55
Section 4.20 Designation of Restricted and Unrestricted Subsidiaries..................................... 55
Section 4.21 Reserved.................................................................................... 55
Section 4.22 Insurance................................................................................... 55
Section 4.23 Subordination of Intercompany Indebtedness.................................................. 56
ARTICLE 5.
SUCCESSORS
Section 5.01 Merger, Consolidation, or Sale of Assets.................................................... 56
Section 5.02 Successor Corporation Substituted........................................................... 57
ARTICLE 6.
DEFAULTS AND REMEDIES
Section 6.01 Events of Default........................................................................... 58
Section 6.02 Reserved.................................................................................... 60
Section 6.03 Reserved.................................................................................... 60
Section 6.04 Reserved.................................................................................... 60
Section 6.05 Reserved.................................................................................... 60
Section 6.06 Reserved.................................................................................... 60
Section 6.07 Rights of Holders of Series 2002A Bonds to Receive Payment.................................. 60
Section 6.08 Reserved.................................................................................... 60
Section 6.09 Reserved.................................................................................... 60
Section 6.10 Reserved.................................................................................... 60
Section 6.11 Reserved.................................................................................... 60
ARTICLE 7.
TRUSTEE
Section 7.01 Reserved.................................................................................... 60
Section 7.02 Reserved.................................................................................... 60
Section 7.03 Reserved.................................................................................... 60
Section 7.04 Trustee's Disclaimer........................................................................ 60
Section 7.05 Reserved.................................................................................... 61
Section 7.06 Reserved.................................................................................... 61
Section 7.07 Compensation and Indemnity.................................................................. 61
ARTICLE 8.
RESERVED
ARTICLE 9.
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01 Without Consent of Holders of Series 2002A Bonds............................................ 61
Section 9.02 With Consent of Holders of Series 2002A Bonds............................................... 62
Section 9.03 Reserved.................................................................................... 64
Section 9.04 Revocation and Effect of Consents........................................................... 64
Section 9.05 Reserved.................................................................................... 64
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Section 9.06 Trustee to Sign Amendments, etc............................................................. 64
ARTICLE 10.
COLLATERAL AND SECURITY
Section 10.01 Security.................................................................................... 64
Section 10.02 Collateral.................................................................................. 65
Section 10.03 Further Assurances.......................................................................... 66
Section 10.04 Collateral Trustee.......................................................................... 67
Section 10.05 Security Documents and Guarantee............................................................ 67
Section 10.06 Release of Security Interests............................................................... 67
Section 10.07 Environmental Indemnity..................................................................... 69
ARTICLE 11.
COLLATERAL SHARING
Section 11.01 Equal and Ratable Lien Sharing by Holders of Parity Secured Debt............................ 69
Section 11.02 Reserved.................................................................................... 70
Section 11.03 Enforcement of Security Interests........................................................... 70
Section 11.04 Amendment and Supplement.................................................................... 70
ARTICLE 12.
SUBSIDIARY GUARANTEES
Section 12.01 Guarantee................................................................................... 71
Section 12.02 Limitation on Subsidiary Guarantor Liability................................................ 71
Section 12.03 Execution and Delivery of Guarantee Agreement............................................... 72
Section 12.04 Subsidiary Guarantors May Consolidate, etc., on Certain Terms............................... 72
Section 12.05 Releases.................................................................................... 72
ARTICLE 13.
▇▇▇▇▇▇ COLLATERAL AND ▇▇▇▇▇▇ COLLATERAL SHARING
Section 13.01 ▇▇▇▇▇▇ Security............................................................................. 73
Section 13.02 ▇▇▇▇▇▇ Collateral........................................................................... 74
Section 13.03 Further Assurances.......................................................................... 74
Section 13.04 ▇▇▇▇▇▇ Collateral Trustee................................................................... 75
Section 13.05 ▇▇▇▇▇▇ Security Documents and Guarantee..................................................... 75
Section 13.06 Release of Security Interests on the ▇▇▇▇▇▇ Collateral...................................... 76
Section 13.07 Equal and Ratable Sharing of ▇▇▇▇▇▇ Collateral by Holders of Permitted
Indebtedness................................................................................ 76
Section 13.08 Enforcement of Security Interests........................................................... 77
Section 13.09 Amendment and Supplement.................................................................... 77
ARTICLE 14.
MISCELLANEOUS
Section 14.01 Reserved.................................................................................... 77
Section 14.02 Notices..................................................................................... 78
Section 14.03 Reserved.................................................................................... 78
Section 14.04 Certificate and Opinion as to Conditions Precedent.......................................... 79
Section 14.05 Statements Required in Certificate or Opinion............................................... 79
Section 14.06 Reserved.................................................................................... 79
Section 14.07 No Personal Liability of Directors, Officers, Employees and Stockholders.................... 79
Section 14.08 Governing Law............................................................................... 79
Section 14.09 No Adverse Interpretation of Other Agreements............................................... 80
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Section 14.10 Successors.................................................................................. 80
Section 14.11 Severability................................................................................ 80
Section 14.12 Counterpart Originals....................................................................... 80
Section 14.13 Table of Contents, Headings, etc............................................................ 80
EXHIBITS
Exhibit A Form of Supplemental Guarantee Agreement
Exhibit B Form of ▇▇▇▇▇▇ Mortgage
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GUARANTEE AGREEMENT dated as of December 22, 2004, by and among Reliant
Energy, Inc., a Delaware corporation (the "Company"), the Subsidiary Guarantors
(as defined herein) and ▇.▇. ▇▇▇▇▇▇ Trust Company, National Association, as
trustee (the "Trustee"), under the Indenture (as defined herein).
The Company, the Subsidiary Guarantors and the Trustee agree as follows
for the benefit of each other and for the equal and ratable benefit of the
Holders (as defined herein) of the Pennsylvania Economic Development Financing
Authority's ("PEDFA") Exempt Facilities Revenue Bonds (Reliant Energy ▇▇▇▇▇▇,
LLC Project), Series 2002A, in the original aggregate principal amount of
$75,000,000 (the "Series 2002A Bonds"):
ARTICLE 1.
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01 Definitions.
"2001A Guarantee Agreement" means the guarantee agreement, by and among
the Company, the Subsidiary Guarantors and the trustee thereunder, relating to
the 2001A ▇▇▇▇▇▇ Guarantees, as amended, supplemented or otherwise modified from
time to time in accordance with the terms thereof.
"2001A REI Guarantee" means the Guarantee of the Series 2001A Bonds by
the Company contained in the 2001A Guarantee Agreement.
"2001A ▇▇▇▇▇▇ Guarantees" means the 2001A REI Guarantee and the 2001A
Subsidiary Guarantees.
"2001A Subsidiary Guarantees" means the Guarantee by each Subsidiary
Guarantor contained in the 2001A Guarantee Agreement of the Company's payment
Obligations under the 2001A REI Guarantee.
"2002B Guarantee Agreement" means the guarantee agreement, by and among
the Company, the Subsidiary Guarantors and the trustee thereunder, relating to
the 2002B ▇▇▇▇▇▇ Guarantees, as amended, supplemented or otherwise modified from
time to time in accordance with the terms thereof.
"2002B REI Guarantee" means the Guarantee of the Series 2002B Bonds by
the Company contained in the 2002B Guarantee Agreement.
"2002B ▇▇▇▇▇▇ Guarantees" means the 2002B REI Guarantee and the 2002B
Subsidiary Guarantees.
"2002B Subsidiary Guarantees" means the Guarantee by each Subsidiary
Guarantor contained in the 2002B Guarantee Agreement of the Company's payment
Obligations under the 2002B REI Guarantee.
"2003A Guarantee Agreement" means the guarantee agreement, by and among
the Company, the Subsidiary Guarantors and the trustee thereunder, relating to
the 2003A ▇▇▇▇▇▇ Guarantees, as amended, supplemented or otherwise modified from
time to time in accordance with the terms thereof.
"2003A REI Guarantee" means the Guarantee of the Series 2003A Bonds by
the Company contained in the 2003A Guarantee Agreement.
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"2003A ▇▇▇▇▇▇ Guarantees" means the 2003A REI Guarantee and the 2003A
Subsidiary Guarantees.
"2003A Subsidiary Guarantees" means the Guarantee by each Subsidiary
Guarantor contained in the 2003A Guarantee Agreement of the Company's payment
Obligations under the 2003A REI Guarantee.
"2004A Guarantee Agreement" means the guarantee agreement, by and among
the Company, the Subsidiary Guarantors and the trustee thereunder, relating to
the 2004A ▇▇▇▇▇▇ Guarantees, as amended, supplemented or otherwise modified from
time to time in accordance with the terms thereof.
"2004A REI Guarantee" means the Guarantee of the Series 2004A Bonds by
the Company contained in the 2004A Guarantee Agreement.
"2004A ▇▇▇▇▇▇ Guarantees" means the 2004A REI Guarantee and the 2004A
Subsidiary Guarantees.
"2004A Subsidiary Guarantees" means the Guarantee by each Subsidiary
Guarantor contained in the 2004A Guarantee Agreement of the Company's payment
Obligations under the 2004A REI Guarantee.
"2014 Note Guarantees" means the Guarantee by each Subsidiary
Guarantor of the Company's payment obligations under the 2014 Notes Indenture
and on the 2014 Notes, executed pursuant to the provisions of the 2014 Notes
Indenture.
"2014 Notes" means the 6.75% Senior Secured Notes due 2014 of the
Company that are issued from time to time.
"2014 Notes Indenture" means the Base Indenture, as supplemented by the
First Supplemental Indenture, governing the 2014 Notes.
"Acquired Debt" means, with respect to any specified Person:
(1) Indebtedness of any other Person existing at the time such
other Person is merged with or into or became a Subsidiary of such
specified Person, whether or not such Indebtedness is incurred in
connection with, or in contemplation of, such other Person merging with
or into, or becoming a Restricted Subsidiary of, such specified Person;
and
(2) Indebtedness secured by a Lien encumbering any asset
acquired by such specified Person.
"Act of Secured Debtholders" means, as to any matter, a direction in
writing delivered to the Collateral Trustee:
(1) at any time when no Actionable Default Period is
continuing, by the Required Lenders; and
(2) at any time when an Actionable Default Period is
continuing, by or with the written consent of the Required Secured
Debtholders; provided, that (A) so long as no direction has been given
by or on behalf of the Required Secured Debtholders and subject in all
respects to any contrary direction at any time given by the Required
Secured Debtholders, the Collateral Trustee
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shall act in accordance with instructions given to it from time to time
by the Required Lenders and (B) the Required Secured Debtholders may
not countermand, in whole or in part, a direction by the Required
Lenders instructing the Collateral Trustee to foreclose or otherwise
enforce the Collateral Trustee's liens or default remedies upon any
Collateral.
"Actionable Default" means (1) the failure to pay any payment of
principal of or interest on any Series of Secured Debt outstanding in the amount
of $50.0 million or more resulting in an event of default under the applicable
Series of Secured Debt after payment is due, including payments that are due (or
if any required offer had been timely made would be due) in respect of any
mandatory offer to purchase Parity Secured Debt resulting in an event of default
under the applicable Series of Secured Debt, (2) the failure to pay in full,
when due and payable in full (whether at maturity, upon acceleration or
otherwise), either the Existing Notes, the Credit Agreement Debt or any other
Series of Secured Debt (including the ▇▇▇▇▇▇ ▇▇▇▇ Guarantees and the 2014 Notes)
outstanding in the amount of $50.0 million or more, (3) the exercise by the
Collateral Trustee or any of its co-trustees or agents (including the Credit
Agreement Agent) of any right or power that is exercisable by it only upon
default to take sole and exclusive dominion or control over any deposits in a
deposit account, commodity contract in a commodity account or financial asset in
a securities account constituting any Shared Collateral or the delivery of any
instructions to the Collateral Trustee directing it to foreclose or otherwise
enforce, or to disburse the proceeds of enforcement of, any Lien upon any
Collateral, or (4) the occurrence of any Event of Default under the Existing
Indentures or the Credit Agreement arising from the commencement of any
bankruptcy case, receivership or other insolvency or liquidation proceeding by
or against the Company or any of its Subsidiaries or any similar default
provision at any time in effect under any indenture or agreement governing any
Series of Secured Debt.
"Actionable Default Period" means a period that commences on the date a
Notice of Actionable Default is delivered to the Collateral Trustee and
continues until the date (if ever) on which all notices of Actionable Default
are withdrawn or deemed withdrawn under the Collateral Trust Agreement.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control,"
as used with respect to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such Person, whether through the ownership of voting securities, by
agreement or otherwise; provided that a Person will be deemed to be an Affiliate
if the Company has knowledge that such Person beneficially owns 10% or more of
the Voting Stock of the Company; provided, further, that the Company shall only
be deemed to have knowledge of any Person beneficially owning 10% or more of the
Company's Voting Stock if such Person has filed a statement of beneficial
ownership pursuant to Sections 13(d) or 13(g) of the Exchange Act or has
provided written notice thereof to the Company. For purposes of this definition,
the terms "controlling," "controlled by" and "under common control with" have
correlative meanings. Notwithstanding the foregoing, no Person (other than the
Company or any Restricted Subsidiary of the Company) in whom a Securitization
Entity makes an Investment in connection with a Qualified Securitization
Transaction shall be deemed to be an Affiliate of the Company solely by reason
of such Investment.
"Agent" means the Registrar, or any Paying Agent or additional paying
agent.
"Asset Sale" means:
(1) the sale, lease, conveyance or other disposition of any
assets; provided that the sale, conveyance or other disposition of all
or substantially all of the assets of the Company and its
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Restricted Subsidiaries taken as a whole shall be governed by the
provisions of Section 4.15 and/or Section 5.01; and
(2) the issuance of Equity Interests in any of the Company's
Restricted Subsidiaries.
Notwithstanding the preceding, none of the following items will be deemed to be
an Asset Sale:
(1) any single transaction or series of related transactions
that involves assets having a Fair Market Value of less than $20.0
million;
(2) a transfer of assets between or among the Company and its
Restricted Subsidiaries;
(3) an issuance of Equity Interests by a Restricted Subsidiary
to the Company or to a Restricted Subsidiary of the Company;
(4) the sale or lease of products, services or accounts
receivable in the ordinary course of business and any sale or other
disposition of damaged, worn out or obsolete assets or assets no longer
used or useful in the Company's or any of its Restricted Subsidiaries'
business;
(5) the sale or other disposition of cash or Cash Equivalents;
(6) sales of accounts receivable, equipment and related assets
(including contract rights) of the type specified in the definition of
Qualified Securitization Transaction to a Securitization Entity;
(7) a Restricted Payment that is permitted by the provisions
of Section 4.07 hereof or a Permitted Investment;
(8) [Reserved];
(9) a disposition resulting from any condemnation or other
taking, or temporary or permanent requisition of, any property, any
interest therein or right appurtenant thereto, or any change of grade
affecting any property, in each case, as the result of the exercise of
any right of condemnation or eminent domain, including any sale or
other transfer to a Governmental Authority in lieu of, or in
anticipation of, any of the foregoing events;
(10)the disposition by Reliant Energy Wholesale Generation,
LLC of the substation at the Bighorn generating facility (and the
related real property assets) to be conveyed to Nevada Power Company
pursuant to the terms and provisions of that certain EPC Agreement
dated December 18, 2002 between Reliant Energy Wholesale Generation,
LLC (as successor by merger to Reliant Energy Bighorn, LLC) and Nevada
Power Company; and
(11) a disposition of assets (other than any assets securing
Secured Debt) in connection with a foreclosure, transfer or deed in
lieu of foreclosure or other exercise of remedial action.
"Attributable Debt" in respect of a sale and leaseback transaction
means, at the time of determination, the present value of the obligation of the
lessee for net rental payments during the remaining term of the lease included
in such sale and leaseback transaction including any period for which such lease
has been extended or may, at the option of the lessor, be extended. Such present
value shall be calculated using a discount rate equal to the rate of interest
implicit in such transaction, determined in accordance with GAAP; provided,
however, that if such sale and leaseback transaction
4
results in a Capital Lease Obligation, the amount of Indebtedness represented
thereby will be determined in accordance with the definition of "Capital Lease
Obligation."
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal or
state law for the relief of debtors.
"Base Indenture" means the senior indenture, dated as of December 22,
2004, between the Company and the trustee thereunder, as amended, supplemented
or otherwise modified from time to time in accordance with the terms thereof,
governing the 2014 Notes.
"Beneficial Owner" has the meaning assigned to such term in Rule 13d-3
and Rule 13d-5 under the Exchange Act. The terms "Beneficially Owns" and
"Beneficially Owned" have a corresponding meaning.
"Board of Directors" means:
(1) with respect to a corporation, the board of directors of
the corporation or any committee thereof duly authorized to act on
behalf of such board;
(2) with respect to a partnership, the Board of Directors of
the general partner of the partnership;
(3) with respect to a limited liability company, the managing
member or members or any controlling committee of managing members or
Board of Directors thereof; and
(4) with respect to any other Person, the board or committee
of such Person serving a similar function.
"Bonds" means the Series 2001A Bonds, the Series 2002A Bonds, the
Series 2002B Bonds, the Series 2003A Bonds and the Series 2004A Bonds,
collectively.
"Business Day" means any day other than a Legal Holiday.
"Capital Lease Obligation" means, at the time any determination is to
be made, the amount of the liability in respect of a capital lease that would at
that time be required to be capitalized on a balance sheet in accordance with
GAAP, and the Stated Maturity thereof shall be the date of the last payment of
rent or any other amount due under such lease prior to the first date upon which
such lease may be prepaid by the lessee without payment of a penalty.
"Capital Stock" means:
(1) in the case of a corporation, corporate stock;
(2) in the case of an association or business entity, any and
all shares, interests, participations, rights or other equivalents
(however designated) of corporate stock;
(3) in the case of a partnership or limited liability company,
partnership interests (whether general or limited) or membership
interests; and
(4) any other interest or participation that confers on a
Person the right to receive a share of the profits and losses of, or
distributions of assets of, the issuing Person, but excluding from all
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of the foregoing any debt securities convertible into Capital Stock,
whether or not such debt securities include any right of participation
with Capital Stock.
"Cash Collateral Account" means a deposit account at all times under
the sole dominion and control of the Collateral Trustee (acting on its own or
through its agent, sub-agent, or co-trustee including Bank of America, N.A., as
collateral agent under the Credit Agreement or a successor collateral agent
under the Credit Agreement) that is being held by the Collateral Trustee or such
agent, sub-agent or co-trustee for the benefit of the holders of Secured Debt.
"Cash Equivalents" means:
(1) United States dollars;
(2) securities issued or directly and fully guaranteed or
insured by the United States government or any agency or
instrumentality of the United States government (provided that the full
faith and credit of the United States is pledged in support of those
securities) having maturities of not more than one year from the date
of acquisition;
(3) deposit accounts with any lender party to the Credit
Agreement, Mellon Bank N.A., ▇▇▇▇▇ Fargo Bank, N.A., Wachovia Bank,
National Association, or any other bank that has a long-term debt
rating at the time of investment of A+ or better by S&P and A1 or
better by Moody's (an "Approved Bank");
(4) time deposits, certificates of deposit, acceptances or
prime commercial paper issued by an Approved Bank at the time acquired
or issued (as applicable and whichever is latest), in each case, having
a maturity of not more than one year from the date of acquisition;
(5) repurchase obligations for underlying securities of the
types described in clause (2) entered into with an Approved Bank at the
time acquired, issued or entered into (as applicable and whichever is
latest), in each case, having a maturity of not more than one year from
the date of acquisition and secured by securities of the type described
in clause (2), the market value of which (including accrued interest)
is not less than the amount of the applicable repurchase agreement;
(6) commercial paper with a rating at the time of investment
of A-1 by S&P and P-1 by Moody's and, in each case, maturing within one
year after the date of acquisition; and
(7) money market funds which invest primarily in Cash
Equivalents of the kinds described in clauses (1) through (6) of this
definition.
"CenterPoint" means CenterPoint Energy, Inc., a Texas corporation and
its successors.
"Change of Control" means the occurrence of any of the following:
(1) the direct or indirect sale, transfer, conveyance or other
disposition (other than by way of merger or consolidation), in one or a
series of related transactions, of all or substantially all of the
properties or assets of the Company and its Subsidiaries taken as a
whole to any "person" (as that term is used in Section 13(d) of the
Exchange Act, but excluding any employee benefit plan of the Company or
any of its Restricted Subsidiaries, and any person or entity acting in
its capacity as trustee, agent or other fiduciary or administrator of
any such plan);
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(2) the adoption of a plan relating to the liquidation or
dissolution of the Company other than (A) the consolidation with,
merger into or transfer of all or part of the properties and assets of
any Restricted Subsidiary of the Company to the Company or any other
Restricted Subsidiary of the Company and (B) the merger of the Company
with an Affiliate solely for the purpose of reincorporating the Company
or reforming the Company in another jurisdiction;
(3) the consummation of any transaction (including, without
limitation, any merger or consolidation) the result of which is that
any "person" (as defined above) becomes the Beneficial Owner, directly
or indirectly, of more than 50% of the Voting Stock of the Company,
measured by voting power rather than number of shares;
(4) the first day on which a majority of the members of the
Board of Directors of the Company are not Continuing Directors; or
(5) the Company consolidates with, or merges with or into, any
Person, or any Person consolidates with, or merges with or into, the
Company, in any such event pursuant to a transaction in which any of
the outstanding Voting Stock of the Company or such other Person is
converted into or exchanged for cash, securities or other property,
other than any such transaction where the Voting Stock of the Company
outstanding immediately prior to such transaction is converted into or
exchanged for Voting Stock (other than Disqualified Stock) of the
surviving or transferee Person constituting a majority of the
outstanding shares of such Voting Stock of such surviving or transferee
Person (immediately after giving effect to such issuance);
provided, however, that so long as the 2014 Notes and the Existing Notes are
not, at such time, outstanding, no such event shall constitute a Change of
Control if, prior to or within 30 days after the occurrence of such event, S&P
(if S&P is then rating the Bonds) and Moody's (if ▇▇▇▇▇'▇ is then rating the
Bonds) confirm that their respective ratings of the Bonds in existence prior to
the announcement of such event would not be downgraded as a result of such event
and S&P and Moody's have not, in fact, downgraded such ratings.
"Choctaw Facility" means the nominally rated 822 MW combined cycle
facility and related assets owned by Reliant Energy Wholesale Generation, LLC
and located, in French Camp, Choctaw County, Mississippi.
"Collateral" means the Shared Collateral and the Separate Collateral.
"Collateral Trust Agreement" means the Collateral Trust Agreement dated
July 1, 2003, executed and delivered by the Company, the Subsidiary Guarantors
and the Collateral Trustee, as amended, modified, renewed, restated or replaced,
in whole or in part, from time to time in accordance with its terms.
"Collateral Trustee" means Wachovia Bank, National Association or one
of its affiliates, in its capacity as Collateral Trustee under the Collateral
Trust Agreement, together with its successors in such capacity.
"Company" means Reliant Energy, Inc., and any and all successors
thereto.
"Consolidated Cash Flow" means, with respect to any specified Person
for any period, the Consolidated Net Income of such Person for such period plus,
without duplication:
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(1) an amount equal to any extraordinary loss plus any net
loss realized by such Person or any of its Restricted Subsidiaries in
connection with an Asset Sale or the disposition of any securities by
such Person or any of its Restricted Subsidiaries or the extinguishment
of any Indebtedness of such Person or any of its Restricted
Subsidiaries, to the extent such losses were deducted in computing such
Consolidated Net Income; plus
(2) provision for taxes based on income or profits of such
Person and its Restricted Subsidiaries for such period, to the extent
that such provision for taxes was deducted in computing such
Consolidated Net Income; plus
(3) the Fixed Charges of such Person and its Restricted
Subsidiaries for such period, to the extent that such Fixed Charges
were deducted in computing such Consolidated Net Income; plus
(4) depreciation, depletion, amortization (including
amortization of intangibles) and other non-cash expenses (excluding any
such non-cash expense to the extent that it represents an accrual of or
reserve for cash expenses in any future period) of such Person and its
Restricted Subsidiaries for such period to the extent that such
depreciation, amortization and other non-cash expenses were deducted in
computing such Consolidated Net Income; plus
(5) accruals for payments to CenterPoint as required under
Section 39.262 of the Texas Public Utility Regulatory Act to the extent
by which the Company's affiliated retail electric provider's price to
beat for providing retail electric service to residential and small
commercial customers in CenterPoint's Houston service territory during
2003 exceeds the market price of electricity, to the extent such
accruals were deducted in computing such Consolidated Net Income; plus
(6) charges associated with fees and expenses, including
professional fees, incurred prior to the Issue Date in connection with
the modification of or preparation in connection therewith of
Indebtedness of the Company that occurred prior to the Issue Date, to
the extent such charges were deducted in computing such Consolidated
Net Income; plus
(7) any fees payable pursuant to the Credit Agreement for
failure to reduce Indebtedness below certain levels, to the extent such
fees were deducted in computing such Consolidated Net Income; plus
(8) the upfront costs of any Hedging Obligations paid prior to
the Issue Date to the extent such costs were deducted in computing
Consolidated Net Income; plus
(9) cash received during such period related to ▇▇▇▇-to-market
activities; less
(10)cash paid during such period related to ▇▇▇▇-to-market
activities;
provided, however, that for purposes of this definition, any ▇▇▇▇-to-market
earnings or losses shall be excluded from the calculation of Consolidated Cash
Flow to the extent taken into account in calculating Consolidated Net Income for
such period.
"Consolidated Net Income" means, with respect to any specified Person
for any period, the aggregate of the Net Income of such Person and its
Restricted Subsidiaries for such period, on a consolidated basis, determined in
accordance with GAAP; provided that:
8
(1) the Net Income of any Person that is not a Restricted
Subsidiary or that is accounted for by the equity method of accounting
shall be included only to the extent of the amount of dividends or
similar distributions (including pursuant to other intercompany
payments) paid in cash to the specified Person or a Restricted
Subsidiary of the Person;
(2) for purposes of the provisions of Section 4.07 only, the
Net Income of any Restricted Subsidiary shall be excluded to the extent
that the declaration or payment of dividends or similar distributions
by that Restricted Subsidiary of that Net Income is not at the date of
determination permitted without any prior governmental approval (that
has not been obtained) or, directly or indirectly, by operation of the
terms of its charter or any agreement, instrument, judgment, decree,
order, statute, rule or governmental regulation applicable to that
Restricted Subsidiary or its stockholders;
(3) the cumulative effect of a change in accounting principles
shall be excluded; and
(4) any non-cash impairment charges incurred subsequent to the
Issue Date shall be excluded.
"Consolidated Net Worth" means, with respect to any specified Person as
of any date, the assets of such Person less the liabilities of such Person all
as determined on a consolidated basis in accordance with GAAP.
"Consolidated Senior Debt" means, as of any date, the sum, without
duplication, of:
(1) the amount that would be shown on a consolidated balance
sheet of the Company and its Restricted Subsidiaries prepared as of
such date in accordance with GAAP as the liability in respect of (A)
all Secured Debt, (B) all other Indebtedness of the Company or any
Subsidiary Guarantor that is secured by a Lien on any of their
properties and (C) all Indebtedness of any Excluded Subsidiary (other
than intercompany Indebtedness between or among the Company and any of
its Restricted Subsidiaries); provided, however, that Hedging
Obligations will be excluded for purposes of this definition; and
(2) to the extent not required to be reflected as a balance
sheet liability, the aggregate maximum possible contingent
reimbursement obligations of the Company and its Restricted
Subsidiaries on such day in respect of all letters of credit and other
extensions of credit that are then outstanding under any Credit
Facility, secured by a Lien upon any of their properties, or incurred
or Guaranteed by any Excluded Subsidiary.
"Consolidated Senior Leverage Ratio" means, as of any date, the ratio
of (1) the Consolidated Senior Debt outstanding on such date after giving effect
to all incurrences and repayments of Indebtedness made or to be made on such
date to (2) the Consolidated Cash Flow of the Company for the most recently
ended four full fiscal quarters for which internal financial statements are
available.
In addition, for purposes of calculating the Consolidated Senior Leverage
Ratio:
(1) acquisitions that have been made by the Company or any of
its Restricted Subsidiaries, including through mergers or
consolidations, or any Person or any of its Restricted Subsidiaries
acquired by the Company or any of its Restricted Subsidiaries, and
including any related financing transactions and including increases in
ownership of Restricted Subsidiaries, during the four-quarter reference
period or subsequent to such reference period and on or prior to the
date on which the event for which the calculation of the Consolidated
Senior Leverage Ratio
9
is made ("Leverage Ratio Calculation Date") will be given pro forma
effect in accordance with Regulation S-X under the Securities Act as if
they had occurred on the first day of the four-quarter reference
period; and
(2) the Consolidated Cash Flow attributable to discontinued
operations, as determined in accordance with GAAP, and operations or
businesses (and ownership interests therein) disposed of prior to the
Leverage Ratio Calculation Date, shall be excluded.
"Continuing Directors" means, as of any date of determination, any
member of the Board of Directors of the Company who:
(1) was a member of such Board of Directors on the Issue Date;
or
(2) was nominated for election or elected to such Board of
Directors with the approval of a majority of the Continuing Directors
who were members of such Board of Directors at the time of such
nomination or election.
"Credit Agreement" means the Second Amended and Restated Credit
Agreement, dated as of December 22, 2004, among the Company, the other Loan
Parties named therein, the Lenders named therein, Bank of America, N.A., as
Administrative Agent, Collateral Agent and as an L/C Issuer, Barclays Bank, PLC
and Deutsche Bank Securities Inc., as Co-Syndication Agents, Barclays Bank, PLC
and Deutsche Bank AG, New York Branch, as L/C Issuers, ▇▇▇▇▇▇▇ Sachs Credit
Partners, L.P. and ▇▇▇▇▇▇▇ ▇▇▇▇▇ Capital Corporation, as Co-Documentation
Agents, Deutsche Bank Securities Inc., Barclays Capital and Banc of America
Securities LLC, as Joint Lead Arrangers for the Revolving Credit Facility,
Deutsche Bank Securities Inc., Barclays Capital, Banc of America Securities LLC,
▇▇▇▇▇▇▇ Sachs Credit Partners, L.P. and ▇▇▇▇▇▇▇ ▇▇▇▇▇ Capital Corporation, as
Joint Bookrunners for the Revolving Credit Facility, Deutsche Bank Securities
Inc., Barclays Capital and Banc of America Securities LLC, as Joint Lead
Arrangers for the Term Loan Facility, and Deutsche Bank Securities Inc.,
Barclays Capital, Banc of America Securities LLC, ▇▇▇▇▇▇▇ Sachs Credit Partners,
L.P. and ▇▇▇▇▇▇▇ ▇▇▇▇▇ Capital Corporation, as Joint Bookrunners for the Term
Loan Facility, providing for up to $1.3 billion of term borrowings and $1.7
billion of revolving credit borrowings, $1.35 billion of which is available for
the issuance of letters of credit, including any related notes, guarantees,
collateral documents, instruments and agreements executed in connection
therewith, as the same may be amended, modified, restated, renewed, extended,
refinanced, or replaced, in each case, in whole or in part; provided, that a
refinancing or replacement of any such agreement will only be deemed a "Credit
Agreement" if so designated by the Company.
"Credit Agreement Agent" means Bank of America, N.A., as administrative
agent and collateral agent under the Credit Agreement, together with any
successor or replacement agent in such capacity.
"Credit Agreement Debt" means Indebtedness of the Company (and
guarantees thereof by any Subsidiary Guarantor) under the Credit Agreement.
"Credit Agreement Documents" means the Credit Agreement and the
Security Documents.
"Credit Agreement Obligations" means Credit Agreement Debt and all
Obligations in respect thereof under the Credit Agreement Documents.
"Credit Facility" or "Credit Facilities" means, one or more debt
facilities (including, without limitation, the Credit Agreement) or commercial
paper facilities, in each case, with banks or other institutional lenders
(including PEDFA) providing for revolving credit loans, term loans, receivables
financing (including through the sale of receivables to such lenders or to
special purpose entities formed
10
to borrow from such lenders against such receivables) or letters of credit, in
each case, as amended, restated, modified, renewed, refunded, replaced or
refinanced (including by means of sales of debt securities to institutional
investors), in each case, in whole or in part from time to time.
"Default" means any event that is, or with the passage of time or the
giving of notice or both would be, an Event of Default.
"Description of the Guarantees" means the section titled "The
Guarantees" in the Reoffering Circular and Official Statement, dated December
15, 2004, related to the issuance or the reoffering and sale, as applicable, of
the Bonds.
"Disqualified Stock" means any Capital Stock that, by its terms (or by
the terms of any security into which it is convertible, or for which it is
exchangeable, in each case, at the option of the holder of the Capital Stock),
or upon the happening of any event, matures or is mandatorily redeemable,
pursuant to a sinking fund obligation or otherwise, or redeemable at the option
of the holder of the Capital Stock, in whole or in part, on or prior to the date
that is 91 days after the earlier of (i) the date on which the Series 2002A
Bonds mature or (ii) the latest date on which a long-term interest rate period
applicable to any Series 2002A Bonds ends. Notwithstanding the preceding
sentence, any Capital Stock that would constitute Disqualified Stock solely
because the holders of the Capital Stock have the right to require the Company
to repurchase such Capital Stock upon the occurrence of a change of control or
an asset sale shall not constitute Disqualified Stock if the terms of such
Capital Stock provide that the Company may not repurchase or redeem any such
Capital Stock pursuant to such provisions unless such repurchase or redemption
complies with the provisions of Section 4.07 hereof. The amount of Disqualified
Stock deemed to be outstanding at any time for purposes of this Guarantee
Agreement shall be equal to the maximum amount that the Company and its
Restricted Subsidiaries may become obligated to pay upon the maturity of, or
pursuant to any mandatory redemption provisions of, such Disqualified Stock,
exclusive of accrued dividends.
"Domestic Subsidiary" means any Restricted Subsidiary of the Company
that was formed under the laws of the United States or any state of the United
States or the District of Columbia or that guarantees or otherwise provides
direct credit support for any Indebtedness of the Company.
"Environmental Claim" means any investigation, notice, notice of
violation, claim, action, suit, proceeding, demand, abatement order or other
order or directive (conditional or otherwise), by any Governmental Authority or
any other Person, arising (i) pursuant to or in connection with any actual or
alleged violation of any Environmental Law; (ii) in connection with any
Hazardous Material or any actual or alleged Hazardous Materials Activity; or
(iii) in connection with any actual or alleged damage, injury, threat or harm to
health, safety, natural resources or the environment.
"Environmental Laws" means any and all current or future foreign or
domestic, federal or state (or any subdivision of either of them), statutes,
ordinances, orders, rules, regulations, judgments, Governmental Authorizations,
or any other requirements of Governmental Authorities relating to (i)
environmental matters, including those relating to any Hazardous Materials
Activity; (ii) the generation, use, storage, transportation or disposal of
Hazardous Materials; or (iii) occupational safety and health, industrial
hygiene, land use or the protection of human, plant or animal health or welfare,
in any manner applicable to the Company or any of its Restricted Subsidiaries or
any Facility.
"Equally and Ratably" means, in reference to sharing of any Liens on
Shared Collateral or proceeds thereof as among the holders of Note Obligations,
the holders of Credit Agreement Obligations and the holders of other Parity
Secured Obligations in respect of any other Series of Secured Debt, after
allowing for the payment priorities in the Order of Application, that such Liens
or proceeds:
11
(1) shall be allocated and distributed to the trustees for
account of the holders of the 2014 Notes and the Existing Notes, to the
Credit Agreement Agent for account of the holders of Credit Agreement
Debt and to the Secured Debt Representative for each other Series of
Secured Debt for account of the holders of such Series of Secured Debt,
ratably in proportion to the principal, interest, fees and premium (if
any) outstanding, when the allocation or distribution is made, on the
2014 Notes, the Existing Notes, Credit Agreement Debt (including
Hedging Obligations and amounts payable to a lender in connection with
a bank account or any other banking services, in each case, that are
required by the Credit Agreement to be secured on an equal and ratable
basis with the Credit Agreement Debt) and all other Series of Secured
Debt (allocated proportionately to the Secured Debt Representative for
each other Series of Secured Debt if there is more than one),
respectively; and thereafter
(2) shall be allocated and distributed (if any remain after
payment in full of all of the principal, interest, fees and premium (if
any) outstanding on the 2014 Notes, the Existing Notes, Credit
Agreement Debt, including the Hedging Obligations and other amounts
payable to a lender referred to in clause (1), and each other Series of
Secured Debt) to the trustees for account of the holders of any
remaining Note Obligations, to the Credit Agreement Agent for account
of the holders of any remaining Credit Agreement Obligations and to the
Secured Debt Representative for each other Series of Secured Debt for
account of the holders of any remaining Parity Secured Obligations in
respect of such Series of Secured Debt, ratably in proportion to the
aggregate unpaid amount of such remaining Note Obligations, Credit
Agreement Obligations and other remaining Parity Secured Obligations,
respectively, that are due and demanded prior to the date such
distribution is made.
For this purpose:
(1) Unfunded commitments to extend credit shall not be counted
as outstanding debt;
(2) Obligations of the Company or any Subsidiary Guarantor in
respect of outstanding letters of credit, bank guarantees, bankers'
acceptances or other similar instruments shall be counted as
outstanding debt (whether or not contingent), except that if any such
instrument thereafter expires without being funded, an equitable
adjustment shall be made in any future distribution so that the
aggregate amount distributed is distributed Equally and Ratably as if
such instrument had never been outstanding (but all distributions shall
be final and non-refundable when made);
(3) During the pendency of any Actionable Default, and subject
to the Order of Application, if any payment or distribution is made in
cash to holders of Credit Agreement Obligations or any other holders of
Parity Secured Obligations from or on account of Separate Collateral by
reason of enforcement of Liens or realization in a bankruptcy case,
receivership or other insolvency or liquidation proceeding, then any
concurrent or subsequent payment or distribution that is to be made in
cash to such holders from or on account of Shared Collateral by reason
of any such enforcement or realization shall be reduced, and any
concurrent or subsequent payment or distribution that is to be made in
cash to the remaining holders of Parity Secured Obligations from or on
account of Shared Collateral by reason of any such enforcement or
realization shall be increased, to the extent necessary to cause the
aggregate amount of all payments and distributions made in cash to all
holders of Parity Secured Obligations (whether made from or on account
of Separate Collateral or from or on account of Shared Collateral) by
reason of any such enforcement or realization to be distributed Equally
and Ratably as fully as if the Separate Collateral had been Shared
Collateral; and
12
(4) All amounts apportioned and distributed to the Credit
Agreement Agent or the Secured Debt Representative for any other Series
of Secured Debt may be allocated, apportioned and distributed by it in
accordance with the applicable provisions of the Credit Agreement or
the indenture, guarantee agreements or other agreement governing such
other Series of Secured Debt, including to give effect to any payment
priorities provided for therein as among the holders of Obligations
outstanding thereunder.
Notwithstanding the foregoing, in reference to sharing of any Liens on
the ▇▇▇▇▇▇ Collateral or proceeds thereof as among the holders of the Bonds and
any other Permitted Secured PEDFA Bond Indebtedness after the occurrence of the
▇▇▇▇▇▇ Security Event, "equally and ratably" means, after allowing for the
payment priorities in the ▇▇▇▇▇▇ Order of Application, that such Liens or
proceeds:
(1) shall be allocated and distributed first to the Trustee
for account of the holders of the Series 2002A Bonds and to the ▇▇▇▇▇▇
Secured Debt Representative for each other series of Permitted Secured
PEDFA Bond Indebtedness for account of the holders of such series of
Permitted Secured PEDFA Bond Indebtedness, ratably in proportion to the
principal, interest, fees and premium (if any) outstanding, when the
allocation or distribution is made, on the Bonds and all other series
of Permitted Secured PEDFA Bond Indebtedness (allocated proportionately
to the ▇▇▇▇▇▇ Secured Debt Representative for each other series of
Permitted Secured PEDFA Bond Indebtedness if there is more than one),
respectively; and thereafter
(2) shall be allocated and distributed thereafter (if any
remain after payment in full of all of the principal, interest, fees
and premium (if any) outstanding on the Bonds and each other series of
Permitted Secured PEDFA Bond Indebtedness) to the Trustee for account
of the holders of any remaining Bonds and to the ▇▇▇▇▇▇ Secured Debt
Representative for each other series of Permitted Secured PEDFA Bond
Indebtedness for account of the holders of any remaining series of
Permitted Secured PEDFA Bond Indebtedness, ratably in proportion to the
aggregate unpaid amount of such remaining Bonds and other remaining
series of Permitted Secured PEDFA Bond Indebtedness, respectively, that
are due and demanded prior to the date such distribution is made.
For this purpose, all amounts apportioned and distributed to the
Trustee or the ▇▇▇▇▇▇ Secured Debt Representative for any other series of
Permitted Secured PEDFA Bond Indebtedness may be allocated, apportioned and
distributed by it in accordance with the applicable provisions of the
indentures, guarantee agreements or other agreement governing such Bonds and
other series of Permitted Secured PEDFA Bond Indebtedness, including to give
effect to any payment priorities provided for therein as among the holders of
Obligations outstanding thereunder.
"Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Excluded Orion Power Subsidiaries" means Orion Power Capital LLC and
each of its Subsidiaries for so long as each such Person has not guaranteed or
otherwise provided direct credit support for any other Indebtedness of the
Company or any of its other Restricted Subsidiaries.
"Excluded Property" consists of:
(1) [Reserved];
13
(2) Capital Stock of Subsidiaries and intercompany notes that satisfy
the requirements of the defined term "Excluded Securities," provided that
property that is received by the Company or any of its Subsidiaries as proceeds
from the sale, exchange or other disposition of any Excluded Securities and
other proceeds of Excluded Securities (except proceeds from the foreclosure,
collection or other enforcement of Liens upon Excluded Securities) will not
constitute Excluded Property and will be part of the Shared Collateral, to the
extent such property otherwise constitutes Shared Collateral under the Security
Documents, unless the proceeds are themselves Excluded Securities; and
(3) Separate Cash Deposits.
"Excluded Securities" means debt or equity securities issued by any
Subsidiary of the Company other than Reliant Energy Retail Holdings, LLC, Orion
Power Holdings, Inc. and REMA (or their successors).
"Excluded Subsidiaries" means each of the Excluded Orion Power
Subsidiaries, the Miscellaneous Orion Subsidiaries, Reliant Energy Mid-Atlantic
Power Holdings, LLC and its Subsidiaries, Reliant Energy Channelview, L.P.,
Reliant Energy Channelview (Delaware) LLC, Reliant Energy Channelview (Texas)
LLC, Reliant Energy Services Channelview LLC, Reliant Energy Services Canada,
Ltd., RE Retail Receivables, LLC, CapTrades GP, LLC and CapTrades, LP, in each
case, only if and for as long as it has not guaranteed or otherwise provided
direct credit support for any Indebtedness of the Company or any of its other
Restricted Subsidiaries.
"Existing 2010 Notes" means the $550.0 million in aggregate principal
amount of the Company's 9.25% Senior Secured Notes due 2010, issued pursuant to
the Existing 2010 Notes Indenture on July 1, 2003, and any related exchange
notes.
"Existing 2010 Notes Indenture" means the indenture between the
Company, the Subsidiary Guarantors and the Wilmington Trust Company, dated as of
July 1, 2003, governing the Existing 2010 Notes.
"Existing 2013 Notes" means the $550.0 million in aggregate principal
amount of the Company's 9.50% Senior Secured Notes due 2013, issued pursuant to
the Existing 2013 Notes Indenture on July 1, 2003, and any related exchange
notes.
"Existing 2013 Notes Indenture" means the indenture between the
Company, the Subsidiary Guarantors and the Wilmington Trust Company, dated as of
July 1, 2003, governing the Existing 2013 Notes.
"Existing Convertible Notes" means the Company's 5.00% Convertible
Senior Subordinated Notes due 2010 in the aggregate principal amount of up to
$275,000,000 issued pursuant to the Existing Convertible Notes Indenture on June
24, 2003.
"Existing Convertible Notes Indenture" means that certain indenture,
dated as of June 24, 2003, by and between the Company and Wilmington Trust
Company, as trustee, governing the Existing Convertible Notes.
"Existing Indebtedness" means Indebtedness of the Company and its
Restricted Subsidiaries in existence on the Issue Date, until such amounts are
repaid; provided, however, that in no event will any Indebtedness that qualifies
for categorization as Permitted Debt under clauses (1) through (5) of the
definition of Permitted Debt be considered to be Existing Indebtedness.
14
"Existing Indentures" means the Existing 2010 Notes Indenture and the
Existing 2013 Notes Indenture.
"Existing Notes" means the Existing 2010 Notes and the Existing 2013
Notes.
"Facility" means any real property (including all buildings, fixtures
or other improvements located thereon) now, hereafter or heretofore owned,
leased, operated or used by the Company or any of its Restricted Subsidiaries or
any of their respective predecessors or Affiliates.
"Fair Market Value" means the value that would be paid by a willing
buyer to a willing seller in a transaction not involving distress or necessity
of either party, determined in good faith by the chief financial officer or
Board of Directors of the Company (unless otherwise provided in this Guarantee
Agreement).
"First Supplemental Indenture" means the First Supplemental Indenture,
dated as of the Issue Date, by and among the Company, the Subsidiary Guarantors
and the trustee thereunder, governing the 2014 Notes.
"Fixed Charge Coverage Ratio" means with respect to any specified
Person for any period, the ratio of the Consolidated Cash Flow of such Person
and its Restricted Subsidiaries for such period to the Fixed Charges of such
Person for such period. In the event that the specified Person or any of its
Restricted Subsidiaries incurs, assumes, guarantees, repays, repurchases,
redeems, defeases or otherwise discharges any Indebtedness (other than ordinary
working capital borrowings) or issues, repurchases or redeems preferred stock
subsequent to the commencement of the period for which the Fixed Charge Coverage
Ratio is being calculated and on or prior to the date on which the event for
which the calculation of the Fixed Charge Coverage Ratio is made (the
"Calculation Date"), then the Fixed Charge Coverage Ratio shall be calculated
giving pro forma effect to such incurrence, assumption, guarantee, repayment,
repurchase, redemption, defeasance or other discharge of Indebtedness, or such
issuance, repurchase or redemption of preferred stock, and the use of the
proceeds therefrom as if the same had occurred at the beginning of the
applicable four-quarter reference period.
In addition, for purposes of calculating the Fixed Charge Coverage Ratio:
(1) acquisitions that have been made by the specified Person
or any of its Restricted Subsidiaries, including through mergers or
consolidations, or any Person or any of its Restricted Subsidiaries
acquired by the specified Person or any of its Restricted Subsidiaries,
and including any related financing transactions and including
increases in ownership of Restricted Subsidiaries, during the
four-quarter reference period or subsequent to such reference period
and on or prior to the Calculation Date shall be given pro forma effect
in accordance with Regulation S-X under the Securities Act as if they
had occurred on the first day of the four-quarter reference period and
Consolidated Cash Flow for such reference period will be calculated on
a pro forma basis;
(2) the Consolidated Cash Flow attributable to discontinued
operations, as determined in accordance with GAAP, and operations or
businesses (and ownership interests therein) disposed of prior to the
Calculation Date, shall be excluded;
(3) the Fixed Charges attributable to discontinued operations,
as determined in accordance with GAAP, and operations or businesses
(and ownership interests therein) disposed of prior to the Calculation
Date, shall be excluded, but only to the extent that the obligations
15
giving rise to such Fixed Charges will not be obligations of the
specified Person or any of its Restricted Subsidiaries following the
Calculation Date; and
(4) if any Indebtedness that is being incurred on the
Calculation Date bears a floating rate of interest, the interest
expense on such Indebtedness shall be calculated as if the rate in
effect on the Calculation Date had been the applicable rate for the
entire period (taking into account any Hedging Obligations applicable
to such Indebtedness, but only for such period of time as equals the
then remaining term of such Hedging Obligations as of the Calculation
Date).
"Fixed Charges" means, with respect to any specified Person for any
period, the sum, without duplication, of:
(1) the consolidated interest expense of such Person and its
Restricted Subsidiaries for such period, whether paid or accrued
determined in accordance with GAAP, including, without limitation,
amortization of debt issuance costs incurred on or after the Issue Date
(but excluding (A) amortization of debt issuance costs incurred prior
to the Issue Date and (B) charges associated with fees and expenses,
including professional fees, incurred prior to the Issue Date in
connection with the modification of or preparation in connection
therewith of Indebtedness of the Company that occurred prior to the
Issue Date) and original issue discount, non-cash interest payments,
the interest component of any deferred payment obligations, the
interest component of all payments associated with Capital Lease
Obligations, imputed interest with respect to Attributable Debt created
after the Issue Date, commissions, discounts and other fees and charges
incurred in respect of letter of credit or bankers' acceptance
financings, and net of the effect of all payments made or received
pursuant to Hedging Obligations with respect to interest rates and net
of interest income; plus
(2) the consolidated interest of such Person and its
Restricted Subsidiaries that was capitalized during such period; plus
(3) any interest accruing on Indebtedness of another Person
that is Guaranteed by such Person or one of its Restricted Subsidiaries
or secured by a Lien on assets of such Person or one of its Restricted
Subsidiaries, whether or not such Guarantee or Lien is called upon;
plus
(4) the product of (A) all dividends, whether paid or accrued
and whether or not in cash, on any series of preferred stock of such
Person or any of its Restricted Subsidiaries, other than dividends on
Equity Interests payable solely in Equity Interests of the Company
(other than Disqualified Stock) or to the Company or a Restricted
Subsidiary of the Company, times (B) a fraction, the numerator of which
is one and the denominator of which is one minus the then current
combined federal, state and local statutory tax rate of such Person,
expressed as a decimal, in each case, on a consolidated basis and in
accordance with GAAP; minus
(5) any charges associated with upfront payments with respect
to interest rate ▇▇▇▇▇▇ made prior to the Issue Date.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect from time to time.
16
"Governmental Authority" means the government of the United States of
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of, or pertaining to,
government.
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America, and the payment for which the
United States pledges its full faith and credit.
"Guarantee" means a guarantee other than by endorsement of negotiable
instruments for collection in the ordinary course of business, direct or
indirect, in any manner including, without limitation, by way of a pledge of
assets or through letters of credit or reimbursement agreements in respect
thereof, of all or any part of any Indebtedness (whether arising by virtue of
partnership arrangements, or by agreements to keep-well, to purchase assets,
goods, securities or services, to take or pay or to maintain financial statement
conditions or otherwise).
"Guarantee Agreement" means this Guarantee Agreement, as amended,
supplemented or otherwise modified from time to time in accordance with the
terms hereof.
"Guarantee Obligations" means the ▇▇▇▇▇▇ ▇▇▇▇ Guarantees and all
Obligations in respect thereof under this Guarantee Agreement, the 2001A
Guarantee Agreement, the 2002B Guarantee Agreement, the 2003A Guarantee
Agreement, the 2004A Guarantee Agreement and the Security Documents and, after
the occurrence of the ▇▇▇▇▇▇ Security Event, the ▇▇▇▇▇▇ Security Documents.
"Hazardous Materials" means any chemical, material or substance,
exposure to which is prohibited, limited or regulated by any Governmental
Authority or which may or could pose a hazard to the health and safety of the
owners, occupants or any Persons in the vicinity of any Facility or to the
indoor or outdoor environment.
"Hazardous Materials Activity" means any past, current, proposed or
threatened activity, event or occurrence involving any Hazardous Materials,
including the use, manufacture, possession, storage, holding, presence,
existence, location, release, threatened release, discharge, placement,
generation, transportation, processing, construction, treatment, abatement,
removal, remediation, disposal, disposition or handling of any Hazardous
Materials, and any corrective action or response action with respect to any of
the foregoing.
"Hedging Obligations" means, with respect to any specified Person, the
net obligations of such Person under:
(1) interest rate swap agreements (whether from fixed to
floating or from floating to fixed), interest rate cap agreements and
interest rate collar agreements;
(2) other agreements or arrangements designed to manage
interest rate risk; and
(3) other agreements or arrangements designed to protect such
Person against fluctuations in currency exchange rates.
"Holder" means a Person in whose name a Series 2002A Bond is
registered.
"Indebtedness" means, with respect to any specified Person, any
indebtedness of such Person (excluding accrued expenses or trade payables),
whether or not contingent (without duplication):
17
(1) in respect of borrowed money;
(2) evidenced by bonds, notes, debentures or similar
instruments or letters of credit or reimbursement agreements in respect
thereof;
(3) in respect of banker's acceptances;
(4) representing Capital Lease Obligations or Attributable
Debt in respect of sale and leaseback transactions;
(5) representing the balance deferred and unpaid of the
purchase price of any property or services due more than six months
after such property is acquired or such services are completed; or
(6) representing any Hedging Obligations,
if and to the extent any of the preceding items (other than letters of credit,
Attributable Debt and Hedging Obligations) would appear as a liability upon a
balance sheet of the specified Person prepared in accordance with GAAP. In
addition, the term "Indebtedness" includes all Indebtedness of others secured by
a Lien on any asset of the specified Person (whether or not such Indebtedness is
assumed by the specified Person) and, to the extent not otherwise included, the
Guarantee by the specified Person of any Indebtedness of any other Person. If
obligations of a Securitization Entity are Indebtedness, for the purposes of
calculating the amount of Indebtedness of a Securitization Entity outstanding as
of any date, the face or notional amount of any interest in receivables or
equipment that is outstanding as of such date shall be deemed to be Indebtedness
but any such interests held by Affiliates of such Securitization Entity shall be
excluded for purposes of such calculation.
The amount of any Indebtedness outstanding as of any date will be:
(1) the accreted value of the Indebtedness, in the case of any
Indebtedness issued with original issue discount;
(2) the principal amount of and premium (if any) on the
Indebtedness, in the case of any other Indebtedness; and
(3) in respect of Indebtedness of other Persons secured by a
Lien on the assets of the specified Person, the lesser of:
(a) the Fair Market Value of such asset at such date
of determination, and
(b) the amount of such Indebtedness of such other
Persons.
"Indemnified Liabilities" means, collectively, any and all liabilities,
obligations, losses, damages (including natural resource damages), penalties,
claims (including Environmental Claims), costs (including the costs of any
investigation, study, sampling, testing, abatement, cleanup, removal,
remediation or other response action necessary to remove, remediate, clean up or
▇▇▇▇▇ any Hazardous Materials Activity), expenses and disbursements of any kind
or nature whatsoever (including the reasonable fees and disbursements of counsel
for Indemnitees in connection with any investigative, administrative or judicial
proceeding commenced or threatened by any Person, and any fees or expenses
incurred by Indemnitees in enforcing this indemnity), whether direct, indirect
or consequential and whether based on Environmental Laws, on common law or
equitable cause or on contract or otherwise,
18
that may be imposed on, incurred by, or asserted against any such Indemnitee, in
any manner relating to or arising out of any Environmental Claim or any
Hazardous Materials Activity relating to or arising from, directly or
indirectly, any past or present activity, operation, land ownership, or practice
of the Company or any of its Restricted Subsidiaries.
"Indenture" means the indenture between the PEDFA and the Trustee,
dated April 1, 2002, relating to the Series 2002A Bonds, as amended,
supplemented or otherwise modified from time to time in accordance with the
terms thereof.
"Intercreditor Confirmation" means the agreement of any holder of
Parity Secured Debt or other Parity Secured Obligations to the provisions
described in the Order of Application and definition of the term "Equally and
Ratably," as set forth in any Secured Debt Document for the benefit of, and
enforceable as a third party beneficiary by, each present and future holder of
Parity Secured Obligations and each present and future Secured Debt
Representative.
Notwithstanding the foregoing, after the occurrence of the ▇▇▇▇▇▇
Security Event, an "Intercreditor Confirmation" means the agreement of any
holder of Bonds or other Permitted Secured PEDFA Bond Indebtedness to the
provisions of the ▇▇▇▇▇▇ Collateral Trust Agreement, including those described
in the ▇▇▇▇▇▇ Order of Application and the definition of the term "Equally and
Ratably," as set forth in any indenture, guarantee agreement or agreement
governing or guaranteeing each such Indebtedness for the benefit of, and
enforceable as a third party beneficiary by, each present and future holder of
Bonds and other Permitted Secured PEDFA Bond Indebtedness and each present and
future ▇▇▇▇▇▇ Secured Debt Representative.
"Investment Grade Rating" means a rating equal to or higher than Baa3
(or the equivalent) by Moody's or BBB- (or the equivalent) by S&P.
"Investments" means, with respect to any Person, all direct or indirect
investments by such Person in other Persons (including Affiliates) in the forms
of loans (including Guarantees or similar obligations), advances or capital
contributions (excluding payroll, commission, travel and similar advances to
officers and employees made in the ordinary course of business), purchases or
other acquisitions for consideration of Indebtedness, Equity Interests or other
securities, together with all items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP. "Investment"
shall exclude extensions of trade credit by the Company and its Restricted
Subsidiaries in the ordinary course of business and Permitted PEDFA Bond
Indebtedness. If the Company or any Subsidiary of the Company sells or otherwise
disposes of any Equity Interests of any direct or indirect Subsidiary of the
Company such that, after giving effect to any such sale or disposition, such
Person is no longer a Subsidiary of the Company, the Company shall be deemed to
have made an Investment on the date of any such sale or disposition equal to the
Fair Market Value of the Company's Investments in such Subsidiary that were not
sold or disposed of. The acquisition by the Company or any Subsidiary of the
Company of a Person that holds an Investment in a third Person will be deemed to
be an Investment by the Company or such Subsidiary in such third Person in an
amount equal to the Fair Market Value of the Investments held by the acquired
Person in such third Person. Except as otherwise provided in this Guarantee
Agreement, the amount of an Investment shall be its Fair Market Value at the
time the Investment is made and without giving effect to subsequent changes in
value.
"Issue Date" means December 22, 2004.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York, New York, Wilmington, Delaware, Houston,
Texas, Philadelphia, Pennsylvania or at a place of payment are authorized by
law, regulation or executive order to remain closed. If a payment date is a
19
Legal Holiday at a place of payment, payment may be made at that place on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue on
such payment for the intervening period.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law,
including any conditional sale or other title retention agreement and any lease
that constitutes a security interest.
"Loan Agreements" means (A) the Loan Agreement between the ▇▇▇▇▇▇
Subsidiary and PEDFA relating to the Series 2001A Bonds, dated as of December 1,
2001, as amended as of the Issue Date, (B) the Loan Agreement between the ▇▇▇▇▇▇
Subsidiary and PEDFA relating to the Series 2002A Bonds, dated as of April 1,
2002, as amended as of the Issue Date, (C) the Loan Agreement between the ▇▇▇▇▇▇
Subsidiary and PEDFA relating to the Series 2002B Bonds, dated as of April 1,
2002, as amended as of the Issue Date, (D) the Loan Agreement between the ▇▇▇▇▇▇
Subsidiary and PEDFA relating to the Series 2003A Bonds, dated as of September
1, 2003, as amended as of the Issue Date and (E) the Loan Agreement between the
▇▇▇▇▇▇ Subsidiary and PEDFA relating to the Series 2004A Bonds, dated as of
December 1, 2004, as amended as of the Issue Date, under each of which PEDFA, on
behalf of the ▇▇▇▇▇▇ Subsidiary, deposited the proceeds from the sale of the
related series of Bonds with the Trustee to finance a portion of the Project (as
defined therein), in each case, as the same may be amended, modified, restated,
renewed, extended, refinanced, or replaced, in each case, in whole or in part.
"Miscellaneous Orion Subsidiaries" means, collectively, Beaver River,
LLC, Eddystone Power, LLC, Free State Electric, LLC, Grane Creek, LLC, Liberty
Member, LLC, Liberty MidAtlantic, LLC, MidAtlantic Liberty, LLC, Midwest Ash
Disposal, Inc., OPD Group, Inc., OPOS MidAtlantic, Inc., Orion Power Atlantic,
Inc., Orion Power Atlantic LLC, Orion Power Atlantic, Ltd., Orion Power
Development Company, Inc., Orion Power Marketing and Supply, Inc., Orion Power
Operating Services, Inc., Orion Power Operating Services Astoria, Inc. and Orion
Power Operating Services Midwest, Inc.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc.
"Net Income" means, with respect to any specified Person, the net
income (loss) of such Person, determined in accordance with GAAP and before any
reduction in respect of preferred stock dividends, excluding, however:
(1) any gain (or loss), together with any related provision
for taxes on such gain (or loss), realized in connection with:
(a) any Asset Sale;
(b) the disposition of any securities by such Person
or any of its Restricted Subsidiaries or the extinguishment of any
Indebtedness of such Person or any of its Restricted Subsidiaries; and
(2) any extraordinary gain (or loss), together with any
related provision for taxes on such extraordinary gain (or loss).
"Net Proceeds" means the aggregate cash proceeds received by the
Company or any of its Restricted Subsidiaries in respect of any Asset Sale
(including, without limitation, any cash received upon the sale or other
disposition of any non-cash consideration received in any Asset Sale), net of
the direct costs relating to such Asset Sale, including, without limitation,
legal, accounting and investment banking fees, and sales commissions, and any
relocation expenses incurred as a result of the Asset Sale, taxes paid
20
or payable as a result of the Asset Sale, in each case, after taking into
account any available tax credits or deductions and any tax sharing
arrangements, and amounts reserved for adjustment in respect of the sale price
of such asset or assets established in accordance with GAAP.
"Non-Recourse" means, with respect to any specified Person and the
Indebtedness of such Person:
(1) neither the Company nor any of its Restricted Subsidiaries
(A) provides credit support of any kind (including any undertaking,
agreement or instrument that would constitute Indebtedness) for the
Indebtedness of such Person other than a pledge of the Equity Interests
of such Person, (B) is directly or indirectly liable as a guarantor or
otherwise of the Indebtedness of such Person, or (C) constitutes the
lender with respect to the Indebtedness of such Person; and
(2) in the case of an Unrestricted Subsidiary, no default on
the Indebtedness of such Person (including any rights that the holders
of the Indebtedness may have to take enforcement action against an
Unrestricted Subsidiary) would permit upon notice, lapse of time or
both any holder of Indebtedness of the Company or any of its Restricted
Subsidiaries to declare a default on such Indebtedness of the Company
or any of its Restricted Subsidiaries or cause the payment of such
Indebtedness of the Company or any of its Restricted Subsidiaries to be
accelerated or payable prior to its stated maturity.
"Note Documents" means the 2014 Notes and the 2014 Notes Indenture, the
Existing Notes and the Existing Indentures, the related guarantees, each
Intercreditor Confirmation and the Security Documents.
"Note Obligations" means:
(1) the 2014 Notes issued on the Issue Date or the Existing
Notes; or
(2) notes issued by the Company after the Issue Date that
constitute Sharing Eligible Debt and all related exchange notes,
together with the related guarantees and all other Obligations (including all
Obligations owing to the trustee under the related indenture) of any Obligor
under the Note Documents.
"Notice of Actionable Default" means a written notice given to the
Collateral Trustee by the Required Secured Debtholders or any Secured Debt
Representative, stating that an Actionable Default has occurred and is
continuing.
"Obligations" means any principal, interest, premium, fees,
indemnifications, reimbursements, expenses, damages and other liabilities
payable under the documentation governing any Indebtedness.
"Obligor" means the Company, the Subsidiary Guarantors and each other
Subsidiary of the Company that has granted the Collateral Trustee a Lien upon
any property as security for any Note Obligation.
"Officer" means, with respect to any Person, the Chairman of the Board,
the Chief Executive Officer, the President, the Chief Operating Officer, the
Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Controller,
the Secretary, Assistant Secretary, or any Vice-President of such Person.
21
"Officer's Certificate" means a certificate signed on behalf of the
Company by an Officer of the Company, who must be the principal executive
officer, the principal financial officer, the treasurer or the principal
accounting officer of the Company, that meets the requirements of Section 14.05
hereof.
"Opinion of Counsel" means an opinion from legal counsel who is
reasonably acceptable to the Trustee, that meets the requirements of Section
14.05 hereof. The counsel may be an employee of or counsel to the Company, any
Subsidiary of the Company or the Trustee.
"Order of Application" has the meaning assigned to it in the Collateral
Trust Agreement.
"Outstanding" has the meaning assigned to it in the Indenture.
"Parity Secured Debt" means:
(1) the ▇▇▇▇▇▇ ▇▇▇▇ Guarantees;
(2) the 2014 Notes issued on the Issue Date and the Existing
Notes;
(3) Credit Agreement Debt outstanding or committed on the
Issue Date; and
(4) Sharing Eligible Debt that is designated by the Company,
in an Officer's Certificate delivered to the Collateral Trustee on or
before the date of incurrence of such Indebtedness, as entitled to
share Equally and Ratably in the benefits and proceeds of all Liens
held by the Collateral Trustee in Shared Collateral.
As provided in Article 13 hereof, upon the occurrence of the ▇▇▇▇▇▇
Security Event, the REI Guarantee will cease to constitute Parity Secured Debt.
"Parity Secured Obligations" means, collectively, the Guarantee
Obligations, the Note Obligations, the Credit Agreement Obligations and all
Obligations in respect of each other Series of Secured Debt.
"Paying Agent" has the meaning set forth in the Indenture.
"PEDFA" means Pennsylvania Economic Development Financing Authority and
its successors.
"Permitted Business" means the business of providing services and
products in the energy market and any businesses incidental or reasonably
related thereto.
"Permitted ERCOT Assets" means (1) electric generating assets together
with assets related thereto (including any assets related to the operation and
fuel supply of such electric generating assets) which assets support REI's
and/or its Restricted Subsidiaries' retail business in the State of Texas and
(2) all (but not less than all) of the Capital Stock of any Person that owns
solely Permitted ERCOT Assets (whether directly or through one or more wholly
owned Subsidiaries) described in clause (1) above.
"Permitted Investments" means:
(1) any Investment in the Company or in a Restricted
Subsidiary of the Company;
22
(2) any Investment in Cash Equivalents and, in the case of the
Excluded Subsidiaries only, cash equivalents or other liquid
investments permitted under any Credit Facility to which it is a party;
(3) any Investment by the Company or any Restricted Subsidiary
of the Company in a Person, if as a result of such Investment:
(a) such Person becomes a Restricted Subsidiary of
the Company; or
(b) such Person is merged, consolidated or
amalgamated with or into, or transfers or conveys substantially all of
its assets to, or is liquidated into, the Company or a Restricted
Subsidiary of the Company;
(4) [Reserved];
(5) any Investment made as a result of the receipt of non-cash
consideration from an Asset Sale;
(6) any acquisition of assets or Capital Stock solely in
exchange for the issuance of Equity Interests (other than Disqualified
Stock) of the Company;
(7) any Investments received in compromise or resolution of
(A) Obligations of trade creditors or customers that were incurred in
the ordinary course of business of the Company or any of its Restricted
Subsidiaries, including pursuant to any plan of reorganization or
similar arrangement upon the bankruptcy or insolvency of any trade
creditor or customer; or (B) litigation, arbitration or other disputes
with Persons who are not Affiliates;
(8) Investments represented by Hedging Obligations;
(9) loans or advances to employees made in the ordinary course
of business up to an aggregate principal amount not to exceed $10.0
million at any one time;
(10) any Investment acquired by the Company or any of its
Restricted Subsidiaries on account of any claim against, or interest
in, any other Person (A) acquired in good faith in connection with or
as a result of a bankruptcy, workout, reorganization or
recapitalization of such other Person or (B) as a result of a bona fide
foreclosure by the Company or any of its Restricted Subsidiaries with
respect to any claim against any other Person;
(11) repurchases of the Bonds or pari passu Indebtedness;
(12) any Investment by the Company or a Restricted Subsidiary
of the Company in a Securitization Entity or any Investment by a
Securitization Entity in any other Person in connection with a
Qualified Securitization Transaction;
(13) payment of consolidated taxes pursuant to the Tax Sharing
Agreement, dated as of October 1, 2002, among the Company and its
Subsidiaries named therein, as amended, supplemented or modified from
time to time and any other tax allocation agreements among the Company
and its Subsidiaries;
(14) receivables owing to the Company or a Restricted
Subsidiary, if created or acquired in the ordinary course of business
and payable or dischargeable in accordance with customary
23
trade terms; provided, however, that such trade terms may include such
concessionary trade terms as the Company or such Restricted Subsidiary
deems reasonable under the circumstances; and
(15) other Investments in any Person having an aggregate Fair
Market Value (measured on the date each such Investment was made and
without giving effect to subsequent changes in value), when taken
together with all other Investments made pursuant to this clause (15)
that are at the time outstanding not to exceed $125.0 million.
"Permitted Liens" means:
(1) Liens held by the Collateral Trustee Equally and Ratably
securing all Indebtedness that is Parity Secured Debt and Equally and
Ratably securing all other Parity Secured Obligations;
(2) Permitted Separate Liens;
(3) [Reserved];
(4) [Reserved];
(5) Liens on assets of REMA and its Subsidiaries securing
Indebtedness of REMA and its Subsidiaries permitted to be incurred
pursuant to clause (5) of the definition of Permitted Debt, including
cash collateral for letters of credit issued thereunder and Liens
encumbering assets of REMA and/or any of its Subsidiaries securing
obligations under, or in connection with, or which constitute,
Qualifying Credit Support (as defined in the participation agreements
to which REMA is a party);
(6) Liens on assets of the ▇▇▇▇▇▇ Subsidiary securing
Permitted PEDFA Bond Indebtedness incurred by the ▇▇▇▇▇▇ Subsidiary and
that is Non-Recourse to the Company and all of its other Restricted
Subsidiaries (other than an unsecured Guarantee, if any, provided by
the Company);
(7) [Reserved];
(8) [Reserved];
(9) Liens on assets of a Restricted Subsidiary in existence on
the date on which such Person becomes a Restricted Subsidiary; provided
that on the date on which such Person becomes a Restricted Subsidiary,
after giving effect to the incurrence of such Liens, the Consolidated
Senior Leverage Ratio would not exceed 3.0 to 1.0;
(10) Liens securing Indebtedness (including Capital Lease
Obligations) permitted to be incurred pursuant to clause (11) of the
definition of Permitted Debt, covering only the assets acquired with or
financed by such Indebtedness;
(11) Liens securing obligations under sale leaseback
transactions permitted by the provisions of Section 4.16 hereof;
(12) Liens in favor of the Company or the Subsidiary
Guarantors;
24
(13) Liens for taxes, assessments or governmental charges or
claims that are not yet delinquent or that are being contested in good
faith by appropriate proceedings promptly instituted and diligently
concluded; provided that any reserve or other appropriate provision as
is required in conformity with GAAP has been made therefor;
(14) Liens imposed by law, such as carriers', warehousemen's,
landlord's and mechanics' Liens, in each case, incurred in the ordinary
course of business;
(15) survey exceptions, encumbrances, easements or
reservations, including those for licenses, rights-of-way, sewers,
electric lines, telegraph and telephone lines, other utilities, mineral
reservations and rights and leases, zoning restrictions and other
restrictions as to the use of real property or other exceptions to
title that were not incurred in connection with Indebtedness and that
(A) exist on the Issue Date and are recorded on such date, (B) are
permitted under the terms of the Security Documents or the ▇▇▇▇▇▇
Security Documents or (C) do not in the aggregate materially adversely
affect the value of said properties or materially impair their use in
the operation of the business of such Person;
(16) Liens to secure any Permitted Refinancing Indebtedness
permitted to be incurred under this Guarantee Agreement if such
Permitted Refinancing Indebtedness is incurred by the same obligor on
the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded (except as provided in clause (4) of the
definition of Permitted Refinancing Indebtedness); provided, however,
that:
(a) the new Lien shall be limited to all or part of
the same categories of property and assets that secured or,
under the written agreements pursuant to which the original
Lien arose, could secure the original Lien (plus improvements
and accessions to, such property or proceeds or distributions
thereof), except, if Permitted PEDFA Bond Indebtedness is
Sharing Eligible Debt, it may be secured by Liens held by the
Collateral Trustee on the Shared Collateral; and
(b) the Indebtedness secured by the new Lien is not
increased to any amount greater than the sum of (i) the
outstanding principal amount or, if greater, committed amount
of the Permitted Refinancing Indebtedness and (ii) an amount
necessary to pay any fees and expenses, including premiums,
related to such refinancings, refunding, extension, renewal or
replacement and (iii) any protective advances with respect to
the property and assets that secure such Permitted Refinancing
Indebtedness;
(17) Liens on assets transferred to a Securitization Entity or
on assets of a Securitization Entity, in either case incurred in
connection with a Qualified Securitization Transaction;
(18) financing statements (including precautionary statements)
filed in connection with a Capital Lease Obligation or an operating
lease, in each case, not prohibited hereunder; provided that no such
financing statement extends to, covers or refers to as collateral, any
property or assets of the Company or a Restricted Subsidiary, other
than the property or assets which are subject to such Capital Lease
Obligation or such operating lease;
(19) Liens arising out of or in connection with any judgment
that does not constitute an Event of Default or in connection with any
litigation or other legal proceeding as to which an appeal to contest
or review is timely commenced in good faith by appropriate proceedings
and as to which adequate reserves have been established in accordance
with GAAP; provided that any right to levy, seizure, attachment,
sequestration, foreclosure or garnishment of any property and
25
assets of the Company or a Restricted Subsidiary thereof arising out of
or in connection with any such Lien has been and continues to be
enjoined or effectively stayed;
(20) inchoate statutory Liens arising under ERISA;
(21) Liens (A) on cash and short-term investments (i)
deposited by the Company or any of its Subsidiaries in margin accounts
with or on behalf of futures contract brokers or paid over to other
counterparties or (ii) pledged or deposited as collateral to a contract
counterparty or issuer of surety bonds by the Company or any of its
Subsidiaries, in the case of clause (i) or (ii), to secure obligations
with respect to (a) contracts for commercial and trading activities in
the ordinary course of business and contracts (including without
limitation, physical delivery, option (whether cash or financial),
exchange, swap and futures contracts) for the purchase, transmission,
distribution, sale, lease or hedge of any energy-related commodity or
service or (b) interest rate, commodity price, or currency rate
management contracts or derivatives and (B) encumbering assets other
than accounts or receivables arising out of contracts or agreements
relating to the generation, distribution or transmission of energy;
provided that all such agreements or contracts are entered into in the
ordinary course of business;
(22) Liens arising by virtue of any statutory or common law
provision relating to banker's liens, rights of set off or similar
rights, contractual rights of setoff or netting arrangements entered
into in the ordinary course of business and similar rights with respect
to deposit accounts, commodity accounts and/or securities accounts;
(23) Liens arising under Section 9.343 of the Texas Uniform
Commercial Code or similar statutes of states other than Texas;
(24) Liens created under the Security Agreement dated as of
March 28, 2003 among Reliant Energy Retail Services, LLC ("RERS"),
StarEn Power, LLC ("StarEn") and Reliant Energy Solutions, LLC
("Solutions"), as debtors, and Texas ▇▇▇▇▇, ▇.▇. as secured party
securing up to $250.0 million of obligations owing to Texas ▇▇▇▇▇, ▇.▇.
under the Master Power Purchase and Sale Agreement dated as of October
1, 2002 between Texas ▇▇▇▇▇, ▇.▇ and Solutions, as the same may be
amended, amended and restated, supplemented or otherwise modified,
renewed or replaced from time to time, and the related Guaranty dated
as of October 1, 2002 by Reliant Energy Retail Holdings, LLC, RERS,
StarEn and Solutions in favor of Texas ▇▇▇▇▇, ▇.▇., as the same may be
amended, amended and restated, supplemented or otherwise modified,
renewed or replaced from time to time, provided that such Liens are
subject always to the terms of the Texas Genco Intercreditor Agreement,
as such agreement may be amended, amended and restated, supplemented or
otherwise modified, renewed or replaced from time to time;
(25) pledges and deposits to secure the payment of worker's
compensation, unemployment insurance, social security benefits or
obligations under similar laws, or to secure the payment or performance
of statutory or public obligations (including environmental, municipal
and public utility commission obligations and requirements),
reimbursement or indemnity obligations arising out of surety,
performance, or other similar bonds, and other obligations of a like
nature, in each case incurred in the ordinary course of business;
(26) [Reserved];
(27) Liens granted by a Person in favor of a commercial
trading counterparty pursuant to a netting agreement, which Liens
encumber rights under agreements that are subject to such
26
netting agreement and which Liens secure such Person's obligations to
such counterparty under such netting agreement; provided, that any such
agreements and netting agreements are entered into in the ordinary
course of business; and provided, further, that the Liens are incurred
in the ordinary course of business and when granted, do not secure
obligations which are past due;
(28) Liens on proceeds from the issuance of ▇▇▇▇▇▇ Tax-Exempt
Bonds or Permitted PEDFA Bond Indebtedness and Liens on Indebtedness of
the Company held by a ▇▇▇▇▇▇ Subsidiary securing the ▇▇▇▇▇▇ Tax-Exempt
Bonds or Permitted PEDFA Bond Indebtedness;
(29) Liens on assets of the Excluded Subsidiaries existing on
the Issue Date;
(30) Liens on assets of REMA and its Subsidiaries created in
connection with the sale-leaseback of REMA's interests in the Keystone,
Conemaugh and Shawville generating facilities consummated in August
2000;
(31) Liens on certain of Reliant Energy Choctaw County, LLC's
switchyard equipment at the Choctaw Facility granted to Entergy in
connection with an Operating and Maintenance Agreement;
(32) Liens created in connection with the indemnity and
contribution obligations in favor of underwriters or note purchasers in
connection with the ▇▇▇▇▇▇ Tax-Exempt Bonds;
(33) Liens on assets of Reliant Energy Solutions, LLC created
in connection with Delivery Order No. DABT39-97-C-4046 dated September
1997 and issued by the Directorate of Contracting, Contract Support
Division, Ft. Sill, Oklahoma; and
(34) Liens incurred in the ordinary course of business of the
Company or any Restricted Subsidiary of the Company securing
obligations that do not exceed $25.0 million in the aggregate at any
one time outstanding.
"Permitted PEDFA Bond Indebtedness" means Indebtedness incurred by the
Company and/or the ▇▇▇▇▇▇ Subsidiary and/or guaranteed by the Company and/or the
Subsidiary Guarantors (including the Bonds, the obligations of the ▇▇▇▇▇▇
Subsidiary under the Loan Agreements, and the ▇▇▇▇▇▇ ▇▇▇▇ Guarantees) in
tax-exempt industrial development bond financings that are not supported by
letters of credit outstanding under the Credit Agreement, the proceeds of which
are used:
(1) to build the ▇▇▇▇▇▇ Facility;
(2) to reimburse the Company, its Restricted Subsidiaries or
the ▇▇▇▇▇▇ Subsidiary for amounts advanced or incurred, or for
Indebtedness incurred to fund such construction costs, prior to the
date of incurrence of such Indebtedness; or
(3) to refund or defease the ▇▇▇▇▇▇ Tax-Exempt Bonds or
refinance Indebtedness evidenced by or in support of the ▇▇▇▇▇▇
Tax-Exempt Bonds.
"Permitted Prior Liens" means (1) Liens described in clauses (9), (10),
(11), (13), (14), (15), (18), (21), (22), (23), (24), (25), (27), (31), (32) and
(33) of the definition of "Permitted Liens," (2) Liens refinancing or replacing
any of the Liens contemplated in clause (1) of this definition and (3) Liens
that arise by operation of law and are not voluntarily granted, to the extent
entitled by law to priority over the security interests created by the Security
Documents or the ▇▇▇▇▇▇ Security Documents, as applicable.
27
"Permitted Refinancing Indebtedness" means any Indebtedness of the
Company or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of the Company or any of its Restricted Subsidiaries
(other than intercompany Indebtedness); provided that:
(1) the principal amount (or accreted value, if applicable) of
such Permitted Refinancing Indebtedness does not exceed the principal
amount (or accreted value, if applicable) of the Indebtedness extended,
refinanced, renewed, replaced, defeased or refunded (plus all accrued
interest on the Indebtedness and the amount of all expenses, costs and
fees and premiums incurred in connection therewith);
(2) except for Permitted PEDFA Bond Indebtedness, such
Permitted Refinancing Indebtedness has a final maturity date later than
the final maturity date of, and has a Weighted Average Life to Maturity
equal to or greater than the Weighted Average Life to Maturity of, the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded;
(3) if the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded is subordinated in right of payment to
the ▇▇▇▇▇▇ Guarantees, such Permitted Refinancing Indebtedness is
subordinated in right of payment to, the ▇▇▇▇▇▇ Guarantees on terms at
least as favorable to the holders of ▇▇▇▇▇▇ Guarantees as those
contained in the documentation governing the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded, as
reasonably determined by the Company or such Restricted Subsidiary;
(4) such Indebtedness is incurred either by the Company or by
the Restricted Subsidiary who is the obligor on the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded, except
that Permitted PEDFA Bond Indebtedness may be (A) incurred by the
Company and/or guaranteed by the Company if the assets of the ▇▇▇▇▇▇
Subsidiary (other than Investments in the Company pledged to secure
such Permitted PEDFA Bond Indebtedness and proceeds from the issuance
of Permitted PEDFA Bond Indebtedness that secures Permitted PEDFA Bond
Indebtedness) remain free of all Liens securing Indebtedness, except
Liens held by the Collateral Trustee as security for Secured
Obligations or (B) guaranteed by the Company on an unsecured basis if
such Indebtedness is otherwise Non-Recourse to the Company and its
other Restricted Subsidiaries (other than the ▇▇▇▇▇▇ Subsidiary ) and
is secured solely by Liens on the assets of the ▇▇▇▇▇▇ Subsidiary
and/or the Equity Interests of the ▇▇▇▇▇▇ Subsidiary ; provided,
further, that in the case of Indebtedness of an Excluded Orion Power
Subsidiary that is being refinanced, replaced or refunded, such
Indebtedness may be incurred at another Excluded Orion Power Subsidiary
or at Orion Power Holdings, Inc; and
(5) if incurred by the Company, such Indebtedness may be
guaranteed by the Subsidiary Guarantors.
"Permitted Secured PEDFA Bond Indebtedness" means any Permitted PEDFA
Bond Indebtedness that is Non-Recourse to the Company and all of its other
Restricted Subsidiaries (other than an unsecured Guarantee, if any, provided by
the Company); provided that such Indebtedness:
(1) must not be subordinated in right of payment or in respect
of the application of the proceeds of the ▇▇▇▇▇▇ Collateral Trustee's
Liens on the ▇▇▇▇▇▇ Collateral to any other Permitted PEDFA Bond
Indebtedness (whether or not such other Indebtedness is part of the
same series of Indebtedness), except in accordance with the ▇▇▇▇▇▇
Order of Application;
28
(2) is governed by or guaranteed pursuant to an indenture or
agreement that appoints a ▇▇▇▇▇▇ Secured Debt Representative and
includes an intercreditor confirmation; and
(3) is secured pursuant to clause (6) of the definition of
Permitted Liens.
"Permitted Separate Liens" means Liens that are granted or maintained
by the Company and the Restricted Subsidiaries upon Excluded Property as
security for Obligations under Credit Facilities; provided that Permitted
Separate Liens on Excluded Securities are limited as follows:
(1) Liens that are attached to any Excluded Securities on the
Issue Date and were granted by the Security Documents to secure
Indebtedness outstanding or committed under the Credit Agreement on the
Issue Date and Obligations in respect thereof may be maintained and, at
the option of the Company, may also secure Obligations under other
Credit Facilities constituting Parity Secured Debt;
(2) Liens attaching to other Excluded Securities issued by a
Restricted Subsidiary that is a Subsidiary Guarantor may be granted and
maintained to secure only Credit Agreement Obligations and, at the
option of the Company, Obligations under other Credit Facilities
constituting Parity Secured Debt; and
(3) Liens attaching to Excluded Securities issued by an
Unrestricted Subsidiary may be granted and maintained to secure any
Indebtedness of such Unrestricted Subsidiary.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, limited
liability company or government or other entity.
"Plant" means the ▇▇▇▇▇▇ Subsidiary's 520 megawatt waste-coal fired,
baseline electric generating plant located in Indiana County, Pennsylvania.
"Purchase Money Note" means a promissory note of a Securitization
Entity evidencing amounts owed to the Company or any Restricted Subsidiary of
the Company in connection with a Qualified Securitization Transaction to a
Securitization Entity, which note shall be repaid from cash available to the
Securitization Entity other than amounts required to be established as reserves
pursuant to agreements, amounts paid to investors in respect of interest and
principal and amounts paid in connection with the purchase of newly generated
receivables or newly acquired equipment.
"Qualified Securitization Transaction" means any transaction or series
of transactions that may be entered into by the Company or any of its Restricted
Subsidiaries pursuant to which the Company or any of its Restricted Subsidiaries
may sell, convey or otherwise transfer to:
(1) a Securitization Entity (in the case of a transfer by the
Company or any of its Restricted Subsidiaries); and
(2) any other Person (in the case of a transfer by a
Securitization Entity), or may grant a security interest in any
accounts receivable or equipment (whether now existing or arising or
acquired in the future) of the Company or any of its Restricted
Subsidiaries, and any assets related thereto, including, without
limitation, all collateral securing such accounts receivable and
equipment, all contracts and contract rights and all guarantees or
other obligations in respect of such accounts receivable and equipment,
proceeds of such accounts receivable and equipment and other assets
(including contract rights) which are customarily transferred or in
respect of
29
which security interests are customarily granted in connection with
asset securitization transactions involving accounts receivable and
equipment.
"Registrar" has the meaning set forth in the Indenture.
"REI Guarantee" means the Guarantee of the Series 2002A Bonds by the
Company contained in this Guarantee Agreement.
"REMA" means Reliant Energy Mid-Atlantic Power Holdings, LLC.
"REMA Lease" means, collectively, the obligations of REMA as facility
lessee under the Facility Lease Agreements, each dated as of August 24, 2000 and
each between REMA and, respectively, Conemaugh Lessor Genco, LLC, Keystone
Lessor Genco, LLC, and Shawville Lessor Genco, LLC, and under the related
participation agreements and other documents executed in connection therewith,
in each case, as amended through the Issue Date.
"Required Lenders" means, at any time in respect of any action or
matter, (1) the number or percentage of holders of Credit Agreement Obligations
whose consent is required under the Credit Agreement to take such action or bind
the holders of Credit Agreement Obligations to such matter or (2) the Credit
Agreement Agent acting upon authorization under the Credit Agreement or under
the authorization or consent of the number or percentage of holders referred to
in clause (1).
"Required Secured Debtholders" means, at any time, the holders of a
majority in aggregate outstanding principal amount of all Secured Debt then
outstanding and unfunded letters of credit or credit commitments which, if
funded, would constitute outstanding Secured Debt, voting together as a single
class. For this purpose only, Secured Debt registered in the name of, or
beneficially owned by, the Company or any of its Subsidiaries shall be deemed
not to be outstanding.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Subsidiary" of a Person means any Subsidiary of the
referent Person that is not an Unrestricted Subsidiary.
"S&P" means Standard & Poor's Ratings Group.
"SEC" means the Securities and Exchange Commission.
"Secured Debt" means the Parity Secured Debt.
"Secured Debt Documents" means, collectively, the Credit Agreement
Documents, the Note Documents and the indentures, guarantee agreements or
agreements governing each other Series of Secured Debt and all agreements
binding on any obligor related thereto.
"Secured Debt Representative" means:
(1) in the case of the 2014 Notes, the applicable trustee;
(2) in the case of the Existing Notes, the applicable trustee;
(3) in the case of Credit Agreement Debt, the Credit Agreement
Agent;
30
(4) in the case of any other Series of Secured Debt, the
trustee, agent or representative of the holders of such Series of
Secured Debt who maintains, or on whose behalf is maintained, the
transfer register for or who acts as administrative agent for such
Series of Secured Debt and is appointed as Secured Debt Representative
(for purposes related to the administration of the Security Documents)
pursuant to the indenture or agreement governing such Series of Secured
Debt; or
(5) in the case of the ▇▇▇▇▇▇ ▇▇▇▇ Guarantees, the trustees
under the applicable indentures governing the Bonds.
"Secured Obligations" means the Parity Secured Obligations.
"Securities Act" means the Securities Act of 1933, as amended.
"Securitization Entity" means RE Retail Receivables, LLC, and any
Person in which the Company or any Restricted Subsidiary of the Company makes an
Investment and to which the Company or any Restricted Subsidiary of the Company
transfers accounts receivable or equipment (and related assets, including
contract rights) which engages in no activities other than in connection with
the financing, sale, or purchase of accounts receivable or equipment or related
assets (including contract rights) and which is designated by the Board of
Directors of the Company (as provided below) as a Securitization Entity:
(1) no portion of the Indebtedness or any other Obligations
(contingent or otherwise) of which:
(a) is guaranteed by the Company or any Restricted
Subsidiary of the Company (excluding guarantees of Obligations
(other than the principal of, and interest on, Indebtedness))
pursuant to Standard Securitization Undertakings;
(b) is recourse to or obligates the Company or any
Restricted Subsidiary of the Company in any way other than
pursuant to Standard Securitization Undertakings; or
(c) subjects any property or asset of the Company or
any Restricted Subsidiary of the Company, directly or
indirectly, contingently or otherwise, to the satisfaction
thereof, other than pursuant to Standard Securitization
Undertakings;
(2) with which neither the Company nor any Restricted
Subsidiary of the Company has any material contract, agreement,
arrangement or understanding (except in connection with a Purchase
Money Note or Qualified Securitization Transaction) other than on terms
no less favorable to the Company or such Restricted Subsidiary than
those that might be obtained at the time from Persons that are not
Affiliates of the Company, as determined by the Company, other than
amounts payable in the ordinary course of business in connection with
servicing receivables and other assets of such entity; and
(3) to which neither the Company nor any Restricted Subsidiary
of the Company has any obligation to maintain or preserve such entity's
financial condition or cause such entity to achieve certain levels of
operating results.
Any such designation by the Board of Directors of the Company shall be
evidenced to the Trustee by filing with the Trustee a certified copy of the
Board Resolution of the Company giving effect to such
31
designation and an Officer's Certificate certifying that such designation
complied with the foregoing conditions.
"Security Documents" means the Collateral Trust Agreement, and all
security agreements, pledge agreements, control agreements, collateral
assignments, mortgages, deed of trust or other grants or transfers for security
or agreements related thereto executed and delivered by the Company or any
Subsidiary Guarantor creating (or purporting to create) a Lien upon Collateral
in favor of the Collateral Trustee to secure Secured Obligations, in each case,
as amended, modified, renewed, restated or replaced, in whole or in part, from
time to time.
"Separate Cash Deposits" means cash collateral deposits required by the
Credit Agreement to secure letter of credit exposure after default or to provide
for mandatory prepayments after outstanding loans are repaid.
"Separate Collateral" means Capital Stock of Subsidiaries and
intercompany notes that satisfy the requirements of the defined term "Excluded
Securities."
"Series 2001A Bonds" means PEDFA's Exempt Facilities Development
Revenue Bonds (Reliant Energy ▇▇▇▇▇▇, LLC Project), Series 2001A, in the
aggregate principal amount of $150,000,000.
"Series 2002A Bonds" means PEDFA's Exempt Facilities Development
Revenue Bonds (Reliant Energy ▇▇▇▇▇▇, LLC Project), Series 2002A, in the
aggregate principal amount of $75,000,000.
"Series 2002B Bonds" means PEDFA's Exempt Facilities Development
Revenue Bonds (Reliant Energy ▇▇▇▇▇▇, LLC Project), Series 2002B, in the
aggregate principal amount of $75,000,000.
"Series 2003A Bonds" means PEDFA's Exempt Facilities Development
Revenue Bonds (Reliant Energy ▇▇▇▇▇▇, LLC Project), Series 2003A, in the
aggregate principal amount of $100,000,000.
"Series 2004A Bonds" means PEDFA's Exempt Facilities Development
Revenue Bonds (Reliant Energy ▇▇▇▇▇▇, LLC Project), Series 2004A, in the
aggregate principal amount of $100,000,000.
"Series of Bonds" means, severally, each of the Series 2001A Bonds, the
Series 2002A Bonds, the Series 2002B Bonds, the Series 2003A Bonds and the
Series 2004A Bonds.
"Series of Secured Debt" means, severally, the 2014 Notes, the Existing
2010 Notes, the Existing 2013 Notes, the ▇▇▇▇▇▇ ▇▇▇▇ Guarantees, the Credit
Agreement Debt and each other issue or series of Parity Secured Debt.
"▇▇▇▇▇▇ ▇▇▇▇ Guarantees" means, collectively, the ▇▇▇▇▇▇ Guarantees,
the 2001A ▇▇▇▇▇▇ Guarantees, the 2002B ▇▇▇▇▇▇ Guarantees, the 2003A ▇▇▇▇▇▇
Guarantees and the 2004A ▇▇▇▇▇▇ Guarantees.
"▇▇▇▇▇▇ Collateral Trust Agreement" means the Collateral Trust
Agreement, dated as of December 1, 2004, executed and delivered by the ▇▇▇▇▇▇
Subsidiary and the ▇▇▇▇▇▇ Collateral Trustee, as amended, modified, renewed,
restated or replaced, in whole or in part, from time to time.
"▇▇▇▇▇▇ Collateral Trustee" means ▇.▇. ▇▇▇▇▇▇ Trust Company, National
Association, or one of its affiliates, in its capacity as ▇▇▇▇▇▇ Collateral
Trustee under the ▇▇▇▇▇▇ Collateral Trust Agreement, together with its
successors in such capacity.
32
"▇▇▇▇▇▇ Facility" means the 520 MW coal facility and related assets
owned by the ▇▇▇▇▇▇ Subsidiary, or its successors, and located, or to be
located, in New ▇▇▇▇▇▇▇▇, Indiana County, Pennsylvania.
"▇▇▇▇▇▇ Guarantee Obligations" means the ▇▇▇▇▇▇ Guarantees and all
Obligations in respect thereof under this Guarantee Agreement, the Security
Documents and, after the occurrence of the ▇▇▇▇▇▇ Security Event, the ▇▇▇▇▇▇
Security Documents.
"▇▇▇▇▇▇ Guarantees" means, collectively, the REI Guarantee and the
Subsidiary Guarantees.
"▇▇▇▇▇▇ Order of Application" has the meaning assigned to the term
"Order of Application" in the ▇▇▇▇▇▇ Collateral Trust Agreement.
"▇▇▇▇▇▇ Secured Debt Representative" means:
(1) in the case of the ▇▇▇▇▇▇ ▇▇▇▇ Guarantees, the trustees
under the applicable indentures governing the Bonds; and
(2) in the case of any other series of Permitted Secured PEDFA
Bond Indebtedness, the trustee, agent or representative of the holders
of such series of Permitted Secured PEDFA Bond Indebtedness who
maintains, or on whose behalf is maintained, the transfer register for
or who acts as administrative agent for such series of Permitted
Secured PEDFA Bond Indebtedness and is appointed as ▇▇▇▇▇▇ Secured Debt
Representative (for purposes related to the administration of the
▇▇▇▇▇▇ Security Documents) pursuant to the indentures or agreement
governing such series of Permitted Secured PEDFA Bond Indebtedness.
"▇▇▇▇▇▇ Security Documents" means the ▇▇▇▇▇▇ Collateral Trust
Agreement, and all security agreements, mortgages, deed of trust or other grants
or transfers for security or agreements related thereto executed and delivered
by the ▇▇▇▇▇▇ Subsidiary creating (or purporting to create) a Lien upon the
▇▇▇▇▇▇ Collateral in favor of the ▇▇▇▇▇▇ Collateral Trustee to secure the Bonds
and all other Permitted Secured PEDFA Bond Indebtedness, in each case, as
amended, modified, renewed, restated or replaced, in whole or in part, from time
to time.
"▇▇▇▇▇▇ Subsidiary" means Reliant Energy ▇▇▇▇▇▇, LLC, a Delaware
limited liability company.
"▇▇▇▇▇▇ Tax-Exempt Bonds" means (1) the Pennsylvania Economic
Development Financing Authority Exempt Facilities Revenue Bonds (Reliant Energy
▇▇▇▇▇▇, LLC Project), Series 2001A, in the original aggregate principal amount
of $150,000,000, (2) the Pennsylvania Economic Development Financing Authority
Exempt Facilities Revenue Bonds (Reliant Energy ▇▇▇▇▇▇, LLC Project), Series
2002A, in the original aggregate principal amount of $75,000,000, (3) the
Pennsylvania Economic Development Financing Authority Exempt Facilities Revenue
Bonds (Reliant Energy ▇▇▇▇▇▇, LLC Project), Series 2002B, in the original
aggregate principal amount of $75,000,000, (4) the Pennsylvania Economic
Development Financing Authority Exempt Facilities Revenue Bonds (Reliant Energy
▇▇▇▇▇▇, LLC Project), Series 2003A, in the original aggregate principal amount
of $100,000,000 and (5) any bonds issued by PEDFA on or after the Issue Date as
permitted under the Credit Agreement as in effect on the Issue Date and
supported by letters of credit outstanding under the Credit Agreement.
"Sharing Eligible Debt" means:
(1) Indebtedness incurred pursuant to clause (1) of the
definition of Permitted Debt;
33
(2) Indebtedness incurred under clause (21) of the definition
of Permitted Debt;
(3) the Existing Notes and the 2014 Notes issued on the Issue
Date;
(4) Permitted Refinancing Indebtedness incurred by the Company
or, if it constitutes Permitted PEDFA Bond Indebtedness, Indebtedness
incurred by the Company and/or the ▇▇▇▇▇▇ Subsidiary and/or guaranteed
by the Company and/or the Subsidiary Guarantors, the net proceeds of
which are used to refinance, extend, renew, replace, defease or refund
Indebtedness evidenced by or in support of the ▇▇▇▇▇▇ Tax-Exempt Bonds;
provided, that, in the case of Permitted PEDFA Bond Indebtedness, the
assets of the ▇▇▇▇▇▇ Subsidiary (other than Investments in the Company
pledged to secure such Permitted PEDFA Bond Indebtedness and proceeds
from the issuance of Permitted PEDFA Bond Indebtedness that secures
Permitted PEDFA Bond Indebtedness) shall remain free of all Liens
securing Indebtedness, except Permitted Prior Liens and Liens held by
the Collateral Trustee as security for the Parity Secured Debt;
(5) [Reserved];
(6) [Reserved];
(7) Permitted Refinancing Indebtedness, the net proceeds of
which are used to refinance Parity Secured Debt; and
(8) any other Indebtedness incurred by the Company if (A) when
it was incurred, the incurrence of such Indebtedness by the Company was
permitted by this Guarantee Agreement and (B) on the day such
Indebtedness was incurred, after giving effect to such incurrence and
the application of the proceeds from, and the creation of Liens to
secure, such Indebtedness, the Consolidated Senior Leverage Ratio was
not greater than 3.0 to 1.0;
provided that each category of Indebtedness described above:
(1) must be guaranteed by any of the Restricted Subsidiaries
that, on the date of incurrence of such Indebtedness, is obligated as a
Subsidiary Guarantor under a Subsidiary Guarantee of the REI Guarantee;
(2) must not be subordinated in right of payment or in respect
of the application of the proceeds of the Collateral Trustee's Liens on
the Collateral to any other Indebtedness of the Company or any
Subsidiary Guarantor (whether or not such other Indebtedness is part of
the same series of Indebtedness), except in accordance with the Order
of Application; and
(3) is governed by an indenture or agreement that appoints a
Secured Debt Representative and includes an Intercreditor Confirmation.
"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation was in effect on
July 1, 2003; provided that clause (3) of such definition will be disregarded.
"Specified Junior Securities" means subordinated debt securities issued
by the Company that:
(1) are subordinated in right of payment in full to the REI
Guarantee;
34
(2) have a final maturity date occurring at least 91 days
after the final maturity date of the Series 2002A Bonds and have a
Weighted Average Life to Maturity at least 91 days longer than the
Weighted Average Life to Maturity of the Series 2002A Bonds;
(3) are not guaranteed by any Subsidiary of the Company except
for any guarantee by a Subsidiary Guarantor that is contractually
subordinated in right of payment to the prior payment in full in cash
to the Subsidiary Guarantees; and
(4) are not convertible into any other securities except
Equity Interests of the Company (other than Disqualified Stock).
"Standard Securitization Undertakings" means representations,
warranties, covenants and indemnities entered into by the Company or any
Subsidiary of the Company, which are substantially similar to those in existence
on the Issue Date or are otherwise reasonably customary in an accounts
receivable or equipment securitization transaction, in each case, as determined
by the Company.
"Stated Maturity" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which the payment of
interest or principal was scheduled to be paid in the documentation governing
such Indebtedness as of the Issue Date, and shall not include any contingent
obligations to repay, redeem or repurchase any such interest or principal prior
to the date originally scheduled for the payment thereof.
"Subsidiary" means, with respect to any specified Person:
(1) any corporation, association or other business entity of
which more than 50% of the total voting power of shares of Capital
Stock entitled (without regard to the occurrence of any contingency and
after giving effect to any voting agreement or stockholders' agreement
that effectively transfers voting power) to vote in the election of
directors, managers or trustees of the corporation, association or
other business entity is at the time owned or controlled, directly or
indirectly, by that Person or one or more of the other Subsidiaries of
that Person (or a combination thereof); and
(2) any partnership (A) the sole general partner or the
managing general partner of which is such Person or a Subsidiary of
such Person or (B) the only general partners of which are that Person
or one or more Subsidiaries of that Person (or any combination
thereof).
"Subsidiary Guarantee" means the Guarantee by each Subsidiary Guarantor
contained in this Guarantee Agreement of the Company's payment Obligations under
this Guarantee Agreement and the REI Guarantee.
"Subsidiary Guarantors" means each of:
(1) the entities listed on Schedule I hereto; and
(2) any other Restricted Subsidiary of the Company that
executes a supplemental guarantee agreement in accordance with the
provisions of this Guarantee Agreement,
and their respective successors and assigns.
"Texas Genco" means Texas Genco Holdings, Inc., a Texas corporation and
a 100% owner of Texas ▇▇▇▇▇, ▇▇, a Texas limited partnership.
35
"Texas Genco Intercreditor Agreement" means the Intercreditor Agreement
dated as of July 1, 2003 among Texas ▇▇▇▇▇, ▇.▇., Bank of America, N.A. and the
Collateral Trustee.
"Trustee" means the party named as such in the preamble to this
Guarantee Agreement until a successor replaces it in accordance with the
applicable provisions of the Indenture and thereafter means the successor
serving thereunder.
"Unrestricted Subsidiary" means (i) RE Retail Receivables, LLC, but
only to the extent that it continues to be a Securitization Entity, and (ii) any
Subsidiary of the Company or any successor to any of them that is designated by
the Board of Directors of the Company as an Unrestricted Subsidiary pursuant to
a Board Resolution, but only to the extent that such Subsidiary:
(1) has no Indebtedness other than Indebtedness that is
Non-Recourse to the Company and its Restricted Subsidiaries;
(2) is not party to any agreement, contract, arrangement or
understanding with the Company or any Restricted Subsidiary of the
Company unless the terms of any such agreement, contract, arrangement
or understanding are no less favorable to the Company or such
Restricted Subsidiary than those that might be obtained at the time
from Persons who are not Affiliates of the Company; and
(3) is a Person with respect to which neither the Company nor
any of its Restricted Subsidiaries has any direct or indirect
obligation (A) to subscribe for additional Equity Interests or (B) to
maintain or preserve such Person's financial condition or to cause such
Person to achieve any specified levels of operating results.
Any designation of a Subsidiary of the Company as an Unrestricted
Subsidiary shall be evidenced to the Trustee by filing with the Trustee a
certified copy of the Board Resolution giving effect to such designation and an
Officer's Certificate certifying that such designation complied with the
preceding conditions and was permitted by the provisions of Section 4.07 hereof.
If, at any time, any Unrestricted Subsidiary would fail to meet the preceding
requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an
Unrestricted Subsidiary for purposes of this Guarantee Agreement and any
Indebtedness of such Subsidiary shall be deemed to be incurred by a Restricted
Subsidiary of the Company as of such date and, if such Indebtedness is not
permitted to be incurred as of such date under the provisions of Section 4.09
hereof, the Company shall be in default of such Section. The Board of Directors
of the Company may at any time designate any Unrestricted Subsidiary to be a
Restricted Subsidiary; provided that such designation will be deemed to be an
incurrence of Indebtedness by a Restricted Subsidiary of the Company of any
outstanding Indebtedness of such Unrestricted Subsidiary and such designation
shall only be permitted if (1) such Indebtedness is permitted to be incurred
under the provisions of Section 4.09 hereof, calculated on a pro forma basis as
if such designation had occurred at the beginning of the four-quarter reference
period; and (2) no Default or Event of Default would be in existence following
such designation.
"Voting Stock" of any Person as of any date means the Capital Stock of
such Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing:
36
(1) the sum of the products obtained by multiplying (A) the
amount of each then remaining installment, sinking fund, serial
maturity or other required payments of principal, including payment at
final maturity, in respect of the Indebtedness, by (B) the number of
years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment; by
(2) the then outstanding principal amount of such
Indebtedness.
Section 1.02 Other Definitions.
Defined in
Term Section
---- -------
"Affiliate Transaction"............................................................. 4.11
"Change of Control Offer"........................................................... 4.15
"Change of Control Payment"......................................................... 4.15
"Change of Control Payment Date".................................................... 4.15
"Event of Default".................................................................. 6.01
"incur"............................................................................. 4.09
"Indemnitee"........................................................................ 10.07
"Permitted Debt".................................................................... 4.09
"Restricted Payments"............................................................... 4.07
"▇▇▇▇▇▇ Collateral" ................................................................ 13.02
"▇▇▇▇▇▇ Security Event" ............................................................ 13.01
"Shared Collateral"................................................................. 10.02
"Termination Date".................................................................. 4.23
Section 1.03 Definition of "Obligor."
"obligor" on the ▇▇▇▇▇▇ Guarantees means the Company and the Subsidiary
Guarantors, respectively, and any successor obligor upon the REI Guarantee and
the Subsidiary Guarantees, respectively.
Section 1.04 Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the
plural include the singular;
(5) "will" shall be interpreted to express a command;
(6) provisions apply to successive events and transactions;
and
37
(7) references to sections of or rules under the Securities
Act will be deemed to include substitute, replacement of successor
sections or rules adopted by the SEC from time to time.
ARTICLE 2.
DESIGNATED SENIOR DEBT
Section 2.01 Reserved.
Section 2.02 Reserved.
Section 2.03 Reserved.
Section 2.04 Reserved.
Section 2.05 Reserved.
Section 2.06 Reserved.
Section 2.07 Reserved.
Section 2.08 Reserved.
Section 2.09 Reserved.
Section 2.10 Reserved.
Section 2.11 Reserved.
Section 2.12 Reserved.
Section 2.13 Reserved.
Section 2.14 Designated Senior Debt.
For purposes of the Existing Convertible Notes Indenture, the REI
Guarantee issued under this Guarantee Agreement will be deemed to be "Designated
Senior Debt," as such term is defined in the Existing Convertible Notes
Indenture.
Section 2.15 Reserved.
ARTICLE 3.
REI GUARANTEE
Section 3.01 Guarantee.
38
(a) Subject to this Article 3, the Company hereby unconditionally
guarantees to each Holder of a Series 2002A Bond and to the Trustee and its
successors and assigns, irrespective of the validity and enforceability of this
Guarantee Agreement, the Indenture, the Series 2002A Bonds or the obligations of
the Company hereunder or thereunder, that:
(1) the principal of, and premium, if any, and interest on the
Series 2002A Bonds shall be promptly paid in full when due, whether at
maturity, by acceleration, redemption or otherwise;
(2) the purchase price of the Series 2002A Bonds payable
pursuant to Section 2.02 of the Indenture shall be promptly paid when
due; and
(3) in case of any extension of time of payment or renewal of
any Series 2002A Bonds or any of such other obligations, the same shall
be promptly paid in full when due or performed in accordance with the
terms of the extension or renewal, whether at stated maturity, by
acceleration or otherwise.
Failing payment when due of any amount so guaranteed for whatever
reason, the Company will obligated to pay the same immediately. The Company
agrees that this is a guarantee of payment and not a guarantee of collection.
(b) The Company hereby agrees that its obligations hereunder are
unconditional, irrespective of the validity, regularity or enforceability of the
Series 2002A Bonds, the Indenture or this Guarantee Agreement, the absence of
any action to enforce the same, any waiver or consent by any Holder of the
Series 2002A Bonds with respect to any provisions hereof or thereof, the
recovery of any judgment against PEDFA or the ▇▇▇▇▇▇ Subsidiary, any action to
enforce the same or any other circumstance which might otherwise constitute a
legal or equitable discharge or defense of a guarantor. The Company hereby
waives diligence, presentment, demand of payment, filing of claims with a court
in the event of insolvency or bankruptcy of PEDFA or the ▇▇▇▇▇▇ Subsidiary, any
right to require a proceeding first against PEDFA or the ▇▇▇▇▇▇ Subsidiary,
protest, notice and all demands whatsoever and covenants that the REI Guarantee
will not be discharged except by complete performance of the payment obligations
contained in Section 3.01(a).
(c) If any Holder or the Trustee is required by any court or otherwise
to return to the Company, the Subsidiary Guarantors or any custodian, trustee,
liquidator or other similar official acting in relation to either the Company or
the Subsidiary Guarantors, any amount paid by either to the Trustee or such
Holder, the REI Guarantee, to the extent theretofore discharged, shall be
reinstated in full force and effect.
(d) The Company agrees that it will not be entitled to any right of
subrogation in relation to the Holders in respect of any obligations guaranteed
hereby until payment in full of all obligations guaranteed hereby. The Company
further agrees that, as between the Company, on the one hand, and the Holders
and the Trustee, on the other hand, (1) the maturity of the obligations
guaranteed hereby may be accelerated as provided in the Indenture for the
purposes of the REI Guarantee, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the obligations
guaranteed hereby, and (2) in the event of any declaration of acceleration of
such obligations as provided in the Indenture, such obligations (whether or not
due and payable) will forthwith become due and payable by the Company for the
purpose of the REI Guarantee. The Company will have the right to seek
contribution from any non-paying Subsidiary Guarantor so long as the exercise of
such right does not impair the rights of the Holders under the REI Guarantee.
Section 3.02 Limitation on Liability.
39
The Company, and by its acceptance of Series 2002A Bonds, each Holder,
hereby confirms that it is the intention of all such parties that the REI
Guarantee of the Company not constitute a fraudulent transfer or conveyance for
purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform
Fraudulent Transfer Act or any similar federal or state law to the extent
applicable to any REI Guarantee. To effectuate the foregoing intention, the
Trustee, the Holders and the Company hereby irrevocably agree that the
obligations of the Company will be limited to the maximum amount that will,
after giving effect to such maximum amount and all other contingent and fixed
liabilities of the Company that are relevant under such laws, and after giving
effect to any collections from, rights to receive contribution from or payments
made by or on behalf of any Subsidiary Guarantor in respect of the obligations
of such Subsidiary Guarantor under Article 12 of this Guarantee Agreement,
result in the obligations of the Company under its REI Guarantee not
constituting a fraudulent transfer or conveyance.
Section 3.03 Execution and Delivery of Guarantee Agreement.
To evidence its REI Guarantee set forth in Section 3.01, the Company
hereby agrees that this Guarantee Agreement shall be executed on behalf of the
Company by one of its Officers.
Section 3.04 Releases.
(a) The REI Guarantee of the Company shall be released with respect to
the Series 2002A Bonds automatically upon satisfaction and discharge or
defeasance of the Series 2002A Bonds pursuant to the Indenture.
(b) Upon delivery by the Company to the Trustee of an Officer's
Certificate and an Opinion of Counsel to the effect that the action or event
giving rise to the release of the REI Guarantee pursuant to Section 3.04(a) has
occurred or was made by the Company in accordance with the provisions of this
Guarantee Agreement, the Trustee shall execute any documents reasonably required
in order to evidence the release of the Company from its obligations under the
REI Guarantee.
ARTICLE 4.
COVENANTS
Section 4.01 Reserved.
Section 4.02 Reserved.
Section 4.03 Reports.
(a) Whether or not required by the SEC's rules and regulations, so long
as any Series 2002A Bonds are outstanding, the Company shall furnish to Holders,
within the time periods specified in the SEC's rules and regulations:
(1) all quarterly and annual reports that would be required to
be filed with the SEC on Forms 10-Q and 10-K if the Company were
required to file such reports; and
(2) all current reports that would be required to be filed
with the SEC on Form 8-K if the Company were required to file such
reports.
All such reports shall be prepared in all material respects in
accordance with all of the rules and regulations applicable to such reports.
Each annual report on Form 10-K will include a report on the Company's
consolidated financial statements by the Company's certified independent
accountants. In
40
addition, the Company shall file a copy of each of the reports referred to in
clauses (1) and (2) above with the SEC for public availability within the time
periods specified in the rules and regulations applicable to such reports
(unless the SEC will not accept such a filing) and make such information
available to securities analysts and prospective investors upon reasonable
request.
If, at any time, the Company is no longer subject to the periodic
reporting requirements of the Exchange Act for any reason, the Company shall
nevertheless continue filing the reports specified in clauses (1) and (2) of
this Section 4.03(a) with the SEC within the time periods specified above unless
the SEC will not accept such a filing. The Company agrees that it shall not take
any action for the purpose of causing the SEC not to accept any such filings.
If, notwithstanding the foregoing, the SEC will not accept the Company's filings
for any reason, the Company shall post the reports referred to in the preceding
paragraph on its website within the time periods that would apply if the Company
were required to file those reports with the SEC.
(b) Reserved.
Section 4.04 Compliance Certificate.
(a) The Company shall deliver to the Trustee, within 90 days after the
end of each fiscal year, an Officer's Certificate stating that a review of the
activities of the Company and its Subsidiaries during the preceding fiscal year
has been made under the supervision of the signing Officers with a view to
determining whether the Company has kept, observed, performed and fulfilled its
obligations under this Guarantee Agreement and the Security Documents, and
further stating, as to each such Officer signing such certificate, that to the
best of his or her knowledge the Company has kept, observed, performed and
fulfilled each and every covenant contained in this Guarantee Agreement and the
Security Documents and is not in default in the performance or observance of any
of the terms, provisions and conditions of this Guarantee Agreement or the
Security Documents (or, if a Default or Event of Default has occurred,
describing all such Defaults or Events of Default of which he or she may have
knowledge and what action the Company is taking or proposes to take with respect
thereto) and that to the best of his or her knowledge no event has occurred and
remains in existence by reason of which payments pursuant to Section 3.01 of
this Guarantee Agreement are prohibited or if such event has occurred, a
description of the event and what action the Company is taking or proposes to
take with respect thereto. The Company's fiscal year ends December 31st.
(b) So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.03(a) above shall be accompanied by a
written statement of the Company's independent public accountants (who shall be
a firm of established national reputation) that in making the examination
necessary for certification of such financial statements, nothing has come to
their attention that would lead them to believe that the Company has violated
any provisions of Article 4 or Article 5 hereof in so far as such provisions
relate to financial and accounting matters or, if any such violation has
occurred, specifying the nature and period of existence thereof, it being
understood that such accountants shall not be liable directly or indirectly to
any Person for any failure to obtain knowledge of any such violation.
(c) So long as any of the Series 2002A Bonds are outstanding, the
Company shall deliver to the Trustee, forthwith upon any Officer becoming aware
of any Default or Event of Default, an Officer's Certificate specifying such
Default or Event of Default and what action the Company is taking or proposes to
take with respect thereto.
Section 4.05 Taxes.
41
The Company shall pay, and shall cause each of its Subsidiaries to pay,
prior to delinquency, all material taxes, assessments, and governmental levies
except such as are contested in good faith and by appropriate proceedings or
where the failure to effect such payment is not adverse in any material respect
to the Holders.
Section 4.06 Stay, Extension and Usury Laws.
The Company and each of the Subsidiary Guarantors covenants (to the
extent that it may lawfully do so) that they shall not at any time insist upon,
plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay, extension or usury law wherever enacted, now or at any time hereafter
in force, that may affect the covenants or the performance of this Guarantee
Agreement; and the Company and each of the Subsidiary Guarantors (to the extent
that they may lawfully do so) hereby expressly waive all benefit or advantage of
any such law, and covenant that they shall not, by resort to any such law,
hinder, delay or impede the execution of any power herein granted to the
Trustee, but shall suffer and permit the execution of every such power as though
no such law has been enacted.
Section 4.07 Restricted Payments.
(a) The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly:
(1) declare or pay any dividend or make any other payment or
distribution on account of the Company's or any of its Restricted
Subsidiaries' Equity Interests (including, without limitation, any
payment in connection with any merger or consolidation involving the
Company or any of its Restricted Subsidiaries) or to the direct or
indirect holders of the Company's or any of its Restricted
Subsidiaries' Equity Interests in their capacity as such (other than
dividends or distributions payable in Equity Interests (other than
Disqualified Stock) of the Company or to the Company or a Restricted
Subsidiary of the Company);
(2) purchase, redeem or otherwise acquire or retire for value
(including, without limitation, in connection with any merger or
consolidation involving the Company) any Equity Interests of the
Company;
(3) make any payment on or with respect to, or purchase,
redeem, defease or otherwise acquire or retire for value any
Indebtedness of the Company or of any Subsidiary Guarantor that is
contractually subordinated to the REI Guarantee or any Subsidiary
Guarantee (excluding any intercompany Indebtedness, intercompany
receivables or intercompany advances between or among any of the
Company and any of its Restricted Subsidiaries and Permitted PEDFA Bond
Indebtedness), except a payment of interest or principal at the Stated
Maturity thereof; or
(4) make any Restricted Investment (all such payments and
other actions set forth in these clauses (1) through (4) above being
collectively referred to as "Restricted Payments"),
unless, at the time of and after giving effect to such Restricted Payment:
(1) no Default or Event of Default has occurred and is
continuing or would occur as a consequence of such Restricted Payment;
and
(2) the Company would, at the time of such Restricted Payment
and after giving pro forma effect thereto as if such Restricted Payment
had been made at the beginning of the applicable four-quarter period,
have been permitted to incur at least $1.00 of additional
42
Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth
in Section 4.09(a) hereof; and
(3) such Restricted Payment, together with the aggregate
amount of all other Restricted Payments made by the Company and its
Restricted Subsidiaries after July 1, 2003 (excluding Restricted
Payments permitted by clauses (2) through (12) of paragraph (b) below),
is less than the sum, without duplication, of:
(A) 50% of the Consolidated Net Income of the Company
for the period (taken as one accounting period) from the
beginning of the first full fiscal quarter since July 1, 2003
to the end of the Company's most recently ended fiscal quarter
for which internal financial statements are available at the
time of such Restricted Payment (or, if such Consolidated Net
Income for such period is a deficit, less 100% of such
deficit), plus
(B) 100% of the aggregate net cash proceeds received
by the Company since July 1, 2003 as a contribution to its
common equity capital or surplus or from the issue or sale of
Equity Interests of the Company (other than Disqualified
Stock) or from the issue or sale of convertible or
exchangeable Disqualified Stock or convertible or exchangeable
debt securities of the Company that have been converted into
or exchanged for such Equity Interests (other than Equity
Interests (or Disqualified Stock or debt securities) sold to a
Subsidiary of the Company), plus
(C) to the extent that any Restricted Investment that
was made after July 1, 2003 is sold for cash or otherwise
liquidated or repaid for cash, the lesser of (i) the cash
return with respect to such Restricted Investment (less the
cost of disposition, if any) and (ii) the initial amount of
such Restricted Investment, plus
(D) 50% of any cash received by the Company or a
Restricted Subsidiary of the Company after July 1, 2003 from
an Unrestricted Subsidiary of the Company, to the extent that
such cash was not otherwise included in Consolidated Net
Income of the Company for such period and did not result in an
increase in the amount available for future Permitted
Investments, plus
(E) to the extent that any Unrestricted Subsidiary of
the Company is redesignated as a Restricted Subsidiary after
July 1, 2003, the Fair Market Value of the Company's
Investment in such Subsidiary as of the date of such
redesignation.
(b) The provisions of Section 4.07(a) hereof shall not prohibit:
(1) the payment of any dividend within 60 days after the date
of declaration of the dividend, if at the date of declaration the
dividend payment would have complied with the provisions of this
Guarantee Agreement;
(2) so long as no Default has occurred and is continuing or
would be caused thereby, the making of any Restricted Payment in
exchange for, or out of the net cash proceeds of, the substantially
concurrent sale (other than to a Restricted Subsidiary of the Company)
of, Equity Interests of the Company (other than Disqualified Stock) or
of the substantially concurrent contribution of common equity capital
or surplus to the Company, provided that the amount of any such net
cash proceeds that are utilized for any such redemption, repurchase,
retirement, defeasance or other acquisition shall be excluded from
clause (3)(B) of Section 4.07(a) hereof;
43
(3) the defeasance, redemption, repurchase or other
acquisition of Indebtedness of the Company or any Subsidiary Guarantor
that is subordinated to the REI Guarantee or to any Subsidiary
Guarantee with the net cash proceeds from a substantially concurrent
incurrence of Permitted Refinancing Indebtedness;
(4) the payment of any dividend (or, in the case of any
partnership or limited liability company, any similar distribution) by
a Restricted Subsidiary of the Company to the holders of its Equity
Interests on a pro rata basis;
(5) so long as no Default has occurred and is continuing or
would be caused thereby, (A) the repurchase, redemption or other
acquisition or retirement for value of any Equity Interests of the
Company or any Restricted Subsidiary of the Company in connection with
any management equity subscription agreement, stock option agreement,
shareholders' agreement, severance agreement, employee benefit plan or
agreement or similar agreement or (B) the repurchase for value of any
Equity Interests of the Company in the open market to satisfy stock
options issued by the Company that are outstanding; provided that the
aggregate price paid for all such repurchased, redeemed, acquired or
retired Equity Interests after the Issue Date may not exceed $25.0
million in any calendar year (or the pro rata portion thereof for the
calendar year 2004);
(6) the repurchase of Equity Interests deemed to occur upon
the exercise of stock options to the extent such Equity Interests
represent a portion of the exercise price of those stock options;
(7) the purchase by the Company of fractional shares upon
conversion of any securities of the Company into Equity Interests of
the Company;
(8) the declaration and payment of dividends (A) to holders of
any class or series of Disqualified Stock of the Company or any
Restricted Subsidiary of the Company issued on or after the Issue Date
in accordance with the Fixed Charge Coverage test set forth in Section
4.09(a) hereof;
(9) upon the occurrence of a Change of Control and after the
completion of the offer to repurchase the Series 2002A Bonds pursuant
to the provisions of Section 4.15 hereof (including the purchase of all
Series 2002A Bonds tendered), any purchase, defeasance, retirement,
redemption or other acquisition of Capital Stock or Indebtedness that
is contractually subordinated to the REI Guarantee or any Subsidiary
Guarantee required under the terms of such Capital Stock or
Indebtedness as a result of such Change of Control;
(10) the transactions with any Person (including any Affiliate
of the Company) set forth in clauses (1) and (4) of Section 4.11(b)
hereof and the funding of any obligations in connection therewith;
(11) the issuance of Equity Interests of the Company (other
than Disqualified Stock) for other Equity Interests of the Company in
connection with any rights offering and payments for the redemption of
fractional shares in connection with any rights offering; and
(12) so long as no Default has occurred and is continuing or
would be caused thereby, additional Restricted Payments in an aggregate
amount not to exceed $100.0 million since July 1, 2003.
44
The amount of all Restricted Payments (other than cash) shall be the
Fair Market Value on the date of the Restricted Payment of the asset(s) or
securities proposed to be transferred or issued by the Company or such
Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment.
For purposes of determining compliance with this Section 4.07, in the
event that a Restricted Payment meets the criteria of more than one of the types
of Restricted Payments described in the above clauses, the Company, in its sole
discretion, may order and classify, and from time to time may reorder and
reclassify, such Restricted Payment if it would have been permitted at the time
such Restricted Payment was made and at the time of any such reclassification.
Section 4.08 Dividend and Other Payment Restrictions Affecting Subsidiaries.
(a) The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or permit to exist or become
effective any consensual encumbrance or restriction on the ability of any
Restricted Subsidiary to:
(1) pay dividends or make any other distributions on its
Capital Stock to the Company or any of its Restricted Subsidiaries, or
with respect to any other interest or participation in, or measured by,
its profits, or pay any indebtedness owed to the Company or any of its
Restricted Subsidiaries;
(2) make loans or advances to the Company or any of its
Restricted Subsidiaries; or
(3) transfer any of its properties or assets to the Company or
any of its Restricted Subsidiaries.
(b) The restrictions in Section 4.08(a) hereof shall not apply to
encumbrances or restrictions existing under or by reason of:
(1) agreements as in effect on the Issue Date and any
amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings of those
agreements, provided that such amendments, modifications, restatements,
renewals, increases, supplements, refundings, replacement or
refinancings are not materially more restrictive, taken as a whole,
with respect to such dividend and other payment restrictions than those
contained in those agreements on the Issue Date as reasonably
determined by the Company or such Restricted Subsidiary;
(2) the ▇▇▇▇▇▇ ▇▇▇▇ Guarantees, the 2014 Notes Indenture, the
2014 Notes and the 2014 Note Guarantees;
(3) applicable law, rule, regulation or order;
(4) [Reserved];
(5) Indebtedness incurred by REMA pursuant to clause (4) of
Section 4.09(b) hereof;
(6) Indebtedness incurred by the ▇▇▇▇▇▇ Subsidiary consisting
of Permitted PEDFA Bond Indebtedness or Indebtedness evidenced by or in
support of the ▇▇▇▇▇▇ Tax-Exempt Bonds pursuant to clause (5) of
Section 4.09(b) hereof;
(7) [Reserved];
45
(8) [Reserved];
(9) customary non-assignment provisions in contracts,
agreements, leases, permits and licenses entered into or issued in the
ordinary course of business;
(10) purchase money obligations for property acquired in the
ordinary course of business and Capital Lease Obligations that impose
restrictions on the property purchased or leased of the nature
described in clause (3) of Section 4.08(a) hereof;
(11) any agreement for the sale or other disposition of a
Restricted Subsidiary that restricts distributions by that Restricted
Subsidiary pending the sale or other disposition;
(12) Permitted Refinancing Indebtedness; provided that the
restrictions contained in the agreements governing such Permitted
Refinancing Indebtedness are not materially more restrictive, taken as
a whole, than those contained in the agreements governing the
Indebtedness being refinanced, as reasonably determined by the Company
or such Restricted Subsidiary;
(13) Permitted Liens that limit the right of the debtor to
dispose of the assets subject to such Liens;
(14) provisions limiting or prohibiting the disposition or
distribution of assets or property in joint venture agreements, asset
sale agreements, sale-leaseback agreements, stock sale agreements and
other similar agreements entered into (i) in the ordinary course of
business or (ii) with the approval of the Company's or the Restricted
Subsidiary's Board of Directors or chief financial officer, which
limitation or prohibition is applicable only to the assets that are the
subject of such agreements;
(15) restrictions on cash or other deposits or net worth
imposed by customers under contracts entered into in the ordinary
course of business;
(16) any Purchase Money Note or other Indebtedness or any
contractual requirements of a Securitization Entity in connection with
a Qualified Securitization Transaction; provided that such restrictions
apply only to such Securitization Entity;
(17) restrictions or conditions contained in any trading,
netting, operating, construction, service, supply, purchase, sale or
similar agreement to which the Company or any Restricted Subsidiary of
the Company is a party entered into in the ordinary course of business;
provided that such agreement prohibits the encumbrance of solely the
property or assets of the Company or such Restricted Subsidiary that
are the subject of such agreement, the payment rights arising
thereunder and/or the proceeds thereof and not to any other asset or
property of the Company or such Restricted Subsidiary or the assets or
property of any other Restricted Subsidiary;
(18) Indebtedness of a Restricted Subsidiary of the Company
existing at the time it became a Restricted Subsidiary if such
restriction was not created in connection with or in anticipation of
the transaction or series of transactions pursuant to which such
Restricted Subsidiary became a Restricted Subsidiary or was acquired by
the Company; and
(19) with respect to clause (3) of Section 4.08(a) hereof
only, restrictions encumbering property at the time such property was
acquired by the Company or any of its Restricted Subsidiaries, so long
as such restrictions relate solely to the property so acquired and were
not created in connection with or in anticipation of such acquisition.
46
Section 4.09 Incurrence of Indebtedness and Issuance of Preferred Stock.
(a) The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee
or otherwise become directly or indirectly liable, contingently or otherwise,
with respect to (collectively, "incur") any Indebtedness (including Acquired
Debt), and the Company shall not issue any Disqualified Stock and shall not
permit any of its Restricted Subsidiaries to issue any shares of preferred
stock; provided, however, that the Company may incur Indebtedness (including
Acquired Debt) or issue Disqualified Stock, and the Subsidiary Guarantors may
incur Indebtedness (including Acquired Debt) or issue preferred stock, if the
Fixed Charge Coverage Ratio for the Company's most recently ended four full
fiscal quarters for which internal financial statements are available
immediately preceding the date on which such additional Indebtedness is incurred
or such Disqualified Stock or preferred stock is issued would have been at least
2.0 to 1, determined on a pro forma basis (including a pro forma application of
the net proceeds therefrom), as if the additional Indebtedness had been incurred
or the Disqualified Stock or preferred stock had been issued, as the case may
be, at the beginning of such four-quarter period.
(b) The provisions of Section 4.09(a) will not prohibit the incurrence
of any of the following items of Indebtedness (collectively, "Permitted Debt"):
(1) the incurrence (A) by the Company and the guarantee by the
Subsidiary Guarantors of additional Indebtedness and letters of credit
under Credit Facilities and (B) by Securitization Entities of
Indebtedness in Qualified Securitization Transactions in an aggregate
principal amount at any one time outstanding under this clause (1)
(with letters of credit being deemed to have a principal amount equal
to the maximum potential liability of the Company and its Restricted
Subsidiaries thereunder), including all Permitted Refinancing
Indebtedness incurred to refund, refinance or replace any Indebtedness
incurred pursuant to this clause (1), not to exceed the greater of:
(a) $3.0 billion; or
(b) $3.73 billion less the sum, without duplication,
of:
(i) the aggregate amount of all repayments,
optional or mandatory, of the principal of any term
Indebtedness under a Credit Facility (other than
repayments under Credit Facilities of Excluded
Subsidiaries, REMA and its Subsidiaries or the ▇▇▇▇▇▇
Subsidiary ) that have been made by the Company or
any of its Restricted Subsidiaries since the Issue
Date;
(ii) the aggregate amount, without
duplication, of all commitment reductions with
respect to any revolving credit borrowings under a
Credit Facility that have been made by the Company or
any of its Restricted Subsidiaries (other than Credit
Facilities of Excluded Subsidiaries, REMA and its
Subsidiaries or the ▇▇▇▇▇▇ Subsidiary) since the
Issue Date; and
(iii) the aggregate principal amount of
Indebtedness incurred pursuant to clause (5) of this
Section 4.09(b) (including all Permitted Refinancing
Indebtedness incurred to refund, refinance or replace
any Indebtedness incurred pursuant to such clause
(5)) that is at the time outstanding;
(2) [Reserved];
47
(3) [Reserved];
(4) the incurrence by REMA and its Subsidiaries of additional
Indebtedness and letters of credit under Credit Facilities of REMA or
any of its Subsidiaries in an aggregate principal amount at any one
time outstanding under this clause (4) (with letters of credit being
deemed to have a principal amount equal to the maximum potential
liability of REMA and its Subsidiaries thereunder), including all
Permitted Refinancing Indebtedness incurred to refund, refinance or
replace any Indebtedness incurred pursuant to this clause (4), not to
exceed $60.0 million;
(5) the incurrence by the Company and/or the ▇▇▇▇▇▇ Subsidiary
of (A) Permitted PEDFA Bond Indebtedness (including the Bonds) and/or
the guarantee thereof by the Company and/or the Subsidiary Guarantors
(including the ▇▇▇▇▇▇ ▇▇▇▇ Guarantees) or (B) Indebtedness evidenced by
or in support of the ▇▇▇▇▇▇ Tax-Exempt Bonds, in an aggregate principal
amount at any one time outstanding under this clause (5), including all
Permitted Refinancing Indebtedness incurred to refund, refinance or
replace any Indebtedness incurred pursuant to this clause (5), without
duplication, not to exceed $600.0 million less the aggregate amount of
all repayments, optional or mandatory, of the principal of any
Indebtedness incurred pursuant to this clause (5) that have been made
by the Company and/or the Subsidiary Guarantors and/or the ▇▇▇▇▇▇
Subsidiary since the Issue Date;
(6) [Reserved];
(7) [Reserved];
(8) the issuance of Specified Junior Securities by the
Company, including all Permitted Refinancing Indebtedness incurred to
refund, refinance or replace any Indebtedness incurred pursuant to this
clause (8); provided that at least 50% of the net proceeds of such
issuance (other than proceeds that are used by the Company or any
Subsidiary Guarantor to acquire Permitted ERCOT Assets) are applied to
the repayment of term Indebtedness under the Company's Credit
Facilities; provided, further, that if there is any change in the terms
of such Specified Junior Securities that results in such securities no
longer meeting all of the requirements of the definition of "Specified
Junior Securities," then such change will be deemed to constitute an
incurrence of Indebtedness by the Company that was not permitted by
this clause (8);
(9) the incurrence by the Company and its Restricted
Subsidiaries of the Existing Indebtedness, including the Existing
Convertible Notes, the Existing Notes, Reliant Energy Channelview's
Indebtedness, Orion Power Holdings, Inc.'s Senior Notes due 2010 and
Indebtedness under the REMA Lease, and including all Permitted
Refinancing Indebtedness incurred to refund, refinance or replace any
Indebtedness incurred pursuant to this clause (9);
(10) the incurrence by the Company and the Subsidiary
Guarantors of Indebtedness represented by the 2014 Notes and the
related 2014 Note Guarantees issued on the Issue Date and the
incurrence by any Restricted Subsidiary of the Company of any other
2014 Note Guarantee of the 2014 Notes, including all Permitted
Refinancing Indebtedness incurred to refund, refinance or replace any
Indebtedness incurred pursuant to this clause (10);
(11) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness represented by Capital Lease Obligations,
mortgage financings or purchase money obligations, in each case,
incurred for the purpose of financing all or any part of the purchase
price or cost of design, construction, installation or improvement of
property, plant or equipment used in the business of the Company or any
of its Restricted Subsidiaries, in an aggregate principal amount,
48
including all Permitted Refinancing Indebtedness incurred to refund,
refinance or replace any Indebtedness incurred pursuant to this clause
(11), not to exceed $100.0 million at any one time outstanding;
(12) the incurrence by the Company or any of its Restricted
Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or
the net proceeds of which are used to refund, refinance or replace
Indebtedness (other than intercompany Indebtedness) that was permitted
to be incurred under Section 4.09(a) hereof or clauses (1), (4), (5),
(8), (9), (10), (11), (12) or (21) of this Section 4.09(b);
(13) the incurrence by the Company or any of its Restricted
Subsidiaries of intercompany Indebtedness between or among the Company
and any of its Restricted Subsidiaries; provided, however, that:
(a) if the Company or any Subsidiary Guarantor is the
obligor on such Indebtedness and (i) the payee is not the Company or a
Subsidiary Guarantor or (ii) such Indebtedness constitutes Excluded
Securities, such Indebtedness (except Permitted PEDFA Bond
Indebtedness) must be expressly subordinated to the prior payment in
full in cash of all Obligations then due with respect to the REI
Guarantee, in the case of the Company, or the Subsidiary Guarantee, in
the case of a Subsidiary Guarantor; and
(b) (i) any subsequent issuance or transfer of Equity
Interests that results in any such Indebtedness being held by a Person
other than the Company or a Restricted Subsidiary of the Company and
(ii) any sale or other transfer of any such Indebtedness to a Person
that is not either the Company or a Restricted Subsidiary of the
Company (except transfers to the Collateral Trustee to secure Secured
Obligations) shall be deemed, in each case, to constitute an incurrence
of such Indebtedness by the Company or such Restricted Subsidiary, as
the case may be, that was not permitted by this clause (13);
(14) the incurrence by any Subsidiary Guarantor of any
Guarantee of Parity Secured Debt or any other Obligation that
guarantees, secures or supports, Equally and Ratably, all of the Parity
Secured Debt and Parity Secured Obligations;
(15) the issuance by any of the Company's Restricted
Subsidiaries to the Company or to any of its Restricted Subsidiaries of
shares of preferred stock; provided, however, that:
(a) any subsequent issuance or transfer of Equity
Interests that results in any such preferred stock being held by a
Person other than the Company or a Restricted Subsidiary of the
Company; and
(b) any sale or other transfer of any such preferred
stock to a Person that is not either the Company or a Restricted
Subsidiary of the Company,
shall be deemed, in each case, to constitute an issuance of such
preferred stock by the Company or such Restricted Subsidiary, as the
case may be, that was not permitted by this clause (15);
(16) the incurrence by the Company or any of its Restricted
Subsidiaries of Hedging Obligations in the ordinary course of business
and not for speculative purposes;
(17) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness in respect of workers' compensation
claims, self-insurance obligations, bankers' acceptances,
49
performance and surety bonds provided by the Company or a Restricted
Subsidiary in the ordinary course of business;
(18) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness arising from the honoring by a bank or
other financial institution of a check, draft or similar instrument
inadvertently drawn against insufficient funds, so long as such
Indebtedness is covered within five business days;
(19) the incurrence of Indebtedness arising from agreements of
the Company or a Restricted Subsidiary providing for indemnification,
adjustment of purchase price or similar obligations, in each case,
incurred or assumed in connection with the disposition of any business,
assets or Equity Interests of a Subsidiary; provided that the maximum
aggregate liability in respect of all such Indebtedness shall at no
time exceed the gross proceeds (including non-cash proceeds) actually
received by the Company and/or such Restricted Subsidiary in connection
with such disposition;
(20) the Guarantee by the Company or any Subsidiary Guarantor
of Indebtedness that was permitted to be incurred by Section 4.09(a)
hereof or clauses (8), (11) or (21) of this Section 4.09(b); and
(21) the incurrence by the Company or any of its Restricted
Subsidiaries of additional Indebtedness in an aggregate principal
amount (or accreted value, as applicable) at any time outstanding
pursuant to this clause (21), including all Permitted Refinancing
Indebtedness incurred to refund, refinance or replace any Indebtedness
incurred pursuant to this clause (21), not to exceed $500.0 million
(which may, but need not, be incurred under a Credit Facility).
The Company shall not, and shall not permit any Subsidiary Guarantor
to, incur any Indebtedness (including Permitted Debt) that is contractually
subordinated in right of payment to any other Indebtedness of the Company or
that Subsidiary Guarantor (except Permitted PEDFA Bond Indebtedness) unless such
Indebtedness is also contractually subordinated in right of payment to the REI
Guarantee or the applicable Subsidiary Guarantee on substantially identical
terms; provided, however, that no Indebtedness of the Company shall be deemed to
be contractually subordinated in right of payment to any other Indebtedness of
the Company solely by virtue of being unsecured or by virtue of being secured on
a junior basis.
For purposes of determining compliance with this Section 4.09, in the
event that an item of proposed Indebtedness meets the criteria of more than one
of the categories of Permitted Debt described in clauses (1) through (21) of
Section 4.09(b) hereof, or is entitled to be incurred pursuant to Section
4.09(a) hereof, the Company shall be permitted to classify such item of
Indebtedness on the date of its incurrence, or later reclassify from time to
time all or a portion of such item of Indebtedness, in any manner that complies
with this Section 4.09. Indebtedness under Credit Facilities outstanding on the
Issue Date shall initially be deemed to have been incurred on such date in
reliance on the exception provided by clauses (1), (4) and (9) of Section
4.09(b) hereof, as applicable, and all Permitted PEDFA Bond Indebtedness,
including the Bonds, the Loan Agreements and the ▇▇▇▇▇▇ ▇▇▇▇ Guarantees, and
other Indebtedness evidenced by or in support of the ▇▇▇▇▇▇ Tax-Exempt Bonds
outstanding on the Issue Date shall initially be deemed to have been incurred on
such date in reliance on the exception provided by clause (5) of Section 4.09(b)
hereof. The accrual of interest, the accretion or amortization of original issue
discount, the payment of interest on any Indebtedness in the form of additional
Indebtedness with the same terms, and the payment of dividends on Disqualified
Stock in the form of additional shares of the same class of Disqualified Stock
shall not be deemed to be an incurrence of Indebtedness or an issuance of
Disqualified Stock for purposes of this Section 4.09; provided, in each such
case, that the amount
50
thereof is included in Fixed Charges of the Company as accrued. Notwithstanding
any other provision of this Section 4.09, the maximum amount of Indebtedness
that the Company or any Restricted Subsidiary may incur pursuant to this Section
4.09 shall not be deemed to be exceeded solely as a result of fluctuations in
exchange rates or currency values.
Section 4.10 Reserved.
Section 4.11 Transactions with Affiliates.
(a) The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or make or amend any transaction, contract,
agreement, understanding, loan, advance or guarantee with, or for the benefit
of, any Affiliate of the Company (each, an "Affiliate Transaction"), unless:
(1) such Affiliate Transaction is on terms that are no less
favorable (as reasonably determined by the Company) to the Company or
the relevant Restricted Subsidiary than those that would have been
obtained in a comparable transaction by the Company or such Restricted
Subsidiary with an unrelated Person; and
(2) the Company delivers to the Trustee:
(A) with respect to any Affiliate Transaction or
series of related Affiliate Transactions involving aggregate
consideration in excess of $25.0 million, a resolution of the
Board of Directors set forth in an Officer's Certificate
certifying that such Affiliate Transaction complies with this
Section 4.11(a) and that such Affiliate Transaction has been
approved by a majority of the disinterested members of the
Board of Directors; and
(B) with respect to any Affiliate Transaction or
series of related Affiliate Transactions involving aggregate
consideration in excess of $35.0 million, an opinion as to the
fairness to the Company or such Restricted Subsidiary of such
Affiliate Transaction from a financial point of view issued by
an accounting, appraisal or investment banking firm of
national standing.
(b) The following items shall not be deemed to be Affiliate
Transactions and, therefore, shall not be subject to the provisions of Section
4.11(a) hereof:
(1) any employment agreement or director's engagement
agreement, employee benefit plan, officer and director indemnification
agreement or any similar arrangement entered into by the Company or any
of its Restricted Subsidiaries in the ordinary course of business or
approved by the relevant Board of Directors;
(2) transactions between or among the Company and/or its
Restricted Subsidiaries;
(3) transactions with a Person that is an Affiliate of the
Company solely because the Company owns, directly or through a
Restricted Subsidiary, an Equity Interest in, or controls, such Person;
(4) payment of reasonable directors' fees to Persons who are
not otherwise Affiliates of the Company;
51
(5) any issuance of Equity Interests (other than Disqualified
Stock) of the Company to Affiliates of the Company;
(6) Restricted Payments that do not violate the provisions of
Section 4.07 hereof;
(7) transactions effected as part of a Qualified
Securitization Transaction;
(8) loans or advances to employees in the ordinary course of
business not to exceed $10.0 million in the aggregate outstanding at
any one time;
(9) any agreement, instrument or arrangement as in effect as
of the Issue Date or any amendment thereto or any transaction
contemplated thereby (including pursuant to any amendment thereto) in
any replacement agreement thereto so long as any such amendment or
replacement agreement is not more disadvantageous to the Holders in any
material respect than the original agreement as in effect on the Issue
Date as determined by the Company;
(10) any pro rata distribution (including a rights offering)
to all holders of a class of Equity Interests or Indebtedness of the
Company or any of its Restricted Subsidiaries, including Persons who
are Affiliates of the Company or any of its Restricted Subsidiaries;
and
(11) any transaction involving sales of electric capacity,
energy, ancillary services, transmission services and products, steam,
emissions credits, fuel, fuel transportation and fuel storage in the
ordinary course of business on terms that are no less favorable (as
reasonably determined by the Company) to the Company or the relevant
Restricted Subsidiary of the Company than those that would have been
obtained in a comparable transaction by the Company or such Restricted
Subsidiary with an unrelated Person.
Section 4.12 Liens.
The Company shall not and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, assume or otherwise
cause or suffer to exist or become effective any Lien of any kind on any asset
now owned or hereafter acquired, except Permitted Liens.
Section 4.13 Line of Business.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, engage in any business other than Permitted Businesses, except
to such extent as would not be material to the Company and its Subsidiaries
taken as a whole.
Section 4.14 Corporate Existence.
Subject to Article 5 hereof, the Company shall do or cause to be done
all things necessary to preserve and keep in full force and effect:
(1) its corporate existence, and the corporate, partnership or
other existence of each of its Subsidiaries, in accordance with the
respective organizational documents (as the same may be amended from
time to time) of the Company or any such Subsidiary; and
(2) the rights (charter and statutory), licenses and
franchises of the Company and its Subsidiaries; provided, however, that
the Company shall not be required to preserve any such right, license
or franchise, or the corporate, partnership or other existence of any
of its
52
Subsidiaries, if (a) the Company shall determine that the preservation
thereof is no longer desirable in the conduct of the business of the
Company and its Subsidiaries, taken as a whole, and that the loss
thereof is not adverse in any material respect to the Holders of the
Series 2002A Bonds and (b) if a Subsidiary is to be dissolved, such
Subsidiary has no assets.
Section 4.15 Offer to Repurchase Upon Change of Control.
(a) Upon the occurrence of a Change of Control, the Company shall make
an offer (a "Change of Control Offer") to each Holder to repurchase all or any
part (equal to $100,000 or an integral multiple of $5,000 in excess of $100,000)
of each Holder's Series 2002A Bonds at a purchase price equal to 101% of the
aggregate principal amount thereof plus accrued and unpaid interest on the
Series ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, if any, to the date of purchase (the "Change of
Control Payment"). Within thirty days following any Change of Control, the
Company shall mail a notice to each Holder describing the transaction or
transactions that constitute the Change of Control and stating:
(1) that the Change of Control Offer is being made pursuant to
this Section 4.15 and that all Series 2002A Bonds tendered will be
accepted for payment;
(2) the purchase price and the purchase date, which date will
be no earlier than 30 days and no later than 60 days from the date such
notice is mailed (the "Change of Control Payment Date");
(3) [Reserved];
(4) [Reserved];
(5) that Holders electing to have any Series 2002A Bonds
purchased pursuant to a Change of Control Offer shall be required to
surrender the Series 2002A Bonds to the paying agent at the address
specified in the notice prior to the close of business on the third
Business Day preceding the Change of Control Payment Date;
(6) that Holders will be entitled to withdraw their election
if such paying agent receives, not later than the close of business on
the second Business Day preceding the Change of Control Payment Date, a
telegram, telex, facsimile transmission or letter setting forth the
name of the Holder, the principal amount of Series 2002A Bonds
delivered for purchase, and a statement that such Holder is withdrawing
his election to have the Series 2002A Bonds purchased; and
(7) [Reserved].
The Company shall comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent those laws and regulations are applicable in connection with the
repurchase of the Series 2002A Bonds as a result of a Change in Control. To the
extent that the provisions of any securities laws or regulations conflict with
the provisions of Section 4.15 of this Guarantee Agreement, the Company shall
comply with the applicable securities laws and regulations and will not be
deemed to have breached its obligations under this Section 4.15 by virtue of
such conflict.
(b) On the Change of Control Payment Date, the Company shall, to the
extent lawful:
(1) accept for payment all Series 2002A Bonds or portions of
Series 2002A Bonds properly tendered pursuant to the Change of Control
Offer;
53
(2) deposit with the paying agent an amount equal to the
Change of Control Payment in respect of all Series 2002A Bonds or
portions of Series 2002A Bonds properly tendered; and
(3) deliver or cause to be delivered to the Trustee the Series
2002A Bonds properly accepted together with an Officer's Certificate
stating the aggregate principal amount of Series 2002A Bonds or
portions of Series 2002A Bonds being purchased by the Company.
The Company shall publicly announce the results of the Change of
Control Offer on or as soon as practicable after the Change of Control Payment
Date.
(c) Notwithstanding anything to the contrary in this Section 4.15, the
Company shall not be required to make a Change of Control Offer upon a Change of
Control if (1) a third party makes the Change of Control Offer in the manner, at
the times and otherwise in compliance with the requirements set forth in this
Section 4.15 hereof and purchases all Series 2002A Bonds properly tendered and
not withdrawn under the Change of Control Offer or (2) notice of redemption has
been given pursuant to the Indenture unless and until there is a default in
payment of the applicable redemption price.
Section 4.16 Limitation on Sale and Leaseback Transactions.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, enter into any sale and leaseback transaction; provided that
the Company or any Restricted Subsidiary may enter into a sale and leaseback
transaction if:
(1) the Company or that Restricted Subsidiary, as applicable,
could have incurred Indebtedness in an amount equal to the Attributable
Debt relating to such sale and leaseback transaction under the
provisions of Section 4.09 hereof; and
(2) the gross cash proceeds of that sale and leaseback
transaction are at least equal to the Fair Market Value of the property
that is the subject of that sale and leaseback transaction.
The preceding restrictions shall not apply to a sale and leaseback
transaction entered into between the Company and a Restricted Subsidiary or
between Restricted Subsidiaries of the Company.
Section 4.17 Payments for Consent.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, pay or cause to be paid any monetary
consideration to or for the benefit of any Holder for or as an inducement to any
consent under or waiver or amendment of any of the terms or provisions of this
Guarantee Agreement unless such consideration is offered to be paid and is paid
to all Holders that consent, waive or agree to amend in the time frame set forth
in the solicitation documents relating to such consent, waiver or agreement.
Section 4.18 Additional Subsidiary Guarantees.
If after the Issue Date but before the ▇▇▇▇▇▇ Security Event the
Company or any of its Restricted Subsidiaries acquires or creates another
Domestic Subsidiary that is required to become a guarantor of any borrowings
under the Credit Agreement or any other Indebtedness of the Company, or any
Excluded Subsidiary ceases to be an Excluded Subsidiary, then that Domestic
Subsidiary or former Excluded Subsidiary shall become a Subsidiary Guarantor and
(A) execute a supplemental guarantee agreement substantially in the form as
Exhibit A hereto and a joinder agreement to the Security Documents in form and
substance reasonably satisfactory to the Trustee providing that such Subsidiary
shall become a
54
Subsidiary Guarantor under this Guarantee Agreement and a party as grantor to
the Security Documents and (B) deliver an Opinion of Counsel satisfactory to the
Trustee, in each case, within 30 Business Days of the date on which it was
required to become a guarantor of any borrowings under the Credit Agreement or
any other Indebtedness of the Company, or any Excluded Subsidiary ceases to be
an Excluded Subsidiary.
Section 4.19 Changes in Covenants When Series 2002A Bonds Rated Investment
Grade.
If on any date following the Issue Date:
(a) the rating assigned to the Series 2002A Bonds by either S&P or
▇▇▇▇▇'▇ is an Investment Grade Rating, and
(b) no Default or Event of Default shall have occurred and be
continuing,
then, beginning on that day and subject to the provisions of the following
paragraph, the provisions of Sections 4.07, 4.08, 4.09, 4.11, 4.20 and clause
(4) of Section 5.01 hereof shall be suspended.
Notwithstanding the foregoing, if the ratings assigned by both such
rating agencies with respect to the Series 2002A Bonds should subsequently
decline to below an Investment Grade Rating, the provisions of Sections 4.07,
4.08, 4.09, 4.11, 4.20 and clause (4) of Section 5.01 hereof shall be
reinstituted as of and from the date of such rating decline. The provisions of
Section 4.07 hereof shall be interpreted as if they had been in effect since
July 1, 2003 except that no default will be deemed to have occurred solely by
reason of a Restricted Payment made or declared (and later made) in accordance
with the provisions of Section 4.07(b)(1) while the provisions of such Section
were suspended.
Section 4.20 Designation of Restricted and Unrestricted Subsidiaries.
The Board of Directors may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if that designation would not cause a Default. If a
Restricted Subsidiary is designated as an Unrestricted Subsidiary, the aggregate
Fair Market Value of all outstanding Investments owned by the Company and its
Restricted Subsidiaries in the Subsidiary properly designated shall be deemed to
be an Investment made as of the time of the designation and shall reduce the
amount available for Restricted Payments under Section 4.07(a) hereof or under
the definition of Permitted Investments, as determined by the Company. That
designation shall only be permitted if the Investment would be permitted at that
time and if the Restricted Subsidiary otherwise meets the definition of an
Unrestricted Subsidiary. The Board of Directors may redesignate any Unrestricted
Subsidiary to be a Restricted Subsidiary.
Section 4.21 Reserved.
Section 4.22 Insurance.
The Company and the Subsidiary Guarantors shall maintain with
financially sound and reputable insurance companies, insurance on their property
and assets (including the Shared Collateral) in at least such amounts, with such
deductibles and against at least such risks as is customary for companies of the
same or similar size engaged in the same or similar businesses as those of the
Company and the Subsidiary Guarantors and furnish to the Collateral Trustee,
upon written request, full information as to its property and liability
insurance carriers. Holders of Bonds, as a class, will be named as an additional
insured on all liability insurance policies of the Company and its Restricted
Subsidiaries and the Collateral Trustee will be named as loss payee on all
property and casualty insurance policies of each such person.
55
Section 4.23 Subordination of Intercompany Indebtedness.
(a) Each of the Company and the Subsidiary Guarantors hereby agrees
that any intercompany Indebtedness or other intercompany receivables,
intercompany payables or intercompany advances directly or indirectly made by or
owed to the Company or such Subsidiary Guarantor by any Subsidiary Guarantor or
the Company, as applicable, of whatever nature at any time outstanding shall be
subordinate and subject in right of payment to the prior indefeasible payment in
full in cash of the ▇▇▇▇▇▇ Guarantee Obligations. Each of the Company and the
Subsidiary Guarantors hereby agrees that it shall not become obligated or
otherwise liable for any intercompany Indebtedness, or other intercompany
receivable, intercompany payable or intercompany advance that is owed to any
Person other than the Company or any Subsidiary Guarantor, unless such Person
agrees that such Indebtedness, receivable, payable or advance (as applicable) is
completely subordinated to the ▇▇▇▇▇▇ Guarantee Obligations and subject in right
of payment to the prior indefeasible payment in full in cash of the ▇▇▇▇▇▇
Guarantee Obligations, and that no payment on any such Indebtedness, receivable,
payable or advance shall be made by the Company or any Subsidiary Guarantor
until the earliest to occur of: (i) satisfaction and discharge of the Series
2002A Bonds pursuant to the Indenture, (ii) defeasance of the Series 2002A Bonds
pursuant to the Indenture or (iii) payment in full in cash of all ▇▇▇▇▇▇
Guarantee Obligations that are outstanding, due and payable at the time the
Series 2002A Bonds are paid in full in cash (for purposes of this Section 4.23,
only, collectively the "Termination Date"); except: intercompany receivables,
intercompany payables, intercompany advances and intercompany Indebtedness made
to, or on behalf of, any Person, other than the Company or any Subsidiary
Guarantor, permitted pursuant to the terms hereof may be paid or repaid, in each
case so long as no Event of Default shall have occurred and be continuing;
provided, however, that the foregoing shall not apply to any intercompany
Indebtedness or other intercompany receivable, intercompany payable or
intercompany advance with a Person, other than the Company or any Subsidiary
Guarantor, where such Person is expressly prohibited from agreeing to the
foregoing subordination pursuant to the terms and provisions of the definitive
credit documentation with respect to Indebtedness of such Person for borrowed
money listed on Schedule 7.3(k) to the Credit Agreement.
(b) In the event that any payment on any such intercompany
Indebtedness, receivable, payable or advance shall be received by the Company or
any Subsidiary Guarantor other than as permitted by Section 4.23(a) before the
Termination Date, the Company or such Subsidiary Guarantor, as applicable, shall
receive such payments and hold the same in trust for, segregate the same from
its own assets and shall immediately pay over to, the Collateral Trustee for the
benefit of the holders of Parity Secured Debt all such sums to the extent
necessary so that the holders of Parity Secured Debt shall have been
indefeasibly paid in full, in cash, all ▇▇▇▇▇▇ Guarantee Obligations owed or
which may become owing.
ARTICLE 5.
SUCCESSORS
Section 5.01 Merger, Consolidation, or Sale of Assets.
The Company shall not, directly or indirectly: (1) consolidate or merge
with or into another Person (whether or not the Company is the surviving
corporation); or (2) sell, assign, transfer, convey or otherwise dispose of all
or substantially all of the properties or assets of the Company and its
Restricted Subsidiaries taken as a whole, in one or more related transactions,
to another Person; unless:
(1) either:
(A) the Company is the surviving corporation; or
56
(B) the Person formed by or surviving any such
consolidation or merger (if other than the Company) or to
which such sale, assignment, transfer, conveyance or other
disposition has been made is a corporation, partnership or
limited liability company organized or existing under the laws
of the United States, any state thereof or the District of
Columbia;
(2) the Person formed by or surviving any such consolidation
or merger (if other than the Company) or the Person to which such sale,
assignment, transfer, conveyance or other disposition has been made
assumes all the obligations of the Company under this Guarantee
Agreement and the Security Documents pursuant to a supplemental
guarantee agreement reasonably satisfactory to the Trustee;
(3) immediately after such transaction, no Default or Event of
Default exists; and
(4) the Company or the Person formed by or surviving any such
consolidation or merger (if other than the Company), or to which such
sale, assignment, transfer, conveyance or other disposition has been
made:
(A) would have Consolidated Net Worth immediately
after the transaction equal to or greater than the
Consolidated Net Worth of the Company immediately preceding
the transaction; and
(B) would, on the date of such transaction after
giving pro forma effect thereto and to any related financing
transactions as if the same had occurred at the beginning of
the applicable four-quarter period, either (i) have a pro
forma Fixed Charge Coverage Ratio that is at least equal to
the actual Fixed Charge Coverage Ratio of the Company as of
such date or (ii) be permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Fixed Charge Coverage
Ratio test set forth in Section 4.09(a).
In addition, the Company shall not, directly or indirectly, lease all
or substantially all of its properties or assets, in one or more related
transactions, to any other Person.
Notwithstanding the foregoing:
(1) any Restricted Subsidiary of the Company may consolidate
with, merge into or transfer all or part of its properties and assets
to the Company or any other Restricted Subsidiary of the Company; and
(2) the Company may merge with an Affiliate solely for the
purpose of reincorporating the Company or re-forming in another
jurisdiction.
Section 5.02 Successor Corporation Substituted.
Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the assets
of the Company and its Restricted Subsidiaries taken as a whole in a transaction
that is subject to, and that complies with the provisions of, Section 5.01
hereof, the successor corporation formed by such consolidation or into or with
which the Company is merged or to which such sale, assignment, transfer, lease,
conveyance or other disposition is made shall succeed to, and be substituted for
(so that from and after the date of such consolidation, merger, sale, lease,
conveyance or other disposition, the provisions of this Guarantee Agreement
referring to the "Company" shall refer instead to the successor corporation and
not to the Company), and may exercise every right and
57
power of the Company under this Guarantee Agreement with the same effect as if
such successor Person had been named as the Company herein; provided, however,
that the predecessor Company shall not be relieved from the obligation to pay
the principal or purchase price of, or interest, premium on the Series 2002A
Bonds except in the case of a sale of all of the Company's assets in a
transaction that is subject to, and that complies with the provisions of,
Section 5.01 hereof.
ARTICLE 6.
DEFAULTS AND REMEDIES
Section 6.01 Events of Default.
Each of the following is an "Event of Default":
(1) the default in the payment when due of the principal or
purchase price of, or premium, if any, or interest on the Series 2002A
Bonds, after any applicable grace periods;
(2) [Reserved];
(3) the Company or any of its Restricted Subsidiaries fails to
comply with the provisions of Sections 4.15 or 5.01 hereof for 30 days
after notice to the Company from the Trustee or the Holders of at least
25% in the aggregate principal amount of Series 2002A Bonds then
outstanding;
(4) the Company or any of its Restricted Subsidiaries fails to
observe or perform any other covenant, representation, warranty or
other agreement in this Guarantee Agreement, the Security Documents or
the ▇▇▇▇▇▇ Security Documents for 60 days after notice to the Company
from the Trustee or the Holders of at least 25% in aggregate principal
amount of Series 2002A Bonds then outstanding;
(5) default under any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced
any Indebtedness for money borrowed by the Company or any of its
Restricted Subsidiaries other than (A) Reliant Energy Channelview, L.P.
and its Subsidiaries so long as, taken together, they would not
constitute a Significant Subsidiary and (B) Reliant Energy Retail
Holdings, LLC or its successor or any Subsidiary thereof in connection
with a Qualified Securitization Transaction (or the payment of which is
guaranteed by the Company or any of its Restricted Subsidiaries)
whether such Indebtedness or guarantee now exists, or is created after
the Issue Date, if that default:
(a) is caused by a failure to pay principal or
purchase price of, or interest or premium, if any, on such Indebtedness
after the expiration of the grace period provided in such Indebtedness
on the date of such default (a "Payment Default"); or
(b) results in the acceleration of such Indebtedness
prior to its express maturity,
and, in each case, the principal amount of any such Indebtedness,
together with the principal amount of any other such Indebtedness under
which there has been a Payment Default or the maturity of which has
been so accelerated, aggregates $50.0 million or more;
(6) failure by the Company or any of its Restricted
Subsidiaries to pay final and non-appealable judgments aggregating in
excess of $50.0 million, which are not covered by
58
indemnities or third-party insurance, which judgments are not paid,
discharged, vacated or stayed for a period of 60 days;
(7) the repudiation by the Company or any of its Restricted
Subsidiaries of any of its obligations under any of the Security
Documents or the ▇▇▇▇▇▇ Security Documents or the unenforceability of
any of the Security Documents or the ▇▇▇▇▇▇ Security Documents against
the Company or any of its Restricted Subsidiaries for any reason if
such unenforceability is applicable to Collateral having an aggregate
Fair Market Value of $50.0 million or more;
(8) any Security Document or ▇▇▇▇▇▇ Security Document or any
Lien purported to be granted thereby on assets having a Fair Market
Value in excess of $50.0 million is held in any judicial proceeding to
be unenforceable or invalid, in whole or in part, or ceases for any
reason within the control of the Company or any of its Restricted
Subsidiaries (other than pursuant to a release that is delivered or
becomes effective as set forth in this Guarantee Agreement) to be fully
enforceable and perfected;
(9) except as permitted by this Guarantee Agreement, any
Subsidiary Guarantee of a Significant Subsidiary is held in any
judicial proceeding to be unenforceable or invalid or ceases for any
reason to be in full force and effect or any Subsidiary Guarantor that
is a Significant Subsidiary, or any Person acting on behalf of any
Subsidiary Guarantor that is a Significant Subsidiary, denies or
disaffirms its obligations under its Subsidiary Guarantee;
(10) the Company or any of its Restricted Subsidiaries that is
a Significant Subsidiary or any group of Restricted Subsidiaries that,
taken as a whole, would constitute a Significant Subsidiary pursuant to
or within the meaning of Bankruptcy Law:
(a) commences a voluntary case,
(b) consents to the entry of an order for relief
against it in an involuntary case,
(c) consents to the appointment of a custodian of it
or for all or substantially all of its property,
(d) makes a general assignment for the benefit of its
creditors, or
(e) generally is not paying its debts as they become
due; or
(11) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(a) is for relief against the Company or any of its
Restricted Subsidiaries that is a Significant Subsidiary any group of
Restricted Subsidiaries that, taken as a whole, would constitute a
Significant Subsidiary in an involuntary case;
(b) appoints a custodian of the Company or any of its
Restricted Subsidiaries that is a Significant Subsidiary or any group
of Restricted Subsidiaries that, taken as a whole, would constitute a
Significant Subsidiary or for all or substantially all of the property
of the Company or any of its Significant Subsidiaries or any group of
Restricted Subsidiaries that, taken as a whole, would constitute a
Significant Subsidiary; or
59
(c) orders the liquidation of the Company or any of
its Restricted Subsidiaries that is a Significant Subsidiary or any
group of Restricted Subsidiaries that, taken as a whole, would
constitute a Significant Subsidiary;
and the order or decree remains unstayed and in effect for 60
consecutive days;
Section 6.02 Reserved.
Section 6.03 Reserved.
Section 6.04 Reserved.
Section 6.05 Reserved.
Section 6.06 Reserved.
Section 6.07 Rights of Holders of Series 2002A Bonds to Receive Payment.
Notwithstanding any other provision of this Guarantee Agreement, the
right of any Holder of a Series 2002A Bond to receive payment under the ▇▇▇▇▇▇
Guarantees, on or after the respective due dates expressed in the Series 2002A
Bond (including in connection with an offer to purchase), or to bring suit for
the enforcement of any such payment on or after such respective dates, shall not
be impaired or affected without the consent of such Holder; provided that a
Holder shall not have the right to institute any such suit for the enforcement
of payment if and to the extent that the institution or prosecution thereof or
the entry of judgment therein would, under applicable law, result in the
surrender, impairment, waiver or loss of the Lien of this Guarantee Agreement
upon any property subject to such Lien.
Section 6.08 Reserved.
Section 6.09 Reserved.
Section 6.10 Reserved.
Section 6.11 Reserved.
ARTICLE 7.
TRUSTEE
Section 7.01 Reserved.
Section 7.02 Reserved.
Section 7.03 Reserved.
Section 7.04 Trustee's Disclaimer.
The Trustee will not be responsible for and makes no representation as
to the validity or adequacy of this Guarantee Agreement, any Security Document
or, after the occurrence of the ▇▇▇▇▇▇ Security Event, any ▇▇▇▇▇▇ Security
Document, it shall not be accountable for the ▇▇▇▇▇▇ Subsidiary's use of the
proceeds from the Series 2002A Bonds or any money paid to the Company or upon
the Company's
60
direction under any provision of this Guarantee Agreement, it will not be
responsible for the use or application of any money received by any Paying Agent
other than the Trustee, it will not be responsible for any statement or recital
herein or any statement in the Series 2002A Bonds or any other document in
connection with the sale of the Series 2002A Bonds or pursuant to this Guarantee
Agreement, and it will not be responsible for any actions or inactions of the
Collateral Trustee with respect to the Collateral and shall have no duty to
monitor, review or otherwise act with respect to any Collateral.
Section 7.05 Reserved.
Section 7.06 Reserved.
Section 7.07 Compensation and Indemnity.
(a) [Reserved].
(b) The Company and the Subsidiary Guarantors, jointly and severally,
shall indemnify the Trustee against any and all losses, liabilities or expenses
incurred by it arising out of or in connection with the acceptance or
administration of its duties under this Guarantee Agreement, any Security
Document, the Collateral Trust Agreement or, after the occurrence of the ▇▇▇▇▇▇
Security Event, any ▇▇▇▇▇▇ Security Document or the ▇▇▇▇▇▇ Collateral Trust
Agreement including the costs and expenses of enforcing this Guarantee
Agreement, any Security Document, the Collateral Trust Agreement or, after the
occurrence of the ▇▇▇▇▇▇ Security Event, any ▇▇▇▇▇▇ Security Document or the
▇▇▇▇▇▇ Collateral Trust Agreement against the Company and the Subsidiary
Guarantors (including this Section 7.07) and defending itself against any claim
(whether asserted by the Company, the Subsidiary Guarantors or any Holder or any
other Person) or liability in connection with the exercise or performance of any
of its powers or duties hereunder, except to the extent any such loss, liability
or expense may be attributable to its negligence or bad faith or willful
misconduct. The Trustee shall notify the Company promptly of any claim for which
it may seek indemnity. Failure by the Trustee to so notify the Company shall not
relieve the Company or any of the Subsidiary Guarantors of their obligations
hereunder. The Company or such Subsidiary Guarantor shall defend the claim and
the Trustee shall cooperate in the defense. The Trustee may have separate
counsel and the Company and / or Subsidiary Guarantors shall pay the reasonable
fees and expenses of such counsel. Neither the Company nor any Subsidiary
Guarantor need pay for any settlement made without its consent, which consent
shall not be unreasonably withheld.
(c) The obligations of the Company and the Subsidiary Guarantors under
this Section 7.07 will survive the satisfaction and discharge of this Guarantee
Agreement.
ARTICLE 8.
RESERVED
ARTICLE 9.
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01 Without Consent of Holders of Series 2002A Bonds.
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Notwithstanding Section 9.02 of this Guarantee Agreement, the Company,
the Subsidiary Guarantors and the Trustee may amend or supplement this Guarantee
Agreement without the consent of any Holder:
(1) to cure any ambiguity, defect or inconsistency;
(2) [Reserved];
(3) to provide for the assumption of the Company's or a
Subsidiary Guarantor's obligations to the Holders of the Series 2002A
Bonds by a successor to the Company or such Subsidiary Guarantor
pursuant to Article 5 or Article 12 hereof;
(4) to make any change that would provide any additional
rights or benefits to the Holders, including the addition of
guarantees, or that does not adversely affect the legal rights under
this Guarantee Agreement of any such Holder;
(5) [Reserved];
(6) to make, complete or confirm any grant of Collateral
permitted or required by the Security Documents, the ▇▇▇▇▇▇ Security
Documents, the Collateral Trust Agreement, the ▇▇▇▇▇▇ Collateral Trust
Agreement or this Guarantee Agreement or any release of Collateral that
becomes effective as set forth in the Security Documents, the
Collateral Trust Agreement, the ▇▇▇▇▇▇ Collateral Trust Agreement or
this Guarantee Agreement;
(7) to conform the text of this Guarantee Agreement to any
provision of the Description of the Guarantees to the extent that such
provision in the Description of the Guarantees was intended to be a
verbatim recitation of a provision of this Guarantee Agreement;
(8) to reflect any waiver or termination of any right arising
under the provisions of Section 11.01 hereof that otherwise would be
enforceable by any holder of any Series of Secured Debt other than the
Series 2002A Bonds, if such waiver or termination is set forth or
provided in the indenture, guarantee agreement or other agreement
governing or giving rise to such Series of Secured Debt, but no waiver
or amendment pursuant to this clause (8) shall adversely affect the
rights of any Holder; or
(9) [Reserved];
(10) to allow any Person to execute a supplemental guarantee
agreement to become a Subsidiary Guarantor.
Upon the request of the Company authorizing the execution of any such
amended or supplemental guarantee agreement, and upon receipt by the Trustee of
the documents, if any, required by the Indenture, the Trustee shall join with
the Company and the Subsidiary Guarantors in the execution of any amended or
supplemental guarantee agreement authorized or permitted by the terms of this
Guarantee Agreement and to make any further appropriate agreements and
stipulations that may be therein contained, but the Trustee shall not be
obligated to enter into such amended or supplemental guarantee agreement that
affects its own rights, duties or immunities under this Guarantee Agreement or
otherwise.
Section 9.02 With Consent of Holders of Series 2002A Bonds.
62
(a) Except as provided below in this Section 9.02, the Company and the
Trustee may amend or supplement this Guarantee Agreement (including, without
limitation, Section 4.15 hereof) with the consent of the Holders of at least a
majority in aggregate principal amount of the Series 2002A Bonds then
Outstanding (including, without limitation, consents obtained in connection with
a tender offer or exchange offer for, or purchase of, the Series 2002A Bonds),
and any existing Default or Event of Default (other than a Default or Event of
Default in the payment of the principal or purchase price of, premium or
interest on the Series 2002A Bonds, except a payment default resulting from an
acceleration that has been rescinded) or compliance with any provision of this
Guarantee Agreement may be waived with the consent of the Holders of a majority
in principal aggregate amount of the then Outstanding Series 2002A Bonds
(including consents obtained in connection with a tender offer or exchange offer
for, or purchase of, the Series 2002A Bonds).
Upon the written request of the Company and upon the filing with the
Trustee of evidence satisfactory to the Trustee of the consent of the Holders of
Series 2002A Bonds as aforesaid, and upon receipt by the Trustee of the
documents described in Section 9.06 hereof, the Trustee shall join with the
Company in the execution of such amended or supplemental guarantee agreement
unless such amended or supplemental guarantee agreement directly affects the
Trustee's own rights, duties or immunities under this Guarantee Agreement or
otherwise, in which case the Trustee may in its discretion, but will not be
obligated to, enter into such amended or supplemental guarantee agreement.
It is not necessary for the consent of the Holders under this Section
9.02 to approve the particular form of any proposed amendment or waiver, but it
is sufficient if such consent approves the substance thereof.
After an amendment, supplement or waiver under this Section 9.02
becomes effective, the Company shall mail to the Holders affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, will not, however, in
any way impair or affect the validity of any such amended or supplemental
guarantee agreement or waiver.
Subject to Section 6.07 hereof, the Holders of a majority in aggregate
principal amount of the Series 2002A Bonds then Outstanding may waive compliance
in a particular instance by the Company with any provision of this Guarantee
Agreement. However, without the consent of each Holder affected, an amendment or
waiver under this Section 9.02 may not (with respect to any ▇▇▇▇▇▇ Guarantee
relating to Series 2002A Bonds held by a non-consenting Holder):
(1) reduce the principal amount of Series 2002A Bonds whose
Holders must consent to an amendment, supplement or waiver;
(2) [Reserved];
(3) [Reserved];
(4) waive a Default or Event of Default in the payment of
principal or purchase price of, or interest or premium on such ▇▇▇▇▇▇
Guarantee (except a rescission of acceleration of the Series 2002A
Bonds by the Holders of at least a majority in aggregate principal
amount of the Series 2002A Bonds and a waiver of the payment default
that resulted from such acceleration);
(5) make any ▇▇▇▇▇▇ Guarantee payable in money other than that
stated in this Guarantee Agreement;
63
(6) make any change in the provisions of this Guarantee
Agreement relating to waivers of past Defaults or the rights of Holders
of Series 2002A Bonds to receive payments of principal or purchase
price of, or interest or premium on the Series 2002A Bonds;
(7) [Reserved]; or
(8) make any change in Section 6.07 hereof or in the foregoing
amendment and waiver provisions.
(b) Notwithstanding any other provision of this Guarantee Agreement, no
amendment or supplement to the provisions of Article 11 hereof may be made in a
manner which conflicts with the provisions of Section 11.04 hereof.
(c) Notwithstanding any other provision of this Guarantee Agreement, no
amendment or supplement to the provisions of Article 13 hereof may be made in a
manner which conflicts with the provisions of Section 13.09 hereof.
Section 9.03 Reserved.
Section 9.04 Revocation and Effect of Consents.
Until an amendment, supplement or waiver becomes effective, a consent
to it by a Holder of a Series 2002A Bond is a continuing consent by the Holder
of a Series 2002A Bond and every subsequent Holder of a Series 2002A Bond or
portion of a Series 2002A Bond that evidences the same debt as the consenting
Holder's Series 2002A Bond, even if notation of the consent is not made on any
Series 2002A Bond. However, any such Holder of a Series 2002A Bond or subsequent
Holder of a Series 2002A Bond may revoke the consent as to its Series 2002A Bond
if the Trustee receives written notice of revocation before the date the waiver,
supplement or amendment becomes effective. An amendment, supplement or waiver
becomes effective in accordance with its terms and thereafter binds every
Holder.
Section 9.05 Reserved.
Section 9.06 Trustee to Sign Amendments, etc.
The Trustee shall sign any amended or supplemental guarantee agreement
authorized pursuant to this Article 9 if the amendment or supplement does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
In executing any amended or supplemental guarantee agreement, the Trustee will
be entitled to receive and will be fully protected in relying upon, in addition
to the documents required by Section 12.04 hereof, an Officer's Certificate and
an Opinion of Counsel stating that the execution of such amended or supplemental
guarantee agreement is authorized or permitted by this Guarantee Agreement.
ARTICLE 10.
COLLATERAL AND SECURITY
Section 10.01 Security.
Subject to Article 13 of this Guarantee Agreement, the payment of (i)
the REI Guarantee and all other Parity Secured Obligations, (ii) interest on
overdue principal or purchase price of, premium and interest on all other Parity
Secured Obligations, (iii) the performance of all other obligations of the
64
Company to the Holders or the Trustee under this Guarantee Agreement, according
to the terms hereunder, and (iv) the performance of all other obligations of the
Company under the Secured Debt Documents are secured Equally and Ratably by
liens upon the Company's rights in the Shared Collateral. The payment of the
Subsidiary Guarantees of each Subsidiary Guarantor and all other Obligations of
such Subsidiary Guarantor, when due, and the performance of all other
Obligations of such Subsidiary Guarantor under the Secured Debt Documents are
secured Equally and Ratably by Liens upon such Subsidiary Guarantor's rights in
the Shared Collateral.
Section 10.02 Collateral.
(a) The REI Guarantee is secured, together with the Credit Agreement
Debt, all other Parity Secured Debt of the Company and all other Parity Secured
Obligations of the Company, Equally and Ratably by security interests granted to
the Collateral Trustee in all of the assets of the Company that secure Credit
Agreement Obligations, except Excluded Property. Each Subsidiary Guarantee is
secured, together with each Subsidiary Guarantor's guarantee of the Credit
Agreement Debt, all other guarantees of Parity Secured Debt of each Subsidiary
Guarantor and all other Parity Secured Obligations of each Subsidiary Guarantor,
Equally and Ratably by security interests granted to the Collateral Trustee in
all assets of each Subsidiary Guarantor that secure its guarantee of the Credit
Agreement Obligations except Excluded Property. As provided in and limited by
the Security Documents, such security interests are junior in priority to
Permitted Prior Liens.
(b) The assets securing Credit Agreement Obligations and guarantees of
Credit Agreement Obligations, excluding Excluded Property, consist of
substantially all of the operating assets of the Company and the Subsidiary
Guarantors owned as of the Issue Date or at any time thereafter acquired,
subject to Permitted Liens ("Shared Collateral"), including, without limitation,
as of the Issue Date:
(1) mortgages on 13 electric generating plants with a net
generating capacity of approximately 8,455 megawatts and related rights
of way;
(2) the outstanding Capital Stock of Reliant Energy Retail
Holdings, LLC, which through its Subsidiaries is engaged in the retail
energy business;
(3) the outstanding Capital Stock of Orion Power Holdings,
Inc., which through its Subsidiaries owns and operates 10 electric
generating plants with a net generating capacity of approximately 5,400
megawatts located in New York, Pennsylvania, Ohio and West Virginia;
(4) the outstanding Capital Stock of REMA, which owns or
leases, together with its subsidiaries, 19 electric generating plants
with a net generating capacity of approximately 3,732 megawatts located
in Pennsylvania, New Jersey and Maryland; and
(5) substantially all of the inventory, equipment, accounts,
general intangibles and other personal property of the Subsidiary
Guarantors, except Excluded Securities.
The Shared Collateral does not include any of the assets of the
Excluded Subsidiaries and does not include the Orion Intercompany Notes.
The Shared Collateral also does not include certain assets that are
subject to various contractual or legal restrictions on liens or were otherwise
permitted by the holders of the Credit Agreement Obligations to be excluded from
the Liens securing the Credit Agreement Obligations, including (1) certain
receivables and related accounts of certain Subsidiary Guarantors that are in
the retail energy business, which are subject to a receivables securitization
program and are owned by a Securitization
65
Entity, and (2) proceeds from the issuance of ▇▇▇▇▇▇ Tax-Exempt Bonds or
Permitted PEDFA Bond Indebtedness (including the Bonds) that secure the ▇▇▇▇▇▇
Tax-Exempt Bonds or Permitted PEDFA Bond Indebtedness.
As provided in Article 13 hereof, upon the occurrence of the ▇▇▇▇▇▇
Security Event, the REI Guarantee will cease to constitute Parity Secured Debt.
Immediately after the ▇▇▇▇▇▇ Security Event, none of the Credit Agreement, the
2014 Notes, the Existing Notes or the ▇▇▇▇▇▇ ▇▇▇▇ Guarantees will be secured by
liens on the Shared Collateral. At no time thereafter will the REI Guarantee be
secured by security interests in the Shared Collateral, even if as a result of a
subsequent action the Credit Agreement, the 2014 Notes or the Existing Notes
thereafter again become secured by Liens on all or a portion of the Shared
Collateral.
Section 10.03 Further Assurances.
(a) At all times prior to the occurrence of the ▇▇▇▇▇▇ Security Event,
the Company and each Subsidiary Guarantor shall do or cause to be done all acts
and things which may be required, or which the Collateral Trustee from time to
time may reasonably request, to assure and confirm that the Collateral Trustee
holds Equally and Ratably, for the benefit of the Trustee and the Holders of the
Series 2002A Bonds and holders of the other Parity Secured Debt duly created,
enforceable and perfected Liens (subject to Permitted Prior Liens) upon all
property, whether real, personal (including after-acquired personal property) or
mixed, of the Company and the Subsidiary Guarantors that is subject to any Lien
securing any other Series of Secured Debt, except Permitted Separate Liens upon
Excluded Property.
(b) If the Company or any of the Subsidiary Guarantors at any time
prior to the ▇▇▇▇▇▇ Security Event owns or acquires any property that is subject
to a Lien securing any Parity Secured Debt (except Permitted Separate Liens upon
Excluded Property), but is not subject to a valid, enforceable perfected Lien
(subject to Permitted Prior Liens) in favor of the Collateral Trustee as
security Equally and Ratably for all of the Parity Secured Obligations, then the
Company shall, or shall cause such Subsidiary Guarantor if and to the extent
required under the Credit Agreement or any other Credit Facility of the Company
to, concurrently:
(1) execute and deliver to the Collateral Trustee a security
document upon substantially the same terms as the Security Documents
delivered in connection with the issuance of the ▇▇▇▇▇▇ ▇▇▇▇ Guarantees
or other terms reasonably satisfactory to the Company or such
Subsidiary Guarantor and the Collateral Trustee acting at the direction
of the Credit Agreement Agent, granting a Lien upon such property to
the Collateral Trustee for the benefit of the holders of Parity Secured
Obligations, Equally and Ratably;
(2) cause the Lien granted in such security document to be
duly perfected in any manner permitted by law and cause each other Lien
that secures Indebtedness upon such property to be (A) released, unless
it is a Permitted Lien, or (B) subordinated to the Collateral Trustee's
Liens if it is not a Permitted Prior Lien; and
(3) deliver to the Trustee and the Collateral Trustee any
opinion of counsel delivered to or for the benefit of any Series of
Secured Debt relating to such Security Document or the Lien granted
therein.
(c) Upon the written request of the Collateral Trustee at any time and
from time to time, the Company and each Subsidiary Guarantor shall promptly
execute, acknowledge and deliver such Security Documents, instruments,
certificates, notices and other documents and take such other actions as shall
be required or which the Collateral Trustee may reasonably request to grant,
perfect or maintain the priority
66
of (subject to Permitted Prior Liens) the Liens and benefits intended to be
conferred as contemplated by the Secured Debt Documents and the Security
Documents for the benefit of the holders of the Parity Secured Obligations.
Section 10.04 Collateral Trustee.
(a) The Company has appointed Wachovia Bank, National Association or
one of its affiliates to serve as the Collateral Trustee for the benefit of the
holders of:
(1) the ▇▇▇▇▇▇ ▇▇▇▇ Guarantees;
(2) the 2014 Notes and the Existing Notes;
(3) the Credit Agreement Debt;
(4) any and all future Parity Secured Debt; and
(5) all other Secured Obligations outstanding from time to
time.
(b) The Collateral Trustee (directly or through co-trustees, agents or
sub-agents) holds, and is entitled to enforce, all Liens on the Collateral.
(c) Except as provided in the Collateral Trust Agreement or the
Security Documents or as directed by an Act of Secured Debtholders, the
Collateral Trustee is not obligated:
(1) to act upon directions purported to be delivered to it by
any other Person;
(2) to foreclose upon or otherwise enforce any Lien; or
(3) to take any other action whatsoever with regard to any or
all of the Security Documents, the Liens created thereby or the
Collateral.
Section 10.05 Security Documents and Guarantee.
(a) Each Holder, by acceptance of the Series 2002A Bonds, hereby
appoints the Trustee as its Secured Debt Representative under the Collateral
Trust Agreement and authorizes the Trustee and the Collateral Trustee, as
applicable, on behalf of and for the benefit of the Holders, to be the agent for
and representative of the Holders with respect to the ▇▇▇▇▇▇ Guarantees, the
Shared Collateral and the Security Documents.
(b) Anything contained in any of this Guarantee Agreement and the
Security Documents and, after the occurrence of the ▇▇▇▇▇▇ Security Event, the
▇▇▇▇▇▇ Security Documents to the contrary notwithstanding, each Holder hereby
agrees that no Holder or the Trustee shall have any right individually to
realize upon any of the Shared Collateral, it being understood and agreed that
all powers, rights and remedies of the Trustee hereunder may be exercised solely
by the Trustee in accordance with the terms hereof and all powers, rights and
remedies in respect of the Shared Collateral under the Security Documents may be
exercised solely by the Collateral Trustee.
Section 10.06 Release of Security Interests.
(a) The Shared Collateral will be released from the Collateral
Trustee's Liens:
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(1) in whole, at any time when no Actionable Default Period is
continuing, if neither the Company nor any Subsidiary Guarantor has any
Indebtedness secured by Liens, except for the Liens described in
clauses (10), (11), (17) and (28) of the definition of "Permitted
Liens;"
(2) as to any or all Shared Collateral at any time when no
Actionable Default Period is continuing, if (A) consent to the release
of Shared Collateral has been given by an Act of Secured Debtholders
and (B) such release has become effective in accordance with the terms
of the consent;
(3) as to any or all Shared Collateral at any time when an
Actionable Default Period is continuing, if (A) consent to the release
of such Shared Collateral has been given by an Act of Secured
Debtholders and by the Required Lenders and (B) such release has become
effective in accordance with the terms of the consent;
(4) as to (A) deposits in any Cash Collateral Account that are
to be applied to fund any mandatory prepayment or purchase offer
(including an Asset Sale Offer) that becomes required as to any Secured
Debt as a result of a sale of assets, concurrently with such
application, so long as effective provision is made for apportionment
of such funding to all holders of Secured Debt entitled to participate
in such mandatory prepayment or purchase offer in accordance with their
respective entitlements under the Secured Debt Documents; and (B)
deposits in any Cash Collateral Account that constitute proceeds from
an asset sale that are permitted under the Secured Debt Documents to be
reinvested or otherwise are not required under the Secured Debt
Documents to be reinvested or otherwise are not required to be applied
to a mandatory prepayment or purchase offer in respect of any Secured
Debt, concurrently with such reinvestment in assets constituting
Collateral or other permitted use under the Secured Debt Documents;
(5) as to assets of the ▇▇▇▇▇▇ Subsidiary, concurrently with
the incurrence by the ▇▇▇▇▇▇ Subsidiary of Permitted PEDFA Bond
Indebtedness that (A) is Non-Recourse to the Company and all of its
other Restricted Subsidiaries (other than an unsecured Guarantee, if
any, provided by the Company); and (B) is secured solely by Liens on
such assets; or
(6) in accordance with the provisions of the Security
Documents as in effect from time to time.
(b) The Collateral Trustee's Liens upon Shared Collateral will no
longer secure the Guarantee Obligations and the right of the holders of
Guarantee Obligations to the benefits and proceeds of the Collateral Trustee's
Liens on Shared Collateral will terminate and be discharged at the Company's
written request:
(1) upon satisfaction and discharge of the Series 2002A Bonds
pursuant to the Indenture;
(2) upon defeasance of the Series 2002A Bonds pursuant to the
Indenture; or
(3) upon payment in full in cash of the Series 2002A Bonds
that are outstanding, due and payable at the time the Series 2002A
Bonds are paid in full in cash.
(c) Any release of all or substantially all Shared Collateral owned by
any Subsidiary Guarantor will become effective only if all Liens on Excluded
Securities issued by such Subsidiary Guarantor have previously been or are
concurrently released.
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(d) If any Collateral is released in accordance with this Guarantee
Agreement or any Security Document and if the Company has delivered the
certificates and documents required by the Security Documents and this Section
10.06, the Trustee, upon receipt of such certificates and Opinion of Counsel,
shall notify the Collateral Trustee of the receipt of such documents.
Section 10.07 Environmental Indemnity.
(a) Each of the Company and the Subsidiary Guarantors jointly and
severally agrees to defend (subject to Indemnitees' selection of counsel),
indemnify, pay and hold harmless the Trustee and each Holder and each of their
respective Affiliates and each and all of the directors, officers, partners,
trustees, employees, attorneys and agents, and (in each case) their respective
heirs, representatives, successors and assigns (each of the foregoing, an
"Indemnitee") from and against any and all Indemnified Liabilities; provided, no
Indemnitee shall be entitled to indemnification hereunder with respect to any
Indemnified Liability to the extent such Indemnified Liability is found by a
final and nonappealable decision of a court of competent jurisdiction to have
resulted directly and primarily from the gross negligence or willful misconduct
of such Indemnitee.
(b) All amounts due under Section 10.07(a) hereof shall be payable not
later than 10 days after written demand therefor.
(c) To the extent that the undertakings to defend, indemnify, pay and
hold harmless set forth in Section 10.07(a) hereof may be unenforceable in whole
or in part because they are violative of any law or public policy, each of the
Company and Subsidiary Guarantors shall contribute the maximum portion that it
is permitted to pay and satisfy under applicable law to the payment and
satisfaction of all Indemnified Liabilities incurred by Indemnitees or any of
them.
(d) Neither the Company nor any Subsidiary Guarantor shall ever assert
any claim against any Indemnitee, on any theory of liability, for any lost
profits or special, indirect or consequential damages or (to the fullest extent
lawful) any punitive damages arising out of, in connection with, or as a result
of, this Guarantee Agreement, any Security Document or, after the occurrence of
the ▇▇▇▇▇▇ Security Event, any ▇▇▇▇▇▇ Security Document or any agreement or
instrument or transaction contemplated hereby or relating in any respect to any
Indemnified Liability, and each of the Company and Subsidiary Guarantors hereby
forever waives, releases and agrees not to ▇▇▇ upon any claim for any such lost
profits or special, indirect, consequential or (to the fullest extent lawful)
punitive damages, whether or not accrued and whether or not known or suspected
to exist in its favor.
(e) The agreements in this Section 10.07 shall survive repayment of the
Series 2002A Bonds and all other amounts payable hereunder and the resignation
and removal of the Trustee or collateral agent.
ARTICLE 11.
COLLATERAL SHARING
Section 11.01 Equal and Ratable Lien Sharing by Holders of Parity Secured Debt.
(a) Notwithstanding (1) anything to the contrary contained in the
Secured Debt Documents, (2) the time of incurrence of any Series of Secured
Debt, (3) the order or method of attachment or perfection of any Liens securing
any Series of Secured Debt, (4) the time or order of filing or recording of
financing statements, mortgages or other documents filed or recorded to perfect
any Lien upon any Shared
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Collateral, (5) the time of taking possession or control over any Shared
Collateral or (6) the rules for determining priority under any law governing
relative priorities of Liens:
(1) all Liens at any time granted by the Company or any of its
Subsidiaries in the Shared Collateral to secure any of the Parity
Secured Debt shall secure, Equally and Ratably, all liabilities of the
Company or such Subsidiary under or in respect of the Parity Secured
Debt and other Parity Secured Obligations; and
(2) all proceeds of all Liens at any time granted by the
Company or any its Subsidiaries in the Shared Collateral to secure any
of the Parity Secured Debt shall be allocated and distributed Equally
and Ratably on account of all liabilities of the Company or such
Subsidiary under or in respect of the Parity Secured Debt and other
Parity Secured Obligations.
Each Holder of the Series 2002A Bonds, by acceptance of the Series
2002A Bonds, agrees to the provisions described in the Order of Application and
the definition of the term "Equally and Ratably."
(b) The provisions of Section 11.01(a) hereof are intended for the
benefit of, and will be enforceable as a third party beneficiary by, each
present and future holder of Secured Obligations and each present and future
Secured Debt Representative.
(c) It is understood that Shared Collateral may be released pursuant to
the provisions of Section 10.06 hereof.
Section 11.02 Reserved.
Section 11.03 Enforcement of Security Interests.
The enforcement of the Collateral Trustee's Liens in the Shared
Collateral shall be governed by the Collateral Trust Agreement.
Section 11.04 Amendment and Supplement.
(a) No amendment or supplement to the provisions of Section 11.01
hereof that adversely affects the right of any Holder of Series 2002A Bonds to
share in the Shared Collateral Equally and Ratably will:
(1) be effective unless set forth in a writing signed by the
Trustee with the consent of the Holders of at least a majority in
principal amount of the Series 2002A Bonds then outstanding (including,
without limitation, consents obtained in connection with a purchase of,
or tender offer or exchange offer for, any Series 2002A Bonds); or
(2) be effective without the written consent of the Company.
No waiver of the provisions of this Article 11 will in any event be
effective unless set forth in a writing signed and consented to, as required for
an amendment under this Section 11.04, by the party to be bound thereby.
(b) Any amendment or supplement to the provisions of the Security
Documents will be effective only in accordance with the provisions of Section
9.01 of the Collateral Trust Agreement.
ARTICLE 12.
SUBSIDIARY GUARANTEES
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Section 12.01 Guarantee.
(a) Subject to this Article 12, each of the Subsidiary Guarantors
hereby, jointly and severally, unconditionally guarantees to each Holder of a
Series 2002A Bond authenticated and delivered by the Trustee and to the Trustee
and its successors and assigns, irrespective of the validity and enforceability
of this Guarantee Agreement, the Indenture, the Series 2002A Bonds or the
obligations of the Company hereunder or thereunder, that the payments required
to be made by the Company pursuant to Section 3.01(a) hereof shall be promptly
paid in full when due.
Failing payment when due of any amount so guaranteed for whatever
reason, the Subsidiary Guarantors will be jointly and severally obligated to pay
the same immediately. Each Subsidiary Guarantor agrees that this is a guarantee
of payment and not a guarantee of collection.
(b) The Subsidiary Guarantors hereby agree that their obligations
hereunder are unconditional, irrespective of the validity, regularity or
enforceability of the Series 2002A Bonds, the Indenture or this Guarantee
Agreement, the absence of any action to enforce the same, any waiver or consent
by any Holder of the Series 2002A Bonds with respect to any provisions hereof or
thereof, the recovery of any judgment against the Company, any action to enforce
the same or any other circumstance which might otherwise constitute a legal or
equitable discharge or defense of a guarantor. Each Subsidiary Guarantor hereby
waives diligence, presentment, demand of payment, filing of claims with a court
in the event of insolvency or bankruptcy of the Company, any right to require a
proceeding first against the Company, protest, notice and all demands whatsoever
and covenant that this Subsidiary Guarantee will not be discharged except by
complete performance of the payment obligations contained in Section 3.01(a) of
this Guarantee Agreement.
(c) If any Holder or the Trustee is required by any court or otherwise
to return to the Company, the Subsidiary Guarantors or any custodian, trustee,
liquidator or other similar official acting in relation to either the Company or
the Subsidiary Guarantors, any amount paid by either to the Trustee or such
Holder, this Subsidiary Guarantee, to the extent theretofore discharged, shall
be reinstated in full force and effect.
(d) Each Subsidiary Guarantor agrees that it will not be entitled to
any right of subrogation in relation to the Holders in respect of any
obligations guaranteed hereby until payment in full of all obligations
guaranteed hereby. The Subsidiary Guarantors will have the right to seek
contribution from any non-paying Subsidiary Guarantor so long as the exercise of
such right does not impair the rights of the Holders under the Subsidiary
Guarantee.
Section 12.02 Limitation on Subsidiary Guarantor Liability.
Each Subsidiary Guarantor, and by its acceptance of Series 2002A Bonds,
each Holder, hereby confirms that it is the intention of all such parties that
the Subsidiary Guarantee of such Subsidiary Guarantor not constitute a
fraudulent transfer or conveyance for purposes of Bankruptcy Law, the Uniform
Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar
federal or state law to the extent applicable to any Subsidiary Guarantee. To
effectuate the foregoing intention, the Trustee, the Holders and the Subsidiary
Guarantors hereby irrevocably agree that the obligations of such Subsidiary
Guarantor will be limited to the maximum amount that will, after giving effect
to such maximum amount and all other contingent and fixed liabilities of such
Subsidiary Guarantor that are relevant under such laws, and after giving effect
to any collections from, rights to receive contribution from or payments made by
or on behalf of any other Subsidiary Guarantor in respect of the obligations of
such other Subsidiary Guarantor under this Article 12, result in the obligations
of such Subsidiary Guarantor under its Subsidiary Guarantee not constituting a
fraudulent transfer or conveyance.
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Section 12.03 Execution and Delivery of Guarantee Agreement.
To evidence its Subsidiary Guarantee set forth in Section 12.01, each
Subsidiary Guarantor hereby agrees that this Guarantee Agreement shall be
executed on behalf of such Subsidiary Guarantor by one of its Officers.
In the event that the Company creates or acquires any Domestic
Subsidiary after the Issue Date, if required by Section 4.18 hereof, the Company
shall cause such Domestic Subsidiary to comply with the provisions of Section
4.18 hereof and this Article 12, to the extent applicable.
Section 12.04 Subsidiary Guarantors May Consolidate, etc., on Certain Terms.
Except as otherwise provided in Section 12.05, no Subsidiary Guarantor
may sell or otherwise dispose of all or substantially all of its assets to, or
consolidate with or merge with or into (whether or not such Subsidiary Guarantor
is the surviving Person) another Person, other than the Company or another
Subsidiary Guarantor, unless:
(1) immediately after giving effect to that transaction, no
Default or Event of Default exists; and
(2) either:
(a) subject to Section 12.05 hereof, the Person
acquiring the property in any such sale or disposition or the Person
formed by or surviving any such consolidation or merger assumes all the
obligations of that Subsidiary Guarantor under this Guarantee Agreement
and all Security Documents delivered by that Subsidiary Guarantor
pursuant to a supplemental guarantee agreement; or
(b) the Net Proceeds of such sale or other
disposition are applied in accordance with the applicable provisions of
the Collateral Trust Agreement.
In case of any such consolidation, merger, sale or conveyance and upon
the assumption by the successor Person, by supplemental guarantee agreement,
executed and delivered to the Trustee and satisfactory in form to the Trustee,
of this Guarantee Agreement and the due and punctual performance of all of the
covenants and conditions of this Guarantee Agreement to be performed by the
Subsidiary Guarantor, such successor Person shall succeed to and be substituted
for the Subsidiary Guarantor with the same effect as if it had been named herein
as a Subsidiary Guarantor. All the Subsidiary Guarantees so issued will in all
respects have the same legal rank and benefit under this Guarantee Agreement as
the Subsidiary Guarantees theretofore and thereafter issued in accordance with
the terms of this Guarantee Agreement as though all of such Subsidiary
Guarantees had been issued on the Issue Date.
Except as set forth in Articles 4 and 5 hereof, and notwithstanding
clauses (a) and (b) above, nothing contained in this Guarantee Agreement will
prevent any consolidation or merger of a Subsidiary Guarantor with or into the
Company or another Subsidiary Guarantor, or will prevent any sale or conveyance
of the property of a Subsidiary Guarantor as an entirety or substantially as an
entirety to the Company or another Subsidiary Guarantor.
Section 12.05 Releases.
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(a) The Subsidiary Guarantee of a Subsidiary Guarantor shall be
released automatically and all security interests granted by that Subsidiary
Guarantor or granted in such Subsidiary Guarantor's Capital Stock to the
Collateral Trustee shall be released with respect to the Guarantee Obligations:
(1) in connection with any sale or other disposition of all of
the assets or Capital Stock of that Subsidiary Guarantor (including by
way of merger or consolidation) to a Person that is not (either before
or after giving effect to such transaction) the Company or a Restricted
Subsidiary of the Company, if the Net Proceeds of the sale or
disposition are applied in accordance with the applicable provisions of
the Collateral Trust Agreement without limiting any other rights of the
Company hereunder;
(2) if the Company designates any Restricted Subsidiary that
is a Subsidiary Guarantor to be an Unrestricted Subsidiary in
accordance with the applicable provisions of this Guarantee Agreement;
(3) upon a dissolution of that Subsidiary Guarantor that is
permitted under Section 4.14 hereof;
(4) upon written request of the Company, if that Subsidiary
Guarantor has been or will be concurrently released from its guarantee
of all other Indebtedness of the Company; provided that all Liens on
the Excluded Securities issued by such Subsidiary Guarantor securing
any such Indebtedness have been or are concurrently released; or
(5) as provided in Section 13.01, upon the occurrence of a
▇▇▇▇▇▇ Security Event.
(b) The Subsidiary Guarantee of a Subsidiary Guarantor shall be
released with respect to the Series 2002A Bonds automatically upon satisfaction
and discharge or defeasance of the Series 2002A Bonds pursuant to the Indenture.
(c) Upon delivery by the Company to the Trustee of an Officer's
Certificate and an Opinion of Counsel to the effect that the action or event
giving rise to the applicable release has occurred or was made by the Company in
accordance with the provisions of this Guarantee Agreement, the Collateral Trust
Agreement and the ▇▇▇▇▇▇ Collateral Trust Agreement, as applicable, the Trustee
shall execute any documents reasonably required in order to evidence the release
of any Subsidiary Guarantor from its obligations under its Subsidiary Guarantee.
(d) Any Subsidiary Guarantor not released from its obligations under
its Subsidiary Guarantee will remain liable for the full amount of principal or
purchase price of and interest on the Series 2002A Bonds and for the other
obligations of any Subsidiary Guarantor under this Guarantee Agreement as
provided in this Article 12.
ARTICLE 13.
▇▇▇▇▇▇ COLLATERAL AND ▇▇▇▇▇▇ COLLATERAL SHARING
Section 13.01 ▇▇▇▇▇▇ Security
(a) If, pursuant to the provisions of the Collateral Trust Agreement,
the Collateral Trustee's Liens upon the Shared Collateral are released in whole
(such event, the "▇▇▇▇▇▇ Security Event"):
(1) the Subsidiary Guarantees of the Subsidiary Guarantors
will be released in their entirety;
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(2) the ▇▇▇▇▇▇ Subsidiary and the ▇▇▇▇▇▇ Collateral Trustee
shall file a mortgage on the ▇▇▇▇▇▇ Collateral substantially in the
form of Exhibit B hereto for the benefit of the present and future
holders of the Series 2002A Bonds and any other Permitted Secured PEDFA
Bond Indebtedness on an Equal and Ratable Basis, and the Series 2002A
Bonds will thereafter be secured by Liens upon the ▇▇▇▇▇▇ Subsidiary's
rights in the ▇▇▇▇▇▇ Collateral;
(3) the Series 2002A Bonds will continue to be guaranteed by
the Company as provided in Article 3 of this Guarantee Agreement;
(4) the ▇▇▇▇▇▇ Collateral Trust Agreement with the ▇▇▇▇▇▇
Collateral Trustee will become operative, which ▇▇▇▇▇▇ Collateral Trust
Agreement will set forth the terms on which the ▇▇▇▇▇▇ Collateral
Trustee will receive, hold, administer, maintain, enforce and
distribute the proceeds of all Liens upon any ▇▇▇▇▇▇ Collateral at any
time delivered to it, in trust for the benefit of the present and
future holders of the Series 2002A Bonds and any other Permitted
Secured PEDFA Bond Indebtedness on an Equal and Ratable Basis; and
(5) the ▇▇▇▇▇▇ Subsidiary will deliver all notices and
certificates required under Section 2.06 of the ▇▇▇▇▇▇ Collateral Trust
Agreement to designate all then existing Bonds that are supported by
Permitted Secured PEDFA Bond Indebtedness, and related Obligations, as
Secured Obligations under the ▇▇▇▇▇▇ Collateral Trust Agreement.
(b) Upon the occurrence of the ▇▇▇▇▇▇ Security Event and the
application of Section 13.01(a), the punctual payment of (i) the principal or
purchase price of, premium and interest on the Series 2002A Bonds and all other
Permitted Secured PEDFA Bond Indebtedness, (ii) interest on overdue principal or
purchase price of, premium and interest on, all other Permitted Secured PEDFA
Bond Indebtedness and (iii) the performance of all other obligations of the
▇▇▇▇▇▇ Subsidiary under the ▇▇▇▇▇▇ Secured Debt Documents will be secured
Equally and Ratably by Liens granted to the ▇▇▇▇▇▇ Collateral Trustee upon the
▇▇▇▇▇▇ Subsidiary's rights in the ▇▇▇▇▇▇ Collateral.
Section 13.02 ▇▇▇▇▇▇ Collateral.
(a) Upon the occurrence of the ▇▇▇▇▇▇ Security Event and the
application of Section 13.01(a), the Series 2002A Bonds will be secured,
together with all other Permitted Secured PEDFA Bond Indebtedness, Equally and
Ratably by Liens granted to the ▇▇▇▇▇▇ Collateral Trustee in the ▇▇▇▇▇▇
Collateral. As provided in and limited by the ▇▇▇▇▇▇ Security Documents, such
Liens are junior in priority to Permitted Prior Liens.
(b) The ▇▇▇▇▇▇ Collateral will consist of a mortgage to be executed at
the time it is delivered on the Plant (such asset is referred to as the "▇▇▇▇▇▇
Collateral").
(c) Upon the occurrence of the ▇▇▇▇▇▇ Security Event, the REI Guarantee
will cease to constitute Parity Secured Debt. At no time thereafter will the REI
Guarantee be secured by security interests in the Shared Collateral, even if as
a result of a subsequent action the Credit Agreement, the 2014 Notes or the
Existing Notes thereafter again become secured by Liens on all or a portion of
the Shared Collateral.
Section 13.03 Further Assurances.
(a) At all times after the occurrence of the ▇▇▇▇▇▇ Security Event, the
▇▇▇▇▇▇ Subsidiary will do or cause to be done all acts and things which may be
required, or which the ▇▇▇▇▇▇ Collateral Trustee from time to time may
reasonably request, to assure and confirm that the ▇▇▇▇▇▇ Collateral Trustee
holds,
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for the benefit of the Holders of the Bonds duly created, enforceable and
perfected Liens (subject to Permitted Prior Liens) upon the ▇▇▇▇▇▇ Collateral.
(b) At all times after the occurrence of the ▇▇▇▇▇▇ Security Event,
upon the written request of the ▇▇▇▇▇▇ Collateral Trustee at any time and from
time to time, the ▇▇▇▇▇▇ Subsidiary shall promptly execute, acknowledge and
deliver such ▇▇▇▇▇▇ Security Documents, instruments, certificates, notices and
other documents and take such other actions as shall be required or which the
▇▇▇▇▇▇ Collateral Trustee may reasonably request to grant, perfect or maintain
the priority of (subject to Permitted Prior Liens) the Liens and benefits
intended to be conferred as contemplated by this Guarantee Agreement and the
▇▇▇▇▇▇ Security Documents for the benefit of the holders of the Bonds and any
other Permitted Secured PEDFA Bond Indebtedness.
Section 13.04 ▇▇▇▇▇▇ Collateral Trustee.
(a) The ▇▇▇▇▇▇ Subsidiary has appointed ▇.▇. ▇▇▇▇▇▇ Trust Company,
National Association or one of its affiliates to serve as the ▇▇▇▇▇▇ Collateral
Trustee for the benefit of the holders of the Bonds and any other Permitted
Secured PEDFA Bond Indebtedness pursuant to the terms of the ▇▇▇▇▇▇ Collateral
Trust Agreement.
(b) The ▇▇▇▇▇▇ Collateral Trustee (directly or through co-trustees,
agents or sub-agents) will hold, and will be entitled to enforce, all Liens on
the ▇▇▇▇▇▇ Collateral.
(c) Except as provided in the ▇▇▇▇▇▇ Collateral Trust Agreement or the
▇▇▇▇▇▇ Security Documents or as directed by a majority in principal amount of
the Series 2002A Bonds and any other Permitted Secured PEDFA Bond Indebtedness
then outstanding (with all Series 2002A Bonds and other Permitted Secured PEDFA
Bond Indebtedness voting together as a single class), the ▇▇▇▇▇▇ Collateral
Trustee is not obligated:
(1) to act upon directions purported to be delivered to it by
any other Person;
(2) to foreclose upon or otherwise enforce any Lien; or
(3) to take any other action whatsoever with regard to any or
all of the ▇▇▇▇▇▇ Security Documents, the Liens created thereby or the
▇▇▇▇▇▇ Collateral;
but the foregoing shall not impose any obligations on the ▇▇▇▇▇▇ Collateral
Trustee that are not set forth in the ▇▇▇▇▇▇ Collateral Trust Agreement.
Section 13.05 ▇▇▇▇▇▇ Security Documents and Guarantee.
(a) Each Holder, by acceptance of the Series 2002A Bonds, hereby
appoints the Trustee as its ▇▇▇▇▇▇ Secured Debt Representative under the ▇▇▇▇▇▇
Collateral Trust Agreement and authorizes the Trustee and the ▇▇▇▇▇▇ Collateral
Trustee, as applicable, on behalf of and for the benefit of the Holders, to be
the agent for and representative of the Holders with respect to the ▇▇▇▇▇▇
Collateral and the ▇▇▇▇▇▇ Security Documents.
(b) Anything contained in any of the Guarantee Agreement and the ▇▇▇▇▇▇
Security Documents to the contrary notwithstanding, each Holder, by acceptance
of the Series 2002A Bonds, hereby agrees that no Holder or the Trustee shall
have any right individually to realize upon any of the ▇▇▇▇▇▇ Collateral, it
being understood and agreed that all powers, rights and remedies in respect of
the ▇▇▇▇▇▇
75
Collateral under the ▇▇▇▇▇▇ Security Documents may be exercised solely by the
▇▇▇▇▇▇ Collateral Trustee.
Section 13.06 Release of Security Interests on the ▇▇▇▇▇▇ Collateral.
(a) The ▇▇▇▇▇▇ Collateral will be released from the ▇▇▇▇▇▇ Collateral
Trustee's Liens:
(1) if (A) consent to the release of such ▇▇▇▇▇▇ Collateral
has been given by majority in principal amount of the Series 2002A
Bonds and any other Permitted Secured PEDFA Bond Indebtedness then
outstanding (with all Series 2002A Bonds and other Permitted Secured
PEDFA Bond Indebtedness voting together as a single class) and (B) such
release has become effective in accordance with the terms of the
consent; or
(2) in accordance with the provisions of the ▇▇▇▇▇▇ Security
Documents as in effect from time to time.
(b) The ▇▇▇▇▇▇ Collateral Trustee's Liens upon ▇▇▇▇▇▇ Collateral will
no longer secure the Series 2002A Bonds and the right of the holders of such
Series 2002A Bonds to the benefits and proceeds of the ▇▇▇▇▇▇ Collateral
Trustee's Liens on the ▇▇▇▇▇▇ Collateral will terminate and be discharged at the
Company's written request:
(1) upon satisfaction and discharge of the Series 2002A Bonds
pursuant to the Indenture;
(2) upon defeasance of the Series 2002A Bonds pursuant to the
Indenture; or
(3) upon payment in full in cash of the Series 2002A Bonds
that are outstanding, due and payable at the time the Series 2002A
Bonds are paid in full in cash.
(c) If the ▇▇▇▇▇▇ Subsidiary is entitled to a release of any ▇▇▇▇▇▇
Collateral in accordance with this Guarantee Agreement or any ▇▇▇▇▇▇ Security
Document and if the ▇▇▇▇▇▇ Subsidiary has delivered any certificates and
documents required by the ▇▇▇▇▇▇ Security Documents and this Section 13.06, the
Trustee, upon receipt of such certificates, shall notify the ▇▇▇▇▇▇ Collateral
Trustee of the receipt of such documents and that the ▇▇▇▇▇▇ Collateral is to be
released in accordance with the applicable provisions of this Guarantee
Agreement.
Section 13.07 Equal and Ratable Sharing of ▇▇▇▇▇▇ Collateral by Holders of
Permitted Secured PEDFA Bond Indebtedness.
(a) Notwithstanding (1) anything to the contrary contained in the
indentures governing the Series 2002A Bonds, the agreements governing any other
Permitted Secured PEDFA Bond Indebtedness, this Guarantee Agreement, the 2001A
Guarantee Agreement, the 2002B Guarantee Agreement, the 2003A Guarantee
Agreement, the 2004A Guarantee Agreement and the ▇▇▇▇▇▇ Secured Debt Documents,
(2) the time of incurrence of any Series 2002A Bonds or any other Permitted
Secured PEDFA Bond Indebtedness, (3) the order or method of attachment or
perfection of any Liens securing any Bonds or any other Permitted Secured PEDFA
Bond Indebtedness, (4) the time or order of filing or recording of financing
statements, mortgages or other documents filed or recorded to perfect any Lien
upon any ▇▇▇▇▇▇ Collateral, (5) the time of taking possession or control over
any ▇▇▇▇▇▇ Collateral or (6) the rules for determining priority under any law
governing relative priorities of Liens:
(1) all Liens at any time granted by the ▇▇▇▇▇▇ Subsidiary in
the ▇▇▇▇▇▇ Collateral to secure any of the Series 2002A Bonds or any
other Permitted Secured PEDFA Bond Indebtedness
76
shall secure, Equally and Ratably, all liabilities under or in respect
of the Series 2002A Bonds and any other Permitted Secured PEDFA Bond
Indebtedness and, in each case, the Obligations threunder; and
(2) all proceeds of all Liens at any time granted by the
▇▇▇▇▇▇ Subsidiary in the ▇▇▇▇▇▇ Collateral to secure any Series 2002A
Bonds or any other Permitted Secured PEDFA Bond Indebtedness shall be
allocated and distributed Equally and Ratably on account of all
liabilities under or in respect of the Series 2002A Bonds and any other
Permitted Secured PEDFA Bond Indebtedness and, in each case, the
Obligations threunder.
Each Holder of the Series 2002A Bonds, by acceptance of the Series
2002A Bonds, agrees to the provisions of the ▇▇▇▇▇▇ Collateral Trust Agreement,
including those described in the Order of Application and the definition of the
term "Equally and Ratably."
(b) The provisions of Section 13.07(a) hereof are intended for the
benefit of, and will be enforceable as a third party beneficiary by, each
present and future holder of the Series 2002A Bonds and any other Permitted
Secured PEDFA Bond Indebtedness and each present and future trustee with respect
to a Series of Bonds.
Section 13.08 Enforcement of Security Interests.
The enforcement of the ▇▇▇▇▇▇ Collateral Trustee's Liens in the ▇▇▇▇▇▇
Collateral shall be governed by the ▇▇▇▇▇▇ Collateral Trust Agreement.
Section 13.09 Amendment and Supplement.
(a) No amendment or supplement to the provisions of Section 13.07
hereof that adversely affects the right of any Holder of Series 2002A Bonds to
share in the ▇▇▇▇▇▇ Collateral Equally and Ratably will:
(1) be effective unless set forth in a writing signed by the
Trustee with the consent of the Holders of at least a majority in
principal amount of the Series 2002A Bonds then outstanding (including,
without limitation, consents obtained in connection with a purchase of,
or tender offer or exchange offer for, any Series 2002A Bonds); or
(2) be effective without the written consent of the ▇▇▇▇▇▇
Subsidairy.
No waiver of the provisions of this Article 13 will in any event be
effective unless set forth in a writing signed and consented to, as required for
an amendment under this Section 13.09, by the party to be bound thereby.
(b) Any amendment or supplement to the provisions of the ▇▇▇▇▇▇
Security Documents will be effective only in accordance with the provisions of
Section 9.01 of the ▇▇▇▇▇▇ Collateral Trust Agreement.
ARTICLE 14.
MISCELLANEOUS
Section 14.01 Reserved.
77
Section 14.02 Notices.
Any notice or communication by the Company, any Subsidiary Guarantor or
the Trustee to the others is duly given if in writing and delivered in Person or
mailed by first class mail (registered or certified, return receipt requested),
telex, telecopier or overnight air courier guaranteeing next day delivery, to
the others' address:
If to the Company and/or any Subsidiary Guarantor:
Reliant Energy, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
With a copy to:
Bracewell & ▇▇▇▇▇▇▇▇▇, L.L.P.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. Still, Jr.
If to the Trustee:
▇.▇. ▇▇▇▇▇▇ Trust Company, National Association
One Liberty Place ▇▇▇▇
▇▇▇▇▇▇ ▇▇., ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Institutional Trust Services
The Company, any Subsidiary Guarantor or the Trustee, by notice to the
others may designate additional or different addresses for subsequent notices or
communications.
All notices and communications (other than those sent to Holders) will
be deemed to have been duly given: at the time delivered by hand, if personally
delivered; five Business Days after being deposited in the mail, postage
prepaid, if mailed; when answered back, if telexed; when receipt acknowledged,
if telecopied; and the next Business Day after timely delivery to the courier,
if sent by overnight air courier guaranteeing next day delivery.
Any notice or communication to a Holder will be mailed by first class
mail, certified or registered, return receipt requested, or by overnight air
courier guaranteeing next day delivery to its address shown on the register kept
by the Registrar under the Indenture. Failure to mail a notice or communication
to a Holder or any defect in it will not affect its sufficiency with respect to
other Holders.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company mails a notice or communication to Holders, it will mail
a copy to the Trustee and each Agent at the same time.
Section 14.03 Reserved.
78
Section 14.04 Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take
any action under this Guarantee Agreement, the Company shall furnish to the
Trustee:
(1) an Officer's Certificate in form and substance reasonably
satisfactory to the Trustee (which must include the statements set
forth in Section 14.05 hereof) stating that, in the opinion of the
signers, all conditions precedent and covenants, if any, provided for
in this Guarantee Agreement relating to the proposed action have been
satisfied; and
(2) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which must include the statements set
forth in Section 14.05 hereof) stating that, in the opinion of such
counsel, all such conditions precedent and covenants have been
satisfied.
Section 14.05 Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a condition
or covenant provided for in this Guarantee Agreement must include:
(1) a statement that the Person making such certificate or
opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such Person, he or she
has made such examination or investigation as is necessary to enable
him or her to express an informed opinion as to whether or not such
covenant or condition has been satisfied; and
(4) a statement as to whether or not, in the opinion of such
Person, such condition or covenant has been satisfied.
Section 14.06 Reserved.
Section 14.07 No Personal Liability of Directors, Officers, Employees and
Stockholders.
No director, officer, employee, incorporator or stockholder of the
Company or any Subsidiary Guarantor, as such, will have any liability for any
obligations of the Company or the Subsidiary Guarantors under the Series 2002A
Bonds, this Guarantee Agreement, the ▇▇▇▇▇▇ Guarantees, the Security Documents,
the ▇▇▇▇▇▇ Security Documents or for any claim based on, in respect of, or by
reason of, such obligations or their creation. Each Holder of Series 2002A Bonds
by accepting a Series 2002A Bond waives and releases all such liability. The
waiver and release are part of the consideration for issuance of the Series
2002A Bonds. The waiver may not be effective to waive liabilities under the
federal securities laws.
Section 14.08 Governing Law.
THE INTERNAL LAW OF THE STATE OF NEW YORK WILL GOVERN AND BE USED TO
CONSTRUE THIS GUARANTEE AGREEMENT AND THE ▇▇▇▇▇▇ GUARANTEES WITHOUT GIVING
EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE
79
EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE
REQUIRED THEREBY.
Section 14.09 No Adverse Interpretation of Other Agreements.
This Guarantee Agreement may not be used to interpret any other
indenture, loan or debt agreement of the Company or its Subsidiaries or of any
other Person. Any such indenture, loan or debt agreement may not be used to
interpret this Guarantee Agreement.
Section 14.10 Successors.
All agreements of the Company in this Guarantee Agreement and the
Series 2002A Bonds will bind its successors. All agreements of the Trustee in
this Guarantee Agreement will bind its successors. All agreements of each
Subsidiary Guarantor in this Guarantee Agreement will bind its successors,
except as otherwise provided in Section 12.05.
Section 14.11 Severability.
In case any provision in this Guarantee Agreement is invalid, illegal
or unenforceable, the validity, legality and enforceability of the remaining
provisions will not in any way be affected or impaired thereby.
Section 14.12 Counterpart Originals.
The parties may sign any number of copies of this Guarantee Agreement.
Each signed copy will be an original, but all of them together represent the
same agreement.
Section 14.13 Table of Contents, Headings, etc.
The Table of Contents, Cross-Reference Table and Headings of the
Articles and Sections of this Guarantee Agreement have been inserted for
convenience of reference only, are not to be considered a part of this Guarantee
Agreement and will in no way modify or restrict any of the terms or provisions
hereof.
[Signatures on following pages]
80
SIGNATURES
Dated as of December 22, 2004
RELIANT ENERGY, INC.,
as Guarantor
By: ________________________________
Name:
Title:
SUBSIDIARY GUARANTORS:
RELIANT ENERGY ASSET MANAGEMENT, LLC
RELIANT ENERGY AURORA DEVELOPMENT, LLC
RELIANT ENERGY AURORA HOLDING, LLC
RELIANT ENERGY AURORA I, LP
RELIANT ENERGY ▇▇▇▇▇▇ ▇▇, LP
RELIANT ENERGY AURORA, LP
RELIANT ENERGY BROADBAND, INC.
RELIANT ENERGY CALIFORNIA HOLDINGS, LLC
RELIANT ENERGY CAPITAL (EUROPE), INC.
RELIANT ENERGY COMMUNICATIONS, INC.
RELIANT ENERGY COOLWATER, INC.
RELIANT ENERGY CORPORATE SERVICES, LLC
RELIANT ENERGY DEER PARK, INC.
ENERGY ELLWOOD, INC.
RELIANT ENERGY ETIWANDA, INC.
RELIANT ENERGY EUROPE, INC.
RELIANT ENERGY FLORIDA, LLC
RELIANT ENERGY FLORIDA HOLDINGS, LLC
RELIANT ENERGY KEY/CON FUELS, LLC
RELIANT ENERGY MANDALAY, INC.
RELIANT ENERGY NET VENTURES, INC.
RELIANT ENERGY NORTHEAST GENERATION, INC.
RELIANT ENERGY NORTHEAST HOLDINGS, INC.
RELIANT ENERGY ORMOND BEACH, INC.
RELIANT ENERGY POWER GENERATION, INC.
RELIANT ENERGY POWER OPERATIONS I, INC.
RELIANT ENERGY POWER OPERATIONS II, INC.
RELIANT ENERGY RENEWABLES, INC.
RELIANT ENERGY RETAIL HOLDINGS, LLC
RELIANT ENERGY RETAIL SERVICES, LLC
ENERGY SABINE (TEXAS), INC.
RELIANT ENERGY SERVICES DESERT BASIN, LLC
RELIANT ENERGY SERVICES INTERNATIONAL, INC.
RELIANT ENERGY SERVICES MID-STREAM, LLC
81
RELIANT ENERGY SERVICES, INC.
RELIANT ENERGY ▇▇▇▇▇▇, LLC
RELIANT ENERGY SHELBY COUNTY II, LP
RELIANT ENERGY SHELBY COUNTY, LP
RELIANT ENERGY SHELBY DEVELOPMENT CORP.
RELIANT ENERGY SHELBY HOLDING CORP.
RELIANT ENERGY SHELBY I, LP
RELIANT ENERGY ▇▇▇▇▇▇ ▇▇, LP
RELIANT ENERGY SOLUTIONS, LLC
RELIANT ENERGY SOLUTIONS HOLDINGS, LLC
RELIANT ENERGY TEXAS RENEWABLES GP, LLC
RELIANT ENERGY TEXAS RENEWABLES, LP
RELIANT ENERGY TRADING EXCHANGE, INC.
RELIANT ENERGY VENTURES, INC.
RELIANT ENERGY WHOLESALE GENERATION, LLC
RELIANT ENERGY WHOLESALE SERVICE COMPANY
RELIANT RESOURCES INTERNATIONAL SERVICES, INC.
STAREN POWER, LLC
TEXAS STAR ENERGY COMPANY
By:________________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: Assistant Treasurer of the
corporations and limited liability
companies, and of the general
partners of the limited partnerships,
listed above
RELIANT ENERGY CAPTRADES HOLDING CORP.
RELIANT ENERGY ELECTRIC SOLUTIONS, LLC
RELIANT ENERGY RENEWABLES HOLDINGS II, LLC
RELIANT ENERGY SABINE (DELAWARE), INC.
RELIANT ENERGY SOLUTIONS EAST, LLC
By:________________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: Attorney-in-fact
Attest:
___________________________
Name:
Title:
82
▇.▇. ▇▇▇▇▇▇ TRUST COMPANY,
NATIONAL ASSOCIATION
as Trustee
By: _______________________________
Name:
Title:
83
SCHEDULE I
SCHEDULE OF SUBSIDIARY GUARANTORS
The following schedule lists each Subsidiary Guarantor under the
Guarantee Agreement as of the Issue Date:
Reliant Energy Asset Management, LLC a Delaware limited liability company
Reliant Energy Aurora Development, LLC, a Delaware limited liability company
Reliant Energy Aurora Holding, LLC, a Delaware limited liability company
Reliant Energy Aurora I, LP, a Delaware limited partnership
Reliant Energy ▇▇▇▇▇▇ ▇▇, LP, a Delaware limited partnership
Reliant Energy Aurora, LP, a Delaware limited partnership
Reliant Energy Broadband, Inc., a Delaware corporation
Reliant Energy California Holdings, LLC, a Delaware limited liability company
Reliant Energy Capital (Europe), Inc., a Delaware corporation
Reliant Energy CapTrades Holding Corp., a Delaware corporation
Reliant Energy Communications, Inc., a Delaware corporation
Reliant Energy Coolwater, Inc., a Delaware corporation
Reliant Energy Corporate Services, LLC, a Delaware limited liability company
Reliant Energy Deer Park, Inc., a Delaware corporation
Reliant Energy Electric Solutions, LLC, a Delaware limited liability company
Reliant Energy Ellwood, Inc., a Delaware corporation
Reliant Energy Etiwanda, Inc., a Delaware corporation
Reliant Energy Europe, Inc., a Delaware corporation
Reliant Energy Florida, LLC, a Delaware limited liability company
Reliant Energy Florida Holdings, LLC, a Delaware limited liability company
Reliant Energy Key/Con Fuels, LLC, a Delaware limited liability company
Reliant Energy Mandalay, Inc., a Delaware corporation
I-1
Reliant Energy Net Ventures, Inc., a Delaware corporation
Reliant Energy Northeast Generation, Inc., a Delaware corporation
Reliant Energy Northeast Holdings, Inc., a Delaware corporation
Reliant Energy Ormond Beach, Inc., a Delaware corporation
Reliant Energy Power Generation, Inc., a Delaware corporation
Reliant Energy Power Operations I, Inc., a Delaware corporation
Reliant Energy Power Operations II, Inc., a Delaware corporation
Reliant Energy Renewables, Inc., a Delaware corporation
Reliant Energy Renewables Holdings II, LLC, a Delaware limited liability company
Reliant Energy Retail Holdings, LLC, a Delaware limited liability company
Reliant Energy Retail Services, LLC, a Delaware limited liability company
Reliant Energy Sabine (Delaware), Inc., a Delaware corporation
Reliant Energy Sabine (Texas), Inc., a Delaware corporation
Reliant Energy Services Desert Basin, LLC, a Delaware limited liability company
Reliant Energy Services International, Inc., a Delaware corporation
Reliant Energy Services Mid-Stream, LLC, a Delaware limited liability company
Reliant Energy Services, Inc., a Delaware corporation
Reliant Energy ▇▇▇▇▇▇, LLC, a Delaware limited liability company
Reliant Energy Shelby County II, LP, a Delaware limited partnership
Reliant Energy Shelby County, LP, a Delaware limited partnership
Reliant Energy Shelby Development Corp., a Delaware corporation
Reliant Energy Shelby Holding Corp., a Delaware corporation
Reliant Energy Shelby I, LP, a Delaware limited partnership
Reliant Energy ▇▇▇▇▇▇ ▇▇, LP, a Delaware limited partnership
Reliant Energy Solutions, LLC, a Delaware limited liability company
Reliant Energy Solutions East, LLC, a Delaware limited liability company
I-2
Reliant Energy Solutions Holdings, LLC, a Delaware limited liability company
Reliant Energy Texas Renewables GP, LLC, a Delaware limited liability company
Reliant Energy Texas Renewables, LP, a Delaware limited partnership
Reliant Energy Trading Exchange, Inc., a Delaware corporation
Reliant Energy Ventures, Inc., a Delaware corporation
Reliant Energy Wholesale Generation, LLC, a Delaware limited liability company
Reliant Energy Wholesale Service Company, a Delaware corporation
Reliant Resources International Services, Inc., a Delaware corporation
StarEn Power, LLC, a Delaware limited liability company
Texas Star Energy Company, a Delaware corporation
I-3
EXHIBIT A
FORM OF SUPPLEMENTAL GUARANTEE AGREEMENT
SUPPLEMENTAL GUARANTEE AGREEMENT (this "Supplemental Guarantee
Agreement"), dated as of ________________, 20__, among __________________ (the
"Guaranteeing Subsidiary"), a ___________ [corporation][limited liability
company][limited partnership], a subsidiary of Reliant Energy, Inc. (or its
permitted successor), a __________ corporation (the "Company"), the Company, the
other Subsidiary Guarantors (as defined in the Guarantee Agreement referred to
herein) and ▇.▇. ▇▇▇▇▇▇ Trust Company, National Association, as trustee under
the Indenture (as defined in the Guarantee Agreement referred to below) (the
"Trustee").
W I T N E S S E T H
WHEREAS, the Company and the Subsidiary Guarantors have heretofore
executed and delivered to the Trustee a Guarantee Agreement (the "Guarantee
Agreement"), dated as of December 22, 2004, providing for the Company's
guarantee (the "REI Guarantee") of the Pennsylvania Economic Development
Financing Authority's ("PEDFA") Exempt Facilities Revenue Bonds (Reliant Energy
▇▇▇▇▇▇, LLC Project), Series 2002A (the "Series 2002A Bonds"), and the
Subsidiary Guarantors's guarantees of the REI Guarantee;
WHEREAS, the Guarantee Agreement provides that under certain
circumstances the Guaranteeing Subsidiary shall execute and deliver to the
Trustee a supplemental guarantee agreement pursuant to which the Guaranteeing
Subsidiary shall unconditionally guarantee all of the Company's Obligations
under the REI Guarantee and the Guarantee Agreement (the "Subsidiary
Guarantee"); and
WHEREAS, pursuant to Section 9.01 of the Guarantee Agreement, the
Trustee, the Company and the other Subsidiary Guarantors are authorized to
execute and deliver this Supplemental Guarantee Agreement.
NOW THEREFORE, in consideration of the foregoing and for good and
valuable consideration, the receipt of which is hereby acknowledged, the
Guaranteeing Subsidiary, the Trustee, the Company and the other Subsidiary
Guarantors mutually covenant and agree for the equal and ratable benefit of the
Holders of the Series 2002A Bonds as follows:
1. Capitalized Terms. Unless otherwise defined in this Supplemental
Guarantee Agreement, capitalized terms used herein without definition shall have
the meanings assigned to them in the Guarantee Agreement.
2. Agreement to be Bound; Guarantee. The Guaranteeing Subsidiary hereby
becomes a party to the Guarantee Agreement as a Subsidiary Guarantor and as such
will have all of the rights and be subject to all of the Obligations and
agreements of a Subsidiary Guarantor under the Guarantee Agreement. The
Guaranteeing Subsidiary hereby agrees to be bound by all of the provisions of
the Guarantee Agreement applicable to a Subsidiary Guarantor and to perform all
of the Obligations and agreements of a Subsidiary Guarantor under the Guarantee
Agreement. In furtherance of the foregoing, the Guaranteeing Subsidiary shall be
deemed a Subsidiary Guarantor for purposes of Article 12 of the Guarantee
Agreement, including, without limitation, Section 12.02 thereof.
3. NEW YORK LAW TO GOVERN. THE INTERNAL LAW OF THE STATE OF NEW YORK
SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL GUARANTEE AGREEMENT BUT
WITHOUT GIVING EFFECT TO APPLICABLE
A-1
PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF
ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
4. Counterparts. The parties may sign any number of copies of this
Supplemental Guarantee Agreement. Each signed copy shall be an original, but all
of them together represent the same agreement.
5. Effect of Headings. The Section headings herein are for convenience
only and shall not affect the construction hereof.
6. The Trustee. The Trustee shall not be responsible in any manner
whatsoever for or in respect of the validity or sufficiency of this Supplemental
Guarantee Agreement or for or in respect of the recitals contained herein, all
of which recitals are made solely by the Guaranteeing Subsidiary and the
Company.
7. Ratification of Guarantee Agreement; Supplemental Guarantee
Agreement Part of Guarantee Agreement. Except as expressly amended hereby, the
Guarantee Agreement is in all respects ratified and confirmed and all the terms,
conditions and provisions thereof shall remain in full force and effect. This
Supplemental Guarantee Agreement shall form a part of the Guarantee Agreement
for all purposes, and every Holder of Series 2002A Bonds heretofore or hereafter
authenticated and delivered shall by bound hereby.
A-2
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Guarantee Agreement to be duly executed and attested, all as of the date first
above written.
Dated: _______________, 20___
[GUARANTEEING SUBSIDIARY]
By: _______________________________
Name:
Title:
[COMPANY]
By: _______________________________
Name:
Title:
[EXISTING SUBSIDIARY GUARANTORS]
By: _______________________________
Name:
Title:
[TRUSTEE],
as Trustee
By: _______________________________
Authorized Signatory
A-3
EXHIBIT B
FORM OF [MORTGAGE]
WHEN RECORDED MAIL TO:
__________________
__________________
__________________ SPACE ABOVE THIS LINE FOR RECORDER'S USE
MORTGAGE, ASSIGNMENT OF LEASES AND RENTS,
SECURITY AGREEMENT AND FINANCING STATEMENT
THIS IS AN OPEN-END MORTGAGE SECURING FUTURE ADVANCES UP TO A MAXIMUM PRINCIPAL
AMOUNT OF $600,000,000.00, PLUS ACCRUED INTEREST, YIELD AND OTHER INDEBTEDNESS
AS DESCRIBED IN 42 PA. CONS. STAT. ▇▇▇.SECTION 8143 AND SECTION 8144, ACT 126 OF
1990.
THIS MORTGAGE, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT AND FINANCING
STATEMENT IS ENTERED INTO WITH THE BENEFIT OF, AND SUBJECT TO THE TERMS OF A
COLLATERAL TRUST AGREEMENT (AS HEREINAFTER DEFINED).
THIS MORTGAGE, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT AND FINANCING
STATEMENT IS, INTER ALIA, AN OPEN-END MORTGAGE AS DEFINED IN 42 PA. CONS. STAT.
▇▇▇.SECTION 8143(F).
THIS INSTRUMENT CONTAINS AFTER-ACQUIRED PROPERTY PROVISIONS.
DEBTOR ID NO. DE 3024328.
NOTICE: THIS DOCUMENT IS BEING FILED AS A MORTGAGE AND AS A REAL PROPERTY
FINANCING STATEMENT.
THIS MORTGAGE, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT AND
FINANCING STATEMENT (this "Instrument") is made as of this __ day of ________,
20___ but is to be effective as of the ___ day of ______, 20____ ("Effective
Date"), by and between RELIANT ENERGY ▇▇▇▇▇▇, LLC, a Delaware limited liability
company (the "Mortgagor"), having an address at ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇,
and ▇.▇. ▇▇▇▇▇▇ TRUST COMPANY, NATIONAL ASSOCIATION, a national banking
association (the "Mortgagee"), having an address at One Liberty Place, ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention:
Institutional Trust Services, not in its individual capacity, but solely as
Collateral Trustee under the Collateral Trust Agreement (as hereinafter
defined), and for the ratable benefit of the Secured Parties (as defined in the
Collateral Trust Agreement) from time to time entitled to the benefits of the
Collateral Trust Agreement (collectively, the "Secured Parties").
All capitalized terms used in this Instrument without definition shall
have the respective meanings ascribed to such terms in that certain Collateral
Trust Agreement by and between the Mortgagor and the Mortgagee, dated as of
December 1, 2004 (as the same may be amended, amended and restated, supplemented
or otherwise modified, renewed or replaced from time to time, the "Collateral
Trust Agreement").
B-1
WHEREAS, the Mortgagor, Reliant Energy, Inc., a Delaware corporation
("REI"), and certain Subsidiaries of REI are parties to the existing REI
Guarantees and Subsidiary Guarantees in favor of the PEDFA Trustee;
WHEREAS, pursuant to existing Subsidiary Guarantees, the Mortgagor
guaranteed the due and punctual payment and performance of the obligations of
REI under the REI Guarantees;
WHEREAS, pursuant to the terms of the REI Guarantees and Subsidiary
Guarantees, upon the occurrence of a Collateral Fall-Away, (a) the Mortgagor
shall ▇▇▇▇▇ ▇ ▇▇▇▇ in favor of the Mortgagee under to this Instrument to secure
those PEDFA Bonds covered by an REI Guarantee and designated by the Mortgagor
pursuant to Section 2.06 of the Collateral Trust Agreement and (b) it is
intended that all such PEDFA Bonds shall be secured, Equally and Ratably, by the
lien created by this Instrument;
WHEREAS, a Collateral Fall-Away has occurred, and the Mortgagor has
agreed to execute and deliver this Instrument as security for the Secured
Obligations (as herein after defined) in consideration for the release of the
Mortgagor from all liability under the existing REI Guarantees and Subsidiary
Guarantees; and
WHEREAS, the Collateral Trust Agreement contemplates that (i) the
Mortgagor may, from time to time while no Actionable Default exists, designate
PEDFA Bonds that are supported by Permitted PEDFA Bond Indebtedness, and any
related Obligations, as constituting Secured Obligations under the Collateral
Trust Agreement secured by this Instrument and (ii) in connection therewith, the
Mortgagor will execute and deliver to the Mortgagee such supplement or amendment
to this Instrument as is contemplated in paragraph 21 hereof.
NOW, THEREFORE, in consideration of the premises and in order to secure
the due and punctual payment and performance of the Secured Obligations, the
Mortgagor does hereby grant, bargain, sell, mortgage, warrant, convey, alien,
demise, release, assign, transfer, set over, deliver, confirm and convey unto
the Mortgagee, its successors, assigns and transferees upon the terms and
conditions hereof, with power of sale and right of entry as provided herein, and
subject to the Permitted Encumbrances (as hereinafter defined), all of the
right, title and interest of the Mortgagor in and to the real property located
in Indiana County, Commonwealth of Pennsylvania, more particularly described on
Exhibit A attached hereto and incorporated herein by reference for all purposes
(the "Land");
TOGETHER with all buildings, improvements, and tenements now or
hereafter erected on the Land, but excluding the Existing ▇▇▇▇▇▇ Facility (as
hereinafter defined) and the Excluded Assets (as hereinafter defined) (the
"Improvements"), and all of the Mortgagor's right, title and interest in all
heretofore or hereafter vacated alleys and streets abutting the Land, and all of
the Mortgagor's right, title and interest in all easements, rights, rights of
way, gores of land, appurtenances, railroad crossings, access and use
agreements, rents (subject, however, to the assignment of rents to the Mortgagee
herein), royalties, mineral, oil and gas rights and profits, water, water
rights, and water stock appurtenant to the Land and/or relating or pertaining to
the Land and/or the Improvements, and all fixtures, machinery, equipment,
engines, boilers, incinerators, building materials, appliances and goods of
every nature whatsoever that are owned by the Mortgagor and now or hereafter
located in, or on, or used, or intended to be used in connection with the Land
and/or the Improvements, including, but not limited to, all "equipment" as
defined in the Uniform Commercial Code as in effect in the Commonwealth of
Pennsylvania (the "Uniform Commercial Code"), including, without limitation,
turbines, turbine generators, electric substations, interconnection facilities,
transmission lines, auxiliary equipment that are owned by the Mortgagor and to
be affixed to, associated with or necessary for the operation of an electric
generating facility on the Land, together with any and all equipment and
machinery that are owned by the Mortgagor and used for the purposes of supplying
or distributing heating, cooling, electricity, gas, water,
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air and light to the Land and/or the Improvements, and any and all elevators,
and related machinery and equipment, fire prevention and extinguishing
apparatus, security and access control apparatus, plumbing machinery, fixtures
and equipment, water heaters, water closets, sinks, refrigerators, storm
windows, storm doors paneling, attached floor coverings, furniture, furnishings,
antennas, trees and plants that are owned by the Mortgagor and now or hereafter
located on the Land (subject, in the case of equipment, to any equipment lease
which constitutes a Permitted Encumbrance); all of which, including replacements
and additions thereto, shall be deemed to be and remain a part of the real
property covered by this Instrument, and all of the foregoing, together with
said Land and Improvements, are hereinafter referred to as the "Property";
TOGETHER with all of the Mortgagor's right, title and interest in, to
and under any and all leases and subleases now or hereinafter in existence and
covering space in or applicable to the Property (hereinafter referred to
collectively as the "Leases" and singularly as a "Lease"), together with all of
the Mortgagor's right, title and interest in all rents, earnings, income,
profits, benefits and advantages arising from said Leases and all other sums due
or to become due under and pursuant thereto, and together with any and all
guarantees of or under any of said Leases, and together with all rights, powers,
privileges, options and other benefits of the Mortgagor as lessor or sublessor
under the Leases, including, without limitation, the immediate and continuing
right, either in person, by agent or by receiver to be appointed in court,
subject to the License (as defined in paragraph 18 herein), to (a) receive and
collect all rents, income, revenues, issues, profits, condemnation awards,
insurance proceeds, moneys and security payable or receivable under such Leases
or pursuant to any of the provisions thereof, whether as rent or otherwise, (b)
accept or reject any offer made by any tenant or subtenant pursuant to its Lease
to purchase the Property and any other property subject to the Lease as therein
provided, (c) perform all other necessary or appropriate acts with respect to
such Leases as agent and attorney-in-fact for the Mortgagor, and (d) make all
waivers and agreements, give and receive all notices, consents and releases,
take such action upon the happening of a default under any Lease, including the
commencement, conduct and consummation of proceedings at law or in equity as
shall be permitted under any provision of any Lease or by any law, and do any
and all other things whatsoever which the Mortgagor is or may become entitled to
do under any such Lease, together with (to the extent the same shall constitute
real property under the law of the state in which the Property is located) all
contract rights, franchises, interests, estates or other claims, both at law or
in equity relating to the Property, to the extent not included in the rents
under any of the Leases;
TOGETHER with all of the Mortgagor's right, title and interest in, to
and under any and all reserve, deposit or escrow accounts (the "Accounts") made
in connection with the Mortgagor's account with any utility company, together
with all income, profits, benefits and advantages arising therefrom, and
together with all rights, powers, privileges, options and other benefits of the
Mortgagor under the Accounts, and together with the right to do any and all
other things whatsoever which the Mortgagor is or may become entitled to do
under the Accounts, other than Ineligible Property;
TOGETHER with all of the Mortgagor's right, title and interest in all
agreements, contracts, certificates, guaranties, warranties, instruments,
franchises, permits, licenses, plans, specifications and other documents, now or
hereafter entered into, and all rights therein and thereto, pertaining to the
use, occupancy, construction, management or operation of the Property and any
part thereof and any improvements or respecting any business or activity
conducted on the Property and any part thereof (other than Ineligible Property),
and all right, title and interest of the Mortgagor therein, including the right
to receive and collect any sums payable to the Mortgagor thereunder (except to
the extent the Mortgagor is entitled to receive and collect the same without
violating the terms of any one of the other Secured Debt Documents (as
hereinafter defined)) and all deposits or other security or advance payments
made by the Mortgagor with respect to any of the services related to the
Property or the operation thereof, together with any tax refunds and the
Mortgagor's rights to insurance proceeds, unearned insurance premiums and
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choses in action (except to the extent the Mortgagor is entitled to receive,
collect or apply the same without violating the terms of any one of the other
Secured Debt Documents);
TOGETHER with all of the Mortgagor's right, title and interest in all
trade names, trademarks, service marks, logos, copyrights, goodwill, books and
records and all other general intangibles relating to or used in connection with
the operation of the Property (other than Ineligible Property); and
TOGETHER with any and all proceeds resulting or arising from the
foregoing (all of the foregoing are herein collectively referred to as the
"Mortgaged Property").
TO HAVE AND TO HOLD such property hereby conveyed or mentioned and
intended so to be, unto the Mortgagee, and the Mortgagee's successors and
assigns, to its own use, forever.
This Instrument shall be deemed to be and shall be enforceable, inter
alia, as an open-end mortgage, as set forth in 42 Pa. C.S.A. Sections 8143 and
8144, and secures future advances up to a maximum amount of indebtedness
outstanding at any time of $600,000,000.00, plus accrued and unpaid interest. In
addition to any other Secured Obligations, this Instrument shall secure all
advances by the Mortgagee with respect to the Mortgaged Property for the payment
of taxes, assessments, maintenance charges, insurance premiums, costs incurred
for the protection of the Mortgaged Property or the lien of this Instrument,
expenses incurred by the Mortgagee by reason of any default by the Mortgagor
under this Instrument or any other document executed with respect to the Secured
Obligations secured hereby, including, without limitation, legal fees and costs,
and advances for construction, alteration or renovation on the Mortgaged
Property, together with all other sums due hereunder or secured hereby.
The Mortgagor covenants that (i) the Mortgagor is lawfully seized of
the estates hereby conveyed and has the right to mortgage, grant, convey and
assign such estate in the Mortgaged Property, (ii) the Mortgaged Property is
unencumbered except for Permitted Encumbrances, and (iii) the Mortgagor will
warrant and defend generally the title to the Mortgaged Property against all
claims and demands, subject to the Permitted Encumbrances.
The Mortgagor and the Mortgagee, intending to be legally bound hereby,
covenant and agree as follows:
1. DEFINITIONS.
(a) As used in this Instrument, the term "Condemnation Event"
shall mean any condemnation or other taking, or temporary or permanent
requisition of, any property, any interest therein or right appurtenant thereto,
or any change of grade affecting any property, in each case as the result of the
exercise of any right of condemnation or eminent domain. A sale or other
transfer to a governmental authority in lieu of, or in anticipation of,
condemnation shall be deemed to be a Condemnation Event.
(b) As used in this Instrument, the term (i) "Default Rate"
shall mean an annual interest rate equal to the Base Rate plus 2%; (ii) "Base
Rate" shall mean, for any day, a fluctuating rate per annum equal to the higher
of (a) the rate of interest in effect for such day as publicly announced from
time to time by ▇.▇. ▇▇▇▇▇▇ ▇▇▇▇▇ Bank as its "prime rate" and (b) the Federal
Funds Rate in effect for such day plus -1/2 of 1%; and (iii) "Federal Funds
Rate" shall mean, for any day, the rate per annum equal to the weighted average
(rounded upwards, if necessary, to the next 1/100th of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers on such day, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York; provided, that
if such day is not a Business Day, the Federal Funds Rate for such day
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shall be such rate on such transactions on the next preceding Business Day as so
published on the next succeeding Business Day.
(c) As used in this Instrument, the term "Excluded Assets"
shall have the meaning ascribed to such term in that certain Easement and
License Agreement between Pennsylvania Electric Company and Sithe Pennsylvania
Holdings LLC dated November 19, 1999 and recorded in the Office of the Recorder
of Indiana County in Deed Book Volume 1167, page 581, as amended by Amendment
Number 1 to Easement and License Agreement between Pennsylvania Electric Company
and Reliant Energy ▇▇▇▇▇▇, LLC dated November 19, 2001 and recorded in the
Office of the Recorder of Indiana County in Record Book Volume 1217, page 803.
(d) As used in this Instrument, "Existing ▇▇▇▇▇▇ Facility"
shall mean the coal-fired power plant (under demolition) currently owned by
Reliant Mid-Atlantic Power Holdings, LLC and located on the Land.
(e) As used in this Instrument, the term "Ineligible Property"
shall mean any of the following property or assets of any Grantor:
(i) any property or assets to the extent that the
Mortgagor is prohibited from granting a security
interest in, pledge of, or charge, mortgage or lien
upon any such property or assets by reason of
applicable law or regulation to which such Mortgagor
is subject, except to the extent such prohibition is
ineffective under Sections 9-406, 9-407, 9-408 or
9-409 of the NYUCC;
(ii) permits and licenses to the extent the grant of a
security interest therein is prohibited under
applicable law or regulation or by their express
terms, except to the extent such prohibition is
ineffective under Section 9-408 of the NYUCC;
(iii) cash and cash equivalents furnished by Mortgagor to
third parties as deposits or as security for any
obligation owing by Mortgagor or any of its
[Subsidiaries], to the extent the furnishing of such
cash and cash equivalents by such Person does not
violate the terms of any Secured Debt Document;
(iv) cash and cash equivalents held by Mortgagor, or on
the instruction of Mortgagor, on behalf of third
parties, or held by Mortgagor as customer margin
accounts, or held as security for any obligation
owing to REI or any of its subsidiaries or as a
deposit (all of the foregoing, collectively,
"Restricted Cash and Cash Equivalents"), together
with any deposit accounts in which such balances are
maintained ("Restricted Deposit Accounts"); provided,
however, that the foregoing exclusion shall apply
only to (x) Restricted Cash and Cash Equivalents that
are segregated from, and not commingled with, any
other cash or cash equivalents of Mortgagor, and (y)
Restricted Deposit Accounts that contain only
Restricted Cash and Cash Equivalents and no other
cash;
(v) Deposit accounts exclusively used for payroll,
payroll taxes and other employee wage and benefit
payments to or for the benefit of any Mortgagor's
salaried employees to the extent not required to be
pledged pursuant to the terms of any Secured Debt
Document.
(f) As used in this Instrument, the term "Permitted
Encumbrances" shall mean the items listed or described on Exhibit B attached
hereto.
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(g) As used in this Instrument, the term "Secured Debt
Documents" shall have the meaning set forth in the Collateral Trust Agreement.
(h) As used in this Instrument, the term "Secured Obligations"
shall mean the due and punctual payment and performance of all Obligations in
respect of each of the following Series of Secured Debt, together with any other
Permitted PEDFA Bond Indebtedness that is subsequently designated as and becomes
a Secured Obligation under the Collateral Trust Agreement:
(i) [Indicate which bond series have been designated
pursuant to Section 2.06 of the Collateral Trust Agreement as Permitted PEDFA
Bond Indebtedness that is to become Secured Obligations hereunder.]
2. PAYMENT AND PERFORMANCE OF SECURED OBLIGATIONS. The Mortgagor shall
promptly pay and perform when due the Secured Obligations.
3. TAXES AND OTHER CHARGES; LIENS. Except to the extent failure to do
so does not violate the terms of any one of the other Secured Debt Documents,
the Mortgagor shall duly pay and discharge, or cause to be paid and discharged,
before the same shall become in arrears (and after giving effect to all
applicable extensions), all taxes, assessments, vault, water and sewer rents,
rates, charges and assessments, premiums, levies, permits, inspection and
license fees, other governmental and quasi-governmental charges or other
impositions attributable to the Property or this Instrument, and any penalties
or interest for non-payment thereof, heretofore or hereafter imposed, or which
may become a lien, upon the Property or arising with respect to the occupancy,
use and possession thereof (collectively, the "Impositions"). The Mortgagor
shall promptly discharge any lien (other than a Permitted Encumbrance) which
has, or may have, priority over or equality with, the lien of this Instrument.
Except to the extent failure to do so does not violate the terms of any one of
the other Secured Debt Documents, the Mortgagor shall duly pay and discharge, or
cause to be paid and discharged before the same shall become in arrears, all
claims for labor, materials or supplies which if unpaid would become a lien upon
the Property (and not otherwise permitted as a Permitted Encumbrance).
4. HAZARD AND LIABILITY INSURANCE. If the Property is sold pursuant to
paragraph 23 hereof or if the Mortgagee acquires title to the Property, the
Mortgagee shall have all of the right, title and interest of the Mortgagor in
and to any insurance policies and unearned premiums thereon and in and to the
proceeds resulting from any damage to the Property prior to such sale or
acquisition.
5. PROTECTION OF THE MORTGAGEE'S SECURITY. If the Mortgagor fails to
perform the covenants and agreements contained in this Instrument, or if any
action or proceeding is commenced which affects the Mortgaged Property or title
thereto or the interest of the Mortgagee therein, including, but not limited to,
eminent domain, insolvency, code enforcement, or arrangements or proceedings
involving a bankrupt or decedent, and such proceeding has or is reasonably
expected to have a Material Adverse Effect, then the Mortgagee may make such
appearances, disburse such sums and take such action as the Mortgagee deems
necessary to protect the Mortgagee's interest, including, but not limited to,
(i) disbursement of reasonable attorneys' fees, (ii) entry upon the Property to
make repairs, (iii) procurement of satisfactory insurance, and (iv) the payment
of any Impositions levied against the Property then due and payable. Any amounts
disbursed by the Mortgagee pursuant to this paragraph 5, with interest thereon,
shall become additional indebtedness of the Mortgagor secured by this
Instrument. Such amounts shall be immediately due and payable and shall bear
interest from the date of disbursement until the date of actual payment of such
amounts at the Default Rate. The Mortgagor hereby covenants and agrees that the
Mortgagee shall be subrogated to the lien of any mortgage or other lien
discharged, in whole or in part, by the indebtedness secured hereby. Nothing
contained in this paragraph 5 shall require the Mortgagee to incur any expense
or take any action hereunder.
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6. CONDEMNATION. The Mortgagor shall promptly notify the Mortgagee of
any threatened or pending Condemnation Event, whether direct or indirect,
affecting the Property, or any part thereof, and the Mortgagor shall appear in
and prosecute any such action or proceeding unless otherwise directed by the
Mortgagee in writing. Upon the occurrence and during the pendancy of an
Actionable Default the Mortgagor authorizes the Mortgagee, acting upon an Act of
Secured Debtholders, as attorney-in-fact for the Mortgagor, to commence, appear
in and prosecute, in the Mortgagee's or the Mortgagor's name, any action or
proceeding relating to any Condemnation Event applicable to the Property or any
part thereof, whether direct or indirect, and to settle or compromise any claim
in connection with such condemnation or other taking.
7. MORTGAGOR AND LIEN NOT RELEASED. From time to time, subject to the
provisions of the relevant Secured Debt Documents, each Secured Party may, at
its option, without giving notice to or obtaining the consent of the Mortgagor,
the Mortgagor's successors or assigns or of any ▇▇▇▇▇▇ ▇▇▇▇-▇▇▇▇▇▇ or
guarantors, without liability on such Secured Party's part and notwithstanding
the Mortgagor's breach of any covenant or agreement of the Mortgagor in this
Instrument, extend the time for payment of the Secured Obligations or any part
thereof held by such Secured Party, reduce the payments thereon, release anyone
liable on any part of the Secured Obligations held by such Secured Party, accept
a renewal note or notes therefor, and modify the terms and time of payment of
the Secured Obligations held by such Secured Party. From time to time, subject
to the provisions of the Collateral Trust Agreement, the Mortgagee may release
from the lien of this Instrument any part of the Mortgaged Property, take or
release other or additional security held by it, re-convey any part of the
Mortgaged Property, consent to any map or plan of the Property, consent to the
granting of any easement, join in any extension or subordination agreement,
and/or agree in writing with any of the other Secured Parties to modify the
terms of any other Secured Debt Document held by the Mortgagee. Any actions
taken by any Secured Party or the Mortgagee pursuant to the terms of this
paragraph 7 shall not affect the obligation of the Mortgagor or the Mortgagor's
successors or assigns to pay and perform the Secured Obligations and to observe
the covenants of the Mortgagor contained herein, and shall not affect the lien
or priority of lien hereof on the Mortgaged Property. The Mortgagor shall pay
the Mortgagee all out-of-pocket expenses incurred by the Mortgagee, including,
without limitation, such title insurance premiums and attorneys' fees as may be
incurred at the Mortgagee's option, for any such action if taken at the
Mortgagor's request.
8. FORBEARANCE BY THE MORTGAGEE NOT A WAIVER. Any forbearance by the
Mortgagee in exercising any right or remedy hereunder or otherwise afforded by
applicable law, shall not be a waiver of or preclude the exercise of any right
or remedy. The acceptance by the Mortgagee or any Secured Party of payment of
any sum secured by this Instrument after the due date of such payment shall not
be a waiver of the Mortgagee's or such Secured Party's right to either require
prompt payment when due of all other sums so secured or to declare a default for
failure to make prompt payment. The procurement of insurance or the payment of
taxes or other liens or charges by the Mortgagee shall not be a waiver of the
Mortgagee's right to exercise its remedies hereunder, nor shall the Mortgagee's
receipt of any awards, proceeds or damages pursuant to the provisions of the
Collateral Trust Agreement operate to cure or waive the Mortgagor's default in
payment of the Secured Obligations.
9. UNIFORM COMMERCIAL CODE SECURITY AGREEMENT. This Instrument is
intended to be a security agreement pursuant to the Uniform Commercial Code for
any of the items specified above as part of the Mortgaged Property which, under
applicable law, may be subject to a security interest pursuant to the Uniform
Commercial Code, and the Mortgagor hereby grants the Mortgagee a security
interest in said items. The Mortgagor agrees that the Mortgagee may file this
Instrument or a reproduction thereof, in the real estate records or other
appropriate index, as a financing statement for any of the items specified above
as part of the Mortgaged Property. Any reproduction of this Instrument or of any
other security agreement or financing statement shall be sufficient as a
financing statement. In addition, the Mortgagor agrees to execute and deliver to
the Mortgagee, upon the
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Mortgagee's request, made at the direction of an Act of Secured Debtholders, any
financing statements, as well as extensions, renewals and amendments thereof,
and reproductions of this Instrument in such form as the Mortgagee may require
to perfect a security interest with respect to said items. Further, the
Mortgagor authorizes the Mortgagee to file Uniform Commercial Code financing
statements in Indiana County, Pennsylvania and such other jurisdictions as the
Mortgagee may require in order to perfect and provide notice of the liens and
security interest created hereunder. The Mortgagor shall pay all costs of filing
such financing statements and any extensions, renewals, amendments and releases
thereof, and shall pay all reasonable costs and expenses of any record searches
for financing statements the Mortgagee may, acting upon an Act of Secured
Debtholders, reasonably require. Except for Permitted Encumbrances and except to
the extent the same does not violate the terms of any one of the other Secured
Debt Documents, without the prior written consent of the Mortgagee, the
Mortgagor shall not create or suffer to be created pursuant to the Uniform
Commercial Code any other security interest in said items, including
replacements and additions thereto. Upon the occurrence and during the pendancy
of an Event of Default, the Mortgagee shall have the remedies of a secured party
under the Uniform Commercial Code and, acting upon an Act of Secured
Debtholders, may also invoke such remedies under the Uniform Commercial Code and
the remedies provided in paragraph 19 of this Instrument as to such items. In
exercising any of said remedies, the Mortgagee may proceed against the items of
real property and any items of personal property specified above as part of the
Mortgaged Property separately or together and in any order whatsoever, without
in any way affecting the availability of the Mortgagee's remedies under the
Uniform Commercial Code or of the remedies provided in paragraph 19 of this
Instrument.
10. LEASES OF THE PROPERTY. Upon assignment by the Mortgagor to the
Mortgagee of any Leases or subleases of the Property, the Mortgagee shall have,
subject to the License (as defined below), all of the rights and powers
possessed by the Mortgagor prior to such assignment and the right to modify,
extend or terminate any and all existing Leases and subleases and to execute new
Leases and subleases, in the Mortgagee's sole discretion.
11. REMEDIES CUMULATIVE. Each remedy provided in this Instrument is
distinct and cumulative to all other rights or remedies under this Instrument or
afforded by law or equity, and may be exercised concurrently, independently, or
successively, in any order whatsoever.
12. TRANSFERS OF THE MORTGAGED PROPERTY OR BENEFICIAL INTERESTS IN
MORTGAGOR. Except to the extent the same does not violate the terms of any one
of the other Secured Debt Documents, neither the Mortgagor nor any constituent
thereof shall sell, transfer, lease or encumber (a) all or any part of the
Mortgaged Property, or any interest therein, (b) all or substantially all of the
assets of the Mortgagor, or (c) all or any part of the beneficial interests in
the Mortgagor (if the Mortgagor is not a natural person or persons but is a
corporation, partnership, trust, limited liability company or other legal
entity).
13. NOTICES. Except for any notice required under applicable law to be
given in another manner, (a) any notice to the Mortgagor provided for in this
Instrument shall be given in the manner and to the address specified in the
Collateral Trust Agreement or at such other address as the Mortgagor may
designate by notice to the Mortgagee as specified in the Collateral Trust
Agreement, and (b) any notice to the Mortgagee shall be given in the manner and
to the address specified in the Collateral Trust Agreement or to such other
address as the Mortgagee may designate by notice to the Mortgagor as specified
in the Collateral Trust Agreement. Any notice provided for in this Instrument
shall be deemed to have been given to the Mortgagor or the Mortgagee as
specified in the Collateral Trust Agreement.
14. SUCCESSORS AND ASSIGNS BOUND; JOINT AND SEVERAL LIABILITY; AGENTS;
CAPTIONS. The covenants and agreements herein contained shall bind, and the
rights hereunder shall inure to, the respective successors and assigns of the
Mortgagee and the Mortgagor. If the
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Mortgagor is comprised of more than one entity or person, all covenants and
agreements of the Mortgagor shall be joint and several. In exercising any rights
hereunder or taking any actions provided for herein, the Mortgagee may act
through its employees, agents or independent contractors as authorized by the
Mortgagee. The captions and headings of the paragraphs of this Instrument are
for convenience only and are not to be used to interpret or define the
provisions hereof.
15. GOVERNING LAW; SEVERABILITY. This Instrument shall be governed by
the laws of the State of New York (without regard to the conflict of laws
principles of the State of New York), except that with respect to the exercise
of remedies hereunder and the creation, perfection and enforcement of the lien
created by this Instrument, the laws of the jurisdiction in which the Property
is located shall govern, without regard to the conflict of laws principles of
such jurisdiction. In the event that any provision of this Instrument conflicts
with applicable law, such conflict shall not affect other provisions of this
Instrument which can be given effect without the conflicting provisions, and to
this end the provisions of this Instrument are declared to be severable.
16. WAIVER OF STATUTE OF LIMITATIONS. The Mortgagor hereby waives the
right to assert any statute of limitations as a bar to the enforcement of the
lien of this Instrument or any other Secured Debt Document or to any action
brought to enforce the payment and performance of the Secured Obligations.
17. WAIVER OF MARSHALLING. Notwithstanding the existence of any other
security interest in the Mortgaged Property held by the Mortgagee or by any
other party, the Mortgagee, acting upon an Act of Secured Debtholders, shall
have the right to determine the order in which any or all of the Mortgaged
Property shall be subjected to the remedies provided herein. The Mortgagor, any
party who consents to this Instrument and any party who now or hereafter
acquires a security interest in the Mortgaged Property and who has actual or
constructive notice hereof hereby waives any and all right to require the
marshalling of assets in connection with the exercise of any of the remedies
permitted by applicable law or provided herein.
18. ASSIGNMENT OF RENTS; APPOINTMENT OF RECEIVER; MORTGAGEE IN
POSSESSION. As part of the consideration to induce the Secured Parties and the
Mortgagee to enter into the Collateral Trust Agreement, the Mortgagor hereby
absolutely and unconditionally assigns and transfers to the Mortgagee all of the
Mortgagor's right, title and interest in all rents of the Property, including
those now due, past due, or to become due by virtue of any Lease, regardless of
to whom such rents are payable. The Mortgagor hereby authorizes the Mortgagee or
the Mortgagee's agents to collect the aforesaid rents and hereby directs each
tenant and subtenant of the Property to pay such rents to the Mortgagee or the
Mortgagee's agents; provided, however, that prior to an Actionable Default, the
Mortgagor shall have the right to collect and receive all rents of the Property
in trust for the benefit of the Mortgagee and the Mortgagor, and, so long as no
Actionable Default has occurred, apply such rents for the account of the
Mortgagor to the extent doing so does not violate the terms of any one of the
other Secured Debt Documents (collectively, the "License"), it being intended by
the Mortgagor and the Mortgagee that this assignment of rents constitutes an
absolute assignment and not an assignment for additional security only. Upon an
Actionable Default, to the extent permitted by applicable law, and without the
necessity of the Mortgagee entering upon and taking and maintaining full control
of the Property in person, by agent or by a court-appointed receiver, the
Mortgagee, acting upon an Act of Secured Debtholders, shall immediately be
entitled to possession of all of the Mortgagor's rents of the Property as
specified in this paragraph 18 as the same become due and payable, including,
but not limited to, rents then due and unpaid, and all such rents shall
immediately upon delivery of such notice be held by the Mortgagor in trust for
the benefit of the Mortgagee only; provided, however, that the written notice by
the Mortgagee to the Mortgagor of such Actionable Default shall contain a
statement that the Mortgagee exercises its rights to such rents. The Mortgagor
agrees that commencing upon delivery of such written
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notice of such Actionable Default by the Mortgagee to the Mortgagor, each tenant
and subtenant of the Property shall make such rents payable to and pay such
rents to the Mortgagee or the Mortgagee's agents on the Mortgagee's written
demand to each tenant and subtenant therefor, delivered to each tenant and
subtenant personally or by mail without any liability on the part of said tenant
or subtenant to inquire further as to the existence of a default.
The Mortgagor hereby covenants that the Mortgagor has not executed any
prior assignment of said rents, that the Mortgagor has not performed, and will
not perform, any acts or has not executed, and will not execute, any instrument
which would prevent the Mortgagee from exercising its rights under this
paragraph 18. The Mortgagee agrees that the foregoing shall not restrict the
Mortgagor from amending, terminating or releasing any such Lease to the extent
doing so does not violate the terms of any one of the other Secured Debt
Documents. The Mortgagor further covenants that the Mortgagor will execute and
deliver to the Mortgagee such further assignments of rents and revenues of the
Property as the Mortgagee may from time to time request.
Upon an Actionable Default, the Mortgagee, acting upon an Act of
Secured Debtholders, shall be entitled to require the appointment of a receiver
for the Property, without notice to the Mortgagor or any other person or entity
and the Mortgagee may in person, by agent or by a court-appointed receiver,
regardless of the adequacy of the Mortgagee's security, enter upon and take and
maintain full control of the Property in order to perform all acts necessary and
appropriate for the operation and maintenance thereof including, but not limited
to, the execution, cancellation or modification of Leases and subleases, the
collection of all rents and revenues of the Property, the enforcement or
fulfillment of any terms, condition or provision of any Lease or sublease, the
making of repairs to the Property and the execution or termination of contracts
providing for the management or maintenance of the Property, all on such terms
as are deemed best by the Mortgagee to protect the security of this Instrument.
In the event the Mortgagee, acting upon an Act of Secured Debtholders, elects to
seek the appointment of a receiver for the Property upon an Actionable Default,
the Mortgagor hereby expressly consents to the appointment of such receiver. The
Mortgagee or the receiver shall be entitled to receive a reasonable fee for so
managing the Property.
All rents collected subsequent to delivery of written notice by the
Mortgagee to the Mortgagor of the occurrence of an Actionable Default shall be
applied first to the costs, if any, of taking control of and managing the
Property and collecting the rents, including, but not limited to, reasonable
attorneys' fees, receiver's fees, premiums on receiver's bonds, costs of repairs
to the Property, premiums on insurance policies, taxes, assessments and other
charges on the Property, and the costs of discharging any obligation or
liability of the Mortgagor as lessor or landlord of the Property and then in
accordance with the terms of the Collateral Trust Agreement. The Mortgagee or
the receiver shall have access to the books and records used in the operation
and maintenance of the Property and shall be liable to account only for those
rents actually received. The Mortgagee shall not be liable to the Mortgagor,
anyone claiming under or through the Mortgagor or anyone having an interest in
the Property by reason of anything done or left undone by the Mortgagee under
this paragraph 18.
If the rents of the Property are not sufficient to meet the costs, if
any, of taking control of and managing the Property and collecting the rents,
any funds expended by the Mortgagee for such purposes shall become indebtedness
of the Mortgagor to the Mortgagee secured by this Instrument pursuant to
paragraph 5 hereof. Unless the Mortgagee and the Mortgagor agree in writing to
other terms of payment, such amounts shall be payable upon notice from the
Mortgagee to the Mortgagor requesting payment thereof and shall bear interest
from the date of disbursement until the date of actual payment of such amounts,
at the Default Rate.
B-10
Any entering upon and taking and maintaining of control of the Property
by the Mortgagee or the receiver and any application of rents as provided herein
shall not cure or waive any default hereunder or invalidate any other right or
remedy of the Mortgagee under applicable law or provided herein. This assignment
of rents of the Property shall terminate as provided in the Collateral Trust
Agreement.
19. DEFAULT; REMEDIES. Upon the occurrence of an Actionable Default,
the Mortgagee may, acting upon an Act of Secured Debtholders, foreclose this
Instrument by judicial proceeding, and may invoke the power of sale and any
other remedies permitted by applicable law or provided herein. Supplementing the
definition of an Actionable Default, if the Mortgagor shall at any time deliver
or cause to be delivered to the Mortgagee without prior written consent of the
Mortgagee a notice pursuant to 42 Pa. C.S.A. Section 8143 electing to limit the
indebtedness secured by this Instrument, same shall be deemed to constitute an
Actionable Default. The Mortgagor acknowledges that, to the extent permitted by
applicable law, upon the occurrence of an Actionable Default, the Mortgagee
without prior judicial hearing may, acting upon an Act of Secured Debtholders,
exercise the power of sale herein granted. The Mortgagor has the right to bring
an action to assert the non-existence of a breach or any other defense of the
Mortgagor to such sale. The Mortgagee shall be entitled to collect all costs and
expenses incurred in pursuing such remedies, including, but not limited to,
reasonable attorneys' fees and costs of documentary evidence, abstracts and
title reports.
If the Property is sold pursuant to paragraph 23 of this Instrument,
the Mortgagor or any person holding possession of the Property through the
Mortgagor shall immediately surrender possession of the Property to the
purchaser at such sale upon the purchaser's written demand. If possession is not
surrendered upon the purchaser's written demand, the Mortgagor or such person
shall be a tenant at sufferance and may be removed by writ of possession or by
an action for forcible entry and detainer.
20. ATTORNEYS' FEES. As used in this Instrument, "attorneys' fees"
shall include attorneys' fees, if any, which may be awarded by an appellate
court and attorneys' fees incurred in connection with any bankruptcy proceedings
relating to or otherwise involving the Borrower or the Mortgagor or any of their
constituent entities.
21. FUTURE ADVANCES.
(a) This Instrument is given to secure not only the existing
indebtedness secured hereby but also future advances as are made under the
Secured Debt Documents up to a total maximum principal amount of
$600,000,000.00, plus interest thereon, and any disbursements made under this
Instrument or the other Secured Debt Documents by the Mortgagee for the payment
of taxes, insurance or other liens on the Mortgaged Property encumbered by this
Instrument, with interest on such disbursements, which advances shall be secured
hereby to the same extent as if such future advances were made on this date. The
total amount of indebtedness secured hereby may increase or decrease from time
to time. The provisions of this paragraph 21 shall not be construed to imply any
obligation on any of the Secured Parties to make any future advances, it being
the intention of the parties that any future advances shall be solely at the
discretion and option of the relevant Secured Parties.
(b) This instrument shall, from time to time, be supplemented
or amended by the Mortgagee and the Mortgagor to further evidence that a
specific future Series of Secured Debt is included within the Secured
Obligations and secured by this Instrument. Such supplements or amendments shall
be in the form attached hereto as Exhibit C or in such other form as the
Mortgagee and the Mortgagor may from time to time agree.
22. MORTGAGOR'S MISCELLANEOUS COVENANTS. The Mortgagor hereby
covenants, agrees and undertakes to:
B-11
(a) except for Permitted Encumbrances and except to the extent
doing so does not violate the terms of any one of the other Secured Debt
Documents, not execute or deliver any deed of trust, mortgage or pledge of any
type covering all or any portion of the Mortgaged Property;
(b) except for Permitted Encumbrances and except to the extent
doing so does not violate the terms of any one of the other Secured Debt
Documents, not permit any drilling or exploration for or extraction, removal or
production of any mineral, natural element, compound or substance from the
surface or subsurface of the Property regardless of the depth thereof or the
method of mining or extraction thereof;
(c) without providing notice to the Mortgagee, not change its
name or organizational identification number if it has one; and
(d) pay on demand all out-of-pocket costs, fees and expenses
and other expenditures, including, but not limited to, reasonable attorneys'
fees and expenses paid or incurred by the Mortgagee to enforce or incident to
the enforcement of this Instrument or the exercise of any right or remedy of the
Mortgagee hereunder.
23. FORECLOSURE; MORTGAGEE IN POSSESSION; INDEMNIFICATION. At any time
after the occurrence of an Actionable Default, the Mortgagee may, acting upon an
Act of Secured Debtholders, either with or without entry or taking possession as
herein provided, proceed by suit or suits at law or in equity or by any other
appropriate proceeding or remedy to foreclose the lien hereof for the Secured
Obligations or any part thereof and to sell the Mortgaged Property as an
entirety or otherwise, as the Mortgagee may determine. In any civil action to
foreclose the lien hereof or otherwise enforce the Mortgagee's rights, there
shall be allowed and included as additional indebtedness secured hereby in the
order or judgment for foreclosure and sale or other order all reasonable
expenditures and expenses which may be paid or incurred by or on behalf of the
Mortgagee for attorneys' fees, costs and expenses, appraisers' fees, engineers'
fees, outlays for documentary and expert evidence, stenographers' charges,
publication costs, and costs (which may be estimates as to items to be expended
after entry of said order or judgment) of procuring all such abstracts of title,
title searches and examination, title insurance policies, and similar data and
assurances with respect to the title as the Mortgagee may deem reasonably
necessary either to prosecute such civil action or to evidence to bidders at any
sale which may be had pursuant to such order or judgment the true condition of
the title to, or the value of, the Mortgaged Property. All expenditures and
expenses of the nature in this paragraph 23 mentioned and such costs, expenses
and fees as may be incurred in the protection of the Mortgaged Property and the
maintenance of the lien of this Instrument, including the reasonable fees, and
actual costs and expenses of any attorneys employed by the Mortgagee in any
litigation or proceeding affecting this Instrument or any other Secured Debt
Document or the Mortgaged Property, including probate, appellate and bankruptcy
proceedings, or in preparation for the commencement or defense of any action or
proceeding or threatened action or proceeding, shall be immediately due and
payable to the Mortgagee, with interest thereon at the Default Rate, and shall
be secured by this Instrument. The failure to join any tenant or tenants of the
Property as party defendant or defendants in any such civil action or the
failure of any such order or judgment to foreclose their rights shall not be
asserted by the Mortgagor as a defense in any civil action instituted to collect
the Secured Obligations, or any part thereof, or any deficiency remaining unpaid
after foreclosure and sale of the Mortgaged Property, any statute or rule of law
at any time existing to the contrary notwithstanding. Upon any foreclosure sale,
the Mortgagee may bid for and purchase the Mortgaged Property and shall be
entitled to apply all or any part of the Secured Obligations as a credit to the
purchase price. The proceeds of any foreclosure sale of the Mortgaged Property
shall be distributed and applied, at the Mortgagee's option, to reduce the
amount of the Secured Obligations in such priority and in such proportions as
the Mortgagee in its sole discretion shall deem proper.
B-12
24. TRANSFER OF LIEN. The Mortgagee may, at any time, transfer or
assign this Instrument and any other Secured Debt Document held by it as
permitted pursuant to the provisions of the Collateral Trust Agreement. The
Mortgagee may forward to each purchaser, transferee, or assignee all documents
and information which the Mortgagee now has or may hereafter acquire relating to
the transactions contemplated by the Collateral Trust Agreement and to the
Mortgagor and/or the Mortgaged Property, whether furnished by the Mortgagor or
otherwise, as the Mortgagee determines necessary or desirable. The Mortgagor
shall furnish and the Mortgagor consents to the Mortgagee furnishing to such
purchaser, transferee or assignee any and all information concerning the
Mortgaged Property and the Leases, as may be requested by the Mortgagee,
purchaser, transferee or assignee in connection with any sale or transfer.
25. CONFESSION OF JUDGMENT
THE FOLLOWING SECTION SETS FORTH WARRANTS OF ATTORNEY FOR ANY ATTORNEY
TO CONFESS JUDGMENTS AGAINST THE MORTGAGOR. IN GRANTING THESE WARRANTS OF
ATTORNEY TO CONFESS JUDGMENTS AGAINST THE MORTGAGOR, THE MORTGAGOR HEREBY
KNOWINGLY, INTENTIONALLY, VOLUNTARILY AND UNCONDITIONALLY WAIVES, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHTS THE MORTGAGOR MAY HAVE TO PRIOR
NOTICE AND AN OPPORTUNITY FOR HEARING UNDER THE RESPECTIVE CONSTITUTIONS AND
LAWS OF THE COMMONWEALTH OF PENNSYLVANIA AND THE UNITED STATES OF AMERICA.
WITHOUT LIMITATION OF THE FOREGOING, TO THE EXTENT PERMITTED BY APPLICABLE LAW,
THE MORTGAGOR HEREBY SPECIFICALLY WAIVES ALL RIGHTS THE MORTGAGOR HAS OR MAY
HAVE TO NOTICE AND AN OPPORTUNITY FOR A HEARING PRIOR TO EXECUTION UPON ANY
JUDGMENT ENTERED AGAINST THE MORTGAGOR PURSUANT TO THE TERMS HEREOF.
FOR THE PURPOSE OF OBTAINING POSSESSION OF THE MORTGAGED PROPERTY, OR
ANY PORTION(S) THEREOF, AFTER THE OCCURRENCE OF ANY ACTIONABLE DEFAULT, ACTING
UPON AN ACT OF SECURED DEBTHOLDERS, THE MORTGAGOR HEREBY AUTHORIZES AND EMPOWERS
ANY ATTORNEY OF ANY COURT OF RECORD IN THE COMMONWEALTH OF PENNSYLVANIA OR
ELSEWHERE, AS ATTORNEY FOR THE MORTGAGOR AND ALL PERSONS CLAIMING UNDER OR
THROUGH THE MORTGAGOR, BY COMPLAINT OR OTHERWISE, TO APPEAR FOR AND ENTER AND
CONFESS JUDGMENT AGAINST THE MORTGAGOR, AND AGAINST ALL PERSONS CLAMING UNDER OR
THROUGH THE MORTGAGOR, IN FAVOR OR THE MORTGAGEE, FOR RECOVERY BY THE MORTGAGEE
OF POSSESSION OF THE MORTGAGED PROPERTY, OR ANY PORTION(S) THEREOF, FOR WHICH
THIS INSTRUMENT, OR A COPY THEREOF VERIFIED BY AFFIDAVIT, SHALL BE A SUFFICIENT
WARRANT; AND THEREUPON A WRIT OF POSSESSION (OR LIKE WRIT UNDER THEN APPLICABLE
LAW) MAY IMMEDIATELY ISSUE FOR POSSESSION OF THE MORTGAGED PROPERTY, OR SUCH
PORTION(S) THEREOF, WITHOUT ANY PRIOR WRIT OR PROCEEDING WHATSOEVER AND WITHOUT
ANY STAY OF EXECUTION. IF FOR ANY REASON AFTER SUCH ACTION HAS BEEN COMMENCED IT
SHALL BE DISCONTINUED, OR POSSESSION OF THE MORTGAGED PROPERTY OR SUCH
PORTION(S) THEREOF SHALL REMAIN IN OR BE RESTORED TO THE MORTGAGOR, THE
MORTGAGEE SHALL HAVE THE RIGHT FOR THE SAME ACTIONABLE DEFAULT OR ANY SUBSEQUENT
ACTIONABLE DEFAULT, ACTING UPON AN ACT OF SECURED DEBTHOLDERS, TO BRING ONE OR
MORE FURTHER ACTIONS OR ENTER AND CONFESS JUDGMENT ONE OR MORE TIMES AS ABOVE
PROVIDED TO
B-13
RECOVER POSSESSION OF THE MORTGAGED PROPERTY, OR ANY PORTION(S) THEREOF. UPON
ANY ACTIONABLE DEFAULT AND ACTING UPON AN ACT OF SECURED DEBTHOLDERS, THE
MORTGAGEE MAY BRING AN ACTION IN EJECTMENT AND CONFESS JUDGMENT THEREIN BEFORE
OR AFTER THE INSTITUTION OF PROCEEDINGS TO FORECLOSE THIS INSTRUMENT OR TO
ENFORCE THE PROVISIONS OF THE SECURED DEBT DOCUMENTS, OR AFTER ENTRY OF JUDGMENT
THEREIN OR ON ANY SECURED DEBT DOCUMENT, OR AFTER A SHERIFF'S SALE OR JUDICIAL
SALE OR OTHER FORECLOSURE SALE OF THE MORTGAGED PROPERTY, OR ANY PORTION(S)
THEREOF, IN WHICH THE MORTGAGEE IS THE SUCCESSFUL BIDDER, IT BEING THE
UNDERSTANDING OF THE PARTIES THAT THE AUTHORIZATION TO PURSUE SUCH PROCEEDINGS
FOR OBTAINING POSSESSION AND CONFESSION OF JUDGMENT THEREIN IS AN ESSENTIAL PART
OF THE REMEDIES FOR ENFORCEMENT OF THIS INSTRUMENT AND OTHER SECURED DEBT
DOCUMENTS, AND SHALL SURVIVE ANY EXECUTION SALE TO THE MORTGAGEE.
THE MORTGAGOR (I) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY
OF THE MORTGAGEE HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH PARTY WOULD
NOT SEEK TO EXERCISE OR ENFORCE THE FOREGOING PROVISIONS CONCERNING CONFESSION
OF JUDGMENTS AND (II) ACKNOWLEDGES THAT THE ENTERING INTO BY THE MORTGAGEE OF
THE OBLIGATIONS SECURED BY THIS INSTRUMENT HAS BEEN INDUCED BY, AMONG OTHER
THINGS, THE INCLUSION HEREIN OF SAID PROVISIONS. THE MORTGAGOR FURTHER
ACKNOWLEDGES THAT IT HAS HAD THE ASSISTANCE OF INDEPENDENT LEGAL COUNSEL,
SELECTED OF THE MORTGAGOR'S OWN FREE WILL, IN THE REVIEW AND EXECUTION OF THIS
INSTRUMENT AND IN THE MAKING OF SAID PROVISIONS, THAT IT HAS HAD THE OPPORTUNITY
TO DISCUSS SAID PROVISIONS WITH SAID COUNSEL AND THAT THE MEANING AND EFFECT
THEREOF HAVE BEEN FULLY EXPLAINED TO THE MORTGAGOR BY SUCH COUNSEL, AND AS
EVIDENCE OF SUCH FACT AN AUTHORIZED OFFICER OF THE MORTGAGOR SIGNS HIS/HER NAME.
(MORTGAGOR'S SIGNATURE)
26. PENNSYLVANIA "OPEN-END MORTGAGE" PROVISIONS.
(a) The proceeds of the advances have been and shall be
disbursed, advanced, and repaid in accordance with the terms and conditions of
the Secured Debt Documents. Without limiting anything contained in any provision
hereof, this Instrument is an Open-End Mortgage which secures the Mortgagor's
obligation to repay all advances of principal made prior to, at or after closing
up to the principal amount of the Secured Obligations up to the maximum amount
of $600,000,000.00, and all interest, late charges, fees and other amounts due
under this Instrument and the other Secured Debt Documents and, in addition
thereto, (i) all advances by the Mortgagee or any Secured Party to the Mortgagor
or any other person to pay costs of erection, construction, alteration, repair,
restoration and completion of any part of the Improvements or any other
Mortgaged Property, (ii) any and all advances made or costs incurred by the
Mortgagee or any Secured Party for the payment of taxes, assessments,
maintenance charges, insurance premiums, and inspections or audits of the
Mortgaged Property, (iii) any and all costs incurred for the protection of all
or any part of the Mortgaged Property or the lien of this Instrument, and (iv)
any and all legal fees, costs and other expenses incurred by the Mortgagee by
reason of any Actionable Default, Actionable Default Period or otherwise in
connection with the Secured Obligations. All such advances shall be entitled to
the lien priority and all the benefits provided under 42
B-14
Pa. Cons. Stat. ▇▇▇. Section 8143 et seq. (1990) (the "Open-End Mortgage
Statute"). Without limiting the generality of any other provisions hereof, this
Instrument shall be entitled to the lien priority and all of the benefits of an
"Open-End Mortgage" under the Open-End Mortgage Statute.
(b) If the Mortgagee receives written notice which may
constitute or purports to constitute a notice pursuant to Section 8143(b) of the
Open-End Mortgage Statute from a holder of a lien or encumbrance on the
Mortgaged Property which is subordinate to the lien of the Instrument, then, and
notwithstanding any provision to the contrary contained in any of the Secured
Debt Documents, the Mortgagor agrees that the Secured Parties shall not be
responsible to make any further advances to the Mortgagor (and the Secured
Parties are released from all liability, if any, for failure to make such
advances) if the Secured Parties determine in their sole discretion that any
such advance requested by the Mortgagor could be construed to be an unobligated
advance under Section 8143(b) of the Open-End Mortgage Statute.
(c) If the Mortgagor should at any time elect to limit the
liabilities secured by this Instrument pursuant to Section 8143(c) of the
Open-End Mortgage Statute, the Mortgagor agrees that notice of such election
shall (i) not be effective unless and until it is served upon the Mortgagee in
accordance with the requirements of Section 8143(d) of the Open-End Mortgage
Statute and fully complies with the requirements for the giving of notices under
the Secured Debt Documents; (ii) release the Secured Parties from all
obligation, if any, to make any further advances under the Secured Debt
Documents notwithstanding anything to the contrary contained in such notice or
the Secured Debt Documents; (iii) constitute, at the election of the Secured
Parties, a Credit Agreement Event of Default; and (iv) not be effective to limit
the Mortgagor's liability for payment and performance of all liabilities for
which the Mortgagor is responsible under this Instrument or the other Secured
Debt Documents (including, without limitation, all reimbursement and
indemnification agreements) whether such liabilities arise prior or subsequent
to the date of such notice. Any advances made by the Mortgagee thereafter shall
continue to be secured by this Instrument.
27. DUPLICATE ORIGINALS. This Instrument may be executed in any number
of duplicate originals and each duplicate original shall be deemed to be an
original.
28. RIGHTS OF MORTGAGEE. Notwithstanding anything to the contrary
contained in this Instrument, the rights of the Mortgagee under this Instrument
and each other Secured Debt Document held by the Mortgagee are subject to the
terms, conditions and limitations set forth in the Collateral Trust Agreement,
reference to which is made for all purposes; provided, however, that any
forbearance by the Mortgagee in exercising any right or remedy available to the
Mortgagee under the Collateral Trust Agreement shall not give rise to a defense
on the part of the Mortgagor with respect to the Mortgagee's exercise of any
right or remedy pursuant to this Instrument or as otherwise afforded by
applicable law.
PROVIDED ALWAYS, that this Instrument will cease, terminate and
thereafter be of no further force and effect upon payment of the Secured
Obligations, and upon such occurrence Mortgagee shall promptly satisfy this
Instrument of record in accordance with the Collateral Trust Agreement.
B-15
IN WITNESS WHEREOF, intending to be legally bound hereby, the Mortgagor
and the Mortgagee have caused this Instrument to be executed by their respective
representatives thereunto duly authorized as of the day and year set forth above
but effective as of the Effective Date.
MORTGAGOR:
(SEAL) RELIANT ENERGY ▇▇▇▇▇▇, LLC, a Delaware
limited liability company
By:__________________________________
Name:________________________________
Title:_______________________________
MORTGAGEE:
(SEAL) ▇.▇. ▇▇▇▇▇▇ TRUST COMPANY, NATIONAL
ASSOCIATION a national banking
association, as Collateral Trustee
By:__________________________________
Name:________________________________
Title:_______________________________
Certification of Address. I do hereby certify that the address of the
above-named Mortgagee is:
By:
Name :
Title :__________________________________
▇-▇▇
▇▇▇▇▇ ▇▇ _____________________________________________ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇▇▇ OF ___________________________________________ Section
The foregoing instrument was acknowledged before me this __ day of ____________,
20__ by _______________, as _________________ of Reliant Energy ▇▇▇▇▇▇, LLC, a
Delaware limited liability company. He is personally known to me or has produced
_____________________ as identification.
________________________________________
Print Name: Notary Public
Serial No.:
Expiration:
My Commission expires:
STATE OF ____________________________________________ Section
Section
COUNTY OF ___________________________________________ Section
The foregoing instrument was acknowledged before me this ____ day of
____________, 20___ by _______________, as ________________ of ______________, a
______________. He is personally known to me or who has produced
_____________________ as identification.
________________________________________
Print Name: Notary Public
Serial No.:
Expiration:
My Commission expires:
B-17
EXHIBIT A
PROPERTY DESCRIPTION
All those certain tracts or parcels of land and premises situated, lying and
being in East Wheatfield Township and/or West Wheatfield Township, Indiana
County, Pennsylvania, with the following Tax Parcel Identification Numbers:
▇▇-▇▇▇-▇▇▇, ▇▇-▇▇▇-▇▇▇.
[See enclosed legal descriptions to be attached at time of execution.]
Exhibit A, Page 1
EXHIBIT B
PERMITTED ENCUMBRANCES
1. Permitted Prior Liens (as such term is used and defined in the
documents evidencing the REI Guarantees and the Subsidiary Guarantees).
2. Current Impositions which are a lien but not yet due and payable.
3. Any variation in location or dimensions, conflict with lines of
adjoining property, encroachments, projections or other matters which
might be disclosed by an accurate survey of the Land.
4. All oil and gas, coal and mining rights and all rights relating
thereto.
5. Right of way granted to Central Pennsylvania Water Supply Company, by
instrument from Pennsylvania Electric Company, dated August 10, 1990
and recorded in Deed Book 973, page 175, as shown on survey made of the
insured property for Sithe Energies, Inc. by ▇▇▇▇▇▇ Associates, Inc.
dated April 28, 1999 and last revised September 7, 1999. Sheet 3 of 4
(Tract 4).
6. Rights of way granted to General Telephone Company of Pennsylvania by
instrument from Pennsylvania Electric Company dated July 31, 1969 and
recorded in Deed Book 598, page 264 (Tract 4).
7. Riparian rights of others to the flow of the Conemaugh River.
8. Title to that part of the subject premises lying in the bed of Power
Plant Road also known as State Road 2008 is subject to public rights
therein as shown on survey made of the insured property for Sithe
Energies, Inc. by ▇▇▇▇▇▇ Associates, Inc. dated April 28, 1999 and last
revised September 7, 1999. Sheets 2 and 3 of 4 (Tract 5).
9. The following matters as more fully set forth in deed from the
Pennsylvania Railroad Company to Pennsylvania Electric Company dated
August 29, 1931 and recorded in Deed Book 260, page 433:
a) Exceptions and reservation of all coal together with mining
rights.
b) The effect and operation of a certain Agreement between the
Pennsylvania Railroad Company and the Conemaugh Smokeless Coal
Company dated December 13, 1919 for maintenance of a 4 inch
water pipe.
c) Condition that the Pennsylvania Railroad Company, and its
successors and assigns shall not be liable to construct or
maintain any fence between the parcel conveyed and adjoining
lands of Grantor (Tracts 4 and 5).
10. Terms, provisions and conditions contained in the Landowner Consent
(Supplemental C) granted to Derry International, from Pennsylvania
Electric Company dated June 1, 1995 and recorded in Deed Book 1066,
page 147 (Tracts 4 and 5).
11. Terms, provisions and conditions contained in the Deed of Easement, for
S. R. 2008, granted to Commonwealth of Pennsylvania, Department of
Transportation, by instrument from Pennsylvania Electric Company dated
March 10, 1997 recorded in Deed Book 1105, page 930 as
Exhibit B, Page 1
shown on survey made of the insured property for Sithe Energies, Inc.
by ▇▇▇▇▇▇ Associates, Inc. dated April 28, 1999 and last revised
September 7, 1999. Sheet 3 of 4 (Tract 5).
12. Coal and mining rights granted in deed to Operators Coal Mining Company
from C. A. ▇▇▇▇▇▇▇▇, et al., Executors of the Last Will and Testament
of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, et al. as in Deed dated November 29, 1913
recorded in Deed Book 135, page 407.
13. Exception and reservation by Pennsylvania Electric Company of "Excluded
Assets" in deed to Sithe Pennsylvania Holdings LLC dated November 19,
1999 and recorded in Deed Book Volume 1167, page 559.
14. Terms, provisions and conditions contained in the Easement and License
Agreement between Pennsylvania Electric Company and Sithe Pennsylvania
Holdings LLC dated November 19, 1999 and recorded on December 3, 1999
in Indiana County in Deed Book 1167, page 581; as amended by Amendment
Number 1 to Easement and License Agreement between Reliant Energy
▇▇▇▇▇▇, LLC and Pennsylvania Electric Company dated November 19, 2001
and recorded in Record Book Volume 1217, page 803.
15. Terms, provisions and conditions contained in the Easement Agreement
between Sithe Pennsylvania Holdings LLC and Pennsylvania Electric
Company dated November 19, 1999 and recorded in Deed Book Volume 1157,
page 665.
16. Easement Granted to Atlantic City Electric Co., et al. by instrument
from Sithe Pennsylvania Holdings LLC dated November 22, 1999 and
recorded in Deed Book Volume 1167, page 685.
17. The following matters set forth in deed from Reliant Energy
Mid-Atlantic Power Holdings, LLC to Reliant Energy ▇▇▇▇▇▇, LLC, dated
as of April 20, 2001 and recorded in Record Book Volume 1202, page 43,
as corrected by corrective deed dated as of April 20, 2001 and recorded
in Record Book Volume 1216, page 975 and as further corrected by
corrective date deed as of April 20, 2001 and recorded in Record Book
Volume 1272, page 9:
a) Notice with respect to the disposal of materials and
environmental investigations.
b) Exception and reservation of the "Existing Plant" as described
in Exhibit C of said deed as corrected.
18. Rights of third parties in possession, with no option to purchase or
rights of first refusal, pursuant to the following unrecorded
instruments:
a) Easement from Reliant Energy Mid-Atlantic Power Holdings, LLC
to Pennsylvania Electric Company dated May 2, 2001. (Affects
Tracts 4 and 5.)
b) Easement from Reliant Energy ▇▇▇▇▇▇, LLC to Pennsylvania
Electric Company dated June 10, 2002. (Affects Tracts 4 and
5.)
c) Easement From Reliant Energy ▇▇▇▇▇▇ LLC to Pennsylvania
Electric Company dated July 23, 2002. (Affects Tracts 4 and
5.)
d) Siding Agreement between Norfolk Southern Railway Company and
Reliant Energy ▇▇▇▇▇▇ LLC dated March 18, 2002.
Exhibit B, Page 2
19. The following matters shown on survey made by ▇▇▇▇▇▇ Associates, Inc.
(Drawing No. 025000-01), dated September 16, 2002 affecting Tract No.
4:
a) 200 foot wide electric easement.
b) Stream crossing tract.
c) 30 foot electric easements.
d) Conemaugh River.
e) 160 foot wide proposed electric easement.
f) Seventh Street.
g) Conemaugh Street.
h) 100 foot wide electric easement.
i) 120 foot wide electronic easement.
j) 30 foot wide distribution easement.
k) 40 foot wide transmission easement.
l) 12.50 foot wide electric easement.
m) Easement area containing 8.065 acres.
21. The following matters shown on survey made by ▇▇▇▇▇▇ Associates, Inc.
(Drawing No. 025000-01), dated September 16, 2002, affecting Tract No.
5:
a) Power Plant Road, also known as S.R. 2008.
b) Pump House Road, also known as T-718.
c) 100 foot wide electronic easement.
d) 30 foot wide electric easement.
e) Overhead electric and telephone lines.
22. Possible encroachments due to construction of the items listed below
subsequent to the survey by ▇▇▇▇▇▇ Associates, Inc. (Drawing No.
025000-01) dated September 16, 2002:
a) Bridge
b) Fuel Hoppers
c) Fuel Storage Barn
d) Fuel Handling Control Building
e) Limestone Hoppers (2)
f) Ash Silos Foundation
Exhibit B, Page 3
g) Emissions Monitoring Building
h) Aqueous Ammonia Tanks
i) Cooling Tower Electrical Building
j) Waste Water Basin
k) Make-Up Clarifier
l) Bulk Storage Gas
m) Auxiliary Transformers (2)
n) Start-Up Transformer
o) Material Handling Electrical Building
p) Oil/Water Separator
q) Power Island Sump
r) Coal Crusher Electrical Building
s) Coal Handling Electric Building
t) Boiler Feed Conveyor
u) Limestone unloading conveyor.
23. Terms and conditions of Highway Occupancy Permit issued by the
Pennsylvania Department of Energy to Reliant Energy ▇▇▇▇▇▇ LLC dated
November 8, 2002 and recorded on November 12, 2002 in Record Book
Volume 1244, page 420.
24. Right of way granted to Pennsylvania Electric Company by Reliant Energy
▇▇▇▇▇▇ LLC dated June 10, 2002 and recorded in Record Book Volume 1246,
page 543.
25. Rights of the public in and to ▇▇▇▇▇▇▇▇ Road, also known as ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇.
26. Coal and mining rights as excepted and reserved in deed from ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, et ux. to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ dated February 16, 1911 and
recorded in Deed Book Volume 127, page 25.
27. Coal and mining rights conveyed to Operators Coal Mining Company by
deeds from (a) C.A. ▇▇▇▇▇▇▇▇, et al., Executors dated November 29, 1913
and recorded in Deed Book Volume 135, page 407, (b) ▇▇▇▇▇▇ ▇. ▇▇▇▇, et
ux, dated January 12, 1914 and recorded in Deed Book Volume 135, page
490, and (c) ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ et al. dated October 9, 1913 and
recorded in Deed Book Volume 135, page 503.
28. The following rights of way granted to:
a) Keystone Pipe Line Company by instrument from ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇ et ux. dated July 6, 1935 and recorded in Deed Book
Volume 277, page 149.
b) Socony-Vacuum Oil Company, Incorporated by instrument from
Pennsylvania Electric Company dated January 29, 1946 and
recorded in Deed Book Volume 354, page 111.
c) Socony-Vacuum Oil Company, Incorporated by instrument from
Pennsylvania Electric Company dated August 14, 1946 and
recorded in Deed Book Volume 354, page 588.
d) Texas Eastern Penn-Jersey Transmission Corporation by
instrument from Pennsylvania Electric Company dated March 24,
1954 and recorded in Deed Book Volume 432, page 207.
Exhibit B, Page 4
e) Laurel Pipe Line Company by instrument from Pennsylvania
Electric Company dated July 19, 1957 and recorded in Deed Book
Volume 465, page 226.
f) Texas Eastern Transmission Corporation by instrument from
Pennsylvania Electric Company dated October 10, 1960 and
recorded in Deed Book Volume 495, page 631.
29. Title to that part of the subject premises lying in the bed of Power
Plant Road, also known as State Route 2008, is subject to public rights
therein as shown on survey made of the insured property for Sithe
Energies, Inc. by ▇▇▇▇▇▇ Associates, Inc. dated April 28, 1999 and last
revised September 7, 1999.
30. Easement for electric, CATV and communication purposes granted by
Reliant Energy ▇▇▇▇▇▇, LLC to Pennsylvania Electric Company dated
October 27, 2003 recorded in Record Book Volume 1343, page 238.
31. Mechanic's Lien Claim in the amount of $35,900,000.00, filed by RMF
Industrial Contracting, Inc. against Reliant Energy ▇▇▇▇▇▇, LLC and
▇▇▇▇▇▇ Trust under Case Nos. 41100CD2003 and 41769CD2003 in the Court
of Common Pleas of Indiana County, Pennsylvania on July 2, 2003 and
September 25, 2003.
32. Mechanic's Liens Claim in the amount of $2,865,128.45, filed by
Agri-Systems, Inc. against Reliant Energy ▇▇▇▇▇▇, LLC, as Owner and
Consortium of Duke Fluor ▇▇▇▇▇▇ and Alstom Power, Inc., as Prime
Contractor, under Case No. 42090CD2003 in the Court of Common Pleas of
Indiana County, Pennsylvania.
Exhibit B, Page 5